SAXON ASSET SECURITIES TRUST 199_-_
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 199_-_
TRUST AGREEMENT
dated as of ___1, 199_,
among
SAXON ASSET SECURITIES COMPANY,
as Depositor
SAXON MORTGAGE, INC.,
as Master Servicer
and
--------------------------------,
as Trustee
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Standard Terms; Section References..............................................................1
Section 1.02. Defined Terms...................................................................................3
ARTICLE II FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS......................................................20
Section 2.01. Conveyance of Mortgage Loans...................................................................20
ARTICLE III REMITTING TO CERTIFICATEHOLDERS......................................................................21
Section 3.01. Subaccount Distributions.......................................................................21
Section 3.02. Certificate Distributions......................................................................22
Section 3.04. Reports by Master Servicer.....................................................................28
Section 4.01. The Certificates...............................................................................29
Section 4.02. Denominations..................................................................................30
Section 4.03. Interest Fund..................................................................................30
Section 4.04. Principal Fund.................................................................................30
ARTICLE V MISCELLANEOUS PROVISIONS...............................................................................30
Section 5.01. Request for Opinions...........................................................................30
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing Law....................................31
Section 5.03. REMIC Administration...........................................................................31
Section 5.04. Optional Termination...........................................................................32
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent........................................32
Schedule I: The Mortgage Loans: A. Group I Mortgage Loans
B. Group II Mortgage Loans
Schedule II: Sales Agreement and Servicing Agreements
Schedule III: Mortgage Loans for which first payment to the Trust will be
after ___1, 199_
Exhibit AF: 1: Form of Class AF-1 Certificate
2: Form of Class AF-2 Certificate
3: Form of Class AF-3 Certificate
4: Form of Class AF-4 Certificate
5: Form of Class AF-5 Certificate
6: Form of Class AF-6 Certificate
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: 1: Form of Class BF-1 Certificate
2: Form of Class BF-2 Certificate
3: Form of Class BF-3 Certificate
Exhibit AV 1: Form of Class AV-1 Certificate
Exhibit AV 2: Form of Class AV-2 Certificate
Exhibit MV: 1: Form of Class MV-1 Certificate
2: Form of Class MV-2 Certificate
Exhibit BV: 1: Form of Class BV-1 Certificate
2: Form of Class BV-2 Certificate
3: Form of Class BV-3 Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of ___1, 199_ (this "Agreement"), among
SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"), SAXON
MORTGAGE, INC., a Virginia corporation, as Master Servicer (the "Master
Servicer"), and ________________________________, a national banking
association, as Trustee, under this Agreement and the Standard Terms to Trust
Agreement (January 1997 Edition) (the "Standard Terms"), all the provisions of
which, unless otherwise specified herein, are incorporated herein and shall be a
part of this Agreement as if set forth herein in full (this Agreement with the
Standard Terms so incorporated, the "Trust Agreement").
PRELIMINARY STATEMENT
The Board of Directors of the Depositor has duly authorized the
formation of a trust (the "Trust") to issue a series of asset backed
certificates with an aggregate initial Certificate Principal Balance of $0 to be
known as the Saxon Asset Securities Trust 199_-_, Mortgage Loan Asset Backed
Certificates, Series 199_-_ (the "Certificates"). The Certificates in the
aggregate evidence the entire beneficial ownership in the Trust. The
Certificates consist of the following: the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class
BF-2, Class BF-3, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV-1,
Class BV-2, Class BV-3, Class C and Class R Certificates.
In accordance with Section 10.01 of the Standard Terms, the Trustee will
make elections to treat certain assets of the Trust as real estate mortgage
investment conduits for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the Depositor, the Master
Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms; Section References
(a) The Standard Terms prescribe the duties, responsibilities and
obligations of the Depositor, the Master Servicer and the Trustee with respect
to the Certificates. The Depositor, the Master Servicer, and the Trustee agree
to observe and perform such duties, responsibilities and obligations to the
extent they are not inconsistent with the provisions of this Agreement and
acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Sections
1.01, 1.02 and 5.07 hereof, are and shall be a part of this Agreement to the
same extent as if set forth herein in full.
(b) Unless otherwise specified herein, all references in this Agreement
to sections shall mean sections contained in this Agreement.
(c) The definition of "Qualified Substitute Mortgage Loan" is amended to
read as follows:
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
by Saxon or a Seller for a Deleted Mortgage Loan that, on the date of
such substitution: (i) has an Unpaid Principal Balance not greater than
the Unpaid Principal Balance of the Deleted Mortgage Loan, (ii) has a
Mortgage Interest Rate not less than (and not more than one percentage
point in excess of) the Mortgage Interest Rate of the Deleted Mortgage
Loan, (iii) has a Net Rate not less than the Net Rate of the Deleted
Mortgage Loan, (iv) has a remaining term to maturity not later than one
year prior to the "latest possible maturity date" specified in the
Trust Agreement, (v) has a Loan-to-Value Ratio as of the first day of
the month in which the substitution occurs equal to or less than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date (in
each case, using the fair market value at origination and after taking
into account the Monthly Payment due on such date), and (vi) complies
with each applicable representation, warranty, and covenant pertaining
to an individual Mortgage Loan set forth in the Trust Agreement, was
underwritten on the basis of credit underwriting standards at least as
strict as the credit underwriting standards used with respect to the
Deleted Mortgage Loan and, if a Seller is effecting the substitution,
complies with each applicable representation, warranty, or covenant
pertaining to an individual Mortgage Loan set forth in the related
Sales Agreement or Subsequent Sales Agreement; provided, however, that
no ARM Loan may be substituted for a Deleted Mortgage Loan unless such
Deleted Mortgage Loan is also an ARM Loan and, in addition to meeting
the conditions set forth above, the ARM Loan to be substituted, on the
date of the substitution: (a) provides for a lowest possible Net Rate
that is not lower than the lowest possible Net Rate for the Deleted
Mortgage Loan and a highest possible Net Rate that is not lower than
the highest possible Net Rate for the Deleted Mortgage Loan, (b) has a
Gross Margin that is not less than the Gross Margin of the Deleted
Mortgage Loan, (c) has a Periodic Rate Cap not less than the Periodic
Rate Cap on the Deleted Mortgage Loan, (d) has a next interest
adjustment date that is the same as the next interest adjustment date
for the Deleted Mortgage Loan or occurs not more than two months prior
to or two months later than the next interest adjustment date for the
Deleted Mortgage Loan, (e) does not have a permitted increase or
decrease in the Monthly Payment less than the permitted increase or
decrease applicable to the Deleted Mortgage Loan and (f) is not
convertible to a fixed Mortgage Interest Rate unless the Deleted
Mortgage Loan is so convertible. If more than one mortgage loan is
substituted for one or more Deleted Mortgage Loans, the amount
described in clause (i) of the preceding sentence shall be determined
on the basis of aggregate Unpaid Principal Balances, the rates
described in clauses (ii) and (iii) of the preceding sentence and
clause (a) of the proviso to the preceding sentence shall be determined
on the basis of weighted average Mortgage Interest Rates and Net Rates,
as the case may be, the Gross Margins described in clause (b) of the
proviso to the preceding sentence shall be determined on the basis of
weighted average Gross Margins, and the interest adjustment dates
described in clause (d) of the proviso to the preceding sentence shall
be determined on the basis of weighted average interest adjustment
dates. In the case of a Trust for which a REMIC election has been or
will be made, a Qualified Substitute Mortgage Loan also shall satisfy
the following criteria as of the date of its substitution for a Deleted
Mortgage Loan: (A) the Borrower shall not be 59 or more days delinquent
in payment on the Qualified Substitute Mortgage Loan, (B) the Trustee
Mortgage Loan File for such Mortgage Loan shall not contain any
material deficiencies in documentation and shall include an executed
Mortgage Note and a recorded Security Instrument; (C) the Loan to Value
Ratio of such Mortgage Loan must be 125% or less on the date of
origination of such Mortgage Loan or, if any of the terms of such
Mortgage Loan were modified other than in connection with a default or
imminent default on such Mortgage Loan, on the date of such
modification; (D) no property securing such Mortgage Loan may be
subject to foreclosure, bankruptcy, or insolvency proceedings; (E) such
Mortgage Loan must be secured by a valid lien on the related Mortgaged
Premises; and (F) shall otherwise constitute an eligible asset for a
REMIC under the REMIC Provisions.
(d) Paragraph (e) of the definition of "Trustee Mortgage Loan File" in
the Standard Terms is amended to read as follows:
"(e) in the case of a Mortgage Loan that is not identified in the
Mortgage Loan Schedule as a Junior Mortgage Loan of the type described
below, an original Title Insurance Policy, Certificate of Title
Insurance or a written commitment to issue a Title Insurance Policy or
Certificate of Title Insurance or a copy of a Title Insurance Policy or
Certificate of Title Insurance certified as true and correct by the
applicable Insurer and, in the case of a Mortgage Loan identified as a
Junior Mortgage Loan with a principal balance of $50,000 or less, a
representation of the Seller in the Sales Agreement that (i) the
related senior mortgage loan is held by an institutional lender such as
a bank, other financial institution or mortgage company and (ii) the
Seller has determined based on a review of a property profile or title
report acceptable to such Seller that the Borrower has valid title to
the Mortgaged Premises;"
(e) Upon the occurrence of a Group I or Group II Trigger Event, the
Trustee shall advise the Certificateholders of that fact and, if requested to do
so by the holders of Certificates representing a majority of the Voting Rights,
the Trustee shall terminate Meritech as the Servicer.
Section 1.02. Defined Terms
Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein, the definition herein shall control.
"Accrual Period": With respect to the Group I Certificates and the Class
AV-2 Certificates and any Distribution Date, the calendar month immediately
preceding such Distribution Date; a "calendar month" shall be deemed to be 30
days. With respect to the Group II Certificates (other than the Class AV-2
Certificates) and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
the current Distribution Date. All calculations of interest on the Group I
Certificates and the Class AV-2 Certificates will be made on the basis of a
360-day year assumed to consist of twelve 30-day months and all calculations of
interest on the Group II Certificates (other than the Class AV-2 Certificates)
will be made on the basis of the actual number of days elapsed in the related
Accrual Period and in a year of 360 days.
"Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1,
Class AV-2, Class MV-1, Class MV-2, Class BV-1 Class BF-2, Class BF-3, Class
BV-2 and Class BV-3 Certificates, except to the extent provided in Section 5.03
of the Standard Terms.
"Certificate": Any of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-2,
Class BF-3, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV-1, Class
BV-2, Class BV-3, Class C and Class R Certificates.
"Certificate Registrar": ________________________________, a
national banking association, and its successors and assigns in such
capacity.
"Class": Any of Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-2, Class BF-3,
Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV-1, Class BV-2, Class
BV-3, Class C and Class R.
"Certificate Definitions":
"Group I Certificates":
"Class AF-1 Certificate": Any "Class AF-2 Certificate": Any "Class AF-3 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-1 Certificate" on the face thereof, AF-2 Certificate" on the face AF-3 Certificate" on the face
in the form of Exhibit AF-1 hereto, thereof, in the form of Exhibit AF-2 thereof, in the form of Exhibit AF-3
representing the right to hereto, representing the right to hereto, representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
"Class AF-1 Certificate Principal "Class AF-2 Certificate Principal "Class AF-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-1 Certificates. Balance of the Class AF-2 Balance of the Class AF-3
Certificates. Certificates.
"Class AF-1 Current Interest": With "Class AF-2 Current Interest": "Class AF-3 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-2 Certificate Principal Class AF-3 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class AF-1 Pass-Through Rate Accrual Period at the Class AF-2 Accrual Period at the Class AF-3
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
AF-1 that is recovered during the to interest for Class AF-2 that is to interest for Class AF-3 that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. final non-appealable order.
"Class AF-1 Interest Carry Forward "Class AF-2 Interest Carry Forward "Class AF-3 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class AF-1 Current the excess of (A) Class AF-2 Current the excess of (A) Class AF-3 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class AF-1 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior AF-2 with respect to interest on AF-3 with respect to interest on
Distribution Dates and (ii) interest such prior Distribution Dates and such prior Distribution Dates and
thereon at the Class AF-1 Pass-Through (ii) interest thereon at the Class (ii) interest thereon at the Class
Rate for the related Accrual Period. AF-2 Pass-Through Rate for the AF-3 Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class AF-1 Pass-Through Rate": "Class AF-2 Pass-Through Rate": "Class AF-3 Pass-Through Rate":
With respect to each Distribution With respect to each Distribution With respect to each Distribution
Date, _.__% per annum. Date, _.__% per annum. Date, _.__% per annum.
"Class AF-4 Certificate": Any "Class AF-5 Certificate": Any "Class AF-6 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-4 Certificate" on the face thereof, AF-5 Certificate" on the face AF-6 Certificate" on the face
in the form of Exhibit AF-4 hereto, thereof, in the form of Exhibit AF-5 thereof, in the form of Exhibit AF-6
representing the right to hereto, representing the right to hereto, representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
"Class AF-4 Certificate Principal "Class AF-5 Certificate Principal "Class AF-6 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-4 Certificates. Balance of the Class AF-5 Balance of the Class AF-6
Certificates. Certificates.
"Class AF-4 Current Interest": With "Class AF-5 Current Interest": "Class AF-6 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-4 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-5 Certificate Principal Class AF-6 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class AF-4 Pass-Through Rate Accrual Period at the Class AF-5 Accrual Period at the Class AF-6
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
AF-4 that is recovered during the to interest for Class AF-5 that is to interest for Class AF-6 that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. final non-appealable order.
"Class AF-4 Interest Carry Forward "Class AF-5 Interest Carry Forward "Class AF-6 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class AF-4 Current the excess of (A) Class AF-5 Current the excess of (A) Class AF-6 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class AF-4 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior AF-5 with respect to interest on AF-6 with respect to interest on
Distribution Dates and (ii) interest such prior Distribution Dates and such prior Distribution Dates and
thereon at the Class AF-4 Pass-Through (ii) interest thereon at the Class (ii) interest thereon at the Class
Rate for the related Accrual Period. AF-5 Pass-Through Rate for the AF-6 Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class AF-4 Pass-Through Rate": With "Class AF-5 Pass-Through Rate": "Class AF-6 Pass-Through Rate":
respect to each Distribution Date, With respect to each Distribution With respect to each Distribution
_.__% per annum. Date, the lesser of (i) _.__% per Date, _.__% per annum.
annum plus, after the Initial Optional
Termination Date, 0._0% and (ii) the
Group I Net Rate for such
date.
"Class AF-6 Principal Distribution Amount": With respect to any Distribution
Date, the product of (i) a fraction the numerator of which is the Class AF-6
Certificate Principal Balance and the denominator of which is the Group I Class
A Certificate Principal Balance, in each case immediately prior to such
Distribution Date, (ii) the Group I Class A Principal Distribution Amount for
such Distribution Date and (iii) the applicable percentage for such Distribution
Date set forth below:
Distribution Date Percentage
July 1998 - June 2001 0%
July 2001 - June 2003 45%
July 2003 - June 2004 80%
July 2004 - June 2005 100%
July 2005 and thereafter 300%
"Class MF-1 Applied Realized Loss "Class MF-2 Applied Realized Loss "Class BF-1 Applied Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the sum of the Realized Losses with Date, the sum of the Realized Losses Date, the sum of the Realized Losses
respect to Group I which have been with respect to Group I which have with respect to Group I which have
applied in reduction of the been applied in reduction of the been applied in reduction of the
Certificate Principal Balance of the Certificate Principal Balance of the Certificate Principal Balance of the
Class MF-1 Certificates pursuant to Class MF-2 Certificates pursuant to Class BF-1 Certificates pursuant to
Section 3.02(h) hereof. Section 3.02(h) hereof. Section 3.02(h) hereof.
"Class MF-1 Certificate": Any "Class MF-2 Certificate": Any "Class BF-1 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
MF-1 Certificate" on the face thereof, MF-2 Certificate" on the face BF-1 Certificate" on the face
in the form of Exhibit MF-1 hereto, thereof, in the form of Exhibit MF-2 thereof, in the form of Exhibit BF-1
representing the right to hereto, representing the right to hereto, representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
"Class MF-1 Certificate Principal "Class MF-2 Certificate Principal "Class BF-1 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-1 Certificates Balance of the Class MF-2 Balance of the Class BF-1
less any Class MF-1 Unpaid Realized Certificates less any Class MF-2 Certificates less any Class BF-1
Loss Amount. Unpaid Realized Loss Amount. Unpaid Realized Loss Amount.
"Class MF-1 Current Interest": With "Class MF-2 Current Interest": "Class BF-1 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class MF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class MF-2 Certificate Principal Class BF Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class MF-1 Pass-Through Rate Accrual Period at the Class MF-2 Accrual Period at the Class BF-1
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
MF-1 that is recovered during the to interest for Class MF-2 that is to interest for Class BF-1 that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. final non-appealable order.
"Class MF-1 Interest Carry Forward "Class MF-2 Interest Carry Forward "Class BF-1 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class MF-1 Current the excess of (A) Class MF-2 Current the excess of (A) Class BF-1 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class MF-1 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior MF-2 with respect to interest on BF-1 with respect to interest on
Distribution Dates and (ii) interest such prior Distribution Dates and such prior Distribution Dates and
thereon at the Class MF-1 Pass-Through (ii) interest thereon at the Class (ii) interest thereon at the Class
Rate for the related Accrual Period. MF-2 Pass-Through Rate for the BF-1 Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class MF-1 Pass-Through Rate": With "Class MF-2 Pass-Through Rate": "Class BF-1 Pass-Through Rate":
respect to each Distribution Date, the With respect to each Distribution With respect to each Distribution
lesser of (i) _.__% per annum and (ii) Date the lesser of (i) _.__% per Date, the lesser of (i) _.__% per
the Group I Net Rate. annum and (ii) the Group I Net Rate. annum and (ii) the Group I Net Rate
on such date.
"Class MF-1 Unpaid Realized Loss "Class MF-2 Unpaid Realized Loss "Class BF-1 Unpaid Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the excess of (i) the Class MF-1 Date, the excess of (i) the Class Date, the excess of (i) the Class
Applied Realized Loss Amount over (ii) MF-2 Applied Realized Loss Amount BF-1 Applied Realized Loss Amount
the sum of all increases in the Class over (ii) the sum of all increases over (ii) the sum of all increases
MF-1 Certificate Principal Balance on in the Class MF-2 Certificate in the Class BF-1 Certificate
all previous Distribution Dates Principal Balance on all previous Principal Balance on all previous
pursuant to Section 3.02(j) hereof. Distribution Dates pursuant to Distribution Dates pursuant to
Section 3.02(j) hereof. Section 3.02(j) hereof.
5
"Class BF-2 Applied Realized Loss Amount": As to any "Class BF-3 Applied Realized Loss Amount": As to any
Distribution Date, the sum of the Realized Losses with Distribution Date, the sum of the Realized Losses with
respect to Group I which have been applied in reduction respect to Group I which have been applied in reduction
of the Certificate Principal Balance of the Class BF-2 of the Certificate Principal Balance of the Class BF-3
Certificates pursuant to Section 3.02(h) hereof. Certificates pursuant to Section 3.02(h) hereof.
"Class BF-2 Certificate": Any Certificate designated "Class BF-3 Certificate": Any Certificate designated
as a "Class BF-2 Certificate" on the face thereof, in the as a "Class BF-3 Certificate" on the face thereof, in
form of Exhibit BF-2 hereto, representing the right to the form of Exhibit BF-3 hereto, representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class BF-2 Certificate Principal Balance": The "Class BF-3 Certificate Principal Balance": The
Certificate Principal Balance of the Class BF-2 Certificate Principal Balance of the Class BF-3
Certificates less any Class BF-2 Unpaid Realized Loss Certificates less any Class BF-3 Unpaid Realized Loss
Amount. Amount.
"Class BF-2 Current Interest": With respect to any "Class BF-3 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class BF-2 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such BF-2 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at such Distribution Date during the related Accrual
the Class BF-2 Pass-Through Rate plus any amount Period at the Class BF-3 Pass-Through Rate plus any
previously distributed with respect to interest for Class amount previously distributed with respect to interest
BF-2 that is recovered during the related Accrual Period for Class BF-3 that is recovered during the related
as a voidable preference by a trustee in bankruptcy Accrual Period as a voidable preference by a trustee in
pursuant to a final non-appealable order. bankruptcy pursuant to a final non-appealable order.
"Class BF-2 Interest Carry Forward Amount": With "Class BF-3 Interest Carry Forward Amount": With
respect to each Distribution Date, the sum of (i) the respect to each Distribution Date, the sum of (i) the
excess of (A) Class BF-2 Current Interest with respect to excess of (A) Class BF-3 Current Interest with respect
prior Distribution Dates over (B) the amount actually to prior Distribution Dates over (B) the amount
distributed to Class BF-2 with respect to interest on actually distributed to Class BF-3 with respect to
such prior Distribution Dates and (ii) interest thereon interest on such prior Distribution Dates and (ii)
at the Class BF-2 Pass-Through Rate for the related interest thereon at the Class BF-3 Pass-Through Rate
Accrual Period. for the related Accrual Period.
"Class BF-2 Pass-Through Rate": With respect to each "Class BF-3 Pass-Through Rate": With respect to each
Distribution Date, the lesser of (i) _.__% per annum and Distribution Date, the lesser of (i) _.__% per annum
(ii) the Group I Net Rate on such date. and (ii) the Group I Net Rate on such date.
"Class BF-2 Unpaid Realized Loss Amount": As to any "Class BF-3 Unpaid Realized Loss Amount": As to any
Distribution Date, the excess of (i) the Class BF-2 Distribution Date, the excess of (i) the Class BF-3
Applied Realized Loss Amount over (ii) the sum of all Applied Realized Loss Amount over (ii) the sum of all
increases in the Class BF-2 Certificate Principal increases in the Class BF-3 Certificate Principal
Balance on all previous Distribution Dates pursuant to Balance on all previous Distribution Dates pursuant to
Section 3.02(j) hereof. Section 3.02(j) hereof.
"Group II Certificates":
"Class AV-1 Certificate": Any Certificate designated "Class AV-2 Certificate": Any Certificate designated
as a "Class AV-1 Certificate" on the face thereof, in the as a "Class AV-2 Certificate" on the face thereof, in
form of Exhibit AV-1 hereto representing the right to the form of Exhibit AV-2 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class AV-1 Certificate Principal Balance": The "Class AV-2 Certificate Principal Balance": The
Certificate Principal Balance of the Class AV-1 Certificate Principal Balance of the Class AV-2
Certificates. Certificates.
"Class AV-1 Certificates Carryover": If on any Distribution Date the Class
AV-1 Pass-Through Rate is based upon the Group II Available Funds Cap, the
excess of (i) the amount of interest the Class AV-1 Certificates would be
entitled to receive on such Distribution Date had the Class AV-1 Pass-Through
Rate not been calculated based on the Group II Available Funds Cap over (ii) the
amount of interest such Certificates received on such Distribution Date based on
the Group II Available Funds Cap, together with the unpaid portion of any such
excess from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate, without giving effect to the Group II Available
Funds Cap).
"Class AV-1 Current Interest": With respect to any "Class AV-2 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class AV-1 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such AV-2 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at such Distribution Date during the related Accrual
the Class AV-1 Pass Through Rate plus any amount Period at the Class AV-2 Pass Through Rate plus any
previously distributed with respect to interest for Class amount previously distributed with respect to interest
AV-1 that is recovered during the related Accrual Period for Class AV-2 that is recovered during the related
as a voidable preference by a trustee in bankruptcy Accrual Period as a voidable preference by a trustee in
pursuant to a final, nonappealable order; provided, bankruptcy pursuant to a final, nonappealable order.
however, Class AV-1 Current Interest shall not include
any Class AV-1 Certificates Carryover.
"Class AV-1 Interest Carry Forward Amount": With "Class AV-2 Interest Carry Forward Amount": With
respect to any Distribution Date, the sum of (i) the respect to any Distribution Date, the sum of (i) the
excess of (A) Class AV-1 Current Interest with respect to excess of (A) Class AV-2 Current Interest with respect
prior Distribution Dates (excluding any Class AV-1 to prior Distribution Dates (excluding any Class AV-2
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class AV-1 with respect to interest (other distributed to Class AV-2 with respect to interest
than in respect of Class AV-1 Certificate Carryover) on (other than in respect of Class AV-2 Certificate
such prior Distribution Dates and (ii) interest on such Carryover) on such prior Distribution Dates and (ii)
excess at the Class AV-1 Pass-Through Rate for the interest on such excess at the Class AV-2 Pass-Through
related Accrual Period. Rate for the related Accrual Period.
"Class AV-1 Pass-Through Rate": With respect to any "Class AV-2 Pass-Through Rate": With respect to any
Distribution Date, the least of (x) One Month LIBOR plus, Distribution Date, the lesser of (x) _.__% and (y) the
in the case of any Distribution Date prior to the Initial Group II Available Funds Cap for such Distribution Date.
Optional Termination Date, 0.__% per annum, or in the
case of any Distribution Date that occurs on or after the
Initial Optional Termination Date, plus 0.__% per annum,
(y) the weighted average of the Maximum Lifetime Mortgage
Interest Rates on the Mortgage Loans in Group II less the
Group II Servicing Fee Rate and the Group II Master
Servicing Fee Rate and (z) the Group II Available Funds
Cap for such Distribution Date.
"Class AV-2 Principal Distribution Amount": With respect to any Distribution
Date (i) on or before June 2003, the product of (i) a fraction the numerator of
which is the Class AV-2 Certificate Principal Balance and the denominator of
which is the Group II Class A Certificate Principal Balance, in each case
immediately prior to such Distribution Date, (ii) the Group II Class A Principal
Distribution Amount for such Distribution Date and (iii) the applicable
percentage for such Distribution Date set forth below:
Distribution Date Percentage
July 1998 - October 1999 0%
November 1999 - June 2003 500%
and (ii) after June 2003 so long as the Class AV-2 Certificates are
outstanding, the Group II Class A Principal Distribution Amount.
"Class MV-1 Applied Realized Loss Amount": As to any "Class MV-2 Applied Realized Loss Amount": As to any
Distribution Date, the sum of the Realized Losses with Distribution Date, the sum of the Realized Losses with
respect to Group II which have been applied in reduction respect to Group II which have been applied in
of the Certificate Principal Balance of the Class MV-1 reduction of the Certificate Principal Balance of the
Certificates pursuant to Section 3.02(i) hereof. Class MV-2 Certificates pursuant to Section 3.02(i)
hereof.
"Class MV-1 Certificate": Any Certificate designated "Class MV-2 Certificate": Any Certificate designated
as a "Class MV-1 Certificate" on the face thereof, in the as a "Class MV-2 Certificate" on the face thereof, in
form of Exhibit MV-1 hereto representing the right to the form of Exhibit MV-2 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class MV-1 Certificate Principal Balance": The "Class MV-2 Certificate Principal Balance": The
Certificate Principal Balance of the Class MV-1 Certificate Principal Balance of the Class MV-2
Certificates less any Class MV-1 Unpaid Realized Loss Certificates less any Class MV-2 Unpaid Realized Loss
Amount. Amount.
"Class MV-1 Certificates Carryover": If on any "Class MV-2 Certificates Carryover": If on any
Distribution Date the Class MV-1 Pass-Through Rate is Distribution Date the Class MV-2 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess based upon the Group II Available Funds Cap, the excess
of (i) the amount of interest the Class MV-1 Certificates of (i) the amount of interest the Class MV-2
would be entitled to receive on such Distribution Date Certificates would be entitled to receive on such
had the Class MV-1 Pass-Through Rate not been calculated Distribution Date had the Class MV-2 Pass-Through Rate
based on the Group II Available Funds Cap over (ii) the not been calculated based on the Group II Available
amount of interest such Certificates received on such Funds Cap over (ii) the amount of interest such
Distribution Date based on the Group II Available Funds Certificates received on such Distribution Date based
Cap, together with the unpaid portion of any such excess on the Group II Available Funds Cap, together with the
from prior Distribution Dates (and interest accrued unpaid portion of any such excess from prior
thereon at the then applicable Pass-Through Rate, without Distribution Dates (and interest accrued thereon at the
giving effect to the Group II Available Funds Cap). then applicable Pass-Through Rate, without giving
effect to the Group II Available Funds Cap).
"Class MV-1 Current Interest": With respect to any "Class MV-2 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class MV-1 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such MV-2 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at such Distribution Date during the related Accrual
the Class MV-1 Pass Through Rate plus any amount Period at the Class MV-2 Pass Through Rate plus any
previously distributed with respect to interest for Class amount previously distributed with respect to interest
MV-1 that is recovered during the related Accrual Period for Class MV-2 that is recovered during the related
as a voidable preference by a trustee in bankruptcy Accrual Period as a voidable preference by a trustee in
pursuant to a final, nonappealable order; provided, bankruptcy pursuant to a final, nonappealable order;
however, Class MV-1 Current Interest shall not include provided, however, Class MV-2 Current Interest shall
any Class MV-1 Certificates Carryover. not include any Class MV-2 Certificates Carryover.
"Class MV-1 Interest Carry Forward Amount": With "Class MV-2 Interest Carry Forward Amount": With
respect to any Distribution Date, the sum of (i) the respect to each Distribution Date, the sum of (i) the
excess of (A) Class MV-1 Current Interest with respect to excess of (A) Class MV-2 Current Interest with respect
prior Distribution Dates (excluding any Class MV-1 to prior Distribution Dates (excluding any Class MV-2
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class MV-1 with respect to interest (other distributed to Class MV-2 with respect to interest
than in respect of Class MV-1 Certificate Carryover) on (other than in respect of Class MV-2 Certificate
such prior Distribution Dates and (ii) interest on such Carryover) on such prior Distribution Dates and (ii)
excess at the Class MV-1 Pass-Through Rate for the interest on such excess at the Class MV-2 Pass-Through
related Accrual Period. Rate for the related Accrual Period.
"Class MV-1 Pass-Through Rate": With respect to any "Class MV-2 Pass-Through Rate": With respect to any
Distribution Date, the least of (x) One Month LIBOR plus, Distribution Date, the least of (x) One Month LIBOR
in the case of any Distribution Date prior to the Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 0.__% per annum, or in the Initial Optional Termination Date, 0.__% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 0.__% per annum, after the Initial Optional Termination Date, plus 0.__%
(y) the weighted average of the Maximum Lifetime Mortgage per annum, (y) the weighted average of the Maximum
Interest Rates on the Mortgage Loans in Group II less the Lifetime Mortgage Interest Rates on the Mortgage Loans
Group II Servicing Fee Rate and the Group II Master in Group II less the Group II Servicing Fee Rate and
Servicing Fee Rate and (z) the Group II Available Funds the Group II Master Servicing Fee Rate and (z) the
Cap for such Distribution Date. Group II Available Funds Cap for such Distribution Date.
"Class MV-1 Unpaid Realized Loss Amount": As to any "Class MV-2 Unpaid Realized Loss Amount": As to
Distribution Date, the excess of (i) the Class MV-1 any Distribution Date, the excess of (i) the Class MV-2
Applied Realized Loss Amount over (ii) the sum of all Applied Realized Loss Amount over (ii) the sum of all
increases in the Class MV-1 Certificate Principal Balance increases in the Class MV-2 Certificate Principal
on all previous Distribution Dates pursuant to Section Balance on all previous Distribution Dates pursuant to
3.02(k) hereof. Section 3.02(k) hereof.
"Class BV-1 Applied Realized Loss "Class BV-2 Applied Realized Loss "Class BV-3 Applied Realized Loss
Amount: As to any Distribution Date, Amount: As to any Distribution Amount: As to any Distribution
the sum of the Realized Losses with Date, the sum of the Realized Losses Date, the sum of the Realized Losses
respect to Group II which have been with respect to Group II which have with respect to Group II which have
applied in reduction of the been applied in reduction of the been applied in reduction of the
Certificate Principal Balance of the Certificate Principal Balance of the Certificate Principal Balance of the
Class BV-1 Certificates pursuant to Class BV-2 Certificates pursuant to Class BV-3 Certificates pursuant to
Section 3.02(i) hereof. Section 3.02(i) hereof. Section 3.02(i) hereof.
"Class BV-1 Certificate": Any "Class BV-2 Certificate": Any "Class BV-3 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
BV-1 Certificate" on the face BV-2 Certificate" on the face BV-3 Certificate" on the face
thereof, in the form of Exhibit BV-1 thereof, in the form of Exhibit BV-2 thereof, in the form of Exhibit BV-3
hereto representing the right to hereto representing the right to hereto representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
"Class BV-1 Certificate Principal "Class BV-2 Certificate Principal "Class BV-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class BV-1 Balance of the Class BV-2 Balance of the Class BV-3
Certificates less any Class BV-1 Certificates less any Class BV-2 Certificates less any Class BV-3
Unpaid Realized Loss Amount. Unpaid Realized Loss Amount. Unpaid Realized Loss Amount.
"Class BV-1 Certificates "Class BV-2 Certificates "Class BV-3 Certificates
Carryover": If on any Distribution Carryover": If on any Distribution Carryover": If on any Distribution
Date the Class BV-1 Pass-Through Rate Date the Class BV-2 Pass-Through Date the Class BV-3 Pass-Through
is based upon the Group II Available Rate is based upon the Group II Rate is based upon the Group II
Funds Cap, the excess of (i) the Available Funds Cap, the excess of Available Funds Cap, the excess of
amount of interest the Class BV-1 (i) the amount of interest the Class (i) the amount of interest the Class
Certificates would be entitled to BV-2 Certificates would be entitled BV-3 Certificates would be entitled
receive on such Distribution Date had to receive on such Distribution Date to receive on such Distribution Date
the Class BV-1 Pass-Through Rate not had the Class BV-2 Pass-Through Rate had the Class BV-3 Pass-Through Rate
been calculated based on the Group II not been calculated based on the not been calculated based on the
Available Funds Cap over (ii) the Group II Available Funds Cap over Group II Available Funds Cap over
amount of interest such Certificates (ii) the amount of interest such (ii) the amount of interest such
received on such Distribution Date Certificates received on such Certificates received on such
based on the Group II Available Funds Distribution Date based on the Group Distribution Date based on the Group
Cap, together with the unpaid portion II Available Funds Cap, together II Available Funds Cap, together
of any such excess from prior with the unpaid portion of any such with the unpaid portion of any such
Distribution Dates (and interest excess from prior Distribution Dates excess from prior Distribution Dates
accrued thereon at the then (and interest accrued thereon at the (and interest accrued thereon at the
applicable Pass-Through Rate, without then applicable Pass-Through Rate, then applicable Pass-Through Rate,
giving effect to the Group II without giving effect to the Group without giving effect to the Group
Available Funds Cap). II Available Funds Cap). II Available Funds Cap).
"Class BV-1 Current Interest": "Class BV-2 Current Interest": "Class BV-3 Current Interest":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
Class BV-1 Certificate Principal Class BV-2 Certificate Principal Class BV-3 Certificate Principal
Balance immediately prior to such Balance immediately prior to such Balance immediately prior to such
Distribution Date during the related Distribution Date during the related Distribution Date during the related
Accrual Period at the Class BV-1 Pass Accrual Period at the Class BV-2 Accrual Period at the Class BV-3
Through Rate plus any amount Pass Through Rate plus any amount Pass Through Rate plus any amount
previously distributed with respect previously distributed with respect previously distributed with respect
to interest for Class BV-1 that is to interest for Class BV-2 that is to interest for Class BV-3 that is
recovered during the related Accrual recovered during the related Accrual recovered during the related Accrual
Period as a voidable preference by a Period as a voidable preference by a Period as a voidable preference by a
trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
final, nonappealable order; provided, final, nonappealable order; final, nonappealable order;
however, Class BV-1 Current Interest provided, however, Class BV-2 provided, however, Class BV-3
shall not include any Class BV-1 Current Interest shall not include Current Interest shall not include
Certificates Carryover. any Class BV-2 Certificates any Class BV-3 Certificates
Carryover. Carryover.
"Class BV-1 Interest Carry Forward "Class BV-2 Interest Carry Forward "Class BV-3 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class BV-1 Current the excess of (A) Class BV-2 Current the excess of (A) Class BV-3 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates (excluding any Distribution Dates (excluding any Distribution Dates (excluding any
Class BV-1 Certificates Carryover) Class BV-2 Certificates Carryover) Class BV-3 Certificates Carryover)
over (B) the amount actually over (B) the amount actually over (B) the amount actually
distributed to Class BV-1 with distributed to Class BV-2 with distributed to Class BV-3 with
respect to interest (other than in respect to interest (other than in respect to interest (other than in
respect of Class BV-1 Certificate respect of Class BV-2 Certificate respect of Class BV-3 Certificate
Carryover) on such prior Distribution Carryover) on such prior Carryover) on such prior
Dates and (ii) interest on such Distribution Dates and (ii) interest Distribution Dates and (ii) interest
excess at the Class BV-1 Pass-Through on such excess at the Class BV-2 on such excess at the Class BV-3
Rate for the related Accrual Period. Pass-Through Rate for the related Pass-Through Rate for the related
Accrual Period. Accrual Period.
"Class BV-1 Pass-Through Rate": "Class BV-2 Pass-Through Rate": "Class BV-3 Pass-Through Rate":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the least of (x) One Month Date, the least of (x) One Month Date, the least of (x) One Month
LIBOR plus, in the case of any LIBOR plus, in the case of any LIBOR plus, in the case of any
Distribution Date prior to the Distribution Date prior to the Distribution Date prior to the
Initial Optional Termination Date, Initial Optional Termination Date, Initial Optional Termination Date,
_.__% per annum, or in the case of _.__% per annum, or in the case of _.__% per annum, or in the case of
any Distribution Date that occurs on any Distribution Date that occurs on any Distribution Date that occurs on
or after the Initial Optional or after the Initial Optional or after the Initial Optional
Termination Date, plus _.__% per Termination Date, plus _.__% per Termination Date, plus _.__% per
annum, (y) the weighted average of annum, (y) the weighted average of annum, (y) the weighted average of
the Maximum Lifetime Mortgage the Maximum Lifetime Mortgage the Maximum Lifetime Mortgage
Interest Rates on the Mortgage Loans Interest Rates on the Mortgage Loans Interest Rates on the Mortgage Loans
in Group II less the Group II in Group II less the Group II in Group II less the Group II
Servicing Fee Rate and the Group II Servicing Fee Rate and the Group II Servicing Fee Rate and the Group II
Master Servicing Fee Rate and (z) the Master Servicing Fee Rate and (z) Master Servicing Fee Rate and (z)
Group II Available Funds Cap for such the Group II Available Funds Cap for the Group II Available Funds Cap for
Distribution Date. such Distribution Date. such Distribution Date.
"Class BV-1 Unpaid Realized Loss "Class BV-2 Unpaid Realized Loss "Class BV-3 Unpaid Realized Loss
Amount": As to any Distribution Amount": As to any Distribution Amount": As to any Distribution
Date, the excess of (i) the Class Date, the excess of (i) the Class Date, the excess of (i) the Class
BV-1 Applied Realized Loss Amount BV-2 Applied Realized Loss Amount BV-3 Applied Realized Loss Amount
over (ii) the sum of all increases in over (ii) the sum of all increases over (ii) the sum of all increases
the Class BV-1 Certificate Principal in the Class BV-2 Certificate in the Class BV-3 Certificate
Balance on all previous Distribution Principal Balance on all previous Principal Balance on all previous
Dates pursuant to Section 3.02(k) Distribution Dates pursuant to Distribution Dates pursuant to
hereof. Section 3.02(k) hereof. Section 3.02(k) hereof.
"Class C Certificate": Any of the Certificates designated as a "Class C
Certificate" on the face thereof in the form of Exhibit C hereto representing
the right to distributions as set forth herein.
"Class C Distribution Amount": With respect to any Distribution Date,
one-twelfth of the sum of:
(a) the product of the AF-1 Balance and the excess of the Group I Net
Rate over the Class AF-1 Pass-Through Rate;
(b) the product of the AF-2 Balance and the excess of the Group I Net
Rate over the Class AF-2 Pass-Through Rate;
(c) the product of the AF-3 Balance and the excess of the Group I Net
Rate over the Class AF-3 Pass-Through Rate;
(d) the product of the AF-4 Balance and the excess of the Group I Net
Rate over the Class AF-4 Pass-Through Rate;
(e) the product of the AF-5 Balance and the excess of the Group I Net
Rate over the Class AF-5 Pass-Through Rate;
(f) the product of the AF-6 Balance and the excess of the Group I Net
Rate over the Class AF-6 Pass-Through Rate;
(g) the product of the MF-1 Balance and the excess of the Group I Net
Rate over the Class MF-1 Pass-Through Rate;
(h) the product of the MF-2 Balance and the excess of the Group I Net
Rate over the Class MF-2 Pass-Through Rate;
(i) the product of the BF-1 Balance and the excess of the Group I Net
Rate over the Class BF-1 Pass-Through Rate;
(j) the product of the BF-2 Balance and the excess of the Group I Net
Rate over the Class BF-2 Pass-Through Rate;
(k) the product of the BF-3 Balance and the excess of the Group I Net
Rate over the Class BF-3 Pass-Through Rate; and
(l) any excess of the amount specified pursuant to clauses (a) through
(k) above for prior Distribution Dates over the amount actually distributed
pursuant to such clauses on prior Distribution Dates.
"Class R Certificate": Any of the Certificates designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit R hereto and evidencing
an interest designated as the "residual interest" in the Pooling and Issuing
REMICs for purposes of the REMIC Provisions.
"Closing Date": _____, 199_.
"Current Interest": As to any Class, the definition therefor
having the corresponding designation as such Class.
"Custodian": ________________________________, a national banking
association, and its successors and assigns in such capacity.
"Cut-Off Date": As of the close of business on ____ 1, 199.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the last day of the Prepayment Period
immediately following the day such payment is scheduled to be due. A Mortgage
Loan is "30 days Delinquent" if such payment has not been received by the close
of business on the last day of the Prepayment Period of the month immediately
succeeding the month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Designated Class": There is no designated Class for purposes of
Section 9.02 of the Standard Terms.
"Distribution Account": The account or accounts created and
maintained for the Trust pursuant to Section 3.01 hereof.
"Distribution Amount": As to each Distribution Date and Class of
Certificates, the aggregate amount to be distributed to such Class on such date
pursuant to Section 3.02 hereof.
"Distribution Date": The 25th day of each month, or the next Business
Day if such 25th day is not a Business Day, commencing ____ __, 1998.
"Fitch": Fitch IBCA, Inc., and its successors (One Xxxxx Xxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10004).
Group Definitions:
"Group I": The pool of Mortgage Loans identified in "Group II": The pool of Mortgage Loans identified
the related Schedules of Mortgage Loans as having been in the related Schedules of Mortgage Loans as having
assigned to Group I, including any Group I Qualified been assigned to Group II, including any Group II
Substitute Mortgage Loans delivered in replacement Qualified Substitute Mortgage Loans delivered in
thereof. replacement thereof.
"Group II Available Funds Cap": As of any Distribution Date, a per
annum rate equal to (w)(i) the total scheduled interest on the Mortgage
Loans in Group II for the related Due Period less (ii) the Group II
Servicing Fees and Group II Master Servicing Fee for such Due Period
divided by (x) the Group II Certificate Principal Balance divided by (y)
the actual number of days in the related Accrual Period (30 days in the
case of the Class AV-2 Certificates) and multiplied by (z) 360.
"Group I Certificate": Any of the Class AF-1, Class "Group II Certificate": Any of the Class AV-1,
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-2, Class MV-1, Class MV-2, Class BV-1, Class
Class MF-1, Class MF-2, Class BF-1, Class BF-2 and Class BV-2 and Class BV-3 Certificates.
BF-3 Certificates.
"Group I Certificate Principal Balance": The sum of "Group II Certificate Principal Balance": The sum
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class of the Class AV-1, Class AV-2, Class MV-1, Class MV-2,
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BV-1, Class BV-2 and Class BV-3 Certificate
Class BF-2 and Class BF-3 Certificate Principal Balances. Principal Balances.
"Group I Class A Certificate Principal Balance": The "Group II Class A Certificate Principal Balance":
sum of the Class AF-1, Class AF-2, Class AF-3, Class The sum of the Class AV-1 and Class AV-2 Certificate
AF-4, Class AF-5 and Class AF-6 Certificate Principal Principal Balances.
Balances.
"Group I Class A Principal Distribution Amount": With "Group II Class A Principal Distribution Amount":
respect to any Distribution Date before the Group I With respect to any Distribution Date before the Group
Stepdown Date or as to which a Group I Trigger Event has II Stepdown Date or as to which a Group II Trigger
occurred, 100% of the Group I Principal Distribution Event has occurred, 100% of the Group II Principal
Amount for such Distribution Date and with respect to any Distribution Amount for such Distribution Date and with
Distribution Date on or after the Stepdown Date and as to respect to any Distribution Date on or after the
which a Group I Trigger Event has not occurred, the Stepdown Date and as to which a Group II Trigger Event
excess of (i) the Group I Class A Certificate Principal has not occurred, the excess of (i) the Group II Class
Balance immediately prior to such Distribution Date over A Certificate Principal Balance immediately prior to
(ii) the lesser of (A) 73% of the Schedule Principal such Distribution Date over (ii) the lesser of (A) 62%
Balances of Group I on the preceding Due Date and (B) the of the Schedule Principal Balances of Group II on the
excess of (I) the Scheduled Principal Balances of Group I preceding Due Date and (B) the excess of (I) the
on the preceding Due Date over (II) $1,169,109. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,120,022.
"Group I Class BF-1 Principal Distribution Amount": "Group II Class BV-1 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the sum of proviso set forth in Section 3.02(d) hereof), the
(A) the Group I Class A Certificate Principal Balance, excess of (i) the sum of (A) the Group II Class A
(B) the Class MF-1 Certificate Principal Balance, (C) the Certificate Principal Balance, (B) the Class MV-1
Class MF-2 Certificate Principal Balance and (D) the Certificate Principal Balance, (C) the Class MV-2
Class BF-1 Certificate Principal Balance immediately Certificate Principal Balance and (D) the Class BV-1
prior to such Distribution Date over (ii) the lesser of Certificate Principal Balance immediately prior to such
(A) 95.5% of the Scheduled Principal Balances of Group I Distribution Date over (ii) the lesser of (A) 94.5% of
on the preceding Due Date and (B) the excess of (I) the the Scheduled Principal Balances of Group II on the
Scheduled Principal Balances of Group I on the preceding preceding Due Date and (B) the excess of (I) the
Due Date over (II) $1,169,109. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,120,022.
"Group I Class BF-2 Principal Distribution Amount": "Group II Class BV-2 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the sum of proviso set forth in Section 3.02(d) hereof), the
(A) the Group I Class A Certificate Principal Balance, excess of (i) the sum of (A) the Group II Class A
(B) the Class MF-1 Certificate Principal Balance, (C) the Certificate Principal Balance, (B) the Class MV-1
Class MF-2 Certificate Principal Balance, (D) the Class Certificate Principal Balance, (C) the Class MV-2
BF-1 Certificate Principal Balance and (E) the Class BF-2 Certificate Principal Balance, (D) the Class BV-1
Certificate Principal Balance immediately prior to such Certificate Principal Balance and (E) the Class BV-2
Distribution Date over (ii) the lesser of (A) 98% of the Certificate Principal Balance immediately prior to such
Scheduled Principal Balances of Group I on the preceding Distribution Date over (ii) the lesser of (A) 98% of
Due Date and (B) the excess of (I) the Scheduled the Scheduled Principal Balances of the Group II on the
Principal Balances of Group I on the preceding Due Date preceding Due Date and (B) the excess of (I) the
over (II) $1,169,109. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,120,022.
"Group I Class BF-3 Principal Distribution Amount": "Group II Class BV-3 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the Group I proviso set forth in Section 3.02(d) hereof), the
Principal Distribution Amount for such Distribution Date excess of (i) the Group II Principal Distribution
over (ii) sum of (A) the Group I Class A Principal Amount for such Distribution Date over (ii) the sum of
Distribution Amount, (B) the Class MF-1 Principal (A) the Group II Class A Principal Distribution Amount,
Distribution Amount, (C) the Class MF-2 Principal (B) the Class MV-1 Principal Distribution Amount, (C)
Distribution Amount, (D) the Class BF-1 Principal the Class MV-2 Principal Distribution Amount, (D) the
Distribution Amount and (E) the Class BF-2 Principal Class BV-1 Principal Distribution Amount and (E) the
Distribution Amount for such Distribution Date. Class BV-2 Principal Distribution Amount for
Distribution Date.
"Group I Class MF-1 Principal Distribution Amount": "Group II Class MV-1 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the sum of proviso set forth in Section 3.02(d) hereof), the
(A) the Group I Class A Certificate Principal Balance and excess of (i) the sum of (A) the Group II Class A
(B) the Class MF-1 Certificate Principal Balance Certificate Principal Balance and (B) the Class MV-1
immediately prior to such Distribution Date over (ii) the Certificate Principal Balance immediately prior to such
lesser of (A) 83% of the aggregate Scheduled Principal Distribution Date over (ii) the lesser of (A) 77% of
Balances of Group I on the preceding Due Date and (B) the the Scheduled Principal Balances of Group II on the
excess of (I) the Scheduled Principal Balances of Group I preceding Due Date and (B) the excess of (I) the
on the preceding Due Date over (II) $1,169,109. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,120,022.
"Group I Class MF-2 Principal Distribution Amount": "Group II Class MV-2 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the sum of proviso set forth in Section 3.02(d) hereof), the
(A) the Group I Class A Certificate Principal Balance, excess of (i) the sum of (A) the Group II Class A
(B) the Class MF-1 Certificate Principal Balance and (C) Certificate Principal Balance, (B) the Class MV-1
the Class MF-2 Certificate Principal Amount immediately Certificate Principal Balance and (C) the Class MV-2
prior to such Distribution Date over (ii) the lesser of Certificate Principal Amount immediately prior to such
(A) 90% of the Scheduled Principal Balances of Group I on Distribution Date over (ii) the lesser of (A) 88.5% of
the preceding Due Date and (B) the excess of (I) the the Scheduled Principal Balances of Group II on the
Scheduled Principal Balances of Group I over on the preceding Due Date and (B) the excess of (I) the
preceding Due Date(II) $1,169,109. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,120,022.
"Group I Extra Principal Distribution Amount": With "Group II Extra Principal Distribution Amount":
respect to any Distribution Date, to the extent of Group With respect to any Distribution Date, to the extent of
I Interest Funds pursuant to Section 3.02(a)(vii) and Group II Interest Funds pursuant to Section
Group II Interest Funds available for the purpose 3.02(b)(vii) and Group I Interest Funds available for
pursuant to Section 3.02(f)(vii) hereof, an amount equal the purpose pursuant to Section 3.02(e)(vii) hereof, an
to the excess of (i) all Realized Losses with respect to amount equal to the excess of (i) all Realized Losses
Group I over (ii) all Group I Extra Principal with respect to Group II over (ii) all Group II Extra
Distribution Amounts with respect to prior Distribution Principal Distribution Amounts with respect to prior
Dates. Distribution Dates.
"Group I Interest Funds": With respect to Group I "Group II Interest Funds": With respect to Group
and any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled interest collected during the related Due all scheduled interest collected during the related Due
Period with respect to Group I less the Group I Servicing Period with respect to Group II less the Group II
Fee and the Group I Master Servicing Fee, (ii) all Servicing Fee and the Group II Master Servicing Fee,
Advances relating to interest with respect to Group I, (ii) all Advances relating to interest with respect to
(iii) all Month End Interest with respect to Group I and Group II, (iii) all Month End Interest with respect to
(iv) Liquidation Proceeds with respect to Group I (to the Group II and (iv) Liquidation Proceeds with respect to
extent such Liquidation Proceeds relate to interest) less Group II (to the extent such Liquidation Proceeds
all Non-Recoverable Advances relating to interest and relate to interest) less all Non-Recoverable Advances
expenses pursuant to Section 6.03 of the Standard Terms. relating to interest and expenses pursuant to Section
6.03 of the Standard Terms.
"Group I Master Servicing Fee": With respect to each "Group II Master Servicing Fee": With respect to
Master Servicer Remittance Date, an amount payable (or each Master Servicer Remittance Date, an amount payable
allocable) to the Master Servicer equal to the product of (or allocable) to the Master Servicer equal to the
one-twelfth of the Group I Master Servicing Fee Rate and product of one-twelfth of the Group II Master Servicing
the aggregate Scheduled Principal Balance of Group I on Fee Rate and the aggregate Scheduled Principal Balance
the first day of the Due Period preceding such Master of Group II on the first day of the Due Period
Servicer Remittance Date. preceding such Master Servicer Remittance Date.
"Group I Master Servicing Fee Rate": 0.03% per annum. "Group II Master Servicing Fee Rate": 0.03% per
annum.
"Group I Net Rate": The weighted average Net Rate "Group II Net Rate": The weighted average Net Rate
for Group I. for Group II.
"Group I Principal Distribution Amount": With "Group II Principal Distribution Amount": With
respect to any Distribution Date, the sum of (i) the respect to any Distribution Date, the sum of (i) the
Group I Principal Funds and (ii) the Group I Extra Group II Principal Funds and (ii) the Group II Extra
Principal Distribution Amount. Principal Distribution Amount.
"Group I Principal Funds": With respect to Group I "Group II Principal Funds": With respect to Group
and any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled principal with respect to Group I collected by all scheduled principal with respect to Group II
the Servicers during the related Due Period or advanced collected by the Servicers during the related Due
on or before such Master Servicer Remittance Date, (ii) Period or advanced on or before such Master Servicer
prepayments with respect to Group I collected by the Remittance Date, (ii) prepayments with respect to Group
Servicers in the related Prepayment Period, (iii) the II collected by the Servicers in the related Prepayment
Scheduled Principal Balance of each Mortgage Loan in Period, (iii) the Scheduled Principal Balance of each
Group I repurchased by the Depositor, (iv) any Mortgage Loan in Group II repurchased by the Depositor,
Substitution Shortfall with respect to Group I and (v) (iv) any Substitution Shortfall with respect to Group
all Liquidation Proceeds with respect to Group I II and (v) all Liquidation Proceeds with respect to
collected by the Servicer during the related Due Period Group II collected by the Servicer during the related
(to the extent such Liquidation Proceeds related to Due Period (to the extent such Liquidation Proceeds
principal) less all non-recoverable Advances relating to related to principal) less all non-recoverable Advances
principal with respect to Group I reimbursed during the relating to principal with respect to Group II
related Due Period. reimbursed during the related Due Period.
"Group I Servicing Fee": With respect to each "Group II Servicing Fee": With respect to each
Mortgage Loan in Group I and each Remittance Date, the Mortgage Loan in Group II and each Remittance Date, the
product of (x) one-twelfth of the Servicing Fee Rate and product of (x) one-twelfth of the Servicing Fee Rate
(y) aggregate Scheduled Principal Balance of such and (y) aggregate Scheduled Principal Balance of such
Mortgage Loan as of the opening of business on the first Mortgage Loan as of the opening of business on the
day of the Due Period preceding such Remittance Date. first day of the Due Period preceding such Remittance
Date.
"Group I Servicing Fee Rate": With respect to each "Group II Servicing Fee Rate": With respect to each
Mortgage Loan in Group I, the fixed per annum rate Mortgage Loan in Group II, the fixed per annum rate
payable to the Servicer as set out on Schedule IA to this payable to the Servicer as set out on Schedule IB to
Agreement. this Agreement.
"Group I Stepdown Date": With respect to Group I, the "Group II Stepdown Date": With respect to Group II,
earlier to occur of (i) the later to occur of (A) the the earlier to occur of (i) the later to occur of (A)
Distribution Date in ___ 200_ and (B) the first the Distribution Date in ___ 200_ and (B) the first
Distribution Date on which the Group I Class A Distribution Date on which the Group II Class A
Certificate Principal Balance immediately prior to such Certificate Principal Balance immediately prior to such
Distribution Date (less the Group I Principal Funds for Distribution Date (less the Group II Principal Funds
such Distribution Date) is less than or equal to 73% of for such Distribution Date) is less than or equal to
the Scheduled Principal Balances of Group I and (ii) the 62% of the Scheduled Principal Balances of Group II and
Distribution Date on which the Group I Class A (ii) the Distribution Date on which the Group II Class
Certificate Principal Balance has been reduced to zero. A Certificate Principal Balance has been reduced to
zero.
"Group I Subordinated Certificates": The Class MF-1, "Group II Subordinated Certificates": The Class
Class MF-2, Class BF-1, Class BF-2 and Class BF-3 MV-1, Class MV-2, Class BV-1, Class BV-2 and Class BV-3
Certificates. Certificates.
"Group I Trigger Event": With respect to Group I and "Group II Trigger Event": With respect to Group II
any Distribution Date after the Group I Stepdown Date, a and any Distribution Date after the Group II Stepdown
Group I Trigger Event exists if two times the quotient of Date, a Group II Trigger Event exists if 2.5 times the
(i) the Scheduled Principal Balances of all 60 or more quotient of (i) the Scheduled Principal Balances of all
days Delinquent Mortgage Loans in Group I and (ii) the 60 or more days Delinquent Mortgage Loans in Group II
Scheduled Principal Balances of Group I as of the and (ii) the Scheduled Principal Balances of Group II
preceding Master Servicer Remittance Date equals or as of the preceding Master Servicer Remittance Date
exceeds 27%. equals or exceeds 38%.
"Initial Optional Termination Date": The Distribution Date immediately
following the Due Period with respect to which the aggregate Scheduled Principal
Balances of the Mortgage Loans have declined to less than 10% of the aggregate
Scheduled Principal Balances on the Closing Date.
"Interest Carry Forward Amount": As to any Class, the definition
therefor having the corresponding designation as such Class.
"Interest Determination Date": With respect to the first Accrual Period
for the Group II Certificates, March 3, 1998, and with respect to any subsequent
Accrual Period for the Group II Certificates, the second London Business Day
preceding such Accrual Period.
"Interest Fund": The Fund created and maintained by the Trustee
pursuant to Section 4.03.
"London Business Day": A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.
"Master Servicer": Saxon Mortgage, Inc., a Virginia corporation, and its
successors and assigns in such capacity.
"Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.
"Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.
"Master Servicing Fee": As applicable, the Group I Master Servicing Fee or the
Group II Master Servicing Fee.
"Meritech": Meritech Mortgage Services, Inc., a Texas corporation.
"Moody's": Xxxxx'x Investors Service, Inc., and its successors (99 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000).
"Mortgage Loan Group": Either Group I or Group II.
"Mortgage Loans": The mortgage loans listed on Schedule I.
"Net Rate": As to each Mortgage Loan and Distribution Date, the related
Mortgage Interest Rate less the sum of the Group I or Group II Servicing Fee
Rate and the Group I or Group II Master Servicing Fee Rate, in each case, as
applicable.
"Notice Address": For purposes of Section 11.05 of the Standard Terms,
the addresses of the Depositor, the Master Servicer and the Trustee, are as
follows:
(i) If to the Depositor:
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
(ii) If to the Master Servicer:
Saxon Mortgage, Inc.
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
(iii) If to the Trustee:
--------------------------------
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
"One Month LIBOR": As of any Interest Determination Date, the rate for
deposits in United States dollars for one-month U.S. dollar deposits which
appears in the Telerate Page 3750, as of 11:00 a.m., (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for that day will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period equal to the relevant Accrual Period (commencing
on the first day of such Accrual Period). The Master Servicer will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic-mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that day will be the arithmetic-mean of the
rates quoted by major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a period equal to the relevant
Accrual Period (commencing on the first day of such Accrual Period). The Trustee
shall review Telerate Page 3750 at the required time, make the required requests
to the principal offices of the Reference Banks and selections of major banks in
New York City and shall determine the rate which constitutes One Month LIBOR for
each Interest Determination Date.
"Paying Agent": ________________________________, a national banking
association, and its successors and assigns in such capacity.
"Private Certificate": Any of the Class BF-2, Class BF-3, Class BV-2,
Class BV-3, Class C and Class R Certificates.
"Private Subordinated Certificate": Any of the Class BF-2, Class BF-3,
Class BV-2, Class BV-3, Class C and Class R Certificates.
"Public Subordinated Certificate": Any of the Group I Subordinated
Certificates or the Group II Subordinated Certificates (other than the Private
Certificates).
"Rating Agency": Each of Xxxxx'x and Fitch (or, if any such agency or a
successor is no longer in existence, such other nationally recognized
statistical rating agency, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Trustee).
"Reference Banks" Leading banks selected by the Master Servicer and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
"Regular Certificates": Any of the Group I Certificates, Group II
Certificates and Class C Certificates which represent the "Regular Interests" in
the Issuing REMIC for purposes of the REMIC Provisions.
"Remittance Date": With respect to each Servicing Agreement, the date
so specified therein which date shall in no case be later than the 21st of each
month, or if the 21st of any month does not fall on a Business Day, then the
Business Day immediately preceding the 21st.
"Residual Certificates": The Class R Certificates, which represent the
"residual interest" in the Pooling and Issuing REMICs for purposes of the REMIC
Provisions.
"Sales Agreement": The Sales Agreement dated ___ __, 199_, between the
Depositor and SMI regarding the sale of the Mortgage Loans.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Meritech and its permitted successors and assigns.
"Servicing Agreement": The Servicing Agreement listed on Schedule II
hereto which shall be deemed to be a "Servicing Agreement" for purposes of the
Standard Terms.
"Servicing Fee Rate": With respect to each Mortgage Loan, the Servicing Rate
specified on Schedule I.
"State": New York.
"Subaccount Definitions":
"Balance": With respect to each Subaccount, on any
Distribution date, the balance, if any, of such Subaccount immediately
prior to such Distribution Date (or, in the case of the first
Distribution Date, an amount equal to the initial balance of such
Subaccount as of the Closing Date) less the amounts to be applied on
such Distribution Date to reduce the balance of such Subaccount.
"Subaccounts": Any one of the Subaccounts created pursuant to Section
5.03(a)(i) hereof.
Group I:
"AF-1 Balance" : The Balance of the "AF-2 Balance" : The Balance of "AF-3 Balance" : The Balance of
Subaccount AF-1. Subaccount AF-2. Subaccount AF-3.
"AF-1 Monthly Interest Amount": "AF-2 Monthly Interest Amount": "AF-3 Monthly Interest Amount":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
AF-1 Balance during the Accrual AF-2 Balance during the Accrual AF-3 Balance during the Accrual
Period for the Class AF-1 Period for the Class AF-2 Period for the Class AF-3
Certificates for that Distribution Certificates for that Distribution Certificates for that Distribution
Date at the Group I Net Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-1": The Subaccount "Subaccount AF-2": The Subaccount "Subaccount AF-3": The Subaccount
by that name created pursuant to by that name created pursuant to by that name created pursuant to
Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"AF-4 Balance" : The Balance of the "AF-5 Balance" : The Balance of "AF-6 Balance" : The Balance of
Subaccount AF-4. Subaccount AF-5. Subaccount AF-6.
"AF-4 Monthly Interest Amount": "AF-5 Monthly Interest Amount": "AF-6 Monthly Interest Amount":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
AF-4 Balance during the Accrual AF-5 Balance during the Accrual AF-6 Balance during the Accrual
Period for the Class AF-4 Period for the Class AF-5 Period for the Class AF-6
Certificates for that Distribution Certificates for that Distribution Certificates for that Distribution
Date at the Group I Net Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-4": The Subaccount "Subaccount AF-5": The Subaccount "Subaccount AF-6": The Subaccount
by that name created pursuant to by that name created pursuant to by that name created pursuant to
Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"MF-1 Balance" : The Balance of "MF-2 Balance" : The Balance of "BF-1 Balance" : The Balance of
Subaccount MF-1. Subaccount MF-2. Subaccount BF.
"MF-1 Monthly Interest Amount": "MF-2 Monthly Interest Amount": "BF-1 Monthly Interest Amount":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the BF
MF-1 Balance during the Accrual MF-2 Balance during the Accrual Balance during the Accrual Period
Period for the Class MF-1 Period for the Class MF-2 for the Class BF Certificates for
Certificates for that Distribution Certificates for that Distribution that Distribution Date at the Group
Date at the Group I Net Rate. Date at the Group I Net Rate. I Net Rate.
"Subaccount MF-1": The Subaccount "Subaccount MF-2": The Subaccount "Subaccount BF-1": The Subaccount
by that name created pursuant to by that name created pursuant to by that name created pursuant to
Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"BF-2 Balance" : The Balance of "BF-3 Balance" : The Balance of
Subaccount BF-2. Subaccount BF-3.
"BF-2 Monthly Interest Amount": "BF-3 Monthly Interest Amount": With respect
to any Distribution With respect to any Distribution Date, the interest accrued
on the Date, the interest accrued on the BF-2 Balance during the Accrual BF-3
Balance during the Accrual Period for the Class BF-2 Period for the Class BF-3
Certificates for that Distribution Certificates for that Distribution Date at
the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount BF-2": The Subaccount "Subaccount BF-3": The Subaccount
by that name created pursuant to by that name created pursuant to
Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
Group II:
"AV-1 Balance" : The Balance of "AV-2 Balance" : The Balance of the Subaccount
the Subaccount AV-1. AV-2.
"AV-1 Monthly Interest Amount": "AV-2 Monthly Interest Amount": With respect to any Distribution Date,
With respect to any Distribution Date, the interest accrued on the AV-2
the interest accrued on the AV-1 Balance during the Accrual Period for the Class AV-2
Balance during the Accrual Period Certificates for that
for the Class AV-1 Distribution Date at the Group II Net Rate.
Certificates for that Distribution
Date at the Group II Net Rate.
"Subaccount AV-1": The Subaccount by that name "Subaccount AV-2": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
"MV-1 Balance" : The Balance of Subaccount MV-1. "MV-2 Balance" : The Balance of Subaccount MV-2.
"MV-1 Monthly Interest Amount": With respect to any "MV-2 Monthly Interest Amounts": With respect to
Distribution Date, the interest accrued on the MV-1 any Distribution Date, the interest accrued on the MV-2
Balance during the Accrual Period for the Class MV-1 Balance during the Accrual Period for the Class MV-2
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount MV-1": The Subaccount by that name "Subaccount MV-2": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
"BV-1 Balance": The Balance of "BV-2 Balance": The Balance of "BV-3 Balance": The Balance of
Subaccount BV-1. Subaccount BV-2. Subaccount BV-3.
"BV-1 Monthly Interest Amount": "BV-2 Monthly Interest Amount": "BV-3 Monthly Interest Amount":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
BV-1 Balance during the Accrual BV-2 Balance during the Accrual BV-3 Balance during the Accrual
Period for the Class BV-1 Period for the Class BV-2 Period for the Class BV-3
Certificates for that Distribution Certificates for that Distribution Certificates for that Distribution
Date at the Group II Net Rate. Date at the Group II Net Rate. Date at the Group II Net Rate.
"Subaccount BV-1": The "Subaccount BV-2": The "Subaccount BV-3": The
Subaccount by that name created Subaccount by that name created Subaccount by that name created
pursuant to Section 5.03(a)(i) hereof. pursuant to Section 5.03(a)(i) pursuant to Section 5.03(a)(i)
hereof. hereof.
"Tax Matters Person": ________________________________, a national banking association, and its
successors and assigns in its capacity as Trustee.
"Telerate Page 3750" the display page currently so designated on the
Dow Xxxxx Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Trust Estate": As defined in Section 2.01 hereof.
"Trustee": ________________________________, a national banking association, its successor in interest
or any successor trustee appointed in accordance with the Trust Agreement.
"Trustee Fee": The fee payable monthly to the Trustee by the Master Servicer.
"Underwriters": ________________, ____________________ Incorporated, ______________ Inc. and
_______________ Incorporated.
"Underwriting Agreement": The Underwriting Agreement dated ___ __, 199_, between the Depositor and SMI
and the Underwriters.
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans
To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, the distribution of all other sums
distributable under the Trust Agreement with respect to the Certificates and the
performance of the covenants contained in the Trust Agreement, the Depositor
hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Certificateholders as
their interests may appear, all the Depositor's right, title and interest in and
to any and all benefits accruing to the Depositor from: (i) the Mortgage Loans
(except for any prepayment penalties payable at any time with respect thereto),
which the Depositor is causing to be delivered to the Trustee (or the Custodian)
herewith (and all Qualified Substitute Mortgage Loans (except for any prepayment
penalties payable at any time with respect thereto) substituted therefor as
provided by Section 2.03 of the Standard Terms and pursuant to the terms of the
Sales Agreement), together in each case with the related Trustee Mortgage Loan
Files and the Depositor's interest in any Collateral that secured a Mortgage
Loan but that is acquired by foreclosure or deed-in-lieu of foreclosure after
the Closing Date, and all Monthly Payments due after the Cut-Off Date and all
curtailments or other principal prepayments received with respect to the
Mortgage Loans paid by the Borrower after the Cut-Off Date (except for any
prepayments received after the Cut-Off Date but reflected in the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date) and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (ii) the
Servicing Agreement; (iii) the Sales Agreement, except that the Depositor does
not assign to the Trustee any of its rights under Sections 9 and 12 of the Sales
Agreement; (iv) the Asset Proceeds Account and the Distribution Account, whether
in the form of cash, instruments, securities or other properties; and (v) all
proceeds of any of the foregoing (including, but not limited to, all proceeds of
any mortgage insurance, hazard insurance, or title insurance policy relating to
the Mortgage Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and, which at any time constitute
all or part or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified herein (items (i) through (v) above, collectively, the
"Trust Estate").
The Depositor hereby assigns to the Master Servicer all right, title
and interest of the Depositor in and to (i) the Interest Fund and all amounts as
are deposited and maintained therein from time to time pursuant to the Trust
Agreement and (ii) all proceeds of the foregoing of every kind and nature
whatsoever, including, but not limited to, proceeds of proceeds and the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquidated property. The Master Servicer hereby pledges to the Trust and grants
to the Trustee, on behalf of the Certificateholders, a first priority security
interest in and to (i) the Interest Fund and all amounts as are deposited and
maintained therein from time to time pursuant to the Trust Agreement, excluding,
however, any earnings thereon, which are payable to Meritech, and (ii) all
proceeds of the foregoing of every kind and nature whatsoever, including, but
not limited to, proceeds of proceeds and the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquidated property in
trust, subject to the limitation set forth above with respect to earnings, to
have and to hold in trust to secure the Certificates. The Trustee acknowledges
this grant and agrees to hold the pledged property in accordance with the terms
hereof.
The Trustee acknowledges the sales, assignments and pledges created by
the foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
may be adequately and effectively protected in accordance with the terms and
conditions of this Agreement.
By its execution of this Agreement, the Trustee acknowledges and
declares that it holds and will hold or has agreed to hold all documents
delivered to it from time to time with respect to the Mortgage Loans and all
assets included in the Trust Estate in trust for the exclusive use and benefit
of all present and future Certificateholders.
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. Subaccount Distributions.
On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers from the Asset Proceeds Account to the
Distribution Account, which shall be an Eligible Account, in the following order
of priority:
(a) from the Group I Interest Funds to Subaccounts AF-1, AF-2,
AF-3, AF-4, AF-5, AF-6, MF-1, MF-2, BF-1, BF-2 and BF-3, pro
rata, the AF-1, AF-2, AF-3, AF-4, AF-5, AF-6, MF-1, MF-2,
BF-1, BF-2 and BF-3 Monthly Interest Amounts;
(b) from the Group II Interest Funds to Subaccounts XX-0, XX-0,
XX-0, XX-0, XX-0, BV-2 and BV-3, pro rata, the XX-0, XX-0,
XX-0, XX-0, XX-0, BV-2 and BV-3 Monthly Interest Amounts;
(c) from the Group I Principal Funds:
(A) to Subaccount AF-1 until the AF-1 Balance
is reduced to zero;
(B) to Subaccount AF-2 until the AF-2 Balance is
reduced to zero;
(C) to Subaccount AF-3 until the AF-3 Balance is
reduced to zero;
(D) to Subaccount AF-4 until the AF-4 Balance is
reduced to zero;
(E) to Subaccount AF-5 until the AF-5 Balance is
reduced to zero;
(F) to Subaccount AF-6 until the AF-6 Balance is
reduced to zero;
(G) to Subaccount MF-1 until the MF-1 Balance is
reduced to zero;
(H) to Subaccount MF-2 until the MF-2 Balance is
reduced to zero;
(I) to Subaccount BF-1 until the BF-1 Balance
is reduced to zero;
(J) to Subaccount BF-2 until the BF-2 Balance is
reduced to zero; and
(K) to Subaccount BF-3 until the BF-3 Balance is
reduced to zero;
provided, however, that (a) such Balances shall be reduced and
increased in the same order and manner that the Class of
Certificates having the corresponding class designation is
increased or decreased; and
(d) from the Group II Principal Funds:
(A) to Subaccount AV-1 until the AV-1 Balance
is reduced to zero;
(B) to Subaccount AV-2 until the AV-2 Balance is
reduced to zero;
(C) to Subaccount MV-1 until the MV-1 Balance is
reduced to zero;
(D) to Subaccount MV-2 until the MV-2 Balance is
reduced to zero;
(E) to Subaccount BV-1 until the BV-1 Balance is
reduced to zero;
(F) to Subaccount BV-2 until the BV-2 Balance is
reduced to zero; and
(G) to Subaccount BV-3 until the BV-3 Balance is
reduced to zero;
provided, however, that (a) such Balances shall be reduced and
increased in the same order and manner that the Class of
Certificates having the corresponding class designation is
increased or decreased.
Section 3.02. Certificate Distributions.
(a) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations have been made until such
amount shall have been fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Current
Interest and any Interest Carry Forward Amount for
the Group I Class A Certificates; provided,
however, if such amount is not sufficient to make a
full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to all the
Group I Class A Certificates, such amount will be
distributed pro rata among each Class of the
Group I Class A Certificates based on the ratio of
(x) the Current Interest and Interest Carry
Forward Amount for each Class of the Group I Class
A Certificates to (y) the total amount of
Current Interest and any Interest Carry Forward
Amount for the Group I Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1
Current Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2
Current Interest;
(iv) to the Class BF-1 Certificates, the Class BF-1
Current Interest;
(v) to the Class BF-2 Certificates, the Class BF-2
Current Interest;
(vi) to the Class BF-3 Certificates, the Class BF-3
Current Interest; and
(vii) any remainder pursuant to Section 3.02(e) hereof.
(b) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group II Interest Funds in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group II Class A Certificates, the Current
Interest and any Interest Carry Forward Amount
for the Group II Class A Certificates; provided,
however, if such amount is not sufficient to make a
full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to all
the Group II Class A Certificates, such amount will
be distributed pro rata among each Class of the
Group II Class A Certificates based on the ratio of
(x) the Current Interest and Interest Carry Forward
Amount for each Class of the Group II Class A
Certificates to (y) the total amount of Current
Interest and any Interest Carry Forward Amount
for the Group II Class A Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1
Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2
Current Interest;
(iv) to the Class BV-1 Certificates, the Class BV-1
Current Interest;
(v) to the Class BV-2 Certificates; the Class BV-2
Current Interest;
(vi) to the Class BV-3 Certificates; the Class BV-3
Current Interest; and
(vii) any remainder pursuant to Section 3.02(f) hereof.
(c) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group I Principal Distribution Amount in the following order of priority, and
each such allocation shall be made only after all preceding allocations shall
have been made until such amount shall have been fully allocated for such
Distribution Date:
(i) to the Group I Class A Certificates, the Group
I Class A Principal Distribution Amount to be
distributed as follows: (x) the Class AF-6 Principal
Distribution Amount to the Class AF-6 Certificates;
and (y) the balance of the Group I Class A
Principal Distribution Amount sequentially to the
Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5 and Class AF-6 Certificates so that no
such distribution pursuant to this clause (y)
will be made to any such Class until the
Certificate Principal Balances of all Group I Class
A Certificates with a lower numeral designation
shall have been reduced to zero; provided, however,
that, on any Distribution Date on which the Group I
Class A Certificate Principal Balance is equal to
or greater than the Scheduled Principal Balances
of Group I, the Group I Class A Principal
Distribution Amount will be distributed pro rata
and not sequentially to the Group I Class A
Certificates;
(ii) to the Class MF-1 Certificates, the Group I Class
MF-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iii) to the Class MF-2 Certificates, the Group I Class
MF-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iv) to the Class BF-1 Certificates, the Group I Class
BF-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(v) to the Class BF-2 Certificates, the Group I Class
BF-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero; and
(vi) to the Class BF-3 Certificates, the Group I Class
BF-3 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
provided, however, that, (i) if a Group I Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group I
Class A Certificates has been reduced to zero, the Class MF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MF-1 Certificates has been reduced to zero, the Class MF-2 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (c) after the Certificate Principal Balance of the Class
MF-2 Certificates has been reduced to zero, the Class BF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount; (d)
after the Certificate Principal Balance of the Class BF-1 Certificates has been
reduced to zero, the Class BF-2 Principal Distribution Amount shall equal the
Group I Principal Distribution Amount and (e) after the Certificate Principal
Balance of the Class BF-2 Certificates has been reduced to zero, the Class BF-3
Principal Distribution Amount shall equal the Group I Principal Distribution
Amount; and (ii)(a) if the Group I Class A Certificate Principal Balance has
been reduced to zero before ___ 200_, the Class MF-1 Principal Distribution
Amount shall equal the Group I Principal Distribution Amount until the
Distribution Date in ___ 200_ (or until the Class MF-1 Certificate Principal
Balance has been reduced to zero); (b) if the Class MF-1 Certificate Principal
Balance has been reduced to zero before ___ 200_, the Class MF-2 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount until
the Distribution Date in ___ 200_ (or until the Class MF-2 Certificate Principal
Balance has been reduced to zero); (c) if the Class MF-2 Certificate Principal
Balance has been reduced to zero before ___ 200_, the Class BF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount until
the Distribution Date in ___ 200_ (or until the Class BF-1 Certificate Principal
Balance has been reduced to zero; and (d) if the Class BF-1 Certificate
Principal Balance has been reduced to zero before ___ 200_, the Class BF-2
Principal Distribution Amount shall equal to the Group Principal Distribution
Amount until the Distribution Date in ___ 200_ (or until the Class BF-2
Certificate Principal Balance has been reduced to zero).
(d) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Principal Distribution Amount in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group II Class A Certificates, the Group
II Class A Principal Distribution Amount, to be
distributed as follows: (x) the Class AV-2 Principal
Distribution Amount to the Class AV-2 Certificates;
and (y) the balance of the Group II Class
Principal Distribution Amount sequentially to the
Class AV-1 Certificates and the Class AV-2
Certificates; provided, however, that, on any
Distribution date on which the Group II Class A
Certificate Principal Balance is equal to or
greater than the Scheduled Principal Balances of
Group II, the Group II Principal Distribution
Amount will be distributed pro rata and not
sequentially to the Group I Class A Certificates;
(ii) to the Class MV-1 Certificates, the Group II Class
MV-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iii) to the Class MV-2 Certificates, the Group II Class
MV-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iv) to the Class BV-1 Certificates, the Group II Class
BV-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(v) to the Class BV-2 Certificates, the Group II Class
BV-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero; and
(vi) to the Class BV-3 Certificates, the Group II Class
BV-3 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
provided, however, that, (i) if a Group II Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group II
Class A Certificates has been reduced to zero, the Group II Class MV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MV-1 Certificates has been reduced to zero, the Class MV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (c) after the Certificate Principal Balance of the Class
MV-2 Certificates has been reduced to zero, the Class BV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (d) after the Certificate Principal Balance of the
Class BV-1 Certificates has been reduced to zero, the Class BV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (ii)(a) if the Group II Class A Certificate
Principal Balance has been reduced to zero before ___ 200_, the Class MV-1
Principal Distribution Amount shall equal the Group II Principal Distribution
Amount until the Distribution Date in ___ 200_ (or until the Class MV-1
Certificate Principal Balance has been reduced to zero); and (e) after the
Certificate Principal Balance of the Class BV-2 Certificates has been reduced to
zero, the Class BV-3 Principal Distribution Amount shall equal the Group II
Principal Distribution Amount; (b) if the Class MV-1 Certificate Principal
Balance has been reduced to zero before ___ 200_, the Class MV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount until
the Distribution Date in ___ 200_ (or until the Class MV-2 Certificate Principal
Amount has been reduced to zero); (c) if the Class MV-2 Certificate Principal
Balance has been reduced to zero before ___ 200_, the Class BV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount until
the Distribution Date in ___ 200_ (or until the Class BV-1 Certificate Principal
Amount has been reduced to zero); and (d) if the Class BV-1 Certificate
Principal Balance has been reduced to zero before ___ 200_, the Class BV-2
Principal Distribution Amount shall equal the Group II Principal Distribution
Amount under the Distribution Date in ___ 200_ (or until the Class BV-2
Certificate Principal Amount has been reduced to zero).
(e) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(a)(vii) hereof and, to the extent required to make the allocations set
forth below in clauses (i) through (vi) of this Section 3.02(e), Section
3.02(f)(vii) hereof in the following order of priority, and each such allocation
shall be made only after all preceding allocations shall have been made until
such remainders shall have been fully allocated:
(i) the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1
Interest Carry Forward Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2
Interest Carry Forward Amount;
(iv) to the Class BF-1 Certificates, the Class BF-1
Interest Carry Forward Amount;
(v) to the Class BF-2 Certificates, the Class BF-2
Interest Carry Forward Amount;
(vi) to the Class BF-3 Certificates, the Class BF-3
Interest Carry Forward Amount;
(vii) to the extent required to make the allocations set
forth in clauses (i) through (vi) of Section 3.02(f)
hereof, pursuant to Section 3.02(f) hereof; and
(viii) the remainder pursuant to Section 3.02(g) hereof.
(f) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(b)(vii) hereof and, to the extent required to make the allocations set
forth below in clauses (i) through (vi) of this Section 3.02(f), Section
3.02(e)(vii) hereof in the following order of priority, and each such allocation
shall be made only after all preceding allocations shall have been made until
such remainders have been fully allocated:
(i) the Group II Extra Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1
Interest Carry Forward Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2
Interest Carry Forward Amount;
(iv) to the Class BV-1 Certificates, the Class BV-1
Interest Carry Forward Amount;
(v) to the Class BV-2 Certificates, the Class BV-2
Interest Carry Forward Amount;
(vi) to the Class BV-3 Certificates, the Class BV-3
Interest Carry Forward Amount;
(vii) to the extent required to make the allocations
set forth in clauses (i) through (vi) of Section
3.02(e) hereof, pursuant to Section 3.02(e) hereof;
(viii) on any Distribution Date on or before the
last Distribution Date with respect to the Class
AV-1 Certificates, to the Class AV-1 Certificates,
the Class AV-1 Certificates Carryover;
(ix) on any Distribution Date on or before the
last Distribution Date with respect to the Class
MV-1 Certificates, to the Class MV-1 Certificates,
the Class MV-1 Certificates Carryover;
(x) on any Distribution Date on or before the last
Distribution Date with respect to the Class MV-2
Certificates, to the Class MV-2 Certificates, the
Class MV-2 Certificates Carryover;
(xi) on any Distribution Date on or before the last
Distribution Date with respect to the Class BV-1
Certificates, to the Class BV-1 Certificates, the
Class BV-1 Certificates Carryover;
(xii) on any Distribution Date on or before the last
Distribution Date with respect to the Class BV-2
Certificates, the Class BV-2 Certificates Carryover;
(xiii) on any Distribution Date on or before the last
Distribution Date with respect to the Class BV-3
Certificates, the Class BV-3 Certificates Carryover;
and
(xiv) the remainder pursuant to Section 3.02(g) hereof.
(g) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(e)(viii) and (f)(xiv) hereof in the following order of priority, and each
such allocation shall be made only after the preceding allocations shall have
been made until such remainders have been fully allocated:
(i) to the Class C Certificates, the Class C Distribution
Amount; and
(ii) to the Class R Certificates, the remainder.
(h) On each Distribution Date, the Trustee shall allocate any excess of
the Group I Certificate Principal Balance over the Schedule Principal Balances
of Group I to reduce the Certificate Principal Balances of the Group I
Subordinated Certificates in the following order of priority:
(i) to the Class BF-3 Certificates until the Class BF-3
Certificate Principal Balance is reduced to zero;
(ii) to the Class BF-2 Certificates until the Class BF-2
Certificate Principal Balance is reduced to zero;
(iii) to the Class BF-1 Certificates until the Class BF-1
Certificate Principal Balance is reduced to zero;
(iv) to the Class MF-2 Certificates until the Class MF-2
Certificate Principal Balance is reduced to zero; and
(v) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate any excess of
the Group II Certificate Principal Balance over the Scheduled Principal Balances
of Group II to reduce the Certificate Principal Balances of the Group II
Subordinated Certificates in the following order of priority:
(i) to the Class BV-3 Certificates until the Class BV-3
Certificate Principal Balance is reduced to zero;
(ii) to the Class BV-2 Certificates until the Class BV-2
Certificate Principal Balance is reduced to zero;
(iii) to the Class BV-1 Certificates until the Class BV-1
Certificate Principal Balance is reduced to zero;
(iv) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero; and
(v) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
(j) On each Distribution Date, the Trustee shall allocate an amount
equal to the Group I Extra Principal Distribution Amount for such Distribution
Date as an increase in the Certificate Principal Balances of the Group I
Subordinated Certificates in the following order of priority:
(i) to the Class MF-1 Certificates in an amount up to
the Class MF-1 Unpaid Realized Loss Amount;
(ii) to the Class MF-2 Certificates in an amount up to the
Class MF-2 Unpaid Realized Loss Amount;
(iii) to the Class BF-1 Certificates in an amount up to the
Class BF-1 Unpaid Realized Loss Amount;
(iv) to the Class BF-2 Certificates in an amount up to the
Class BF-2 Unpaid Realized Loss Amount; and
(v) to the Class BF-3 Certificates in an amount up to the
Class BF-3 Unpaid Realized Loss Amount.
(k) On each Distribution Date, the Trustee shall allocate an amount
equal to the Group II Extra Principal Distribution Amount for such Distribution
Date as an increase in the Certificate Principal Balances of the Group II
Subordinated Certificates in the following order of priority:
(i) to the Class MV-1 Certificates in an
amount up to the Class MV-1 Unpaid Realized Loss
Amount;
(ii) to the Class MV-2 Certificates in an
amount up to the Class MV-2 Unpaid Realized Loss
Amount;
(iii) to the Class BV-1 Certificates in an amount up
to the Class BV-1 Unpaid Realized Loss Amount;
(iv) to the Class BV-2 Certificates in an
amount up to the Class BV-2 Unpaid Realized Loss
Amount; and
(v) to the Class BV-3 Certificates in an amount up to
the Class BV-3 Unpaid Realized Loss Amount.
Section 3.03. Reports to the Depositor. On or before the Business Day
preceding each Distribution Date, based on information provided by the Servicer,
the Master Servicer shall notify the Depositor and the Trustee of the following
information with respect to the next Distribution Date (which notification may
be given by facsimile, or by telephone promptly confirmed in writing):
(a) the aggregate amount then on deposit in the Asset Proceeds
Account and the source thereof (identified as interest, scheduled
principal or unscheduled principal);
(b) the amount of any Realized Losses, Applied
Realized Loss Amounts and Unpaid Realized Loss Amounts;
(c) the application of the amounts described in clauses (a)
and (b) on such Distribution Date in accordance with Section 3.02
hereof; and
(d) whether a Group I or Group II Trigger Event or a Group I
or Group II Subordinated Trigger Event has occurred.
Section 3.04. Reports by Master Servicer.
(a) On each Distribution Date, based on information provided by the
Servicer, the Master Servicer shall report in writing to the Depositor (in hard
copy), each Holder of a Certificate, the Underwriters and the Trustee and their
designees (designated in writing to the Master Servicer) and the Rating
Agencies:
(i) with respect to each Class of Certificates (other
than Class C and Class R) (based on a Certificate in
the original principal amount of $1,000):
(a) the amount of the distributions on such
Distribution Date;
(b) the amount of such distribution allocable to
interest;
(c) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any
prepayments, Substitution Shortfalls, repurchase amounts
pursuant to Section 2.03 of the Standard Terms or other
recoveries of principal included therein and any Group I or
Group II Extra Principal Distribution Amount and any Class
MF-1, Class MF-2, Class BF-1, Class BF-2 and Class BF-3
Applied Realized Loss Amount with respect to, and any Class
MV-1, Class MV-2, Class BV-1, Class BV-2 and Class BV-3 Unpaid
Realized Loss Amount at, such Distribution Date;
(d) the principal balance after giving effect
to any distribution allocable to principal; and
(e) any Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF-1, Class BF-2 and Class BF-3 Interest Carry Forward Amount,
any Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class
BV-1, Class BV-2 and Class BV-3 Interest Carry Forward Amount
or any Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class
BV-1, Class BV-2 and Class BV-3 Certificates Carryover ;
(ii) the Group I Net Rate and the Group II Net Rate;
(iii) the largest Mortgage Loan balance outstanding in
each Group;
(iv) the Servicing Fees and Master Servicing Fees
allocable to each Group;
(v) One-Month LIBOR on the most recent Interest
Determination Date; and
(vi) the Pass-Through Rates for the Group II Certificates
for the current Accrual Period and, if the Pass-
Through Rates for any Class of the Group I
Certificates for the current Accrual Period is based
on the Group I Net Rate, the Pass-Through Rates
for the Group I Certificates with respect to which
the Group I Net Rate applies.
(b) On each Distribution Date, based on information provided by the
Servicer, the Master Servicer will distribute to the Depositor, each Holder, the
Underwriters, the Rating Agencies and the Trustee, together with the information
described in subsection (a) preceding, the following information with respect to
each Mortgage Loan Group in hard copy:
(i) the number and aggregate principal balances of
Mortgage Loans in each Group (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business as
of the end of the related prepayment period;
(ii) the percentage that each of the Scheduled Principal
Balances set forth pursuant to clauses (a), (b) and
(c) of paragraph (i) above represent with respect to
all Mortgage Loans in each Group;
(iii) the number and Scheduled Principal Balance of all
Mortgage Loans in each Group in foreclosure
proceedings as of the close of business as of the end
of the related Prepayment Period and in the
immediately preceding Prepayment Period;
(iv) the number of Mortgagors and the Scheduled Principal
Balances of Mortgage Loans in each Group involved in
bankruptcy proceedings as of the close of business as
of the end of the related Prepayment Period;
(v) the aggregate number and aggregate book value of any
REO Property in each Group as of the close of
business as of the end of the related Prepayment
Period;
(vi) the number and amount by principal balance of 60+ Day
Delinquent Loans in each Group, in each case by
Servicer and as of the end of the related Prepayment
Period.
(c) All allocations made by the Trustee shall be based on
information the Trustee receives from the Master Servicer which the Trustee
shall be protected in relying on.
(d) At the request of any Holder of any Private Certificate
and a prospective purchaser of a Private Certificate designated by any such
Holder, the Master Servicer on behalf of the Depositor will furnish to such
persons a copy of the Confidential Private Placement Memorandum dated ___ __,
199_, prepared by the Depositor with respect to the private offering of such
Certificates and copies of the reports required to be furnished to
Certificateholders pursuant to Section 3.05 hereof for the preceding two years
(or such shorter period commencing ___1, 199_) pursuant to Section 5.05 of the
Standard Terms.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
The Certificates shall be designated generally as the Mortgage Loan
Asset Backed Certificates, Series 199_-_. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $0, except for Certificates executed and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Certificates pursuant to
Sections 5.04 or 5.06 of the Standard Terms. The following table sets forth the
Classes of Certificates and the initial Certificate Principal Balance for each
such Class:
Initial Certificate
Principal Balance
Class
AF-1 $ ,000,000
AF-2 $ ,000,000
AF-3 $ ,000,000
AF-4 $ ,000,000
AF-5 $ , ,000
AF-6 $ , ,000
MF-1 $ , ,000
MF-2 $ , ,000
BF-1 $ ,000
BF-2 $ , ,000
BF-3 $ , ,000
AV-1 $ , ,000
XX-0 x , ,000
XX-0 $ , ,000
MV-2 $ , ,000
BV-1 $ , ,000
BV-2 $ , ,000
BV-3 $ , ,000
C (1)
R (2)
---------------------
(1)The Class C Certificates have no stated principal balance or Pass-Through
Rate and are entitled to receive the Class C Distribution Amount.
(2)The Class R Certificates have no stated principal balance or Pass-Through
Rate and are not entitled to any scheduled distributions of principal or
interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. in the case of the Public Certificates and in denominations of
$250,000 and integral multiples of $1,000 in excess thereof in the case of the
Private Certificates. So long as the Private Certificates are Book-Entry
Certificates, each Person which becomes a Beneficial Owner of Private
Certificates will be deemed to make the representations and agreements set forth
in the form of Rule 144A Agreement-QIB Certification attached as Exhibit D to
the Standard Terms. and to indemnify the Depositor, the Trustee and the Master
Servicer against any liability that may result if any transfer of a Private
Certificate by such person is not exempt from registration under the Securities
Act and all applicable state securities laws or is not made in accordance with
such federal and state laws.The Class C and Class R Certificates shall be issued
in certificated, fully-registered form in minimum Percentage Interests of 25%
and integral multiples of 1% in excess thereof, except that two Class R
Certificates may be issued in different denominations.
Section 4.03. Interest Fund
An Interest Fund shall be established by the Trustee. The Interest Fund
shall initially consist of cash in the amount of $- 0 - (of which $- 0 - is
allocated to Group I and $- 0 - is allocated to Group II). The Interest Fund
shall be an Eligible Account and, as soon as practicable after the Closing Date,
the Trustee shall invest any moneys on deposit in the Interest Fund in Permitted
Investments at the direction of the Master Servicer. On the Business Day
preceding the ____ __, 1998, Distribution Date, the Trustee shall withdraw the
entire amount from the Interest Fund (excluding any earnings thereon) and
deposit such amount into the Asset Proceeds Account. Such entire amount shall be
used to make distributions of interest on such Distribution Date and to cover
applicable administrative costs (which do not include the Servicing Fees)
relating to the Mortgage Loans listed on Schedule III. The Interest Fund shall
not be an asset of either of the REMICs. Any earnings on the Interest Fund shall
be payable on such date to Master Servicer.
Section 4.04. Principal Fund
A Principal Fund shall be established by the Trustee. The Principal
Fund shall consist of cash in the amount of $602.33. The Principal Fund shall be
an Eligible Account and, as soon as practicable, after the Closing Date, the
Trustee shall invest any moneys on deposit in the Principal Fund in Permitted
Investments at the direction of the Master Servicer. On the Business Day
preceding the March 25, 1998 Distribution Date, the Trustee shall withdraw the
entire amount from the Principal Fund (excluding any earnings thereon) and
deposit such amount into the Asset Proceeds Account. Such entire amount shall be
used to make distributions of principal with respect to the Group I Certificates
on such Distribution Date. Any earnings on the Principal Fund shall be payable
on such date to the Master Servicer.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Request for Opinions.
(a) The Depositor and the Master Servicer hereby request and authorize
Xxxxx & Xxxxxx LLP, as their counsel in this transaction, to issue on behalf of
the Depositor and the Master Servicer such legal opinions to the Trustee and
each Rating Agency as may be (i) required by any and all documents, certificates
or agreements executed in connection with the Trust or (ii) requested by the
Trustee, any Rating Agency or their respective counsels.
(b) The Trustee hereby requests and authorizes its counsel to issue on
behalf of the Trustee such legal opinions to the Depositor, the Master Servicer,
and each Rating Agency as may be required by any and all documents, certificates
or agreements executed in connection with the establishment of the Trust and the
issuance of the Certificates.
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing
Law.
(a) The Certificates shall be substantially in the respective forms set
forth in the Exhibits hereto. All Certificates shall be dated the date of their
execution.
(b) Each of the Schedules and Exhibits attached hereto or referenced
herein is incorporated herein by reference as contemplated by the Standard
Terms.
(c) In accordance with Section 11.04 of the Standard Terms, this
Agreement shall be construed in accordance with and governed by the laws of the
State, without regard to any conflicts of laws principles thereof.
(d) Notwithstanding Section 5.05(a) of the Standard Terms, the Class
BF-2, Class BF-3, Class BV-2, Class BV-3, Class C and Class R shall only be
transferable to a Qualified Institutional Buyer.
Section 5.03. REMIC Administration.
(a) Pooling REMIC. (i) The beneficial ownership of the Pooling
REMIC shall be evidenced by interests having the following terms:
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of
Designation Balance Rate REMIC Provisions
Group I
Subaccount AF-1 $ ,000,000 (1) Regular
Subaccount AF-2 $ ,000,000 (1) Regular
Subaccount AF-3 $ ,000,000 (1) Regular
Subaccount AF-4 $ ,000,000 (1) Regular
Subaccount AF-5 $ , ,000 (1) Regular
Subaccount AF-6 $ , ,000 (1) Regular
Subaccount MF-1 $ , ,000 (1) Regular
Subaccount MF-2 $ , ,000 (1) Regular
Subaccount BF-1 $ ,000 (1) Regular
Subaccount BF-2 $ , ,000 (1) Regular
Subaccount BF-3 $ , ,000 (1) Regular
Group II
Subaccount AV-1 $ , ,000 (2) Regular
Subaccount AV-2 $ , ,000 (2) Regular
Subaccount MV-1 $ , ,000 (2) Regular
Subaccount MV-2 $ , ,000 (2) Regular
Subaccount BV-1 $ , ,000 (2) Regular
Subaccount BV-2 $ , ,000 (2) Regular
Subaccount BV-3 $ , ,000 (2) Regular
Subaccount R (3) (3) Residual
(1) On any Distribution Date, the Group I Net Rate.
(2) On any Distribution Date, the Group II Net Rate.
(3) Subaccount R is not issued with a Balance or a Pass-Through
Rate.
(ii) Subaccount R is the residual interest in the Pooling
REMIC and shall be issued in fully registered certificate form as part
of the Class R Certificate. All other Subaccounts shall be deemed
issued as non-certificated interests and shall constitute assets of the
Issuing REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans
and the Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC
shall be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2,
Class BF-1, Class BF-2 and Class BF-3, Class AV-1, Class AV-2, Class MV-1, Class
MV-2, Class BV-1, Class BV-2 and Class BV-3 Certificates and each of the
separate interest-only rights making up the Class C Distribution Amount are
Regular Interests in the Issuing REMIC. The Class R Certificates are the
residual interest in the Issuing REMIC.
(ii) The assets of the Issuing REMIC are the Subaccounts in
the Pooling REMIC other than Subaccount R and the Distribution Account.
(iii) On each Distribution Date, amounts in the Distribution
Account will be distributed as provided in Section 3.02 hereof.
(c) General.
(i) The Closing Date is designated as the "start up" day of
the Pooling REMIC and Issuing REMIC.
(ii) The Trustee shall make elections to treat the Pooling
REMIC and the Issuing REMIC as REMICs under the Code.
(d) The "latest possible maturity date" for purposes of the REMIC
regulations and each REMIC established hereby is ____ 25, 20__.
Section 5.04. Optional Termination.
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, the Master Servicer may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans
and all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the Mortgage
Loans during the current Remittance Period, plus one month's interest on such
amount, plus in all cases all accrued and unpaid Servicing Fees and Master
Servicing Fees plus the aggregate amount of any unreimbursed Advances and any
Advances which the Servicer or the Master Servicer has theretofore failed to
remit; but in any event such purchase amount shall be sufficient to retire all
Group I and Group II Certificates in full. In connection with such purchase, the
Master Servicer shall remit to the Trustee all amounts then on deposit in the
Master Servicer Custodial Account for deposit to the Asset Proceeds Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) The Master Servicer shall direct the Trustee to adopt and the
Trustee shall adopt, as to the REMIC, a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and as prepared by the Master
Servicer, and shall provide to the Trustee an Opinion of Counsel experienced in
federal income tax matters acceptable to the Trustee to the effect that such
purchase and liquidation constitutes, as to the REMIC, a Qualified Liquidation.
In addition, the Master Servicer shall provide to the Trustee an Opinion of
Counsel acceptable to the Trustee to the effect that such purchase and
liquidation does not constitute a preference payment pursuant to the United
States Bankruptcy Code.
(c) Promptly following any purchase described in this Section 5.04, the
Trustee will release the Trustee Mortgage Loan File to the Master Servicer or
otherwise upon its order.
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent
(a) Saxon Mortgage, Inc. is hereby appointed as Master Servicer
hereunder.
(b) ________________________________ is hereby appointed as Certificate
Registrar and Paying Agent.
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized and their respective signatures duly attested all as
of ___1, 199_.
SAXON ASSET SECURITIES COMPANY
By: ____________________________________
Xxxxxxx X. Xxxxx, Vice President
SAXON MORTGAGE, INC.
as Master Servicer
By: __________________________________________
Xxxxxxx X. Xxxxxxxx, President
------------------------------------------
as Trustee
By: _________________________________
___________, Vice President
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me _____, 199_, by
Xxxxxxx X. Xxxxx, a Vice President of Saxon Asset Securities Company, a Virginia
corporation, on behalf of the corporation.
----------------------------------
Notary Public
My Commission expires:
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me on _____, 199_,
by Xxxxxxx X. Xxxxxxxx, a President of Saxon Mortgage, Inc., a Virginia
corporation, on behalf of the corporation.
------------------------------
Notary Public
My Commission expires:
CITY OF WASHINGTION )
) ss.:
DISTRICT OF COLUMBIA )
The foregoing instrument was acknowledged before me _____, 199_, by
___________, a Vice President of ________________________________, a national
banking association, on behalf of the bank.
-------------------------------
Notary Public
My Commission expires:
Schedule I
Mortgage Loans
A. Group I Mortgage Loans.
B. Group II Mortgage Loans.
Schedule II
Sales Agreement
Schedule III
Mortgage Loans for which first payment to the Trust will
be after ___1, 199_
SAXON ASSET SECURITIES COMPANY
ASSET BACKED CERTIFICATES
STANDARD TERMS TO TRUST AGREEMENT
(JULY 1998 EDITION)
TABLE OF CONTENTS
PRELIMINARY STATEMENT.............................................................................................1
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Defined Terms.............................................................................1
Section 1.02. Section References; Calculations; Ratings; Consents; Certain References..................15
Section 1.03. Certain Matters Relating to any Certificate Insurance Policy.............................15
ARTICLE II MORTGAGE LOAN FILES...................................................................................16
Section 2.01. Mortgage Loan Files......................................................................16
Section 2.02. Acceptance by the Trustee................................................................17
Section 2.03. Purchase or Substitution of Mortgage Loans by a Seller, a Servicer or Saxon..............19
Section 2.04. Representations and Warranties of Saxon..................................................22
Section 2.05. Representations and Warranties of the Master Servicer....................................23
ARTICLE III ADMINISTRATION OF THE TRUST..........................................................................24
Section 3.01. Master Servicer Custodial Account........................................................24
Section 3.02. Asset Proceeds Account...................................................................25
Section 3.03. Issuing REMIC Accounts...................................................................26
Section 3.04. Advances by Master Servicer and Trustee..................................................26
Section 3.05. Month End Interest.......................................................................27
Section 3.06. Trustee to Cooperate; Release of Mortgage Files..........................................28
Section 3.07. Reports to the Trustee; Annual Compliance Statements.....................................29
Section 3.08. Title, Management and Disposition of REO Properties......................................29
Section 3.09. Amendments to Servicing Agreements; Modification of the Guide............................31
Section 3.10. Oversight of Servicing...................................................................31
Section 3.11. Credit Enhancement.......................................................................32
ARTICLE IV REPORTING/REMITTING TO CERTIFICATEHOLDERS.............................................................32
Section 4.01. Statements to Certificateholders.........................................................32
Section 4.02. Remittance Reports.......................................................................33
Section 4.03. Compliance with Withholding Requirements.................................................33
Section 4.04. Reports to the Clearing Agency...........................................................33
Section 4.05. Preparation of Regulatory Reports........................................................34
ARTICLE V THE POOLING INTERESTS AND THE CERTIFICATES.............................................................34
Section 5.01. Pooling REMIC Interests..................................................................34
Section 5.02. The Certificates.........................................................................34
Section 5.03. Book-Entry Certificates..................................................................35
Section 5.04. Registration of Transfer and Exchange of Certificates....................................36
Section 5.05. Restrictions on Transfers................................................................37
Section 5.06. Mutilated, Destroyed, Lost or Stolen Certificates........................................38
Section 5.07. Persons Deemed Owners....................................................................38
Section 5.08. Paying Agent.............................................................................39
ARTICLE VI SAXON AND THE MASTER SERVICER.........................................................................39
Section 6.01. Liability of, and Indemnification by, Saxon and the Master Servicer......................39
Section 6.02. Merger or Consolidation of Saxon or the Master Servicer..................................39
Section 6.03. Limitation on Liability of Saxon, the Master Servicer and Others.........................39
Section 6.04. Resignation of the Master Servicer.......................................................40
Section 6.05. Compensation to the Master Servicer......................................................40
Section 6.06. Assignment or Delegation of Duties by Master Servicer....................................40
ARTICLE VII TERMINATION OF SERVICING AND MASTER SERVICING ARRANGEMENTS...........................................40
Section 7.01. Termination and Substitution of Servicing Agreements.....................................40
Section 7.02. Termination of Master Servicer; Trustee to Act...........................................41
Section 7.03. Notification to Certificateholders.......................................................42
ARTICLE VIII CONCERNING THE TRUSTEE..............................................................................43
Section 8.01. Duties of Trustee........................................................................43
Section 8.02. Certain Matters Affecting the Trustee....................................................44
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans....................................45
Section 8.04. Trustee May Own Certificates.............................................................45
Section 8.05. Trustee's Fees...........................................................................45
Section 8.06. Eligibility Requirements for Trustee.....................................................45
Section 8.07. Resignation and Removal of the Trustee...................................................46
Section 8.08. Successor Trustee........................................................................46
Section 8.09. Merger or Consolidation of Trustee.......................................................46
Section 8.10. Appointment of Trustee or Separate Trustee...............................................47
Section 8.11. Appointment of Custodians................................................................47
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates............................48
ARTICLE IX TERMINATION OF THE TRUST; PURCHASE OF CERTIFICATES....................................................48
Section 9.01. Termination of Trust.....................................................................48
Section 9.02. Optional Termination.....................................................................48
Section 9.03. Optional Purchase........................................................................49
Section 9.04. Termination Upon Loss of REMIC Status....................................................49
Section 9.05. Disposition of Proceeds..................................................................50
ARTICLE X REMIC TAX PROVISIONS...................................................................................50
Section 10.02. Prohibited Activities...................................................................51
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................52
Section 11.01. Amendment of Trust Agreement............................................................52
Section 11.02. Recordation of Agreement; Counterparts..................................................52
Section 11.03. Limitation of Rights of Certificateholders..............................................53
Section 11.04. Governing Law...........................................................................53
Section 11.05. Notices.................................................................................53
Section 11.06. Severability of Provisions..............................................................53
Section 11.07. Sale of Mortgage Loans..................................................................54
Section 11.08. Notice to Rating Agency.................................................................54
Exhibit A-1 Form of Initial Certification
Exhibit A-2 Form of Final Certification
Exhibit B Form of Recordation Report
Exhibit C Form of Remittance Report
Exhibit D Form of Rule 144A Agreement-QIB Certification
Exhibit E Form of Transferee Agreement
Exhibit F Form of Benefit Plan Affidavit
Exhibit G Form of Residual Transferee Agreement
Exhibit H-1 Form of Disqualified Organization Affidavit
Exhibit H-2 Form of Disqualified Organization Affidavit
PRELIMINARY STATEMENT
Saxon Asset Securities Company ("Saxon"), a bank or mortgage banking
company, as administrative agent (in such capacity, the "Master Servicer"),
and a bank or trust company, as trustee (the "Trustee"), have entered into a
Trust Agreement (the "Trust Agreement") that provides for the issuance
of a series of asset backed certificates (the "Certificates") that in the
aggregate evidence the entire interest in mortgage-related assets and certain
other property owned by the trust created by the Trust Agreement (the
"Trust"). These Standard Terms are a part of, and are incorporated by reference
into, the Trust Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in the Trust Agreement and as hereinafter
set forth, Saxon, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS
Except as otherwise specified or as the context may otherwise require,
the following capitalized terms shall, whenever used in the Trust Agreement,
have the respective meanings assigned to them in this Section 1.01. Capitalized
terms used but not defined in the Trust Agreement shall have the respective
meanings assigned to them in the Guide.
"ADVANCE": With respect to any Mortgage Loan, any advance of principal
and interest, taxes, insurance or expenses made by a Servicer, the Master
Servicer, the Trustee or an Insurer.
"AFFILIATE": Any person or entity controlling, controlled by or
under common control with Saxon or the Master Servicer ("control" meaning
the power to direct the management and policies of a person or entity,
directly or indirectly, whether through ownership of voting securities,
by contract or otherwise, and "controlling" and "controlled" having meanings
correlative to the foregoing).
"ANNUAL COMPLIANCE STATEMENT": The Officer's certificate required to
be delivered annually by the Master Servicer pursuant to Section 3.07 hereof.
"ARM LOAN": An "adjustable rate" Mortgage Loan, the Mortgage
Interest Rate of which is subject to periodic adjustment in accordance with the
terms of the related Mortgage Note.
"ASSET PROCEEDS ACCOUNT": The account or accounts created and
maintained for the Trust pursuant to Section 3.02 hereof.
"BASIS LIMIT AMOUNT": With respect to a Mortgage Loan purchased
from a REMIC, an amount equal to the REMIC's adjusted federal income tax
basis in such Mortgage Loan as of the date on which the purchase occurs as set
forth in a certificate of an Officer of the Master Servicer, which
certificate shall be delivered to the Trustee in connection with any purchase
of a Mortgage Loan.
"BENEFICIAL OWNER": With respect to a Book-Entry Certificate, the
Person who is registered as owner of such Certificate in the books of the
Clearing Agency for such Certificate or in the books of a Person maintaining
an account with such Clearing Agency.
"BENEFIT PLAN AFFIDAVIT": An affidavit substantially in the form of
Exhibit F attached hereto.
"BENEFIT PLAN OPINION": An Opinion of Counsel satisfactory to the
Master Servicer and the Trustee (and upon which Saxon, the Master Servicer,
the Tax Matters Person and the Trustee are authorized to rely) to the effect
that the proposed transfer will not (i) cause the assets of the Trust to be
regarded as plan assets for purposes of the Plan Asset Regulations, (ii) give
rise to any fiduciary duty under ERISA on the part of Saxon, a Servicer, the
Master Servicer or the Trustee or (iii) result in, or be treated as, a
prohibited transaction under Section 406 or 407 of ERISA or section 4975 of
the Code (which opinion shall not be a cost or expense of Saxon, the Master
Servicer, the Tax Matters Person or the Trustee).
"BOOK-ENTRY CERTIFICATES": Each Class of Certificates, if any,
specified as such in the Trust Agreement.
"BORROWER": With respect to each Mortgage Loan, the individual or
individuals or any Servicer obligated to repay the related Mortgage Note.
"BUSINESS DAY": Unless otherwise provided in the Trust Agreement,
any day that is not a Saturday, Sunday, or a day on which the Certificate
Insurer or commercial banking institutions in New York City or the city in
which the Corporate Trust Office of the Trustee, or the Paying Agent is
located are authorized or obligated by law or executive order to be closed.
"CERTIFICATE": Any asset backed certificate designated in the Trust
Agreement.
"CERTIFICATE GUARANTY INSURANCE POLICY" means any certificate or
financial guaranty insurance policy identified in the Trust Agreement.
"CERTIFICATE INSURER" means the issuer, if any, of a Certificate
Guaranty Insurance Policy with respect to the Certificates named in the Trust
Agreement.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under
the Certificate Insurance Policies in accordance with their terms; or
(b) (i) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Certificate Insurer in
an involuntary case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of
or in respect of the Certificate Insurer under any applicable United States
federal or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar official of
any substantial part of the Certificate Insurer's property, or ordering the
winding-up or liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the consent by the Certificate
Insurer to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer of any substantial
part of its property, or the failure of the Certificate Insurer to pay debts
generally as they become due, or the admission by the Certificate Insurer in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Certificate Insurer in furtherance of
any such action;
provided, however, the Certificate Insurer's rights shall be reinstated
following a cure, to the satisfaction of the Trustee, of any Certificate Insurer
Default.
"CERTIFICATE OF TITLE INSURANCE": A certificate of title insurance
issued pursuant to a master title insurance policy.
"CERTIFICATE PRINCIPAL BALANCE": Unless otherwise provided in the
Trust Agreement, with respect to each Class of Certificates, on any
Distribution Date, the aggregate principal amount, if any, of such Class
of Certificates immediately prior to such Distribution Date (or, in the case
of the first Distribution Date, an amount equal to the aggregate initial
principal amount of such Class of Certificates as of the Closing Date) less the
amounts to be applied on such Distribution Date to reduce the aggregate
principal amount of such Class of Certificates in accordance with the Trust
Agreement plus any amount previously distributed with respect to principal
that is recovered as a voidable preference by a trustee in bankruptcy
pursuant to a final, nonappealable order (except, for purposes of effecting
the Certificate Insurer's subrogation rights, any payment made by the
Certificate Insurer with respect to principal of the Certificates shall not be
taken into account).
2
"CERTIFICATE REGISTER": The register maintained pursuant to the related
Trust Agreement.
"CERTIFICATE REGISTRAR": The registrar designated in the related
Trust Agreement, or appointed pursuant to Section 5.02 hereof.
"CERTIFICATEHOLDERS": The holders of the Certificates as recorded on
the Certificate Register.
"CLASS": The Certificates of a Series bearing the same designation.
"CLEARING AGENCY": The Depository Trust Company or any successor
organization or any other organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act and the regulations of the SEC
thereunder.
"CLEARING AGENCY PARTICIPANT": A broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
such Clearing Agency.
"CLOSING DATE": The date on which Certificates are issued by a Trust as
set forth in the Trust Agreement.
"CODE": The Internal Revenue Code of 1986, as amended.
"COLLATERAL": With respect to any Mortgage Loan, the Mortgaged
Premises and any real property (other than the related Mortgaged Premises),
personal property, securities, cash, instruments, contracts, or other
documents, if any, constituting or evidencing collateral pledged as additional
security for such Mortgage Loan.
"CONVERTED MORTGAGE LOAN": An ARM Loan with respect to which the
Borrower has complied with the applicable requirements of the related
Mortgage Note to convert the Mortgage Interest Rate relating thereto to a fixed
rate of interest (and with respect to which the related Servicer has processed
such conversion).
"COOPERATIVE LOAN": A Mortgage Loan that is secured by a first
lien against (i) shares issued by a cooperative housing corporation and (ii)
the related Borrower's leasehold interest in a cooperative dwelling unit owned
by such cooperative housing corporation.
"CORPORATE TRUST OFFICE": The principal corporate trust office of
the Trustee, any Paying Agent or any Certificate Registrar at which at any
particular time its corporate trust business shall be administered.
"CREDIT ENHANCEMENT": Any certificate guaranty insurance policy,
mortgage pool insurance policy, special hazard insurance policy, special
hazard fund, mortgagor bankruptcy fund, reserve fund, letter of credit,
Certificate Guaranty Insurance Policy, third party guaranty or other form
of insurance specified in the Trust Agreement that is obtained by or on behalf
of Saxon with respect to the Certificates.
"CREDIT ENHANCEMENT FEE": With respect to each form of Credit
Enhancement, the monthly premium or fee that is payable to the provider of
such Credit Enhancement as specified in the Trust Agreement.
"CREDIT ENHANCEMENT FEE RATE": With respect to each form of Credit
Enhancement, each Mortgage Loan and each Distribution Date, an amount equal
to the Credit Enhancement Fee with respect to the related Certificates,
divided by the aggregate Scheduled Principal Balance of the related Mortgage
Loans.
"CUSTODIAN": The Custodian identified in the Trust Agreement that
shall hold all or a portion of the Trustee Mortgage Loan Files with respect to
the Certificates.
"CUT-OFF DATE": The date specified as such in the Trust Agreement.
"DEFECT DISCOVERY DATE": With respect to a Mortgage Loan, the date
on which either the Trustee or the Master Servicer first discovers a
Qualification Defect affecting such Mortgage Loan.
"DELETED MORTGAGE LOAN": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"DIRECTLY OPERATE": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, or any use of such REO Property in a trade or
business conducted by the Trust, in each case other than through an
Independent Contractor; provided, however, that the Trustee or the Master
Servicer on behalf of the Trust shall not be considered to Directly Operate an
REO Property solely because the Trustee or the Master Servicer on behalf of
the Trust establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
maintenance with respect to such REO Property.
3
"DISQUALIFIED ORGANIZATION": Either (i) the United States, (ii)
any state or political subdivision thereof, (iii) any foreign government,
(iv) any international organization, (v) any agency or instrumentality of any
of the foregoing, (vi) any tax-exempt organization (other than a cooperative
described in section 521 of the Code) that is exempt from federal income tax
unless such organization is subject to tax under the unrelated business
taxable income provisions of the Code, (vii) any organization described in
section 1381(a)(2)(C) of the Code, or (vii) any other entity identified as a
disqualified organization by the REMIC Provisions. A corporation will not be
treated as an instrumentality of the United States or any state or political
subdivision thereof if all 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 governmental unit.
"DISQUALIFIED ORGANIZATION AFFIDAVIT": If provided by a Non-U.S.
Person, an affidavit substantially in the form of Exhibit H-1 attached hereto,
and, if provided by a U.S. Person, an affidavit substantially in the form of
Exhibit H-2 attached hereto.
"DISTRIBUTION ACCOUNT": With respect to any Double REMIC Series, an
Eligible Account established and maintained with the Paying Agent by the
Trustee for the Issuing REMIC. Unless otherwise provided in the Trust
Agreement, the Distribution Account shall be considered an asset of the Issuing
REMIC.
"DISTRIBUTION DATE": Unless otherwise provided in the Trust
Agreement, the 25th day of each month, or the next Business Day if such 25th
day is not a Business Day, commencing in the month following the Closing Date.
"DOUBLE REMIC SERIES": A Series with respect to which two REMIC
elections are made to form an Issuing REMIC and a Pooling REMIC.
"DUE DATE": The first day of the month of the related Distribution
Date.
"DUE PERIOD": Unless otherwise provided in the Trust Agreement,
(i) the period from but excluding the Cut-Off Date to and including the first
day of the month in which the first Distribution Date occurs and (ii) each
period thereafter from and including the second day of a month to and
including the first day of the following month.
"ELIGIBLE ACCOUNT": Either (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company
the long-term or short-term unsecured debt obligations of which (or a
federal or state chartered depository institution or trust company that is the
principal subsidiary of a holding company the long-term or short-term unsecured
debt obligations of which), respectively, are rated by each Rating Agency in
one of its two highest long-term rating categories and its highest
short-term rating category at the time any amounts are held on deposit therein
or (ii) a trust account or accounts maintained with a federal or state
chartered depository institution or trust company, acting in the capacity of
a trustee, paying agent or master servicer, in a manner acceptable to each
Rating Agency in respect of mortgage pass-through certificates rated in one of
its two highest rating categories. Eligible Accounts may be
interest-bearing accounts or the funds therein may be invested in Permitted
Investments. If qualified under this definition, accounts maintained with the
Trustee may constitute Eligible Accounts.
"ERISA": The Employee Retirement Income Securities Act of 1974, as
amended.
"EVENT OF DEFAULT": An event with respect to the Master Servicer
described in Section 7.02 hereof.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.
"FINAL CERTIFICATION": A certification as to the completeness of
each Trustee Mortgage Loan File substantially in the form of Exhibit A-2
attached hereto provided by the Trustee (or the Custodian) on or before the
first anniversary of the Closing Date pursuant to Section 2.02(c) hereof.
"FINAL DISTRIBUTION DATE": The meaning set forth in Section 9.03
hereof.
4
"FISCAL YEAR": Unless otherwise provided in the Trust Agreement, the
fiscal year of the Trust shall run from January 1 (or from the Closing Date,
in the case of the first fiscal year) through the last day of December.
"FNMA GUIDELINES": The provisions contained in the guide for
selling and servicing first lien residential mortgage loans issued from time
to time by the Federal National Mortgage Association.
"FRAUD LOSSES": Losses on Mortgage Loans resulting from fraud,
dishonesty or misrepresentation in the origination of such Mortgage Loans.
"GROSS MARGIN": With respect to each ARM Loan, the fixed percentage
specified in the related Mortgage Note that is added to or subtracted from the
Index to determine the Mortgage Interest Rate for such ARM Loan.
"GUIDE": Unless otherwise provided in the Trust Agreement, the
SMI Seller/Servicer Guide, as supplemented and amended from time to time
through the Closing Date.
"HOLDERS": The holders of the Certificates as recorded on the
Certificate Register.
"HOME IMPROVEMENT LOAN": A mortgage loan that is made to finance
actions or items that substantially protect or improve the basic livability
or utility of a residential property and that is secured by a lien on such
residential property.
"INDEPENDENT CONTRACTOR": Either (i) any Person (other than the
Trustee or the Master Servicer) that would be an "independent contractor"
with respect to the Trust within the meaning of section 856(d)(3) of the Code
if the Trust were a real estate investment trust (except that, in applying
such section, more than 35% of the outstanding principal balance of any
Class shall be deemed to be more than 35% of the certificates of beneficial
interest of the Trust), so long as the Trust does not receive or derive any
income from such Person, the relationship between such Person and the Trust
is at arm's length and such Person is not an employee of the Trust, the Trustee
or the Master Servicer, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Trustee or the Master
Servicer) upon receipt by the Trustee of an Opinion of Counsel, the expense of
which shall constitute an Advance if borne by a Servicer or a subservicer,
to the effect that the taking of any action in respect of any REO Property by
such Person, subject to any conditions therein specified, that is otherwise
herein contemplated to be taken by an Independent Contractor will not cause
such REO Property to cease to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of section 860D(a) of the Code), or cause
any income realized in respect of such REO Property to fail to qualify as Rents
From Real Property.
"INDEX": With respect to each ARM Loan, the index rate specified in
the related Mortgage Note to which or from which the Gross Margin is added or
subtracted, in accordance with the terms of such Mortgage Note, to
determine the Mortgage Interest Rate for such ARM Loan.
"INITIAL CERTIFICATION": A certification as to the completeness of
each Trustee Mortgage Loan File substantially in the form of Exhibit A-1
attached hereto provided by the Trustee (or the Custodian) on the Closing
Date pursuant to Section 2.02(b) hereof.
"INITIAL MORTGAGE LOANS": Any of the Mortgage Loans listed on the
Mortgage Loan Schedule attached to the Trust Agreement.
"INITIAL OPTIONAL TERMINATION DATE": As defined in the Trust Agreement.
"INSURANCE PROCEEDS": The proceeds paid by any Insurer pursuant to
an insurance policy covering any Mortgage Loan, less the expenses of
recovering such proceeds and any Non-Recoverable Advances made with respect
to such Mortgage Loan.
"INSURER": Any issuer of an insurance policy relating to the Mortgage
Loans.
"INTEREST FUND": An Eligible Account that may be established for the
purpose of making interest payments on Mortgage Loans for which the Trust is
not due any payments until after the first Distribution Date. The amount
of the Interest Fund, if any, shall be set forth in the Trust Agreement.
The Interest Fund shall not be an asset of any REMIC but shall be for the
benefit of the Certificateholders.
5
"INTEREST SHORTFALL": Month End Interest Shortfall and Soldiers' and
Sailors' Shortfall.
"ISSUING REMIC": With respect to any Double REMIC Series, unless
otherwise provided in the Trust Agreement, the REMIC consisting primarily
of the Distribution Account and the Subaccounts of such Distribution Account.
"JUNIOR MORTGAGE LOAN": Any Mortgage Loan with respect to which
the related Security Instrument constitutes a lien of other than first
priority on the related Collateral.
"LETTER OF CREDIT": A letter of credit issued to the Trustee and its
successors or assigns by any Person whose long-term unsecured debt
obligations are rated by each Rating Agency in one of its two highest rating
categories.
"LIQUIDATION PROCEEDS": The proceeds received in connection with the
liquidation of any Mortgage Loan as a result of defaults by the related Borrower
(including any insurance or guarantee proceeds with respect to such Mortgage
Loan), less the expenses of such liquidation and any Advances made with respect
to such Mortgage Loan.
"LOAN TO VALUE RATIO": With respect to any Mortgage Loan, the
ratio that results when the Unpaid Principal Balance of such Mortgage Loan
is divided by the fair market value of the related Mortgaged Premises. For
purposes of determining that ratio, the fair market value of the Mortgage
Premises must be reduced by (i) the full amount of any lien on such Mortgaged
Premises that is senior to the Mortgage Loan and (ii) a pro rata portion of
any lien on such Mortgaged Premises that is in parity with the Mortgage Loan.
"MASTER SERVICER": The bank or mortgage banking company identified as
such in the Trust Agreement.
"MASTER SERVICER ADVANCE AMOUNT": The amount, if any, specified as such
in the Trust Agreement.
"MASTER SERVICER COMPENSATION": The Master Servicing Fee and any
additional compensation payable to the Master Servicer as specified in Section
6.05 hereof.
"MASTER SERVICER CUSTODIAL ACCOUNT": The account described in Section
3.01 hereof.
"MASTER SERVICER ERRORS AND OMISSIONS INSURANCE POLICY": If the Master
Servicer is not a national banking association, an insurance policy in an
amount and otherwise in form and substance acceptable under FNMA
Guidelines insuring the Master Servicer as the named insured against liability
for damages arising out of errors, omissions or mistakes committed in the
performance of the services and other obligations required of the Master
Servicer under the Trust Agreement and, if permitted by the issuer of such
policy, naming the Trustee as an additional insured, and containing a
severability of interests provision but no other exclusion or other
provision that would limit the liability of any insured to any other insured.
"MASTER SERVICER FIDELITY BOND": If the Master Servicer is not a
national banking association, a fidelity bond issued by an insurer and in
form and substance acceptable under FNMA Guidelines (i) under which such
insurer agrees to indemnify the Master Servicer for all losses sustained
as a result of any theft, embezzlement, fraud or other dishonest act on the
part of the Master Servicer's directors, officers or employees and (ii) which
provides for limits of liability for each such director, officer or employee
of not less than an amount required by such guidelines.
"MASTER SERVICER REMITTANCE DATE": Unless otherwise provided in
the Trust Agreement, (i) each Distribution Date, if the Asset Proceeds
Account and the Master Servicer Custodial Account are maintained at the same
bank, or (ii) the Business Day preceding each Distribution Date, if such
accounts are not maintained at the same bank.
"MASTER SERVICER REPORTING DATE": Unless otherwise provided in
the Trust Agreement, the close of business on the third Business Day
preceding each Distribution Date.
"MASTER SERVICING FEE": Unless otherwise provided in the Trust
Agreement, with respect to each Distribution Date and each Mortgage Loan,
an amount equal to one-twelfth of the Master Servicing Fee Rate multiplied
by the Scheduled Principal Balance of such Mortgage Loan as of the preceding Due
Date.
"MASTER SERVICING FEE RATE": The rate specified as such in the Trust
Agreement.
"MAXIMUM LIFETIME MORTGAGE INTEREST RATE": With respect to each ARM
Loan, the interest rate, if any, set forth in the related Mortgage Note as the
maximum Mortgage Interest Rate thereunder.
6
"MINIMUM LIFETIME MORTGAGE INTEREST RATE": With respect to each ARM
Loan, the interest rate, if any, set forth in the related Mortgage Note as the
minimum Mortgage Interest Rate thereunder.
"MONTH END INTEREST": With respect to any Mortgage Loan liquidated
or prepaid during a Prepayment Period, the difference between the interest
that would have been paid on such Mortgage Loan through the last day of the
month in which such liquidation or prepayment occurred and the interest
actually received by the Servicer with respect to such Mortgage Loan, in
each case net of the Servicing Fee applicable thereto. No Month End
Interest shall accrue with respect to a prepayment of a Mortgage Loan or to
Liquidation Proceeds received on account of any Mortgage Loan during the
period from the first day of a month through the last day of the Prepayment
Period ending during such month.
"MONTH END INTEREST SHORTFALL": The amount of Month End Interest
not paid by a Servicer or the Master Servicer.
"MONTHLY PAYMENT": With respect to any Mortgage Loan and any month,
the scheduled payment of principal and interest due in such month under the
terms of the related Mortgage Note.
"MONTHLY STATEMENT": The statement required to be prepared and
delivered to the Trustee by the Master Servicer on or before each Master
Servicer Reporting Date as described in Section 4.01 hereof.
"MORTGAGE INTEREST RATE": With respect to any Mortgage Loan, the
annual interest rate required to be paid by the related Borrower under the
terms of the related Mortgage Note.
"MORTGAGE LOAN": Any of the Single Family Loans, Multi-Family
Loans, Home Improvement Loans, or Cooperative Loans sold by Saxon to the
Trust and listed on the Mortgage Loan Schedule to the Trust Agreement or any
Subsequent Sales Agreement and any loans substituted therefor pursuant to the
terms of the Trust Agreement.
"MORTGAGE LOAN SCHEDULE": The schedule(s) of the Mortgage Loans
which are attached to the Trust Agreement, in the case of the Initial
Mortgage Loans, and to the Subsequent Sales Agreement(s) in the case of
Subsequent Mortgage Loans, and set forth for each Mortgage Loan (i) the
Servicer (Saxon) Loan Number, (ii) the Borrower's name, (iii) the original
principal balance, (iv) the Scheduled Principal Balance as of the Cut-Off
Date and (v) such additional information as may be reasonably requested by
the Trustee, the Master Servicer or any Certificate Insurer.
"MORTGAGE NOTE": The note or other evidence of indebtedness of a
Borrower with respect to a Mortgage Loan.
"MORTGAGED PREMISES": With respect to any Mortgage Loan other than a
Cooperative Loan, the real property or the leasehold interest, together with
any improvements thereon, securing the indebtedness of the Borrower under
such Mortgage Loan. With respect to any Cooperative Loan, the shares
issued by a cooperative housing corporation that secure the indebtedness of
the Borrower under such Cooperative Loan.
"MORTGAGOR BANKRUPTCY FUND": A fund consisting of: (i) a surety
bond, insurance policy, Letter of Credit, guarantee or other credit
instrument, issued by an insurance company, surety company, bank, trust
company, savings and loan association, financial institution or other Person
or (ii) cash, Permitted Investments or a Class of Certificates or portion
thereof held by or on behalf of the Trust. The Mortgagor Bankruptcy Fund will
not be considered an asset of the Trust or any REMIC, but shall
be for the benefit of the Certificateholders. The owner of the Mortgagor
Bankruptcy Fund will be identified in the Trust Agreement and, to the extent
provided in the REMIC Provisions, any amounts transferred by a REMIC to such
fund shall be treated as amounts distributed by such REMIC to the owner of such
fund.
"MORTGAGOR BANKRUPTCY LOSSES": Losses resulting from any court
ordered reduction in the valuation of the Collateral securing a Mortgage Loan
or changes in the repayment terms of a Mortgage Loan in conjunction with a
bankruptcy proceeding of a Borrower or otherwise.
"MULTI-FAMILY LOAN": A mortgage loan that is secured by a lien on
a rental apartment building, a cooperative housing corporation or a mixed
commercial and residential use property.
"NEGATIVE AMORTIZATION AMOUNT": With respect to each Mortgage
Loan, the excess, if any, of interest accrued at the related Mortgage
Interest Rate for any month over the greater of (i) the amount of the Monthly
Payment for such month and (ii) the interest received in respect of such month.
7
"NET RATE": Unless otherwise provided in the Trust Agreement, with
respect to each Mortgage Loan and Distribution Date, the related Mortgage
Interest Rate less the sum of the Servicing Fee Rate, the Master Servicing
Fee Rate, the Trustee Fee Rate and the Credit Enhancement Fee Rate relating
thereto.
"NEW LEASE": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed, modified or extended on behalf of the Trust
(if the Trustee, the Master Servicer, a Servicer or an agent of the
foregoing has the right to renegotiate the terms of such lease).
"NON-RECOVERABILITY CERTIFICATE": The meaning set forth in Section 3.04
hereof.
"NON-RECOVERABLE ADVANCE": Any Advance or proposed Advance that the
Master Servicer or the Trustee, as the case may be, has determined to be
non-recoverable in accordance with Section 3.04 hereof.
"NON-U.S. PERSON": A foreign person within the meaning of Treasury
regulation Section 1.860G-3(a)(1) (i.e., a person other than (i) a citizen or
resident of the United States, (ii) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, or (iii) an estate or trust that is subject to United States federal
income taxation regardless of the source of its income) who would be subject
to United States income tax withholding pursuant to section 1441 or 1442 of
the Code and the Treasury regulations thereunder on income derived from a
Residual Interest.
"OFFICER": With respect to the Trustee, Custodian, Paying Agent,
Certificate Registrar or Master Servicer, any senior vice president, any
vice president, any assistant vice president, any assistant treasurer, any
trust officer, any assistant secretary, or any other officer customarily
performing functions similar to those performed by the persons who at the
time shall be such officers, and also to whom, with respect to a particular
corporate trust matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject. With respect to any
other Person, the chairman of the board, the president, a vice president
(however designated), the treasurer or the controller of such Person.
"OPINION OF COUNSEL": A written opinion of counsel, who may be counsel
for Saxon or the Master Servicer, acceptable to the Trustee, the Certificate
Insurer and the Master Servicer. Except with the consent of each Rating
Agency and the Certificate Insurer, an Opinion of Counsel may not be delivered
by in-house counsel of the entity required to deliver such opinion.
"PASS-THROUGH RATE": With respect to each Class of Certificates, as to
each Distribution Date, the rate specified as such in the Trust Agreement.
"PAYING AGENT": The paying agent designated in the related Trust
Agreement or appointed pursuant to Section 5.08 hereof.
"PERCENTAGE INTEREST": With respect to any Certificate to which a
principal balance is assigned as of the Closing Date, the portion of the
Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance of such
Certificate and the denominator of which is the aggregate Certificate
Principal Balance of all the Certificates of such Class as of the Closing
Date. With respect to any Certificate to which a principal balance is not
assigned as of the Closing Date, the portion of the Class evidenced by such
Certificate, expressed as a percentage, as stated on the face of such
Certificate.
"PERMITTED INVESTMENTS": Except as otherwise provided in the Trust
Agreement, the following investments:
(a) direct obligations of, or obligations fully guaranteed
as to principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States;
(b) senior debt obligations and mortgage participation
certificates of the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation;
(c) repurchase obligations of a depository institution or
trust company (acting as principal) (the collateral for which is held
by a third party or the Trustee) with respect to any security described
in clauses (a) or (b) above, provided that the long-term or short-term
unsecured debt obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency in one of its
two highest long-term unsecured debt rating categories and its highest
short-term unsecured debt rating category;
8
(d) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company (including the Trustee)
incorporated under the laws of the United States or any state thereof,
provided that the long-term unsecured debt obligations of such
bank or trust company at the date of acquisition thereof have been
rated by each Rating Agency in one of its two highest long-term
unsecured debt rating categories and the short term unsecured debt
rating of such bank or trust company at the date of acquisition thereof
by each Rating Agency is the highest short term unsecured debt
rating by each Rating Agency;
(e) any other demand, money market or time deposit or
obligation, interest-bearing or other security or investment earning
a return in the nature of interest that would not adversely affect
the then current rating of the Certificates by any Rating Agency
(without regard to the existence of any Credit Enhancement); and
(f) any other investment approved by the Certificate Insurer;
provided, however, that no investment described above shall constitute a
Permitted Investment if such investment evidences either the right to receive
(i) only interest with respect to the obligations underlying such
instrument or (ii) both principal and interest payments derived from
obligations underlying such instrument if the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying obligations;
and, provided further, that no investment described above shall constitute
a Permitted Investment unless such investment matures on or before the
Business Day preceding the Distribution Date on which the funds invested
therein are required to be distributed (or, in the case of an investment
that is an obligation of the institution in which the account is maintained,
on or before such Distribution Date).
"PERSON": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"PLAN": Any "employee benefit plan" within the meaning of
Section 3(3) of ERISA, any retirement arrangement (including individual
retirement accounts, individual retirement annuities and Xxxxx plans), and any
collective investment funds, separate accounts, insurance company general
accounts and similar pooled investment funds in which such plans or
arrangements are invested, that are described in or subject to the Plan
Asset Regulations, ERISA or corresponding provisions of the Code.
"PLAN ASSET REGULATIONS": The United States Department of Labor
regulations set forth in 29 C.F.R. ss. 2510.3-101, as amended from time to
time.
"PLAN INVESTOR": Any Plan, any Person acting on behalf of a Plan or
any Person using the assets of a Plan, as determined under the Plan Asset
Regulations.
"POOLING REMIC": With respect to any Double REMIC Series, unless
otherwise provided in the Trust Agreement, the REMIC consisting primarily of
the Mortgage Loans and the Asset Proceeds Account.
"PRE-FUNDING ACCOUNT": An Eligible Account that may be established
with the Paying Agent for the purpose of providing for the purchase by the Trust
of Subsequent Mortgage Loans.
"PREPAYMENT PERIOD": The period specified in each Servicing Agreement
with respect to which prepayments or Liquidation Proceeds with respect to a
Mortgage Loan will be remitted on a Remittance Date.
"PRIVATE CERTIFICATE": Any Certificate designated as such in the Trust
Agreement.
"PRIVATE SUBORDINATED CERTIFICATE": Any Certificate designated as such
in the Trust Agreement.
"PUBLIC SUBORDINATED CERTIFICATE": Any Certificate designated as such
in the Trust Agreement.
"PURCHASE PRICE": With respect to each Mortgage Loan purchased from
the Trust, an amount equal to the Unpaid Principal Balance of such Mortgage
Loan, plus accrued and unpaid interest thereon at the related Mortgage Interest
Rate to the last day of the month in which such purchase occurs, and, if a
Servicer is the Purchaser, minus any unreimbursed Advances of principal and
interest made by such Servicer on such Mortgage Loan and any outstanding
Servicing Fee owed with respect to such Mortgage Loan.
9
"PURCHASER": The Person that purchases a Mortgage Loan from the Trust
pursuant to Section 2.03 hereof.
"QUALIFICATION DEFECT": With respect to a Mortgage Loan, (i) a
defective document in the Trustee Mortgage Loan File, (ii) the absence of a
document in the Trustee Mortgage Loan File, or (iii) the breach of any
representation, warranty or covenant with respect to such Mortgage Loan made
by a Seller, a Servicer or Saxon, but only if the affected Mortgage Loan would
cease to qualify as a "qualified mortgage" for purposes of the REMIC
Provisions. With respect to a Regular Interest or a mortgage certificate
described in section 860G(a)(3) of the Code, the failure to qualify as a
"qualified mortgage" for purposes of the REMIC Provisions.
"QUALIFIED INSTITUTIONAL BUYER": Any "qualified institutional buyer"
as defined in clause (a)(1) of Rule 144A.
"QUALIFIED SUBSTITUTE MORTGAGE LOAN": A mortgage loan substituted
by Saxon or a Seller for a Deleted Mortgage Loan that, on the date of such
substitution: (i) has an Unpaid Principal Balance not greater than the Unpaid
Principal Balance of the Deleted Mortgage Loan, (ii) has a Mortgage Interest
Rate not less than (and not more than one percentage point in excess of) the
Mortgage Interest Rate of the Deleted Mortgage Loan, (iii) has a Net Rate not
less than the Net Rate of the Deleted Mortgage Loan, (iv) has a remaining term
to maturity not later than one year prior to the "latest possible maturity
date" specified in the Trust Agreement, (v) has a Loan-to-Value Ratio as
of the first day of the month in which the substitution occurs equal to or
less than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such
date (in each case, using the fair market value at origination and after
taking into account the Monthly Payment due on such date), and (vi) complies
with each applicable representation, warranty, and covenant pertaining to
an individual Mortgage Loan set forth in the Trust Agreement, was
underwritten on the basis of credit underwriting standards at least as strict
as the credit underwriting standards used with respect to the Deleted
Mortgage Loan and, if a Seller is effecting the substitution, complies
with each applicable representation, warranty, or covenant pertaining to an
individual Mortgage Loan set forth in the related Sales Agreement or Subsequent
Sales Agreement; provided, however, that no ARM Loan may be substituted for
a Deleted Mortgage Loan unless such Deleted Mortgage Loan is also an ARM
Loan and, in addition to meeting the conditions set forth above, the ARM Loan
to be substituted, on the date of the substitution: (a) provides for a lowest
possible Net Rate that is not lower than the lowest possible Net Rate for the
Deleted Mortgage Loan and a highest possible Net Rate that is not lower than
the highest possible Net Rate for the Deleted Mortgage Loan, (b) has a
Gross Margin that is not less than the Gross Margin of the Deleted Mortgage
Loan, (c) has a Periodic Rate Cap not less than the Periodic Rate Cap on the
Deleted Mortgage Loan, (d) has a next interest adjustment date that is the
same as the next interest adjustment date for the Deleted Mortgage Loan or
occurs not more than two months prior to or two months later than the next
interest adjustment date for the Deleted Mortgage Loan, (e) does not have a
permitted increase or decrease in the Monthly Payment less than the permitted
increase or decrease applicable to the Deleted Mortgage Loan and (f) is not
convertible to a fixed Mortgage Interest Rate unless the Deleted Mortgage Loan
is so convertible. If more than one mortgage loan is substituted for one or
more Deleted Mortgage Loans, the amount described in clause (i) of the
preceding sentence shall be determined on the basis of aggregate Unpaid
Principal Balances, the rates described in clauses (ii) and (iii) of the
preceding sentence and clause (a) of the proviso to the preceding
sentence shall be determined on the basis of weighted average Mortgage
Interest Rates and Net Rates, as the case may be, the Gross Margins described
in clause (b) of the proviso to the preceding sentence shall be determined
on the basis of weighted average Gross Margins, and the interest adjustment
dates described in clause (d) of the proviso to the preceding sentence shall be
determined on the basis of weighted average interest adjustment dates. In
the case of a Trust for which a REMIC election has been or will be made, a
Qualified Substitute Mortgage Loan also shall satisfy the following criteria
as of the date of its substitution for a Deleted Mortgage Loan: (A) the
Borrower shall not be 59 or more days delinquent in payment on the Qualified
Substitute Mortgage Loan, (B) the Trustee Mortgage Loan File for such
Mortgage Loan shall not contain any material deficiencies in documentation
and shall include an executed Mortgage Note and a recorded Security
Instrument; (C) the Loan to Value Ratio of such Mortgage Loan must be 125%
or less on the date of origination of such Mortgage Loan or, if any of the
terms of such Mortgage Loan were modified other than in connection with a
default or imminent default on such Mortgage Loan, on the date of such
modification; (D) no property securing such Mortgage Loan may be subject
to foreclosure, bankruptcy, or insolvency proceedings; (E) such Mortgage Loan
must be secured by a valid lien on the related Mortgaged Premises; and (F)
shall otherwise constitute an eligible asset for a REMIC under the REMIC
Provisions.
10
"RATING AGENCY": Each nationally recognized statistical rating
agency specified in the Trust Agreement that, on the Closing Date, rated one or
more Classes of Certificates at the request of Saxon.
"REALIZED INTEREST SHORTFALL": With respect to any Mortgage Loan,
the amount by which the interest payable thereon exceeds the net amount
recovered (including Insurance Proceeds) in liquidation thereof, after
payment of expenses of liquidation and reimbursement of Advances made with
respect to such Mortgage Loan.
"REALIZED LOSS": With respect to any Mortgage Loan, an amount
equal to the sum of (i) the amount by which the Unpaid Principal Balance
thereof exceeds the net amount recovered in liquidation thereof (after payment
of expenses of liquidation and reimbursement of Advances), after payment of
accrued interest on such Mortgage Loan and after application of any Insurance
Proceeds with respect thereto, and (ii) any other types of principal loss with
respect to such Mortgage Loan, including, but not limited to, Mortgagor
Bankruptcy Losses, Special Hazard Losses and Fraud Losses.
"RECORD DATE": Unless otherwise provided in the Trust Agreement,
(i) with respect to the first Distribution Date, the Closing Date, and
(ii) with respect to each Distribution Date thereafter, the last Business
Day of the month preceding the month in which such Distribution Date occurs.
"RECORDATION REPORT": A report substantially in the form of Exhibit
B attached hereto provided by the Trustee (or the Custodian) pursuant to
Section 2.02 hereof identifying those Mortgage Loans for which a Security
Instrument or an Assignment remains unrecorded.
"REDEEMING PURCHASE": The purchase of all the Regular Certificates
issued by the Trust pursuant to Section 9.01 hereof.
"REDEMPTION ACCOUNT": An escrow account maintained by the Trustee
into which any Trust funds not distributed on a Distribution Date on which
a Redeeming Purchase is made are deposited. The Redemption Account shall be
an Eligible Account.
"REDEMPTION DATE": The date, if any, specified as such in the Trust
Agreement.
"REGULAR CERTIFICATE": A Certificate that represents a Regular
Interest or a combination of Regular Interests.
"REGULAR INTEREST": An interest in a REMIC that is designated as a
"regular interest" in such REMIC for purposes of the REMIC Provisions.
"REMIC": With respect to a Trust, each "real estate mortgage
investment conduit," within the meaning of the REMIC Provisions, relating to
such Trust.
"REMIC PROVISIONS": The provisions of the Code relating to "real
estate mortgage investment conduits," which provisions appear at sections
860A through 860G of the Code, related Code provisions, and regulations,
announcements and rulings thereunder, as the foregoing may be in effect from
time to time.
"REMITTANCE DATE": The date specified in the Servicing Agreement
as the date on which the related Servicer is to make the remittance required
by Section 3.01(b) hereof.
"REMITTANCE REPORT": A report (either a data file or hard copy) that
is prepared by the Master Servicer in accordance with Section 4.02 hereof and
contains the information specified in Exhibit C attached hereto.
"RENTS FROM REAL PROPERTY": With respect to any REO Property, gross
income of the character described in section 856(d) of the Code and the
Treasury regulations thereunder.
"REO DISPOSITION": The receipt by a Servicer of Insurance Proceeds
and other payments and recoveries (including Liquidation Proceeds) which a
Servicer recovers from the sale or other disposition of an REO Property.
"REO PROPERTY": A Mortgaged Premises acquired by a Servicer on behalf
of the Certificateholders through foreclosure or deed in lieu of foreclosure,
as further described in Section 3.08 hereof.
"REQUEST FOR RELEASE": A release signed by an Officer of a
Servicer in the form attached to the Servicing Agreement as Form 340 of the
Guide (or a similar certificate of the Master Servicer containing the same
information).
11
"RESERVE FUND": Unless otherwise provided in the Trust Agreement,
any fund in the Trust Estate other than (i) the Asset Proceeds Account or (ii)
any other fund that is expressly excluded from a REMIC.
"RESIDUAL CERTIFICATE": A Certificate that represents a Residual
Interest.
"RESIDUAL INTEREST": An interest in a REMIC that is designated as a
"residual interest" in such REMIC for purposes of the REMIC Provisions.
"RESIDUAL TRANSFEREE AGREEMENT": An agreement substantially in the form
of Exhibit G attached hereto.
"RULE 144A": Rule 144A promulgated by the SEC, as the same may be
amended from time to time.
"RULE 144A AGREEMENT": An agreement substantially in the form of
Exhibit D attached hereto.
"SALES AGREEMENT": The Sales Agreement identified in the Trust
Agreement.
"SAXON": Saxon Asset Securities Company, a Virginia corporation.
"SCHEDULED PRINCIPAL BALANCE": Unless otherwise provided in the
Trust Agreement, with respect to any Mortgage Loan as of any date of
determination, the scheduled principal balance thereof as of the Cut-Off
Date, increased by the Negative Amortization Amount, if any, with respect
thereto, and reduced by (i) the principal portion of all Monthly Payments due
on or before such determination date, whether or not paid by the Borrower or
advanced by a Servicer, the Master Servicer, the Trustee or an Insurer, (ii)
all amounts allocable to unscheduled principal payments received on or before
the last day of the Prepayment Period preceding such date of
determination, and (iii) without duplication, the amount of any Realized
Loss that has occurred with respect to such Mortgage Loan.
"SEC": The Securities and Exchange Commission and its successors.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SECURITY INSTRUMENT": With respect to any Mortgage Loan, the
mortgage, deed of trust, deed to secure debt, security deed, or other
instrument creating a first, second, or more junior lien on the Collateral
that secures the indebtedness of the Borrower under such Mortgage Loan.
"SELLER": With respect to each Mortgage Loan, SMI or any other
party other than Saxon that executes a Sales Agreement applicable to such
Mortgage Loan.
"SENIOR MORTGAGE LOAN": Any Mortgage Loan with respect to which
the related Security Instrument constitutes a lien of first priority on the
related Collateral.
"SERIES": A group of Certificates issued by the Trust.
"SERVICER": With respect to each Mortgage Loan, the Person
responsible for the servicing thereof in accordance with the Guide.
"SERVICER COMPENSATION": The Servicing Fee and any additional
compensation payable to the Servicer.
"SERVICING AGREEMENT": Any agreement between a Servicer and SMI or
Saxon relating to the servicing of Mortgage Loans which is in form and
substance satisfactory to the Master Servicer.
"SERVICING FEE": Unless otherwise provided in the Trust Agreement,
with respect to each Distribution Date and each Mortgage Loan, an amount equal
to one-twelfth of the applicable Servicing Fee Rate multiplied by the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the
preceding Due Period.
"SERVICING FEE RATE": The rate specified as such in the Trust
Agreement.
"SINGLE FAMILY LOAN": A mortgage loan that is secured by a first,
second, or more junior lien on a one- to four-family residential property.
"SMI": Saxon Mortgage, Inc., a Virginia corporation.
"SPECIAL HAZARD FUND": A fund consisting of: (i) a surety bond,
insurance policy, Letter of Credit, guarantee or other credit instrument
issued by an insurance company, surety company, bank, trust company, savings
and loan association, financial institution or other Person or (ii) cash,
Permitted Investments or a Class of Certificates or portion thereof held by
or on behalf of the Trust. The Special Hazard Fund will not be
considered an asset of any REMIC but shall be for the benefit of the
Certificateholders. The owner of the Special Hazard Fund will be identified
in the Trust Agreement and, to the extent provided in the REMIC
Provisions, any amounts transferred by a REMIC to such fund shall be treated
as amounts distributed by such REMIC to the owner of such fund.
12
"SPECIAL HAZARD INSURANCE POLICY": An insurance policy covering a
Mortgage Loan against (i) loss by reason of damage to Mortgaged Premises
caused by certain hazards not covered by any hazard insurance and (ii)
partial loss from damage to the Mortgaged Premises caused by reason of the
application of the coinsurance clause contained in any Hazard Insurance policy.
"SPECIAL HAZARD LOSSES": Losses on Mortgage Loans arising by reason
of damage to Mortgaged Premises not covered by hazard insurance, excluding
losses caused by war, nuclear reaction, nuclear or atomic weapons,
insurrection or normal wear and tear.
"SPECIAL TAX CONSENT": The written consent of the Holder of a
Residual Certificate to any tax (or risk thereof) arising out of a proposed
transaction or activity that may be imposed upon such Holder or that may
affect adversely the value of such Residual Certificate.
"SPECIAL TAX OPINION": An Opinion of Counsel that a proposed
transaction or activity will not (i) affect adversely the status of any REMIC
as a REMIC or of the Regular Interests as the "regular interests" therein
under the REMIC Provisions, (ii) affect the payment of interest or principal
on the Regular Interests or (iii) result in the encumbrance of the Mortgage
Loans by a tax lien.
"STANDARD TERMS": These Standard Terms, as amended or supplemented from
time to time.
"STATE": The jurisdiction specified in the Trust Agreement.
"SUBACCOUNT": With respect to any Double REMIC Series, each subaccount
of the Distribution Account that is deemed established by the Paying Agent
solely for purposes of the REMIC Provisions pursuant to Section 3.03(a) hereof.
"SUBSEQUENT CUT-OFF DATE": The time and date specified in a
Subsequent Sales Agreement with respect to those Subsequent Mortgage Loans
which are acquired by the Trust pursuant to such Subsequent Sales Agreement.
"SUBSEQUENT MORTGAGE LOANS": Any of the Mortgage Loans listed on a
Mortgage Loan Schedule attached to a Subsequent Sales Agreement.
"SUBSEQUENT SALES AGREEMENT": Each Subsequent Sales Agreement
executed by the Master Servicer (on behalf of itself and the Trustee), the
Seller and SMI by which Subsequent Mortgage Loans are sold to the Trust in
the form attached to the related Trust Agreement.
"SUBSTITUTION SHORTFALL": The meaning set forth in Section 2.03(h)
hereof.
"TAPRI CERTIFICATE": A certificate signed by the transferor of a
Residual Certificate stating whether such Certificate has "tax avoidance
potential" as defined in Treasury regulations section 1.860G-3(a)(2).
"TAX MATTERS PERSON": The Person or Persons designated from time to
time under the Trust Agreement to act as the "tax matters person" (within the
meaning of the REMIC Provisions) of a REMIC.
"TITLE INSURANCE POLICY": A title insurance policy insuring the
title to Mortgaged Premises for the benefit of the holder of the related
Mortgage Note.
"TRANSFEREE AGREEMENT": An agreement substantially in the form of
Exhibit E attached hereto.
"TREASURY": The United States Treasury Department.
"TRUST": The trust formed pursuant to the Trust Agreement.
"TRUST AGREEMENT": The Trust Agreement among Saxon, the Master
Servicer and the Trustee relating to the issuance of Certificates and into
which these Standard Terms are incorporated by reference.
13
"TRUST ESTATE": The segregated pool of assets transferred and
assigned and to be transferred and assigned to the Trustee for the benefit of
the Certificateholders by Saxon pursuant to the conveyance clause of the
Trust Agreement.
"TRUSTEE": The bank or trust company identified as the Trustee in the
Trust Agreement.
"TRUSTEE FEE": Unless otherwise provided in the Trust Agreement, with
respect to each Distribution Date and each Mortgage Loan, an amount equal
to one-twelfth of the Trustee Fee Rate multiplied by the Scheduled
Principal Balance of such Mortgage Loan as of the first day of the preceding Due
Period.
"TRUSTEE FEE RATE": The rate specified as such in the Trust Agreement.
"TRUSTEE MORTGAGE LOAN FILE": With respect to each Cooperative Loan,
the file containing the documents specified in the Trust Agreement. With
respect to each Mortgage Loan that is not a Cooperative Loan, unless
otherwise specified in the Trust Agreement, the file containing the following
documents, together with any other Mortgage Loan Documents held by the Trustee
or the Custodian with respect to such Mortgage Loan:
(a) the original Mortgage Note, endorsed in blank or to the
Trustee or the Custodian with all prior and intervening
endorsements as may be necessary to show a complete chain of
endorsements from the originator and any related power of
attorney, surety or guaranty agreement, Note Assumption Rider
or buydown agreement;
(b) the original recorded Security Instrument with evidence of
recordation noted thereon or attached thereto, together with
any addenda or riders thereto, or a copy of such recorded
Security Instrument with such evidence of recordation
certified to be true and correct by the appropriate
governmental recording office, or, if such original Security
Instrument has been submitted for recordation but has not
been returned from the applicable public recording office,
a photocopy of such Security Instrument certified by an
Officer of the Servicer or by the title insurance company
providing title insurance in respect of such Security
Instrument, the closing/settlement - escrow agent or the
closing attorney to be a true and correct copy of the original
Security Instrument submitted for recordation;
(c) each original recorded intervening assignment of the Security
Instrument as may be necessary to show a complete chain of
title from the originator to the related Servicer, Trustee
or Custodian, as applicable, with evidence of recordation
noted thereon or attached thereto, or a copy of such assignment
with such evidence of recordation certified to be true and
correct by the appropriate governmental recording office or,
if any such Assignment has been submitted for recordation but
has not been returned from the applicable public recording
office or is not otherwise available, a copy of such certified
by an Officer of the Servicer to be a true and correct copy of
the recorded assignment or the assignment submitted for
recordation;
(d) if an assignment of the Security Instrument to the related
Servicer has been recorded or sent for recordation, an original
assignment of the Security Instrument from such Servicer in
blank or to the Trustee or the Custodian in recordable form;
(e) in the case of a Mortgage Loan that is not identified in the
Mortgage Loan Schedule as a Junior Mortgage Loan of the type
described below, an original Title Insurance Policy,
Certificate of Title Insurance or a written commitment to
issue a Title Insurance Policy or Certificate of Title
Insurance or a copy of a Title Insurance Policy or
Certificate of Title Insurance certified as true and correct
by the applicable Insurer and, in the case of a Mortgage
Loan identified as a Junior Mortgage Loan with a
principal balance of $50,000 or less, a representation of
the Seller in the Sales Agreement that (i) the related senior
mortgage loan is held by an institutional lender such as a
bank, other financial institution or mortgage company and
(ii) the Seller has determined based on a review of a
property profile or title report acceptable to such Seller that
the Borrower has valid title to the Mortgaged Premises;
14
(f) if indicated on a Schedule to the Trust Agreement or a
Subsequent Sales Agreement (or otherwise received by the
Trustee or the Custodian), the original or certified copies
of each assumption agreement, modification agreement, written
assurance or substitution agreement, if any; and
(g) any other items required by the Rating Agencies as a
condition to their provision of written confirmation that the
ratings on the rated Certificates will not be downgraded
(without regard to any Certificate Guaranty Insurance Policy) or
required by the Certificate Insurer.
"UCC": The Uniform Commercial Code, as in effect in the State from time
to time.
"UNPAID PRINCIPAL BALANCE": With respect to any Mortgage Loan, the
outstanding principal balance thereof payable by the Borrower under the terms
of the related Mortgage Note.
"U.S. PERSON": A Person other than a Non-U.S. Person.
"VOTING RIGHTS": The portion of the voting rights of all the
Certificates that is allocated to any Certificate. Unless otherwise provided
in the Trust Agreement, (i) if any Class of Certificates does not have a
Certificate Principal Balance or has an initial Certificate Principal Balance
that is less than or equal to 1% of the aggregate Certificate Principal
Balance of all the Certificates, then 1% of the Voting Rights shall be
allocated to each Class of such Certificates and the balance of the Voting
Rights shall be allocated among the remaining Classes of Certificates in
proportion to their respective Certificate Principal Balances following the
most recent Distribution Date, and (ii) if no Class of Certificates has an
initial Certificate Principal Balance that is less than 1% of the aggregate
Certificate Principal Balance of all the Certificates, then all the Voting
Rights shall be allocated among all the Classes of Certificates in
proportion to their respective Certificate Principal Balances following the
most recent Distribution Date. Voting Rights allocated to each Class of
Certificates shall be allocated in proportion to the respective Percentage
Interests of the Holders thereof.
"WITHHOLDING AGENT": The Paying Agent or any other person who is
liable to withhold federal income tax from a distribution on a Residual
Certificate under section 1441 or 1442 of the Code and the Treasury regulations
thereunder.
SECTION 1.02. SECTION REFERENCES; CALCULATIONS; RATINGS; CONSENTS
(a) Unless otherwise specified herein, all references in these
Standard Terms to sections shall mean sections contained in these Standard
Terms.
(b) Unless otherwise provided in the Trust Agreement, all
calculations described herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months.
(c) Unless otherwise provided in the Trust Agreement, all
references herein to any long-term rating category of a Rating Agency shall
mean such rating category without regard to any plus or minus or numerical
designation.
(d) Whenever the consent of any Person is required hereunder,
such Person shall not be entitled to withhold its consent unreasonably.
15
SECTION 1.03. CERTAIN MATTERS RELATING TO ANY CERTIFICATE INSURANCE
POLICY
(a) The Trustee shall surrender any Certificate Insurance
Policy to the Certificate Insurer for cancellation upon termination of the
Trust pursuant to the applicable provisions of the Trust Agreement.
(b) Saxon makes the representations and warranties set forth in
Section 2.04 and the Master Servicer makes the representations and warranties
set forth in Section 2.05 to the Certificate Insurer.
(c) All notices, statements, reports, certificates or opinions
required by the Trust Agreement to be sent to any party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer. Any such
opinions shall be given by counsel reasonably acceptable to the Certificate
Insurer. The Trust and the Trustee shall make available to the Certificate
Insurer their books and records, during normal business hours, for the
purpose of copying and inspecting any information about the Certificates,
the Trust Estate or the Certificateholders.
(d) The Certificate Insurer shall be entitled to indemnification
pursuant to Section 5.05 and 6.01 hereof and to security or indemnity pursuant
to Section 5.06 hereof to the same extent as the parties named in those
Sections.
(e) Unless a Certificate Insurer Default exists and is continuing:
(i) The Certificate Insurer shall be entitled to exercise
the Voting Rights, other than with respect to amendments to the
Trust Agreement pursuant to Section 11.01 hereof requiring the
consent of Certificateholders, of any Class of the Certificates
which are covered by a Certificate Guaranty Insurance Policy
issued by such Certificate Insurer and the Certificateholders may
not exercise such rights without the prior written consent of the
Certificate Insurer.
(ii) the Certificate Insurer shall have the right to
institute any suit, action or proceeding in equity or at law upon or
under or with respect to the Trust Agreement if it previously shall
have given the Trustee a written notice of default and of the
continuance thereof and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby and the Trustee,
for 15 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such
action, suit or proceeding;
(iii) the Certificate Insurer's prior written consent
will be required (A) to remove any Trustee, Custodian, Master
Servicer or Servicer, (B) to appoint any successor Trustee, Custodian,
Master Servicer or Servicer or (C) to amend the Agreement or the Guide;
(iv) the Certificate Insurer may give notice to the Master
Servicer and the Trustee with respect to Events of Default and may
direct the Trustee to give any notice pursuant to Section 7.02(a)
hereof or to exercise any right to remove any Trustee, Custodian,
Master Servicer or Servicer;
(v) the Trustee shall not exercise the right, without
the prior written consent of the Certificate Insurer (A) to consent
to the resignation of the Master Servicer pursuant to Section 6.04
hereof or any assignment or delegation of duties pursuant to
Section 6.06 hereof; (B) consent to the resignation of the Servicer
pursuant to the Servicing Agreement; (B) to undertake any
litigation pursuant to the Agreement; (C) to exercise any of the
remedies set forth in Section 7.01 or Section 7.02 hereof; or (v) to
agree to any amendment to any Sales Agreement (or the transfer or
assignment thereof), any Servicing Agreement or the Custody Agreement;
and
(vi) the Trustee shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve
or enforce the Certificate Insurer's rights or interests hereunder
or under the Trust Agreement without limiting the rights or
affecting the interests of the Holders as otherwise set forth herein
or under the Trust Agreement.
(f) Whenever reference is made in these Standard Terms, the Trust
Agreement or the Certificates to "on behalf of the Certificateholders (and
for the exclusive use and benefit of all present and future
Certificateholders)", "the benefit of the Certificateholders", or "for the
benefit of the Certificateholders", such references shall be deemed to
include the Certificate Insurer, and references to "the interest of the
Trust", "an adverse effect on the Certificateholders or the Trust" or "the
interests of the Certificateholders" shall be deemed to include the Certificate
Insurer.
(g) This Section 1.03 and references to Certificate Insurer in
the Standard Terms shall be deemed to be deleted with respect to any Trust
Agreement if a Certificate Guaranty Insurance Policy is not issued with
respect to one or more Classes of Certificates issued pursuant thereto.
ARTICLE II
MORTGAGE LOAN FILES
SECTION 2.01. MORTGAGE LOAN FILES
(a) Pursuant to the Trust Agreement, Saxon has sold to the
Trustee, for the benefit of the Certificateholders without recourse all
the right, title and interest of Saxon in and to the Initial Mortgage Loans,
any and all rights, privileges and benefits accruing to Saxon under the Sales
Agreement and Servicing Agreement with respect to the Initial Mortgage Loans
(except, in the case of the Sales Agreement, any rights of Saxon to fees and
indemnification by the Seller under such Agreement), including the rights
and remedies with respect to the enforcement of any and all representations,
warranties and covenants under such agreements, and all other agreements and
assets included or to be included in the Trust for the benefit of the
Certificateholders as set forth in the conveyance clause of the Trust
Agreement. Such sale includes all Saxon's rights to Monthly Payments on the
Initial Mortgage Loans due after the Cut-Off Date, and all other payments
of principal (and interest) made on or after the Cut-Off Date that are
reflected in the initial aggregate Certificate Principal Balance of the
Certificates issued pursuant to the Trust Agreement (other than amounts
deposited in a Pre-Funding Account).
16
In connection with such sale, Saxon shall deliver, or cause to be
delivered, to the Trustee or the Custodian on or before the Closing Date, a
Trustee Mortgage Loan File with respect to each Initial Mortgage Loan. If
any Security Instrument or assignment of a Security Instrument to the related
Servicer, the Trustee, or the Custodian, as applicable, or any intervening
assignment is in the process of being recorded on the Closing Date, Saxon shall
cause each such original recorded document, or a certified copy thereof, to be
delivered to the Custodian promptly following its recordation. Saxon also
shall cause to be delivered to the Custodian any other original Mortgage Loan
Documents to be included in the Trustee Mortgage Loan File if a copy thereof
initially was delivered.
Saxon has delivered or caused to be delivered to each Servicer, on or
before the Closing Date, a Servicer File with respect to each Initial Mortgage
Loan serviced by such Servicer. All such documents shall be held by such
Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders.
(b) Pursuant to the Trust Agreement, Saxon may sell to the
Trustee, for the benefit of the Certificateholders without recourse all the
right, title and interest of Saxon in and to the Subsequent Mortgage Loans,
any and all rights, privileges and benefits accruing to Saxon under the
Subsequent Sales Agreements and the Servicing Agreement with respect to
the Mortgage Loans (except, in the case of the Subsequent Sales
Agreement, any rights of Saxon to fees and indemnification by the Seller
under such Agreement), including the rights and remedies with respect to the
enforcement of any and all representations, warranties and covenants under
such agreements, and all other agreements and assets included or to be
included in the Trust for the benefit of the Certificateholders as set forth
in the conveyance clause of the Trust Agreement. Any such sale shall include
all Saxon's rights to Monthly Payments on the Subsequent Mortgage Loans due
after the applicable Subsequent Cut-Off Date, and all other payments of
principal (and interest) made on or after the applicable Subsequent Cut-Off
Date that are reflected in the purchase price therefor.
In connection with any such sale, Saxon shall deliver, or cause to
be delivered, to the Trustee or the Custodian on or before the applicable
Subsequent Sales Date, a Trustee Mortgage Loan File with respect to each
Mortgage Loan. If any Security Instrument or assignment of a Security
Instrument to the related Servicer, the Trustee, or the Custodian, as
applicable, or any intervening assignment is in the process of being recorded
on the applicable Subsequent Sales Date, Saxon shall cause each such original
recorded document, or a certified copy thereof, to be delivered to the
Custodian promptly following its recordation. Saxon also shall cause to be
delivered to the Custodian any other original Mortgage Loan Documents to be
included in the Trustee Mortgage Loan File if a copy thereof initially was
delivered.
Saxon will deliver or cause to be delivered to each Servicer, on or
before the applicable Subsequent Sales Date, a Servicer File with respect to
each Mortgage Loan serviced by such Servicer. All such documents shall be
held by such Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders.
SECTION 2.02. ACCEPTANCE BY THE TRUSTEE
(a) By its execution of the Trust Agreement, each of the Trustee
and the Custodian acknowledges and declares that it holds and will hold or
has agreed to hold all documents delivered to it from time to time with
respect to each Mortgage Loan and all assets included in the Trust Estate
in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee represents and warrants that (i) it acquired
the Initial Mortgage Loans, and will acquire Subsequent Mortgage Loans, on
behalf of the Trust from Saxon in good faith, for value and without actual
notice or actual knowledge of any adverse claim, lien, charge, encumbrance or
security interest (including, but not limited to, federal tax liens or
liens arising under ERISA) (it being understood that the Trustee has not
undertaken, and will not undertake, searches (lien records or otherwise) of
any public records), (ii) except as permitted in the Trust Agreement, it has
not and will not, in any capacity, assert any claim or interest in the Mortgage
Loans and will hold (or its agent will hold) such Mortgage Loans and the
proceeds thereof in trust pursuant to the terms of the Trust Agreement and
(iii) it has not encumbered or transferred its right, title or interest in the
Mortgage Loans.
17
(b) The Custodian shall deliver to Saxon, the Trustee and the
Master Servicer, on the Closing Date with respect to the Initial Mortgage
Loans and on each Subsequent Sale Date with respect to the related
Subsequent Mortgage Loans, an Initial Certification certifying that, except
as specifically noted on a schedule of exceptions thereto and subject to its
review as herein provided, it is in possession of a Trustee Mortgage Loan
File for each such Mortgage Loan that includes each of the documents
required to be included therein. Before delivering the Initial Certification,
the Custodian shall have examined each Trustee Mortgage Loan File to confirm
that (except as specifically noted on a schedule of exceptions thereto):
(i) except for the endorsement required pursuant to clause
(a) of the definition of Trustee Mortgage Loan File, the Mortgage
Note, on the face or the reverse side thereof, does not contain
evidence of any unsatisfied claims, liens, security interests,
encumbrances or restrictions on transfer;
(ii) the Mortgage Note bears an endorsement (which
appears to be an original) as required pursuant to clause (a) of the
definition of Trustee Mortgage Loan File;
(iii) all documents required to be contained in the
Trustee Mortgage Loan File are in its possession or in the possession
of a Custodian on its behalf;
(iv) such documents have been reviewed by it, or by a
Custodian on its behalf, and appear regular on their face and relate
to such Mortgage Loan; and
(v) based on its examination, or the examination by a
Custodian on its behalf, and only as to the foregoing documents, the
information set forth on the Mortgage Loan Schedule accurately reflects
the information set forth in the Trustee Mortgage Loan File.
It is understood that, before delivering the Initial Certification,
the Custodian shall examine the Mortgage Loan Documents to confirm that:
(A) each Mortgage Note and Security Instrument bears a
signature or signatures that appear to be original and that purport to be that
of the Person or Persons named as the maker and mortgagor/trustor or, if
photocopies are permitted under the definition of Trustee Mortgage Loan
File, that such copies bear a reproduction of such signature or signatures;
(B) except for the endorsement required pursuant to clause
(a) of the definition of Trustee Mortgage Loan File, neither the Security
Instrument nor any assignment, on the face or the reverse side thereof,
contains evidence of any unsatisfied claims, liens, security interests,
encumbrances or restrictions on transfer;
(C) the principal amount of the indebtedness secured by the
Security Instrument is identical to the original principal amount of the
Mortgage Note;
(D) the assignment of the Security Instrument from the
Seller is in the form required pursuant to clause (c) of the definition of
Trustee Mortgage Loan File and bears a signature or signatures that appear to
be original and that purport to be that of the Seller and any other
necessary party or, if photocopies are permitted under the definition of
Trustee Mortgage Loan File, that such copies bear a reproduction of such
signature or signatures;
(E) if intervening assignments are to be included in the
Trustee Mortgage Loan File, each such intervening assignment bears a
signature or signatures that appear to be original and that purport to be that
of the Mortgagee and/or the assignee (and any other necessary party) or, if
photocopies are permitted under the definition of Trustee Mortgage Loan File,
that such copies bear a reproduction of such signature or signatures;
(F) if either a Title Insurance Policy, a Certificate
of Title Insurance or a written commitment to issue a Title Insurance
Policy is delivered, the address of the real property set forth in such
policy, report or written commitment is substantially identical to the
address of the real property contained in the Security Instrument; and
(G) if a Title Insurance Policy or Certificate of Title
Insurance is delivered with respect to a Mortgage Loan, such policy or
certificate: (i) is for an amount not less than the original principal amount
of the related Mortgage Note and (ii) insures (x) in the case of a
Senior Mortgage Loan, that the Security Instrument constitutes a valid
first lien, senior in priority to all other related deeds of trust,
mortgages, deeds to secure debt, financing statements and security agreements
and to any related mechanic's liens, judgment liens or writs of attachment
and (y) in the case of a Junior Mortgage Loan, that the Security
Instrument constitutes a valid second or more junior lien, senior in
priority to any related mechanic's liens, judgment liens or writs of
attachment but subordinate in priority to certain related deeds of trust,
mortgages, deeds to secure debt, financing statements and security
agreements with respect to the related Collateral of higher priority (or, if
a written commitment to issue a Title Insurance Policy is delivered with
respect to a Mortgage Loan, such written commitment obligates the insurer to
issue such policy for an amount not less than the original principal amount of
the related Mortgage Note).
18
(c) Prior to the first anniversary of the Closing Date, the
Custodian shall deliver to Saxon and the Master Servicer a Final Certification
evidencing the completeness of the Trustee Mortgage Loan File for each
Mortgage Loan, with any applicable exceptions noted on such certification.
(d) In delivering each of the certifications required above, the
Custodian shall be under no duty or obligation (i) to inspect, review or
examine any such documents, instruments, securities or other papers to
determine that they or the signatures thereon are genuine, enforceable, or
appropriate for the represented purpose or that they have actually been
recorded or that they are other than what they purport to be on their face or
that any document that appears to be an original is in fact an original or
(ii) to determine whether any Trustee Mortgage Loan File should include any
power of attorney, surety or guaranty agreement, note assumption rider,
buydown agreement, assumption agreement, modification agreement, written
assurance or substitution agreement.
(e) On or before the fifth Business Day of each third month,
commencing the fourth month following the month in which the Closing Date
occurs, the Custodian shall deliver to the Seller a Recordation Report, dated
as of the first day of such month, identifying those Mortgage Loans for
which it has not yet received (i) an original recorded Security Instrument
or a copy thereof certified to be true and correct by the public recording
office in possession of such Security Instrument, (ii) an original recorded
assignment of the Security Instrument to the related Servicer, the Trustee or
the Custodian, as applicable, and any required intervening assignments or
copies thereof, in each case, certified to be a true and correct copy by
the public recording office in possession of such assignment, or (iii) if
an assignment of the Security Instrument to the related Servicer has been
recorded or sent for recordation, an original assignment of the Security
Instrument from such Servicer in blank or to the Trustee or the Custodian in
recordable form.
(f) The Trustee may, in accordance with Section 8.11 hereof,
appoint one or more Custodians to hold the Trustee Mortgage Loan Files on
its behalf and to review the Trustee Mortgage Loan Files as provided in this
Section 2.02. Saxon shall, upon notice of the appointment of a Custodian,
deliver or cause to be delivered all documents to such Custodian that would
otherwise be delivered to the Trustee. In such event, the Trustee shall obtain
from each such Custodian will deliver, within the specified times, the
Initial Certifications, Final Certifications, and Recordation Reports with
respect to the Mortgage Loans held and reviewed by such Custodian to Saxon and
the Master Servicer in satisfaction of the Trustee's obligation to prepare
such certifications and reports. The Trustee shall notify the Custodian of
any notices delivered to the Trustee with respect to the Trustee Mortgage
Loan Files held by the Custodian.
SECTION 2.03. PURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY A SELLER, A
SERVICER OR SAXON
(a) SELLER BREACH. Upon discovery or notice of any defective
document in a Trustee Mortgage Loan File or of any breach by a Seller of any
of its representations, warranties or covenants under a Sales Agreement,
which defect or breach materially and adversely affects the value of any
Mortgage Loan or the interest of the Trust therein (it being understood
that any such defect or breach shall be deemed to have materially and
adversely affected the value of such Mortgage Loan or the interest of the
Trust therein if the Trust incurs a loss as a result of such defect or
breach), the Custodian or the Trustee shall promptly notify the Master
Servicer of such defect or breach and direct the Master Servicer to request
that the Seller of such Mortgage Loan cure such defect or breach and, if
such Seller does not cure such defect or breach in all material respects
within 60 days from the date on which it is notified of such defect or
breach, to enforce such Seller's obligation under the Sales Agreement to
purchase such Mortgage Loan from the Trustee. In lieu of purchasing any such
Mortgage Loan as provided above, if so provided in the Sales Agreement, the
Seller may cause such Mortgage Loan to be removed from the Trust (in which case
it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(h) hereof. Notwithstanding the
foregoing, if such defect or breach is or results in a Qualification Defect,
such cure, purchase or substitution must take place within 75 days of the
Defect Discovery Date. It is understood and agreed that enforcement of the
obligation of the Seller to cure, purchase or substitute for any Mortgage Loan
as to which a material defect in a constituent document exists or as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such defect or breach available to the Trustee on behalf
of the Certificateholders; provided, however, that such provision shall
not limit the indemnification provisions of Section 8.05 hereof or of any Sales
Agreement.
19
(b) SERVICER BREACH. In addition to taking any action required
pursuant to Section 7.01, upon discovery or notice of any breach by a
Servicer of any representation, warranty or covenant under the Servicing
Agreement which materially and adversely affects the value of any Mortgage
Loan or the interest of the Trust therein (it being understood that any such
breach shall be deemed to have materially and adversely affected the value of
such Mortgage Loan or the interest of the Trust therein if the Trust incurs
a loss as a result of such breach), the Trustee shall promptly notify the
Master Servicer of such breach and direct the Master Servicer to request that
the Servicer of such Mortgage Loan cure such breach and, if such Servicer
does not cure such breach in all material respects within 60 days from the
date on which it is notified of such breach, to enforce the obligation of
such Servicer under the Servicing Agreement to purchase such Mortgage
Loan from the Trustee. Notwithstanding the foregoing, if such breach results
in a Qualification Defect, such cure or purchase must take place within 75 days
of the Defect Discovery Date.
If a Seller has breached a representation or warranty under a Sales
Agreement that is substantially identical to a representation or warranty
breached by a Servicer, the Master Servicer shall first proceed against such
Seller. If such Seller does not, within 60 days after notification of the
breach, take steps to cure such breach or purchase or substitute for the
Mortgage Loan, the Master Servicer shall enforce the obligation of such
Servicer under the Servicing Agreement to cure such breach or purchase
the Mortgage Loan from the Trust as provided in this Section 2.03(b).
Except as specifically set forth herein, the Trustee shall have
no responsibility to enforce any provision of the Sales Agreement or
Servicing Agreements assigned to it hereunder, to oversee compliance
therewith, or to take notice of any breach or default thereunder. No
successor servicer shall have any obligation to repurchase a Mortgage Loan
except to the extent specifically set forth in the Servicing Agreement signed
by such successor servicer.
(c) SAXON BREACH. Within 90 days of the earlier of discovery or
receipt of notice by Saxon of the breach of any of its representations or
warranties set forth in Section 2.04 hereof with respect to any Mortgage Loan,
which breach materially and adversely affects the value of such Mortgage Loan
or the interest of the Trust therein (it being understood that any such breach
shall be deemed to have materially and adversely affected the value of such
Mortgage Loan or the interest of the Trust therein if the Trust incurs a loss
as a result of such breach), Saxon shall (i) cure such breach in all material
respects, (ii) purchase such Mortgage Loan from the Trustee, or (iii)
remove such Mortgage Loan from the Trust (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in Section
2.03(h) hereof. Notwithstanding the foregoing, if such breach results in a
Qualification Defect, such cure, purchase or substitution must take place within
75 days of the Defect Discovery Date.
(d) ASSIGNMENT FAILURE. If an Assignment of a Security
Instrument to the related Servicer, the Trustee, or the Custodian, as
applicable, as required pursuant to the definition of Trustee Mortgage Loan
File has not been recorded within one year of the Closing Date, the Master
Servicer shall enforce the related Servicer's obligation set forth in the
related Servicing Agreement either to (i) purchase the related Mortgage Loan
from the Trustee on behalf of the Certificateholders or (ii) if there have
been no defaults in the Monthly Payments on such Mortgage Loan, deposit an
amount equal to the Purchase Price of such Mortgage Loan into an escrow
account maintained by the Paying Agent (which account shall not be an asset of
the Trust or any REMIC) as required by the related Servicing Agreement. Any
such amounts deposited to an escrow account, plus any earnings thereon, shall
(i) be released to the related Servicer upon receipt by the Trustee of
satisfactory evidence that an Assignment has been recorded in the name of such
Servicer, the Trustee, or the Custodian, as applicable, as required
pursuant to the definition of Trustee Mortgage Loan File (and, if the
Assignment has been recorded in the name of the Servicer, satisfactory
evidence that an original Assignment from such Servicer in blank or to the
Trustee or the Custodian in recordable form has been deposited into the
Trustee Mortgage Loan File) or (ii) be applied to purchase the related Mortgage
Loan if the Master Servicer notifies the Trustee that there has been a default
thereon. Any amounts in the escrow account may be invested in Permitted
Investments at the written direction of the Master Servicer.
20
(e) CONVERTED MORTGAGE LOANS. Upon receipt of written notice from
the Servicer of the conversion of any ARM Loan to a Converted Mortgage Loan,
the Master Servicer shall enforce the Servicer's obligation, if any, set
forth in the Servicing Agreement or the Seller's obligation, if any, set
forth in the Sales Agreement to purchase such Converted Mortgage Loan from
the Trustee. If the Servicer or the Seller defaults upon its obligation
to purchase any Converted Mortgage Loan, and such default remains
unremedied for a period of five Business Days after written notice of such
default shall have been given by the Master Servicer to the Servicer or the
Seller, as applicable, then the Master Servicer shall use its best efforts
to cause such Converted Mortgage Loan to be sold for settlement on the last
day of any month to any Person which the Master Servicer may in its sole
discretion select. The Master Servicer shall not cause a Converted
Mortgage Loan to be sold or otherwise transferred to a Person other than
the Servicer or the Seller (or any other Person who has a preexisting
obligation to purchase such Mortgage Loan) unless (i) upon such sale or
other transfer the Trust would receive a net amount at least equal to the
Purchase Price and (ii) if the Purchase Price exceeds the Basis Limit Amount,
the Master Servicer receives an Opinion of Counsel (which Opinion of Counsel
will not be an expense of the Master Servicer or the Trustee) that such sale
or other transfer will not result in the imposition of a "prohibited
transaction" tax (as such term is defined in the Code) on the related REMIC or
jeopardize its status as a REMIC. Any such Converted Mortgage Loan which is
not purchased by the Servicer or the Seller and which the Master Servicer is
unable to sell shall remain in the Trust.
(f) DELINQUENT MORTGAGE LOANS. Saxon may, but is not obligated to,
purchase any Mortgage Loan that is delinquent in payment by 90 days or more for
a price equal to the greater of the Purchase Price for such Mortgage Loan or
the fair market value thereof at the time of purchase.
(g) PURCHASE PRICE. Unless otherwise provided in the Trust
Agreement, the purchase of any Mortgage Loan from the Trust pursuant to this
Section 2.03 shall be effected for the related Purchase Price. If the
Purchaser is a Servicer, the Purchase Price shall be deposited into its
Servicer Custodial Account. If the Purchaser is other than the Servicer, the
Purchase Price shall be deposited into the Master Servicer Custodial
Account. Within five Business Days of its receipt of such funds or
certification by the Master Servicer that such funds have been deposited in
the appropriate Servicer Custodial Account or in the Master Servicer
Custodial Account, the Trustee shall release or cause to be released to the
Purchaser the related Trustee Mortgage Loan File and the related Servicer
File and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, in form as presented by the Purchaser and
satisfactory to the Trustee, as shall be necessary to vest in the Purchaser
title to any Mortgage Loan released pursuant hereto and the Trustee shall have
no further responsibility with regard to such Trustee Mortgage Loan File or
Servicer File. The Master Servicer shall use its best efforts to cause the
Servicer of any Deleted Mortgage Loan to release to the Purchaser the
Servicer File relating thereto.
(h) SUBSTITUTION. Unless otherwise provided in the Trust
Agreement, the right to substitute a Qualified Substitute Mortgage Loan
for any Deleted Mortgage Loan that is an asset of the Trust shall be limited to
(i) in the case of substitutions pursuant to Section 2.03(a) or 2.03(c)
hereof, the one-year period beginning on the Closing Date and (ii) in the
case of any other substitution, the three-month period beginning on the
Closing Date.
As to any Deleted Mortgage Loan for which Saxon or a Seller
substitutes one or more Qualified Substitute Mortgage Loans, Saxon or the
Seller, as the case may be, shall effect such substitution by delivering to
the Custodian for each such Qualified Substitute Mortgage Loan the related
Mortgage Note, the related Security Instrument, the related Assignment(s),
and such other documents and agreements, with all necessary endorsements
thereon, as are required to be included in the Trustee Mortgage Loan File
pursuant to Sections 1.01 and 2.01 hereof, together with a certificate of
an Officer of Saxon to the effect that each such Qualified Substitute
Mortgage Loan complies with the terms of the Trust Agreement and notify the
Master Servicer and the Trustee in writing of such substitution. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month
of substitution are not part of the Trust and will be retained by Saxon or the
Seller, as the case may be. For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such Deleted
Mortgage Loan on or before the first day of the month in which the substitution
occurs, and Saxon or the Seller, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
the Trust Agreement and the substitution of each such Qualified Substitute
Mortgage Loan. Each Qualified Substitute Mortgage Loan shall be subject,
as of the date of its substitution, to the terms of the Trust Agreement in all
respects (including the representations and warranties of Saxon with respect
to the Mortgage Loans set forth in the Trust Agreement). In addition, in the
case of any substitution effected by a Seller, each Qualified Substitute
Mortgage Loan shall be subject, as of the date of its substitution, to the
terms of the related Sales Agreement (including the representations and
warranties of the Seller with respect to the Mortgage Loans set forth in the
Sales Agreement). The Trustee shall, within five Business Days of its
receipt of the documents referred to above, effect the conveyance of such
Deleted Mortgage Loan to Saxon or the Seller, as the case may be, in accordance
with the procedures specified above.
21
For any month in which Saxon or a Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the Master Servicer shall determine and notify the Trustee in writing of the
amount, if any, by which the aggregate Unpaid Principal Balance of all such
Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Unpaid Principal Balance of all such Deleted Mortgage
Loans (after application of Monthly Payments due in the month of substitution)
(the "Substitution Shortfall"). On the date of such substitution, Saxon or
the Seller, as the case may be, shall deliver or cause to be delivered to the
Paying Agent, for deposit into the Asset Proceeds Account, an amount equal to
the Substitution Shortfall.
(i) DETERMINATION OF PURCHASE PRICE. The Master Servicer shall be
responsible for determining the Purchase Price of any Mortgage Loan for
purposes of this Section 2.03 and, where appropriate, the Basis Limit Amount
for any Converted Mortgage Loan that is sold by the Trust, and shall at the
time of any purchase or escrow of funds pursuant to this Section 2.03 certify
such amounts to the Trustee. If the Master Servicer shall certify to the
Trustee in writing that there is a miscalculation of the amount to be paid
to the Trust, the Trustee shall, from moneys in the Asset Proceeds Account,
return any overpayment that the Trust received as a result of such
miscalculation to the applicable Purchaser upon the discovery of such
overpayment, and the Master Servicer shall collect from the applicable
Purchaser for payment to the Trustee any underpayment that resulted from such
miscalculation upon the discovery of such underpayment. Recovery may be
made either directly or by set-off of all or any part of such underpayment
against amounts owed by the Trust to such Purchaser.
(j) QUALIFICATION DEFECT. If (i) any Person required to cure,
purchase or substitute for a Mortgage Loan affected by a Qualification Defect
under the terms of the Trust Agreement or a separate agreement fails to
perform within the earlier of (A) 75 days of the Defect Discovery Date or
(B) the time limit set forth in the Trust Agreement or such separate agreement
or (ii) no Person is obligated to cure, purchase or substitute for a Mortgage
Loan affected by a Qualification Defect, the Trustee shall dispose of such
Mortgage Loan in such manner and for such price as the Master Servicer notifies
the Trustee in writing are appropriate, provided that the removal of such
Mortgage Loan occurs on or before the 90th day from the Defect Discovery Date.
It is the express intent of the parties that a Mortgage Loan affected by a
Qualification Defect be removed from the Trust before the 90th day from the
Defect Discovery Date so that the related REMIC(s) will continue to qualify
as a REMIC(s). Accordingly, the Trustee is not required to sell an affected
Mortgage Loan for its fair market value nor shall the Trustee be required to
make up any shortfall resulting from the sale of such Mortgage Loan. The
Person failing to cure, purchase, or substitute for a Mortgage Loan as
required under the terms of the Trust Agreement shall be liable to the Trust
for (i) any difference between (A) the Unpaid Principal Balance of the
Mortgage Loan plus accrued and unpaid interest thereon at the related Mortgage
Interest Rate to the date of disposition and (B) the net amount received by
the Trustee from the disposition (after the payment of related expenses),
(ii) interest on such difference at the related Mortgage Interest Rate from
the date of disposition to the date of payment and (iii) any legal and other
expenses incurred by or on behalf of the Trust in seeking such payments. The
Master Servicer shall pursue the legal remedies of the Trust relating to this
Section 2.03(j) on the Trust's behalf, and the Trust shall reimburse the
Master Servicer for any legal or other expenses of the Master Servicer related
to such pursuit not recovered from the Person that failed to cure, purchase,
or substitute for a Mortgage Loan as required under the terms of the Trust
Agreement.
(k) Any Person required under this Section 2.03 to give notice or
to make a request of another Person to give notice shall give such notice or
make such request promptly.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF SAXON
22
Saxon hereby represents and warrants to the Trustee and the Master
Servicer that as of the Closing Date or as of such other date specifically
provided herein:
(a) Saxon has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of the
Commonwealth of Virginia with full power and authority (corporate
and other) to own its properties and conduct its business as now
conducted by it and to enter into and perform its obligations under
the Trust Agreement, and has duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases any material properties, except where the failure so to qualify
would not have a material adverse effect on Saxon;
(b) The Trust Agreement, assuming due authorization,
execution and delivery by the Trustee and the Master Servicer,
constitutes a legal, valid and binding agreement of Saxon, enforceable
against Saxon in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a proceeding in equity or
at law;
(c) Neither the execution and delivery by Saxon of the Trust
Agreement, nor the consummation by Saxon of the transactions therein
contemplated, nor compliance by Saxon with the provisions thereof, will
(i) conflict with or result in a breach of, or constitute a default
under, any of the provisions of the articles of incorporation or
by-laws of Saxon or any law, governmental rule or regulation or
any judgment, decree or order binding on Saxon or any of its
properties, or any of the provisions of any indenture, mortgage,
deed of trust, contract or other instrument to which Saxon is a party or
by which it is bound or (ii) result in the creation or imposition of any
lien, charge, or encumbrance upon any of its properties pursuant to
the terms of any such indenture, mortgage, deed of trust, contract
or other instrument;
(d) There are no actions, suits or proceedings against, or
investigations of, Saxon pending, or, to the knowledge of Saxon,
threatened, before any court, administrative agency or other tribunal
(i) asserting the invalidity of the Trust Agreement or (ii)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the Trust
Agreement;
(e) As of the Closing Date with respect to each Initial
Mortgage Loan and as of each Subsequent Sale Date with respect to each
related Subsequent Mortgage Loan:
(i) The information set forth in the related
Mortgage Loan Schedule with respect to such Mortgage Loan is
true and correct in all material respects at the date or dates
with respect to which such information is furnished;
(ii) Saxon either is (i) the owner of such Mortgage
Loan or (ii) the holder of a first, second, or more junior (as
applicable) priority perfected security interest in the
Collateral securing such Mortgage Loan subject, in the case of
any Junior Mortgage Loan, to any lien on the related Collateral
that is senior in priority to the lien represented by such
loan, and subject, in the case of any Mortgage Loan, to any
exceptions of title set forth in the title insurance policy
with respect to such loan that are generally acceptable to
home equity mortgage lending institutions and such other
exceptions to which similar properties commonly are subject,
provided such exceptions do not individually, or in the
aggregate, materially and adversely affect the benefits of the
security intended to be provided by the related Collateral;
(iii) Saxon has acquired its ownership of, or security
interest in, such Mortgage Loan in good faith without notice of
any adverse claim;
(iv) Saxon has not assigned any interest or
participation in such Mortgage Loan (or, if any such interest
or participation has been assigned, it has been released); and
(e) Saxon has full right to sell the Trust Estate to the
Trustee.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective
Trustee Mortgage Loan Files to the Trustee and shall inure to the benefit of
the Trustee notwithstanding any restrictive or qualified endorsement or
assignment. Upon the discovery by Saxon, the Master Servicer or the Trustee
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the interest of the Certificateholders
in any Mortgage Loan, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties to the Trust Agreement. It is understood and
agreed that the obligations of Saxon set forth in Section 2.03(c) to cure,
repurchase or substitute for a Mortgage Loan constitute the sole remedies
available to the Certificateholders or to the Trustee on their behalf
respecting a breach of the representations and warranties contained in this
Section 2.04. It is further understood and agreed that Saxon shall be deemed
not to have made the representations and warranties in this Section 2.04 with
respect to, and to the extent of, representations and warranties made, as
to the matters covered in this Section 2.04, by any Servicer in the related
Servicing Agreement assigned to the Trustee or any Seller in the related Sales
Agreement assigned to the Trustee.
23
SECTION 2.05. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER
The Master Servicer hereby represents and warrants to the Trustee
that as of the Closing Date or as of such other date specifically provided
herein:
(a) The Master Servicer has been duly incorporated and
is validly existing as a bank or a corporation and in good standing
under the laws of the jurisdiction of its incorporation with full
power and authority (corporate and other) to own its properties and
conduct its business as now conducted by it and to enter into and
perform its obligations under the Trust Agreement, and has duly
qualified to do business and is in good standing under the laws of
each jurisdiction which requires such qualification wherein it owns
or leases any material properties or conducts any material
business or in which the performance of its duties under the Trust
Agreement would require such qualification, except where the failure
so to qualify would not have a material adverse effect on the
performance of its obligations under the Trust Agreement;
(b) The Trust Agreement, assuming due authorization,
execution and delivery by Saxon and the Trustee, constitutes a legal,
valid and binding agreement of the Master Servicer, enforceable against
the Master Servicer in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, conservatorship, receivership,
moratorium or other similar laws affecting creditors' rights generally
and to general principles of equity regardless of whether enforcement
is sought in a proceeding in equity or at law;
(c) Neither the execution and delivery by the Master
Servicer of the Trust Agreement, nor the consummation by the Master
Servicer of the transactions therein contemplated, nor compliance
by the Master Servicer with the provisions thereof, will (i)
conflict with or result in a breach of, or constitute a default
under, any of the provisions of the articles of association or
incorporation (or corresponding charter document) or by-laws of the
Master Servicer or any law, governmental rule or regulation or any
judgment, decree or order binding on the Master Servicer or any of its
properties, or any of the provisions of any indenture, mortgage, deed
of trust, contract or other instrument to which the Master Servicer
is a party or by which it is bound or (ii) result in the creation or
imposition of any lien, charge or encumbrance upon any of its
properties pursuant to the terms of any such indenture, mortgage, deed
of trust, contract or other instrument.
(d) There are no actions, suits or proceedings against,
or investigations of, the Master Servicer pending, or, to the
knowledge of the Master Servicer, threatened, before any
court, administrative agency or other tribunal which would prohibit
the Master Servicer from entering into the Trust Agreement or
performing its obligations under the Trust Agreement; and
(e) If the Master Servicer is not a national banking
association, the Master Servicer maintains a Master Servicer Errors
and Omissions Policy and a Master Servicer Fidelity Bond which cover
the Master Servicer's performance under the Trust Agreement, and such
policy and bond are in full force and effect.
Upon the discovery by Saxon, the Master Servicer or the Trustee
of a breach of any of the foregoing representations or warranties which
materially and adversely affects the interest of the Certificateholders in
any Mortgage Loan, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties to the Trust Agreement.
24
ARTICLE III
ADMINISTRATION OF THE TRUST
SECTION 3.01. MASTER SERVICER CUSTODIAL ACCOUNT
(a) ESTABLISHMENT. The Master Servicer shall establish a Master
Servicer Custodial Account into which the Master Servicer shall deposit
payments, collections and Advances with respect to the Mortgage Loans until
such amounts are transferred to the Asset Proceeds Account as provided
herein. The Master Servicer may elect to use a single Master Servicer
Custodial Account for more than one Series of Certificates (and for more than
one group of Mortgage Loans if the Mortgage Loans for a Series of Certificates
are to be held in separate groups), but shall maintain separate accounting
records for each Series of Certificates (and for each group of Mortgage Loans
with respect to a Series of Certificates). Each Master Servicer Custodial
Account shall be an Eligible Account and shall reflect the custodial nature of
the account and that all funds in such account (except interest earned thereon)
are held in trust for the benefit of the Trustee. Unless otherwise
provided in the Trust Agreement, the owner of the Master Servicer Custodial
Account shall be the Master Servicer. To the extent provided in the REMIC
Provisions or proposed temporary or final regulations, any amounts
transferred by a REMIC to the Master Servicer Custodial Account shall be
treated as amounts distributed by such REMIC to the Master Servicer. The
Master Servicer Custodial Account shall not be considered an asset of the
Trust or any REMIC. The Master Servicer shall notify the Trustee of the
location and account number of such Master Servicer Custodial Account and of
any changes in the location or account number of such account.
(b) DEPOSITS. On each Remittance Date, the Servicer shall
withdraw from the Servicer Custodial Account maintained by each Servicer and
deposit into the Master Servicer Custodial Account an amount with respect to
each Mortgage Loan serviced by such Servicer equal to the sum of the following:
(i) all Monthly Payments received by such Servicer during
the preceding Due Period, whether paid by the Borrower or advanced
by such Servicer, minus the Servicing Fee due such Servicer to the
extent paid by the Borrower after the payment of Month-End Interest;
(ii) all Monthly Payments made by the Borrower after
their Due Date that were not paid or advanced pursuant to Section
3.01(b)(i) hereof;
(iii) all other payments (other than late charges, conversion
fees and similar charges and fees retained by such Servicer pursuant
to the Servicing Agreement) received by such Servicer in connection
with any unscheduled principal payments or recoveries on such
Mortgage Loan during the preceding Prepayment Period, including
Liquidation Proceeds and Insurance Proceeds, together with any
interest thereon paid by or for the account of the Borrower minus the
sum of (A) expenses associated with such recovery, (B) any Advances
on such Mortgage Loan paid by such Servicer and (C) the Servicing
Fee allocable thereto; and
(iv) the Purchase Price of such Mortgage Loan if such
Mortgage Loan was purchased by the Servicer from the Trust during the
preceding Prepayment Period.
(c) WITHDRAWALS. On each Business Day, the Master Servicer may
withdraw from the appropriate Master Servicer Custodial Account (to the
extent the funds therein are not invested) any Non-Recoverable Advance and any
Advance previously made with respect to a Mortgage Loan as to which a late
payment, Liquidation Proceeds or Insurance Proceeds have been received
(but only to the extent of such late payment, Liquidation Proceeds or
Insurance Proceeds).
On or prior to each Master Servicer Remittance Date, the Master
Servicer shall remit from the funds in the Master Servicer Custodial Account by
wire transfer (or as otherwise instructed by the Trustee) in immediately
available funds to the Asset Proceeds Account an amount with respect to each
Mortgage Loan equal to the sum of the following:
(i) all Monthly Payments received by the Master Servicer
during the preceding Due Period, whether paid by the Borrower or
advanced by a Servicer, the Master Servicer, the Trustee or an
Insurer, minus the sum of (A) the Servicing Fees due the Servicer to
the extent paid by the Borrower (net of any payments on account of
Month End Interest required pursuant to Section 3.05 hereof or the
Servicing Agreement) and (B) the Master Servicing Fee to the extent
paid by the Borrower or advanced by the Servicer or the Master
Servicer;
25
(ii) all Monthly Payments made by a Borrower after their Due
Date that were not paid or advanced pursuant to Section 3.01(c)(i)
hereof, net of the Master Servicing Fee;
(iii) all other payments received by the Master Servicer in
connection with any unscheduled principal payments or recoveries on
the Mortgage Loans during the preceding Prepayment Period, including
Liquidation Proceeds and Insurance Proceeds, together, with
respect to prepayments or Liquidation Proceeds or Insurance Proceeds
received during the preceding month, with any interest thereon received
by the Master Servicer (net of the Master Servicing Fee attributable
thereto); and
(iv) the Purchase Price of any Mortgage Loans purchased
from the Trust during the preceding Prepayment Period, less any
amounts due the Servicer or the Master Servicer on account of Advances,
the Servicing Fee or the Master Servicing Fee attributable to such
Mortgage Loans.
(d) INVESTMENT. The Master Servicer shall cause the funds in the
Master Servicer Custodial Account to be invested in Permitted Investments
with a maturity prior to the next Master Servicer Remittance Date. If so
specified in a Servicing Agreement, net investment income on the funds in the
Master Servicer Custodial Account shall be released to the related Servicer as
a part of the Servicer Compensation on or before the fifth Business Day of the
month following the month in which the related Distribution Date occurs
unless the Trust Agreement provides that such net investment income is to be
applied to Month End Interest Shortfall; provided, however, that, if there is
a loss on the investments in the Master Servicer Custodial Account for any
month, the Master Servicer shall deposit the amount of such loss into the
Master Servicer Custodial Account on or before the related Distribution Date
(and shall subsequently retain net investment income to recover such loss).
SECTION 3.02. ASSET PROCEEDS ACCOUNT
(a) DEPOSITS. The Trustee shall establish and maintain with the
Paying Agent one or more accounts (collectively, the "Asset Proceeds
Account") held in trust for the benefit of the Certificateholders. Each Asset
Proceeds Account shall be an Eligible Account. On each Distribution Date,
the Paying Agent shall deposit into the Asset Proceeds Account the following
amounts, to the extent not previously deposited therein:
(i) the amount to be deposited from the Master Servicer
Custodial Account pursuant to Section 3.01(c);
(ii) Advances;
(iii) the amount required to effect a Terminating Purchase
pursuant to Section 9.02 hereof; and
(iv) amounts required to be deposited from any Credit
Enhancement, Reserve Fund, Interest Fund, or other fund as provided in
the Trust Agreement.
(b) WITHDRAWALS. Unless otherwise provided in the Trust
Agreement, on each Distribution Date, the Paying Agent shall withdraw all
moneys in the Asset Proceeds Account in accordance with the amounts set forth
in the statement furnished by the Master Servicer pursuant to Section 4.01
hereof in the following order of priority and for the purposes indicated:
(i) to pay itself the Trustee Fee with respect to such
Distribution Date (unless the Trustee Fee is to be paid by the Master
Servicer out of its Master Servicing Fee);
(ii) to pay each Servicer its Servicing Fee with respect
to such Distribution Date, to the extent not retained by such
Servicer;
(iii) to pay the Master Servicer the Master Servicing Fee with
respect to such Distribution Date, to the extent not previously paid to
the Master Servicer;
(iv) to pay each Credit Enhancement provider its Credit
Enhancement Fee with respect to such Distribution Date unless provision
therefore is otherwise made in the Trust Agreement;
(v) to reimburse the Trustee, the Master Servicer and each
Servicer, in that order of priority, for any Advance previously made
that has been determined to be a Non-Recoverable Advance;
26
(vi) to reimburse Saxon or the Master Servicer for expenses
incurred by or reimbursable to it pursuant to Section 6.03;
(vii) to refund any overpayment of the Purchase Price of a
Mortgage Loan; and
(viii) to make the payments provided for in the Trust Agreement.
(c) ACCOUNTING. The Master Servicer shall keep and maintain
separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the
purpose of justifying any payment to and from the Asset Proceeds Account.
(d) INVESTMENT. No later than the close of business on the
day preceding the Master Servicer Remittance Date, the Master Servicer
shall direct the Paying Agent in writing (which may be in the form of
standing instructions) as to the investment of funds (which funds, if
received by noon, Houston time, shall be invested in Permitted Investments)
in the Asset Proceeds Account for the period from the Master Servicer
Remittance Date through the Distribution Date. Net investment income on
funds in the Asset Proceeds Account shall be released to the Master Servicer
as part of the Master Servicer Compensation on or before the fifth Business
Day of the month following the month in which the related Distribution Date
occurs, unless the Trust Agreement provides that such net investment income
is to be applied to the payment of other amounts due from the Master Servicer.
SECTION 3.03. ISSUING REMIC ACCOUNTS
(a) With respect to any Double REMIC Series, the Paying Agent shall
establish one or more Subaccounts of the Distribution Account. Unless
otherwise provided in the Trust Agreement, the Subaccounts will be Regular
Interests in the Pooling REMIC and the Paying Agent shall deposit all
payments with respect to such Regular Interests into such Subaccounts.
(b) With respect to any Double REMIC Series, the Paying Agent may
establish one or more accounts into which the Paying Agent may deposit all
payments on account of the Residual Interest in the Pooling REMIC and any
Regular Interests in the Pooling REMIC that are not considered assets of
the Issuing REMIC and from which the Paying Agent may withdraw funds to pay the
Certificates that do not evidence interests in the Issuing REMIC. In lieu of
establishing such accounts, the Paying Agent may pay on each Distribution
Date to the Holders of the Certificates that do not evidence interests in
the Issuing REMIC the amounts that are due with respect to such Certificates.
In addition, with respect to a Double REMIC Series, upon payment in full of
all related Regular Interests and all administrative costs of the related
Trust and each related REMIC, any amount remaining in the Asset Proceeds
Account may be distributed directly to the Holders of the Certificate
representing beneficial ownership of the Residual Interest in the Pooling
REMIC.
SECTION 3.04. ADVANCES BY MASTER SERVICER AND TRUSTEE
(a) To the extent not made by the Servicer of a Mortgage Loan, the
Master Servicer shall be obligated to make Advances with respect to such
Mortgage Loan to the extent the Master Servicer determines, in good faith,
that such Advances will be recoverable from Insurance Proceeds, Liquidation
Proceeds or subsequent payments by the Borrower of such Mortgage Loan. If
the Master Servicer determines that all, or a portion of, any Advance
required by this Section 3.04 is not so recoverable, the Master Servicer shall
promptly deliver to the Trustee an Officer's certificate setting forth the
reasons for such determination and the amount of the Non-Recoverable Advance
(a "Non-Recoverability Certificate"). Subject to the foregoing:
(i) Prior to the close of business on the Business Day prior
to each Master Servicer Remittance Date, the Master Servicer shall
determine whether and to what extent any Servicers have failed to make
any Advances in respect of Monthly Payments that were due on the
previous Due Date. The Master Servicer shall make an Advance to the
Master Servicer Custodial Account in the amount, if any, of the
aggregate Monthly Payments (less applicable Servicing Fees) on the
Mortgage Loans that were due on such Due Date but which were not
received or advanced by the Servicers and remitted to the Master
Servicer Custodial Account prior to such Master Servicer
Remittance Date. Each such Advance shall be remitted in
immediately available funds to the Master Servicer Custodial
Account on or before such Master Servicer Remittance Date.
(ii) To the extent not made by a Servicer, the Master
Servicer shall make Advances from time to time for attorneys' fees and
court costs incurred, or which reasonably can be expected to be
incurred, for the foreclosure of any Mortgage Loan or for any
transaction in which the Trustee is expected to receive a deed in
lieu of foreclosure.
27
(iii) If any Mortgaged Premises shall be damaged or
destroyed and the Servicer of the related Mortgage Loan fails to
Advance the funds necessary to repair or restore the damaged or
destroyed Mortgaged Premises, then the Master Servicer shall Advance
such funds and take such other action as is necessary to repair or
restore the damage or loss.
(iv) To the extent a Servicer is required to Advance
funds sufficient to pay the taxes or insurance premiums with respect
to a Mortgage Loan pursuant to Section 380 of the Guide and fails to
make such Advance, the Master Servicer shall Advance such funds and
take such steps as are necessary to pay such taxes or insurance
premiums.
(v) If any Servicer fails to remit to the Master Servicer
Custodial Account, on or before the Master Servicer Remittance Date,
the full amount of the funds in the custody or under the control of the
Servicer that the Servicer is required to remit under its Servicing
Agreement, then the Master Servicer shall Advance and remit to the
Master Servicer Custodial Account an amount equal to the required
remittance on or before the Master Servicer Remittance Date for
the month in which such funds were required to be remitted by the
Servicer under the Servicing Agreement.
(b) Any Advance made by the Master Servicer under this Section
3.04 which the Master Servicer shall ultimately determine in its good faith
judgment to be non-recoverable from Insurance Proceeds, Liquidation
Proceeds, the related Servicer, or subsequent payments by the Borrower shall
be a Non-Recoverable Advance. The determination by the Master Servicer that
it has made a Non-Recoverable Advance shall be evidenced by a
Non-Recoverability Certificate of the Master Servicer promptly delivered to
the Trustee setting forth the reasons for such determination. Following the
Trustee's receipt of such Non-Recoverability Certificate, the Master
Servicer shall be entitled to reimbursement for such Non-Recoverable Advance as
provided herein.
(c) If the Master Servicer fails to make any Advance required of it
hereunder, the Trustee shall, to the maximum extent permitted by law, make
such Advance in its stead, and, in such event, the Trustee shall be entitled
to receive the Master Servicing Fee payable with respect to the Distribution
Date related to such Master Servicer Remittance Date; provided, however,
that in no event shall the Trustee, whether as Trustee, Master Servicer or
Servicer, be deemed to have assumed the obligations of any Person to purchase
any Mortgage Loan from the Trust for breach of representations or warranties
or as a Converted Mortgage Loan or otherwise or to make any Advances or pay
Month End Interest with respect to any Mortgage Loan except to the extent
specifically provided in Sections 3.04 and 3.05 hereof. Notwithstanding the
foregoing, neither the Master Servicer nor the Trustee will be obligated to
make an Advance that it reasonably believes to be a Non-Recoverable
Advance. The Trustee may conclusively rely for any determination to be made
by it hereunder upon the determination of the Master Servicer as set forth
in its Non-Recoverability Certificate.
(d) To the extent that any Advance has been made by the Trustee,
the Trustee shall be entitled to reimbursement therefor at the times and to
the same extent as either the Servicer or the Master Servicer would have
been so entitled had such Person originally made such Advance, whether or
not any provision of the Trust Agreement specifically references the right of
the Trustee to such reimbursement. If the Trustee determines that it is
prevented by law from making an Advance, the Trustee will notify the Master
Servicer within one Business Day of such determination.
(e) Notwithstanding anything herein to the contrary, no Advance
shall be required to be made by the Master Servicer or the Trustee to the
extent that making such Advance would result in the amount of aggregate
Advances then outstanding and unreimbursed by the Master Servicer or the
Trustee to exceed the Master Servicer Advance Amount.
SECTION 3.05. MONTH END INTEREST
Unless otherwise provided in the Servicing Agreement, the
Servicer shall pay and deposit into the Servicer Custodial Account, on or
before each Servicer Remittance Date, an amount equal to Month End Interest
with respect to the preceding month, but only to the extent of the Servicer
Fee payable with respect to the preceding month. Such payment will not be
considered a Non-Recoverable Advance. The Servicer shall not be entitled
to any recovery or reimbursement of such payment from the Master
Servicer, the Trustee or the Certificateholders.
28
SECTION 3.06. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES
The Trustee shall, if requested by any Servicer with a rating
satisfactory to the Trustee, execute a power of appointment pursuant to
which the Trustee shall authorize, make, constitute and appoint designated
officers of such Servicer with full power to execute in the name of the Trustee
(without recourse, representation or warranty) any deed of reconveyance, any
substitution of trustee documents or any other document to release, satisfy,
cancel or discharge any Security Instrument or Mortgage Loan upon its
payment in full or other liquidation; provided, however, that such power of
appointment shall be limited to the powers listed above. The Servicer shall
promptly forward to the Trustee for its files copies of all documents executed
pursuant to such power of appointment.
Upon the liquidation of any Mortgage Loan, the Servicer of such
Mortgage Loan shall remit the proceeds thereof to its Servicer Custodial
Account and, unless such Servicer has been given a power of appointment as
provided in the proceeding paragraph, deliver to the Master Servicer a
Request for Release requesting that the Trustee execute such instrument of
release or satisfaction as is necessary to release the related Collateral from
the lien of the Security Instrument. Upon the Master Servicer's receipt of
such Request for Release and its confirmation that all amounts required to be
remitted to the appropriate Servicer Custodial Account in connection with such
liquidation have been so deposited, the Master Servicer shall deliver such
Request for Release to the Trustee. The Trustee shall, within five Business
Days of its receipt of such Request for Release, release, or cause the
Custodian to release, the related Trustee Mortgage Loan File to the Master
Servicer or the Servicer, as requested by the Master Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Master Servicer Custodial Account or the
Asset Proceeds Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, but not limited to, collection under any
Title Insurance Policy or Credit Enhancement with respect thereto or to effect
a partial release of any Collateral from the lien of the Security Instrument,
the Servicer shall deliver to the Master Servicer a Request for Release.
Upon the Master Servicer's receipt of any such Request for Release, the
Master Servicer shall promptly forward such Request for Release to the
Trustee and the Trustee shall, within five Business Days of its receipt of
such Request for Release, release, or cause the Custodian to release, the
related Trustee Mortgage Loan File to the Master Servicer or the Servicer,
as requested by the Master Servicer. Any such Request for Release shall
obligate the Master Servicer or the Servicer, as the case may be, to return
each and every document previously requested from the Trustee Mortgage Loan
File to the Trustee by the twenty-first day following the release thereof,
unless (i) the related Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to such Mortgage Loan have been deposited in the Asset
Proceeds Account or the Servicer Custodial Account or (ii) the Trustee
Mortgage Loan File or such document has been delivered to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the
foreclosure of the related Mortgaged Premises either judicially or
non-judicially, and the Master Servicer has delivered to the Trustee a
certificate of the Master Servicer or the Servicer certifying as to the name
and address of the Person to which such Trustee Mortgage Loan File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of an Officer's certificate of the Master Servicer or the Servicer
stating that such Mortgage Loan was liquidated and that all amounts received
or to be received in connection with such liquidation which are required to
be deposited into the Servicer Custodial Account or the Asset Proceeds
Account have been so deposited, or that such Mortgage Loan is secured by an REO
Property, the Request for Release shall be released by the Trustee to the
Master Servicer or the Servicer, as appropriate.
Upon written certification of the Master Servicer or the Servicer,
the Trustee (subject to Section 8.01(e) hereof), shall execute and deliver
to the Master Servicer or the Servicer, as directed by the Master Servicer,
court pleadings, requests for trustee's sale or other documents necessary to a
foreclosure proceeding or trustee's sale in respect of a Mortgaged Premises
or to any legal action brought to obtain judgment against any Borrower on any
Mortgage Note or Security Instrument or to obtain a deficiency judgment, or
to enforce any other remedies or rights provided by any Mortgage Note or
Security Instrument or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings, requests or
other documents be executed by the Trustee and a statement as to the reason
such pleadings, requests or other documents are required and that the
execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Security Instrument, except for the
termination of such a lien upon completion of the foreclosure proceeding or
trustee's sale.
29
SECTION 3.07. REPORTS TO THE TRUSTEE; ANNUAL COMPLIANCE STATEMENTS
The Master Servicer shall deliver to the Trustee, on or before
March 31 of each year, an Annual Compliance Statement with respect to the
Trust Agreement (if the Master Servicer entered into the Trust Agreement on or
before the preceding December 31), signed by an Officer of the Master
Servicer, certifying that (i) such Officer has reviewed the activities of the
Master Servicer during the preceding calendar year or portion thereof and its
performance under the Trust Agreement and (ii) to the best of such Officer's
knowledge, based on such review, the Master Servicer has performed and
fulfilled its duties, responsibilities and obligations under the Trust
Agreement in all material respects throughout such year, or, if there has been
a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Officer and the nature
and status thereof, and (iii) (A) an Officer of the Master Servicer has
conducted an examination (based solely on information and written reports
furnished by each Servicer to the Master Servicer) of the activities of each
Servicer during the preceding calendar year and the performance of such
Servicer under the related Servicing Agreement, (B) an Officer of the Master
Servicer has examined each Servicer's Fidelity Bond and Errors and
Omissions Policy and each such bond or policy is in effect and conforms to
the requirements of the related Servicing Agreement, (C) the Master
Servicer has received from each Servicer such Servicer's annual audited
financial statements and such other information as is required by the Guide
and (D) to the best of such Officer's knowledge, based on such examination,
each Servicer has performed and fulfilled its duties, responsibilities and
obligations under its Servicing Agreement in all material respects throughout
such year, or, if there has been a default in the performance or fulfillment of
any such duties, responsibilities or obligations, specifying each such
default known to such Officer and the nature and status thereof. The Trustee
shall provide copies of the Annual Compliance Statement to any
Certificateholder upon written request provided such statement is delivered, or
caused to be delivered, by the Master Servicer to the Trustee.
SECTION 3.08. TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTIES
(a) If any Mortgaged Premises becomes an REO Property, the Master
Servicer shall use its best efforts to cause the Servicer of the related
Mortgage Loan to manage, conserve, protect and operate such REO Property for
the benefit of the Certificateholders solely for the purpose of its prompt
disposition and sale. If one or more REMIC elections are made with respect to
the assets of the Trust, the Master Servicer shall use its best efforts to
cause the Servicer to use its best efforts to dispose of any REO Property
for its fair market value within twenty-two months of its acquisition by
the Trust, unless the Trustee has been granted an extension of time to dispose
of such REO Property by the Internal Revenue Service pursuant to section
856(c)(3) of the Code (an "Extension"). If the Trustee has been granted an
Extension, the Master Servicer shall continue to use its best efforts to
have the Servicer sell the REO Property for its fair market value for the
period ending two months prior to the time such Extension expires (the
"Extended Period"). If the Servicer is unable to dispose of any REO Property
within such twenty-two-month period or Extended Period, as the case may be,
the Master Servicer shall use its best efforts to ensure that such REO Property
is auctioned to the highest bidder within one month after the end of such
twenty-two-month period or Extended Period, as the case may be. If no REMIC
election has been or is to be made with respect to the assets of the Trust, the
time period for disposing of any REO Property as specified in the preceding two
sentences shall be within eleven months of its acquisition by the Trust.
In the event of any such sale or auction of an REO Property, the Trustee shall,
at the written request of the Master Servicer and upon being provided with
appropriate forms therefor, within five Business Days of its receipt of the
proceeds of such sale or auction, release or cause to be released to the
purchaser the related Trustee Mortgage Loan File and Servicer File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the purchaser title to
the REO Property, and upon so doing the Trustee shall have no further
responsibility with regard to such Trustee Mortgage Loan File or Servicer File.
Neither the Trustee, the Master Servicer nor the Servicer, acting on behalf
of the Trust, shall provide financing from the Trust to any purchaser of an REO
Property.
(b) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee for the benefit of the
Certificateholders. Each Servicer shall, in accordance with Section
3.08(a) hereof, use its reasonable efforts to sell any REO Property as
expeditiously as possible, but in any event within the time period, and
subject to the conditions set forth in Section 3.08(a) hereof. Pursuant to
its efforts to sell any REO Property, each Servicer shall either itself,
or through an agent selected by it, protect and conserve such REO Property
in the same manner and to the same extent as it customarily does in
connection with its own real estate acquired through foreclosure or by deed
in lieu of foreclosure, incident to its conservation and protection of the
interests of the Certificateholders, and may rent such REO Property, or any
part thereof, as it deems likely to increase the net proceeds distributable to
the Certificateholders, subject to the terms and conditions described in this
Section 3.08.
30
For the purpose of protecting the interests of the Trustee and
conserving any REO Property prior to sale, the Servicer of the related Mortgage
Loan may contract with any Independent Contractor for the conservation,
protection and rental of such REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor (A) pay all
costs and expenses incurred in connection with the operation and
management of such REO Property, (B) hold all related revenues in a
segregated account insured by the Federal Deposit Insurance
Corporation and (C) remit all related revenues collected (net of
such costs and expenses retained by such Independent Contractor) to
the Servicer on a monthly or more frequent basis; and
(iii) none of the provisions of this Section 3.08 relating
to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its
duties and obligations to the Trustee and the Certificateholders
with respect to the conservation, protection and rental of such REO
Property.
A Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. A Servicer or any Independent Contractor
shall be entitled to a fee, based on the prevailing market rate (and set in
good faith at a reasonable level in the case of a fee payable to a Servicer),
for the operation and management of any REO Property, which fee shall be an
expense of the Trust payable out of the gross income on such REO Property.
(c) A Servicer shall deposit all funds collected and received in
connection with the operation of any REO Property in its Servicer Custodial
Account on or before the second Business Day following receipt of such
funds.
(d) A Servicer, upon the final disposition of any REO Property,
shall be entitled to be reimbursed for any unreimbursed Advances and paid any
unpaid Servicing Fees with respect to the related Mortgage Loan from the
Liquidation Proceeds received in connection with the final disposition of such
REO Property; provided, however, that any such unreimbursed Advances or
unpaid Servicing Fees may be reimbursed or paid, as the case may be, out of
any net rental income or other net amounts derived from such REO Property.
(e) The final disposition of any REO Property shall be carried
out by a Servicer at the fair market value of such REO Property under the
circumstances existing at the time of disposition and upon such terms and
conditions as such Servicer shall deem necessary or advisable and as are in
accordance with accepted servicing practices and in accordance with Section
3.08(a) hereof.
(f) A Servicer shall deposit the Liquidation Proceeds from the
final disposition of any REO Property in its Servicer Custodial Account on or
before the second Business Day following receipt of such Liquidation
Proceeds and, subject to such withdrawals as may be permitted by Section
3.08(d) hereof, such proceeds shall be transferred to the Asset Proceeds
Account pursuant to Section 3.01(c) hereof.
(g) A Servicer shall prepare and file reports of foreclosure and
abandonment in accordance with section 6050J of the Code.
(h) Notwithstanding any other provision of this Agreement, a
Servicer, acting on behalf of the Trustee, shall not rent, lease or
otherwise earn income or take any action on behalf of the Trust with respect to
any REO Property that might (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of section 86OG(a)(8) of the
Code or (ii) result in the receipt by the REMIC of any "income from
non-permitted assets" within the meaning of section 86OF(a)(2) of the Code
or any "net income from foreclosure property" within the meaning of section
860G(c)(2) of the Code, both of which types of income are subject to tax under
the REMIC Provisions, unless the Trustee has received an Opinion of Counsel,
at the expense of the Trust (the costs of which shall be recoverable out of such
Servicer's Servicer Custodial Account), to the effect that, under the REMIC
Provisions and any relevant proposed legislation, any income generated for
any related REMIC by such REO Property would not result in the imposition of a
tax upon such REMIC.
31
Without limiting the generality of the foregoing, neither the Trustee,
the Master Servicer nor a Servicer shall knowingly:
(i) enter into, renew or extend any New Lease with respect
to any REO Property if the New Lease by its terms will give rise to any
income that does not constitute Rents From Real Property;
(ii) permit any amount to be received or accrued under any
New Lease other than amounts that will constitute Rents From Real
Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of
section 856(e)(4)(B) of the Code; or
(iv) Directly Operate, or allow any other Person to Directly
Operate, any REO Property on any date more than 90 days after its
acquisition date (unless the Person who would Directly Operate such
REO Property is an Independent Contractor);
unless, in any such case, the Person proposing to take such action has
requested and received the Opinion of Counsel described in the preceding
sentence, in which case the Person may take such actions as are specified in
such Opinion of Counsel.
A Servicer shall not acquire any personal property relating to any
Mortgage Loan pursuant to this Section 3.08 unless either:
(i) such personal property is incident to real property
(within the meaning of section 856(e)(1) of the Code) so acquired by
such Servicer; or
(ii) such Servicer shall have requested and received an
Opinion of Counsel, at the expense of the Trust (the costs of which
shall be recoverable out of its Servicer Custodial Account), to the
effect that the holding of such personal property by the related REMIC
will not cause the imposition of a tax under the REMIC Provisions on
any REMIC related to the Trust or cause any such REMIC to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
(j) Any actions required or permitted to be taken by a Servicer
under this Section 3.08 may be taken by the Master Servicer on behalf of such
Servicer.
(k) Each Servicing Agreement relating to a Trust Agreement shall
provide that the related Servicer shall manage, conserve, protect and
operate any REO Property as provided in this Section 3.08, and the Master
Servicer is hereby obligated to assure that each Servicer complies with the
provisions of this Section 3.08.
SECTION 3.09. AMENDMENTS TO SERVICING AGREEMENTS; MODIFICATION OF THE
GUIDE
From time to time Saxon may, to the extent permitted by the
applicable Servicing Agreement, make such modifications and amendments to
the Guide as Saxon deems necessary or appropriate to confirm or carry out
more fully the intent and purpose of the Servicing Agreement and the duties,
responsibilities and obligations to be performed by the Servicer thereunder;
provided, however, that in no event shall Saxon modify or amend the Guide if
such modification or amendment would have an adverse effect on the
Certificateholders. Any such modification or amendment of the Guide shall be
deemed to have an adverse effect on the Certificateholders if such amendment
or modification either results in (i) the downgrading of the rating
assigned by any Rating Agency to the Certificates or (ii) the loss by the
Trust or the assets thereof of REMIC status for federal income tax
purposes. Prior to the issuance of any such modification or amendment,
Saxon shall deliver to the Master Servicer and the Trustee an Officer's
certificate setting forth (i) the provision that is to be modified or
amended, (ii) the modification or amendment that Saxon desires to issue and
(iii) the reason or reasons for such proposed modification or amendment.
32
SECTION 3.10. OVERSIGHT OF SERVICING
The Master Servicer shall supervise, administer, monitor and oversee
the servicing of the Mortgage Loans by each Servicer and the performance by
each Servicer of all services, duties, responsibilities and obligations that
are to be observed or performed by such Servicer under its Servicing Agreement
(including, but not limited to, such Servicer's obligation to comply with
the provisions of Section 3.08 hereof). Without limiting the generality of
the foregoing, the Master Servicer, acting with the consent of Saxon and
subject to Section 1.03 hereof but without the consent of the Trustee or any
Certificateholder, shall have the power and responsibility for approving the
transfer or other assignment of any Servicing Agreement by any Servicer.
Saxon shall provide the Master Servicer with a copy of the Servicing
Agreement executed by each Servicer as well as the Guide incorporated by
reference into such Servicing Agreement on or before the Closing Date. The
Master Servicer acknowledges that, prior to taking certain actions required
to service the Mortgage Loans, the Guide provides that the Servicer must
notify, consult with, obtain the consent of or otherwise follow the
instructions of the Master Servicer. The Master Servicer is also given
authority to waive compliance by the Servicer with certain provisions of the
Servicing Agreement. In each such instance, the Master Servicer shall
promptly instruct the Servicer or otherwise respond to any request of the
Servicer. In no event shall the Master Servicer instruct the Servicer to take
any action, give any consent to action by the Servicer or waive compliance by
the Servicer with any provision of the Servicing Agreement if any resulting
action or failure to act is inconsistent with the obligations of the Servicer
for similarly rated transactions or would otherwise have an adverse effect
on the Certificateholders. Any such action or failure to act shall be
deemed to have an adverse effect on the Certificateholders if such action
or failure to act either results in (i) the downgrading of the rating assigned
by any Rating Agency to the Certificates or (ii) the loss by the Trust or the
assets thereof of REMIC status for federal income tax purposes.
The Master Servicer shall instruct each Servicer that it should not
take any action to foreclose, or accept a deed in lieu of foreclosure, with
respect to any Mortgage Loan if such Servicer knows, or has reason to know,
that the related Mortgaged Premises are contaminated with toxic wastes or other
hazardous substances.
During the term of the Trust Agreement, the Master Servicer shall
consult fully with each Servicer as may be necessary from time to time to
perform and carry out the Master Servicer's obligations hereunder and
receive, review and evaluate all reports, information and other data that
are provided to the Master Servicer by each Servicer and otherwise exercise
reasonable efforts to encourage each Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by it under
its Servicing Agreement.
For the purposes of determining whether any modification of a
Mortgage Loan shall be permitted by the Trustee or the Master Servicer, such
modification shall be construed as a substitution of the modified Mortgage
Loan for the Mortgage Loan originally assigned and transferred to the Trust.
No modification shall be approved unless (i) such modification is
occasioned by default or a reasonably foreseeable default or (ii) there is
delivered to the Trustee an Opinion of Counsel (at the expense of the party
seeking to modify the Mortgage Loan) to the effect that such modification
would not be treated as giving rise to a new debt instrument for federal
income tax purposes.
The relationship of the Master Servicer or any Servicer to the
Trustee under the Trust Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer or partner.
33
SECTION 3.11. CREDIT ENHANCEMENT
To the extent provided in the Trust Agreement, one or more forms
of Credit Enhancement shall be maintained for the benefit of the
Certificateholders. The Trust Agreement shall specify with respect to each
such form of Credit Enhancement, among other things, the manner in which
any funds relating to such Credit Enhancement are to be invested, the
source and manner of payment of any Credit Enhancement Fees, the
circumstances, if any, under which supplemental or replacement Credit
Enhancement shall be obtained, the manner in which such Credit Enhancement is
to be enforced, and whether such Credit Enhancement covers or will cover
other Series of Certificates.
ARTICLE IV
REPORTING/REMITTING TO CERTIFICATEHOLDERS
SECTION 4.01. STATEMENTS TO CERTIFICATEHOLDERS
Unless otherwise provided in the Trust Agreement: (i) on or before
each Master Servicer Reporting Date, the Master Servicer shall prepare and
deliver to Saxon and the Paying Agent a Monthly Statement and (ii) on the
Distribution Date following each Master Servicer Reporting Date, the Master
Servicer shall prepare and mail a copy of such Monthly Statement to the Trustee,
the Rating Agencies, the Underwriters and each Certificateholder.
In addition to the Monthly Statement, the Master Servicer shall
prepare and deliver to the Paying Agent prior to each Distribution Date, and
the Paying Agent shall forward to each Holder of a Residual Certificate, if
any, on each Distribution Date, a statement setting forth the amounts
actually distributed with respect to the Residual Certificates on such
Distribution Date and the aggregate Certificate Principal Balance, if any, of
any Residual Certificates after giving effect to any distribution to be made
on such Distribution Date, separately identifying the amount of Realized
Losses allocated to such Residual Certificates for the preceding Prepayment
Period.
Within a reasonable period of time after the end of each calendar
year, the Master Servicer shall prepare, based on information provided by
the Servicers, and deliver a statement setting forth the distributions (based
on a Certificate in the original principal amount of $1,000) allocable to
interest and principal to each Person who at any time during the calendar year
was a Certificateholder that constituted a retail investor or to any other
Certificateholder that requests such statement, aggregated for such calendar
year or portion thereof during which such Person was a Certificateholder. Such
obligation of the Master Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Master Servicer pursuant to any requirements of the Code as from time to time
are in effect.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer shall prepare and deliver to the Trustee, and the
Trustee shall forward by mail to each Person who at any time during such
calendar year was a Holder of a Residual Certificate, a statement containing
the information provided pursuant to the second preceding paragraph aggregated
for such calendar year. Such obligation of the Master Servicer shall be deemed
to have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Code as
from time to time are in effect.
Access to the Monthly Statements and other statements described in
this Section 4.01 may be provided via electronic on-line reports in lieu of
forwarding such statements by mail to Certificateholders provided that such
electronic on-line reports satisfy the requirements of the Code as from time to
time may be in effect.
SECTION 4.02. REMITTANCE REPORTS
The Master Servicer shall prepare and deliver to the Trustee by mail,
facsimile or electronic transfer on or before each Master Servicer Reporting
Date, the Remittance Report with respect to the following Distribution Date.
Each Remittance Report shall contain the information specified in
Exhibit C attached hereto. The information in such report shall be made
available by the Trustee to any Certificateholder that requests such report
in writing.
If the Master Servicer does not furnish the Remittance Report or
any other statement or report as required by this Section 4.02 or Section 4.01
hereof, or if an Officer of the Trustee has actual knowledge that any such
Remittance Report or other statement or report is erroneous or inaccurate in
any material respect, and if any such Remittance Report or other statement
or report is not furnished or corrected, as the case may be, within one
Business Day following the date it is due to be delivered, then the Trustee
shall request and the Master Servicer shall furnish by electromagnetic
tape (or such other medium as the Trustee and the Master Servicer may agree
from time to time) the information necessary to enable the Trustee to prepare
the Remittance Report and the other statements and reports as required by
this Section 4.02 and Section 4.01 hereof, and the Trustee shall thereupon
prepare such report and receive the Master Servicing Fee for such
month. Upon termination of the Master Servicer pursuant to Section 7.02
hereof, the Trustee shall thereafter undertake all the obligations of the
Master Servicer pursuant to this Section 4.02 and Section 4.01 hereof
and shall be entitled to the compensation otherwise payable to the Master
Servicer pursuant hereto in consideration of the performance of such
obligations.
34
The Trustee shall be under no duty and shall have no obligation to
recalculate, verify or recompute the information provided to it hereunder by
the Master Servicer.
SECTION 4.03. COMPLIANCE WITH WITHHOLDING REQUIREMENTS
Notwithstanding any other provision of the Trust Agreement, each of
the Trustee and the Paying Agent shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or
original issue discount on the Certificates that the Trustee or the
Paying Agent reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding.
If either the Trustee or the Paying Agent does withhold any amount from interest
or original issue discount payments or Advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Paying
Agent shall indicate with any payment to such Certificateholder the amount
withheld.
SECTION 4.04. REPORTS TO THE CLEARING AGENCY
If and for so long as any Certificate is held by a Clearing Agency,
on each Master Servicer Remittance Date, the Paying Agent shall telecopy a
copy of the Monthly Statement to the Clearing Agency together with a
statement as to (i) the Distribution Date and (ii) the Record Date for such
Distribution Date.
SECTION 4.05. PREPARATION OF REGULATORY REPORTS
(a) Subject to the provisions of subsections (b) and (c) of this
Section 4.05, the Master Servicer shall prepare or cause to be prepared, on
behalf of the Trust, and shall file or cause to be filed in a timely manner
such supplementary and periodic information, documents and reports
(collectively, "Periodic Reports") as may be required pursuant to Section
12(g) or Section 15(d) of the Exchange Act, by the rules and regulations of
the SEC thereunder or as a condition to approval of any application for
relief ("Application for Relief") hereinafter referred to and, in connection
therewith, shall prepare such applications and requests for exemption and other
relief from such provisions as it may deem appropriate. If any Periodic
Report is required to be signed by Saxon or the Trustee rather than by the
Master Servicer, the Master Servicer shall be deemed to certify as to each
Periodic Report delivered to Saxon or the Trustee for its review and
execution that such Periodic Report conforms in all material respects to
applicable reporting requirements imposed by the Exchange Act or is otherwise
in form and content appropriate for filing with the SEC. Saxon or the Trustee
shall execute all such Periodic Reports and Applications for Relief
delivered as provided above and shall return the same to the Master Servicer for
filing with the SEC and other required filing offices, if any, on behalf
of the Trust or shall authorize the Master Servicer to execute any such
Periodic Report or Application for Relief on the Trustee's behalf.
(b) Within 30 days after the beginning of the first fiscal
year of the Trust during which the obligation to file Periodic Reports
pursuant to the Exchange Act shall have been suspended, the Master Servicer
shall prepare, or cause to be prepared, a notice on SEC Form 15 ("Form 15")
and shall forward such notice to the Trustee for execution. The Trustee shall
execute each Form 15 delivered as provided above and shall return the same to
the Master Servicer for filing with the SEC on behalf of the Trust or shall
authorize the Master Servicer to execute such Form 15 on the Trustee's behalf;
provided, however, that the Master Servicer shall be under no obligation to
prepare such notice if the number of Certificateholders exceeds 300. The
Certificate Registrar shall notify the Master Servicer in a timely manner if
the number of Certificateholders at any one time exceeds 300. The Master
Servicer shall file any Form 15 with the SEC in accordance with the
provisions of Rule 15d-6 under the Exchange Act.
35
(c) Notwithstanding any other provision of this Agreement,
none of the Master Servicer, the Certificate Registrar, the Paying Agent,
or the Trustee has assumed, and shall not by its performance hereunder be
deemed to have assumed, any of the duties or obligations of Saxon or any
other Person with respect to (i) the registration of the Certificates pursuant
to the Securities Act, (ii) the issuance or sale of the Certificates or (iii)
compliance with the provisions of the Securities Act, the Exchange Act or any
applicable federal or state securities or other laws, including, but not
limited to, any requirement to update the registration statement or prospectus
relating to the Certificates in order to render the same not materially
misleading to investors.
(d) In connection with the Master Servicer's preparation of any
Form 15 or any Periodic Report, the Certificate Registrar shall provide the
Master Servicer with such information as the Master Servicer may
reasonably request concerning the number and identity of the Holders appearing
on the Certificate Register, but the Certificate Registrar shall have no
duty or obligation to provide information which does not appear on the
Certificate Register, including any information concerning the ownership
of Persons for whom a nominee is the Certificateholder of record.
ARTICLE V
THE POOLING INTERESTS AND THE CERTIFICATES
SECTION 5.01. POOLING REMIC INTERESTS
If an election has been made to treat certain assets of the Trust as a
Pooling REMIC, the Trust Agreement will set forth the terms of the Regular
Interests and the Residual Interest of the Pooling REMIC. Unless
otherwise provided in the Trust Agreement, (i) the Subaccounts will be the
Regular Interests in the Pooling REMIC but will not constitute securities or
certificates of interest in the Trust and (ii) the Trustee will be the owner
of the Subaccounts, which may not be transferred to any person other than a
successor trustee appointed pursuant to Section 8.07 hereof unless the party
desiring the transfer obtains a Special Tax Opinion.
SECTION 5.02. THE CERTIFICATES
The Certificates shall be designated in the Trust Agreement. The
Certificates in the aggregate will represent the entire beneficial ownership
interest in the Trust Estate. On the Closing Date, the aggregate
Certificate Principal Balance of the Certificates will be equal to or less
than the sum of (i) the aggregate Scheduled Principal Balance of the Initial
Mortgage Loans as of the Cut-Off Date and (ii) the amount in the Pre-Funded
Account. The Certificates will be substantially in the forms annexed to the
Trust Agreement. Unless otherwise provided in the Trust Agreement, the
Certificates of each Class will be issuable in registered form, in denominations
or authorized Percentage Interests as described in the definition thereof.
Each Certificate will share ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of Saxon upon
receipt by the Trustee of the documents specified in Section 2.01 hereof. The
Certificates shall be executed and attested by manual or facsimile signature
on behalf of the Trustee by an authorized Officer. Certificates bearing the
manual or facsimile signatures of individuals who were at any time the proper
Officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices
at the date of such Certificates. The Certificate shall be authenticated by a
manual signature of a duly authorized signatory of the Certificate Registrar.
No Certificate shall be entitled to any benefit under the Trust Agreement or be
valid for any purpose unless there appears on such Certificate a certificate of
authentication substantially in the form provided in the Trust Agreement
executed by the Certificate Registrar by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
under the Trust Agreement. All Certificates shall be dated the date of
their execution.
SECTION 5.03. BOOK-ENTRY CERTIFICATES
(a) The Book-Entry Certificates shall be represented initially by
one or more certificates registered in the name designated by the Clearing
Agency. Saxon, the Master Servicer the Certificate Registrar, the Paying
Agent and the Trustee may for all intents and purposes (including the
making of payments on the Book-Entry Certificates) deal with the Clearing
Agency as the authorized representative of the Beneficial Owners of the
Book-Entry Certificates for as long as such Certificates are registered in
the name of the Clearing Agency. The rights of Beneficial Owners of the
Book-Entry Certificates shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and
Clearing Agency Participants. The Beneficial Owners of the Book-Entry
Certificates shall not be entitled to certificates for the Book-Entry
Certificates as to which they are the Beneficial Owners, except as provided
in subsection (c) below. Requests and directions from, and votes of, the
Clearing Agency, as Certificateholder, shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners. A
Book-Entry Certificate may not be transferred by the Clearing Agency without
the consent of Saxon, the Master Servicer and the Trustee except to another
Clearing Agency that agrees to hold such Book-Entry Certificate for the
account of the respective Clearing Agency Participants and Beneficial Owners.
36
(b) Neither Saxon, the Master Servicer, the Certificate
Registrar, the Paying Agent nor the Trustee shall have any liability for any
aspect of the records relating to or payment made on account of Beneficial
Owners of the Book-Entry Certificates held by the Clearing Agency, for
monitoring or restricting any transfer of beneficial ownership in a Book-Entry
Certificate or for maintaining, supervising or reviewing any records
relating to such Beneficial Owners.
(c) The Book-Entry Certificates shall be issued in fully
registered, certificated form to Beneficial Owners of Book-Entry Certificates
or their nominees, rather than to the Clearing Agency or its nominee, only if
(i) Saxon advises the Trustee in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities as
depository with respect to the Book-Entry Certificates, and Saxon is unable to
locate a qualified successor within 30 days, or (ii) Saxon, at its option,
elects to terminate the book-entry system operating through the Clearing
Agency. Upon the occurrence of either such event, the Trustee shall notify the
Clearing Agency and the Certificate Registrar, which in turn shall notify all
Beneficial Owners of Book-Entry Certificates through Clearing Agency
Participants, of the availability of certificated Certificates. Upon
surrender by the Clearing Agency of the certificates representing the
Book-Entry Certificates and receipt of instructions for re-registration, the
Certificate Registrar shall reissue the Book-Entry Certificates as
certificated Certificates to the Beneficial Owners identified in
writing by the Clearing Agency. Such certificated Certificates shall not
constitute Book-Entry Certificates. All reasonable costs associated with the
preparation and delivery of certificated Certificates shall be borne by Saxon.
SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES
The Certificate Registrar shall cause to be kept at its Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges of
Certificates as provided in the Trust Agreement. The Certificate Registrar
designated in the related Trust Agreement shall initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as provided in the Trust Agreement.
Upon any resignation of any Certificate Registrar, the Trustee shall promptly
appoint, subject to Section 1.03 hereof, a successor or, in the absence of
such appointment, shall assume the duties of Certificate Registrar. The
Trustee shall have no liability or responsibility for any act or omission to
act of any Certificate Registrar (unless the Trustee is then serving as such
Certificate Registrar) appointed pursuant to the terms of the related Trust
Agreement. The Certificate Registrar shall be entitled to the same rights,
privileges and immunities accorded the Trustee pursuant to Article VIII hereof.
Subject to Section 5.05 hereof, upon surrender for registration of
transfer of any Certificate at the Corporate Trust Office of the Certificate
Registrar or at any other office or agency of the Certificate Registrar
maintained for such purpose, the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same Class of a
like aggregate Percentage Interest.
At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with the same and authorized
denominations and a like aggregate Percentage Interest upon surrender of such
Certificate to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute and
cause the Certificate Registrar to authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in a form satisfactory to the
Certificate Registrar duly executed by, the Holder of such Certificate or his
attorney duly authorized in writing.
37
No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
The Certificate Registrar shall provide notice to the Trustee of each
transfer of a Certificate and shall provide the Trustee and the Master Servicer
with an updated copy of the Certificate Register on January 1 and July 1 of
each year. If the Trustee shall not at any time be acting as the Certificate
Registrar, the Trustee shall have the right to inspect such Certificate
Register at all reasonable times and to rely conclusively upon a certificate of
the Certificate Registrar as to the names and addresses of the
Certificateholders and the Percentage Interests held by each.
SECTION 5.05. RESTRICTIONS ON TRANSFERS
(a) SECURITIES LAW COMPLIANCE. No transfer of any Private
Certificate shall be made unless that transfer is made pursuant to an
effective registration statement under the Securities Act and effective
registration or qualification under applicable state securities laws, or is
made in a transaction that does not require such registration or qualification.
Any Holder of a Private Certificate shall, and, by acceptance of such
Certificate, does agree to, indemnify Saxon, the Trustee, the Certificate
Registrar and the Master Servicer against any liability that may result if
any transfer of such Certificate by such Holder is not exempt from
registration under the Securities Act and all applicable state securities
laws or is not made in accordance with such federal and state laws. None of
Saxon, the Trustee, the Certificate Registrar or the Master Servicer is
obligated to register or qualify any Private Certificate under the Securities
Act or any other securities law or to take any action not otherwise required
under the Trust Agreement to permit the transfer of such Certificate without
such registration or qualification. The Certificate Registrar shall not
register any transfer of a Private Certificate (other than a Residual
Certificate) unless and until the prospective transferee provides the
Certificate Registrar with a Transferee Agreement or a Rule 144A Agreement
certifying to facts which, if true, would mean that the proposed transferee
is a Qualified Institutional Buyer, and unless and until the transfer
otherwise complies with the provisions of this Section 5.05. If the proposed
transferee of a Private Certificate does not certify to facts which, if true,
would mean that such proposed transferee is a Qualified Institutional Buyer,
the Certificate Registrar shall require that the transferor and such proposed
transferee certify as to the factual basis for the registration exemption(s)
relied upon, and if the transfer is made within three years of the acquisition
of such Certificate by a non-Affiliate of Saxon from Saxon or an Affiliate of
Saxon, the Master Servicer or the Certificate Registrar also may require
an Opinion of Counsel that such transfer may be made without registration or
qualification under the Securities Act and applicable state securities
laws, which Opinion of Counsel shall not be obtained at the expense of
Saxon, the Certificate Registrar or the Master Servicer. Notwithstanding
the foregoing, no Rule 144A Agreement, Transferee Agreement or Opinion of
Counsel shall be required in connection with the initial issuance of the
Private Certificates to Saxon, SMI, the Master Servicer, the Trustee or any
of their Affiliates.
Saxon shall provide to any Holder of a Private Certificate and any
prospective transferee that is a Qualified Institutional Buyer designated by
such Holder information regarding the related Certificates and the Mortgage
Loans and such other information as shall be necessary to satisfy the condition
to eligibility set forth in Rule 144A(d)(4) for transfer of any such
Certificate without registration thereof under the Securities Act pursuant to
the registration exemption provided by Rule 144A.
(b) REGULAR CERTIFICATES.
(i) PUBLIC SUBORDINATED CERTIFICATES. No Regular
Certificate that is a Public Subordinated Certificate shall be
transferred to a transferee that acknowledges that it is a Plan
Investor unless such transferee provides the Certificate Registrar
and the Master Servicer with a Benefit Plan Opinion. The transferee of
a Public Subordinated Certificate that does not provide the
Certificate Registrar and the Master Servicer with a Benefit Plan
Opinion will be deemed, by virtue of its acquisition of such
Certificate, to have represented that it is not a Plan Investor.
38
(ii) PRIVATE SUBORDINATED CERTIFICATES. No Regular
Certificate that is a Private Subordinated Certificate shall be
transferred unless the prospective transferee provides the Certificate
Registrar and the Master Servicer with a properly completed Benefit
Plan Affidavit, together with a Benefit Plan Opinion if required in
order to comply with such Benefit Plan Affidavit.
(c) RESIDUAL CERTIFICATES. No Residual Certificate (including any
beneficial interest therein) may be transferred to a Disqualified
Organization. In addition, no Residual Certificate (including any
beneficial interest therein) may be transferred unless (i) the proposed
transferee provides the Certificate Registrar and the Master Servicer with (A)
a Residual Transferee Agreement, (B) a Benefit Plan Affidavit, (C) a
Disqualified Organization Affidavit and (D) if the proposed transferee is a
Non-U.S. Person, a TAPRI Certificate, and (ii) the interest transferred
involves the entire interest in a Residual Certificate or an undivided
interest therein (unless the transferor or the transferee provides the
Master Servicer and the Certificate Registrar with an Opinion of Counsel
(which shall not be an expense of the Master Servicer or the Certificate
Registrar) that the transfer will not jeopardize the REMIC status of any
related REMIC). Notwithstanding the foregoing, the Residual Transferee
Agreement, Benefit Plan Affidavit, Disqualified Organization Affidavit or
TAPRI Certificate shall not be required to be provided upon original
issuance of a Residual Certificate to Saxon or SMI or any of their Affiliates
or to the Master Servicer, the Trustee or any of their Affiliates for the
purpose of acting as the Tax Matters Persons. Furthermore, if a proposed
transfer involves a Private Certificate, (i) the Certificate Registrar shall
require that the transferor and the transferee certify as to the
factual basis for the registration exemption(s) relied upon and (ii) if the
transfer is made within three years from the acquisition of the Certificate by a
non-Affiliate of Saxon from Saxon or an Affiliate of Saxon, the Certificate
Registrar also may require an Opinion of Counsel that such transfer may be made
without registration or qualification under the Securities Act and
applicable state securities laws, which Opinion of Counsel shall not be
obtained at the expense of the Certificate Registrar or the Master Servicer.
In any event, the Certificate Registrar shall not effect any transfer of a
Residual Certificate except upon notification of such transfer to the Master
Servicer. Notwithstanding the foregoing, no Opinion of Counsel shall be
required in connection with the initial issuance of the Residual Certificates
or their transfer by a broker or dealer, if such broker or dealer was the
initial transferee.
Upon notice to the Trustee that any legal or beneficial interest
in any portion of the Residual Certificates has been transferred, directly
or indirectly, to a Disqualified Organization or an agent thereof (including
a broker, nominee or middleman) in contravention of the foregoing
restrictions, (i) such transferee shall be deemed to hold the Residual
Certificates in constructive trust for the last transferor who was not a
Disqualified Organization or an agent thereof, and such transferor shall
be restored as the owner of such Residual Certificates as completely as if
such transfer had never occurred; provided, however, that the Trustee may,
but is not required to, recover any distributions made to such transferee
with respect to the Residual Certificates and return such recovery to the
transferor, and (ii) the Master Servicer agrees to furnish to the Internal
Revenue Service and to any transferor of the Residual Certificates or any such
agent (within 60 days of the request therefor by the transferor or such agent)
such information as may be necessary for the computation of the tax imposed
under section 860E(e) of the Code and as otherwise may be required by the
Code, including, but not limited to, the present value of the total
anticipated excess inclusions with respect to the Residual Certificates (or
portion thereof) for periods after such transfer. At the election of the
Master Servicer, the cost of computing and furnishing such information may
be charged to the transferor or the agent referred to above; provided,
however, that the Master Servicer shall in no event be excused from furnishing
such information.
If a tax or a reporting cost is borne by a REMIC as a result of the
transfer of a Residual Certificate (or any beneficial interest therein) in
violation of the restrictions set forth in this Section 5.05, the
transferor shall pay such tax or cost and, if such tax or cost is not
so paid, the Paying Agent, upon notification from the Master Servicer,
shall pay such tax or cost with amounts that otherwise would have been paid
to the transferee of the Residual Certificate (or the beneficial interest
therein). In that event, neither the transferee nor the transferor shall have
any right to seek repayment of such amounts from Saxon, the Trustee, any REMIC,
the Master Servicer, the Certificate Registrar, the Paying Agent or the
other Holders of any of the Certificates, and none of such parties shall have
any liability for payment of any such tax or reporting cost.
SECTION 5.06. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES
If (i) any mutilated Certificate is surrendered to the Trustee or
the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to its respective satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee or the
Certificate Registrar such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of actual knowledge by the
Trustee or the Certificate Registrar that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of the same Class and of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 5.06, the
Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Certificate
Registrar) connected therewith. Any replacement Certificate issued pursuant
to this Section 5.06 shall constitute complete and indefeasible evidence of
ownership in the Trust as if originally issued, whether or not the destroyed,
lost or stolen Certificate shall be found at any time.
39
SECTION 5.07. PERSONS DEEMED OWNERS
Prior to due presentation of a Certificate for registration of
transfer, the Master Servicer, the Trustee, the Paying Agent, the
Certificate Registrar and any agent of either of them may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions and for all other
purposes whatsoever, and neither the Master Servicer, the Trustee, the
Certificate Registrar, the Paying Agent nor any agent of either of them
shall be affected by notice to the contrary.
SECTION 5.08. PAYING AGENT
Any Paying Agent designated in the related Trust Agreement
shall make distributions to Certificateholders. Upon any resignation of
any Paying Agent, the Trustee shall promptly appoint, subject to Section
1.03 hereof, a successor or, in the absence of such appointment, shall
assume the duties of Paying Agent. No such resignation shall be effective
until the acceptance of appointment by the successor Paying Agent. The
Trustee shall have no liability or responsibility for any act or omission to
act of any Paying Agent appointed (unless the Trustee is then servicing as
such Paying Agent) pursuant to the terms of the related Trust Agreement. Any
such Paying Agent will hold all sums held by it for the payment to
Certificateholders in an Eligible Account in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to the
Certificateholders. Any Paying Agent shall be entitled to the same rights,
privileges and immunities accorded the Trustee pursuant to Article VIII hereof.
ARTICLE VI
SAXON AND THE MASTER SERVICER
SECTION 6.01. LIABILITY OF, AND INDEMNIFICATION BY, SAXON AND THE
MASTER SERVICER
Saxon and the Master Servicer shall each be liable in accordance
herewith only to the extent of the respective obligations specifically
imposed by the Trust Agreement and undertaken by Saxon and the Master
Servicer under the Trust Agreement.
The Master Servicer shall indemnify and hold harmless the Trustee,
Saxon and any director, officer, employee or agent thereof against any loss,
liability or expense, including reasonable attorney's fees, arising out of or
in connection with or incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties of the Master Servicer under
the Trust Agreement or by reason of reckless disregard of its obligations and
duties under the Trust Agreement. Any payment pursuant to this Section 6.01
made by the Master Servicer to Saxon, the Trustee shall be from such
entity's own funds, without reimbursement therefor. The provisions of this
Section 6.01 or shall survive the resignation or removal of the Master
Servicer and the termination of the Trust Agreement.
Saxon shall indemnify and hold harmless the Master Servicer and any
director, officer, employee or agent thereof against any loss, liability or
expense, including reasonable attorney's fees, incurred in connection with or
arising out of or in connection with the Trust Agreement (other than a loss,
liability or expense subject to indemnification by the Master Servicer
pursuant to the preceding paragraph), any custodial agreement or the
Certificates, including, but not limited to, any such loss, liability or
expense incurred in connection with any legal action against the Master Servicer
or any director, officer, employee or agent thereof, or the performance of
any of the Master Servicer's duties under the Trust Agreement other than
any loss, liability or expense incurred by reason of the Master Servicer's
willful misfeasance, bad faith or negligence in the performance of its duties
under the Trust Agreement or by reason of its reckless disregard of its
obligations and duties under the Trust Agreement. The provisions of this
Section 6.01 shall survive the resignation or removal of the Master Servicer
and the termination of the Trust Agreement.
40
SECTION 6.02. MERGER OR CONSOLIDATION OF SAXON OR THE MASTER SERVICER
Subject to the following paragraph, Saxon and the Master Servicer
each will keep in full effect its existence, rights and franchises under the
laws of the jurisdiction of its organization, and will obtain and preserve
its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Trust Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under the Trust Agreement.
Saxon or the Master Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all their respective assets
to any Person, in which case any Person resulting from any merger or
consolidation to which Saxon or the Master Servicer shall be a party, or any
Person succeeding to the business of Saxon or the Master Servicer, shall be
the successor of Saxon or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties to the Trust Agreement, anything herein to the
contrary notwithstanding.
SECTION 6.03. LIMITATION ON LIABILITY OF SAXON, THE
MASTER SERVICER AND OTHERS
Neither Saxon, the Master Servicer nor any of the directors,
officers, employees or agents of Saxon or the Master Servicer shall be under
any liability to the Trust or the Certificateholders, and all such Persons
shall be held harmless for any action taken or for refraining from the
taking of any action in good faith pursuant to the Trust Agreement, or for
errors in judgment; provided, however, that this provision shall not
protect any such Person against any breach of warranties or representations
made herein or against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of duties
or by reason of reckless disregard of obligations and duties under the Trust
Agreement. Saxon, the Master Servicer and any of the directors, officers,
employees or agents of Saxon or the Master Servicer may rely in good faith on
any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder. Neither
Saxon nor the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under the Trust Agreement and in its opinion does not
involve it in any expense or liability, except as provided in Section
10.01(b) hereof; provided, however, that Saxon or the Master Servicer may in
its discretion subject to Section 1.03 hereof undertake any such action that
it deems necessary or desirable with respect to the Trust Agreement and the
rights and duties of the parties thereto and the interests of the
Certificateholders thereunder if Saxon or the Master Servicer, as the case
may be, are offered reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby.
SECTION 6.04. RESIGNATION OF THE MASTER SERVICER
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon appointment of a successor master
servicer and receipt by the Trustee of a letter from each Rating Agency that
such a resignation and appointment will not, in and of itself, result in a
downgrading of any rated Certificates (without regard to any Credit
Enhancement) or (ii) upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting
the resignation of the Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor master servicer shall
have become the successor master servicer hereunder and agreed to perform the
responsibilities, duties, liabilities and obligations of the Master Servicer
that arise thereafter; provided, however, that no successor master
servicer shall (unless otherwise agreed) assume any liability for the
actions (or failure to act) of the Master Servicer prior to the date that
such successor becomes Master Servicer under the Trust Agreement.
41
SECTION 6.05. COMPENSATION TO THE MASTER SERVICER
The Master Servicer shall be entitled to receive a monthly fee as
compensation for services rendered by the Master Servicer under the Trust
Agreement. The monthly Master Servicing Fee with respect to the Trust shall
equal the amount set forth in the Trust Agreement, which may be retained by
the Master Servicer when it remits funds from the Master Servicer Custodial
Account to the Asset Proceeds Account. The Master Servicer also will be
entitled, as additional compensation, to any late reporting fees paid by a
Servicer pursuant to Section 450 of the Guide.
SECTION 6.06. ASSIGNMENT OR DELEGATION OF DUTIES BY MASTER SERVICER
Except as expressly provided in the Trust Agreement, the Master
Servicer shall not assign or transfer any of its rights, benefits or
privileges under the Trust Agreement to any other Person, or delegate
to or subcontract with, or authorize or appoint any other Person to perform any
of the duties, covenants or obligations to be performed by the Master
Servicer under the Trust Agreement, without the prior written consent of
the Trustee, and any agreement, instrument or act purporting to effect any
such assignment, transfer, delegation or appointment without such written
consent shall be void. Notwithstanding the foregoing, the Master Servicer
shall have the right without the prior written consent of the Trustee to
delegate to, subcontract with, authorize or appoint an affiliate of the
Master Servicer to perform and carry out any duties, covenants or obligations
to be performed and carried out by the Master Servicer under the Trust
Agreement and hereby agrees so to delegate, subcontract, authorize or
appoint to an affiliate of the Master Servicer any duties, covenants or
obligations to be performed and carried out by the Master Servicer under the
Trust Agreement to the extent that such duties, covenants or obligations are
to be performed in any state or states in which the Master Servicer is
not authorized to do business as a foreign corporation but in which the
affiliate is so authorized. In no case, however, shall any permitted
assignment relieve the Master Servicer of any liability under the Trust
Agreement.
ARTICLE VII
TERMINATION OF SERVICING AND MASTER SERVICING ARRANGEMENTS
SECTION 7.01. TERMINATION AND SUBSTITUTION OF SERVICING AGREEMENTS
Upon the occurrence of any event for which a Servicer may be
terminated pursuant to its Servicing Agreement, the Master Servicer shall
promptly deliver to Saxon, the Master Servicer and the Trustee, a
certificate of an Officer that an event has occurred that may justify
termination of such Servicing Agreement, describing the circumstances
surrounding such event. Subject to Section 1.03 hereof, the Master Servicer
may or shall terminate such Servicing Agreement.
If a Servicing Agreement is terminated, the Master Servicer shall
enter into a substitute Servicing Agreement with another mortgage loan
servicing company acceptable to the Master Servicer and Rating Agency under
which such mortgage loan servicing company shall assume, satisfy, perform and
carry out all liabilities, duties, responsibilities and obligations that are to
be, or otherwise were to have been, satisfied, performed and carried out by
the terminated Servicer under such terminated Servicing Agreement.
Notwithstanding the foregoing, no such substitute Servicing Agreement need
contain a covenant by the substitute Servicer to purchase Converted Mortgage
Loans. Until such time as the Master Servicer enters into a substitute
servicing agreement with respect to the Mortgage Loans, the Master Servicer
shall assume, satisfy, perform and carry out all obligations which otherwise
were to have been satisfied, performed and carried out by the terminated
Servicer under the terminated Servicing Agreement. In no event, however,
shall the Master Servicer be deemed to have assumed the obligations of a
Servicer to purchase any Mortgage Loan from the Trust pursuant to any
provision of the related Servicing Agreement or the Guide or to make Advances
with respect to any Mortgage Loan, except to the extent specifically provided
in Section 3.04 of the Standard Terms. As compensation to the Master
Servicer for any servicing obligations fulfilled or assumed by the Master
Servicer, the Master Servicer shall be entitled to any servicing compensation
to which the terminated Servicer would have been entitled if the Servicing
Agreement with such Servicer had not been terminated.
42
SECTION 7.02. TERMINATION OF MASTER SERVICER; TRUSTEE TO ACT
Each of the following shall constitute an Event of Default by the
Master Servicer of its obligations under the Trust Agreement:
(a) the Master Servicer shall fail duly to observe or perform in
any material respect any of its covenants or agreements (other than its
obligation to make an Advance pursuant to Section 3.04 hereof) contained in
the Trust Agreement and such failure shall continue unremedied for a period of
30 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by the
Trustee or to the Master Servicer and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(b) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under
any present or future federal or state bankruptcy, insolvency or similar law
or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged and unstayed for a period of 60
days; or
(c) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceeding of or relating to
the Master Servicer or relating to all or substantially all its property; or
(d) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations;
or
(e) the Master Servicer shall fail to remit funds in the Master
Servicer Custodial Account to the Asset Proceeds Account as required by
Section 3.01(c) hereof within one Business Day of the date that such funds are
due; or
(f) the Master Servicer shall fail to make any Advance or other
payment required by Section 3.04 or Section 3.05 hereof within one Business
Day of the date that such Advance or other payment is due.
The rights and obligations of the Master Servicer under the Trust
Agreement may be terminated only upon the occurrence of an Event of Default
and subject to Section 1.03 hereof. Subject to Section 1.03 hereof, if an
Event of Default described in clauses (a) through (d) of this Section 7.02
shall occur, then, and in each and every such case, so long as such Event
of Default shall not have been remedied, the Trustee may, and at the
direction of the Holders of Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the Master
Servicer, terminate all the rights and obligations of the Master Servicer
under the Trust Agreement, other than its rights as a Certificateholder.
Subject to Section 1.03 hereof if an Event of Default described in clauses (e)
and (f) of this Section 7.02 shall occur, the Trustee may terminate, by
notice in writing to the Master Servicer, all the rights and obligations
of the Master Servicer under the Trust Agreement, other than its rights as a
Certificateholder. On and after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under the Trust
Agreement, whether with respect to the Certificates (other than as a Holder
thereof) or the Mortgage Loans or otherwise, shall, to the maximum extent
permitted by law, pass to and be vested in the Trustee pursuant to and under
this Section 7.02 (provided, however, that the Master Servicer shall
continue to be entitled to receive all amounts accrued or owing to it under
the Trust Agreement on or prior to the date of such termination. Without
limiting the generality of the foregoing, the Trustee is hereby authorized
and empowered to execute and deliver on behalf of and at the expense of the
Master Servicer, as the Master Servicer's attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things that in the Trustee's sole and absolute judgment may be
necessary or appropriate, to effect such termination. Notwithstanding the
foregoing, upon any such termination the Master Servicer shall do all things
reasonably requested by the Trustee to effect the termination of the Master
Servicer's responsibilities, rights and powers under the Trust Agreement, and
the transfer thereof to the Trustee, including, but not limited to, promptly
providing to the Trustee (and in no event later than ten Business Days
subsequent to such notice) all documents and records electronic and otherwise
reasonably requested by the Trustee to enable the Trustee or its designee
to assume and carry out the duties and obligations that otherwise were to have
been performed and carried out by the Master Servicer but for such termination.
43
Upon any such termination, the Trustee shall, to the maximum extent
permitted by law, be the successor in all respects to the Master Servicer in its
capacity as master servicer under the Trust Agreement, but the Trustee shall
not have any liability for, or any duty or obligation to perform, any duties
or obligations of the Master Servicer required to be performed prior to the
date that the Trustee becomes successor master servicer.
As successor master servicer, the Trustee shall be entitled to the
fees to which the Master Servicer would have been entitled if the Master
Servicer had continued to act as such. The Trustee shall also, as
successor master servicer, be entitled to all the protections and
indemnification afforded to the Master Servicer pursuant to Section 6.03
hereof.
Notwithstanding the above but subject to Section 1.03 hereof, upon the
occurrence of an Event of Default, if the Trustee shall be unwilling so to
act, or shall, if it is unable so to act or, if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in
writing to the Trustee, promptly appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to each Rating Agency and having a net worth of not less
than $15,000,000 as the successor to the Master Servicer. No appointment of
a successor to the Master Servicer shall be effective until the assumption
by such successor of all future responsibilities, duties and liabilities of
the Master Servicer under the Trust Agreement. Pending appointment of a
successor to the Master Servicer, the Trustee or an affiliate shall, to the
maximum extent permitted by law, act in such capacity as hereinabove provided.
In connection with any such appointment and assumption described
herein, the Trustee may make such arrangements for the compensation of such
successor out of payments received on the assets included in the Trust Estate
as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Master Servicer under
the Trust Agreement. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Upon the occurrence of any Event of Default, the Trustee, in
addition to the rights specified in this Section 7.02, shall have the right, in
its own name and as Trustee, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the
Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). No remedy provided for by the Trust
Agreement shall be exclusive of any other remedy, each and every remedy shall
be cumulative and in addition to any other remedy and no delay or failure to
exercise any right or remedy shall impair any such right or remedy or shall be
deemed to be a waiver of any Event of Default.
For the purposes of this Section 7.02 and Section 8.01 hereof, the
Trustee shall not be deemed to have knowledge of an Event of Default unless an
Officer of the Trustee has actual knowledge thereof or unless written notice
of such Event of Default is received by the Trustee at its Corporate
Trust Office and such notice references the Certificates, the Trust or the
Trust Agreement.
SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS
(a) Upon any termination pursuant to Section 7.01 or Section 7.02
hereof, or any appointment of a successor to a Servicer or the Master
Servicer, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default or
the Trustee's receipt of notice of the occurrence of any event permitting
termination of a Servicer, the Trustee shall transmit by mail to the
Certificateholders notice of each such Event of Default or event known to
the Trustee, unless such Event of Default or event shall have been cured or
waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. DUTIES OF TRUSTEE
The Trustee, prior to the occurrence of an Event of Default and
after the curing of each Event of Default, undertakes to perform such
duties and only such duties as are specifically set forth in the Trust
Agreement. During an Event of Default of which the Trustee has notice, the
Trustee shall exercise such of the rights and powers vested in it by the
Trust Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of such person's own affairs.
44
The Trustee, upon receipt of any resolution, certificate, statement,
opinion, report, document, order or other instrument specifically required to
be furnished to it pursuant to any provision of the Trust Agreement, shall
examine such instrument to determine whether it conforms to the
requirements of the Trust Agreement; provided, however, that the Trustee
shall be under no duty to recalculate, verify or recompute any information
provided to it hereunder by Saxon or the Master Servicer. If any such
instrument is found not to conform to the requirements of the Trust Agreement
in a material manner, the Trustee shall take action as it deems appropriate
to have the instrument corrected, and if the instrument is not corrected to
the Trustee's satisfaction, the Trustee shall provide notice thereof to the
Certificateholders.
No provision of the Trust Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(a) prior to the occurrence of an Event of Default, and after the
curing of each Event of Default, the duties and obligations of the Trustee
shall be determined solely by the express provisions of the Trust
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in the Trust
Agreement, no implied covenants or obligations shall be read into the Trust
Agreement against the Trustee and, in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee that conform to the
requirements of the Trust Agreement;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by an Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under the Trust Agreement;
(d) any determination of negligence or bad faith of the Trustee
shall be made only upon a finding that there is clear and convincing evidence
(and not upon the mere preponderance of evidence) thereof in a proceeding
before a court of competent jurisdiction in which the Trustee has had an
opportunity to defend; and
(e) in no event shall the Trustee be held liable for the actions or
omissions of the Master Servicer or a Servicer (excepting the Trustee's own
actions as Master Servicer or Servicer), and in connection with any action or
claim for recovery sought against the Trustee based upon facts involving the
acts or omissions of the Master Servicer or Saxon, or involving any allegation
or claim of liability or recovery against the Trustee by the Master Servicer
or by a Seller, the Trustee shall not be held to a greater standard of care
than the Master Servicer or the Seller would be held in such situation. No
provision of the Trust Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it unless such risk or liability relates to duties set
forth herein (which duties shall not be deemed to include actions required
to be taken by the Trustee arising out of the failure of another person to
take any required action hereunder).
SECTION 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE
(a) Except as otherwise provided in Section 8.01 hereof:
(i) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate of
auditors or other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties. Further, the Trustee may
accept a copy of the vote of the Board of Directors of any party
certified by its clerk or assistant clerk or secretary or assistant
secretary as conclusive evidence of the authority of any person to act
in accordance with such vote, and such vote may be considered as in
full force and effect until receipt by the Trustee of written notice to
the contrary;
45
(ii) the Trustee may, in the absence of bad faith on its
part, rely upon a certificate of an Officer of the appropriate Person
whenever in the administration of the Trust Agreement the Trustee shall
deem it desirable that a matter be proved or established (unless
other evidence be herein specifically prescribed) prior to taking,
suffering or omitting any action hereunder;
(iii) the Trustee may consult with counsel chosen with due
care and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such written advice or Opinion of Counsel;
(iv) the Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by the Trust Agreement or to
institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of the Trust Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(v) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by the Trust Agreement;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing to do so by the Holders of Certificates entitled to at
least 25% of the Voting Rights; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not assured to
the Trustee by the security afforded to it by the terms of the Trust
Agreement, the Trustee may require indemnity against such expense or
liability as a condition to taking any such action. The expense
of every such investigation shall be paid by the Master Servicer
or, if paid by the Trustee, shall be repaid by the Master Servicer
upon demand;
(vii) the Trustee may execute any of the trusts or powers
under the Trust Agreement or perform any duties thereunder either
directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under the Trust
Agreement;
(viii) whenever the Trustee is authorized herein to require
acts or documents in addition to those required to be provided it in
any matter, it shall be under no obligation to make any
determination whether or not such additional acts or documents should
be required unless obligated to do so under Section 8.01 hereof;
(ix) the permissive right or authority of the Trustee to take
any action enumerated in the Trust Agreement shall not be construed as
a duty or obligation; and
(x) the Trustee shall not be deemed to have notice of any
matter, including, but limited to, any Event of Default, unless an
Officer of the Trustee has actual knowledge thereof or unless
written notice thereof is received by the Trustee at its Corporate
Trust Office and such notice references the Certificates, the Trust or
the Trust Agreement.
(b) All rights of action under the Trust Agreement or under
any of the Certificates that are enforceable by the Trustee may be enforced
by the Trustee without the possession of any of the Certificates, or the
production thereof at any trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee shall be brought in
its name for the benefit of all the Holders of such Certificates, subject to
the provisions of the Trust Agreement.
46
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS
The recitals contained in the Trust Agreement and in the
Certificates (other than the signature and countersignature of the Trustee
on the Certificates) shall be taken as the statements of Saxon, and the
Trustee assumes no responsibility for their correctness. The Trustee makes
no representations or warranties as to the validity or sufficiency of the
Trust Agreement or the Certificates (other than the signature and
countersignature of the Trustee on the Certificates) or of any Mortgage
Loan or related document. The Trustee shall not be accountable for the use
or application by Saxon of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of any funds paid to
Saxon in respect of the Mortgage Loans or deposited in or withdrawn from the
Asset Proceeds Account or the Master Servicer Custodial Account other than any
funds held by or on behalf of the Trustee in accordance with Sections 3.01
and 3.02 hereof or as owner of the Regular Interests of the Pooling REMIC.
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES
The Trustee, the Paying Agent, the Certificate Registrar or the
Custodian in its respective individual capacity or any other capacity may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee, the Paying Agent, the Certificate Registrar or the
Custodian.
SECTION 8.05. TRUSTEE'S FEES
The Trustee shall be entitled to receive the Trustee Fee as
compensation for its services under the Trust Agreement. The Trustee Fee shall
be payable from amounts received with respect to the Mortgage Loans.
Saxon shall indemnify and hold harmless the Trustee, the Paying Agent, the
Certificate Registrar or the Custodian and any director, officer, employee or
agent thereof against any loss, liability or expense, including reasonable
attorney's fees, incurred in connection with or arising out of or in
connection with the Trust Agreement (other than a loss, liability or expense
subject to indemnification by the Master Servicer pursuant to Section 6.01
hereof), any custodial agreement or the Certificates, including, but not
limited to, any such loss, liability or expense incurred in connection with
any legal action against the Trust or the Trustee, the Paying Agent, the
Certificate Registrar or the Custodian or any director, officer, employee or
agent thereof, or the performance of any of the duties of the Trustee, the
Paying Agent or the Certificate Registrar under the Trust Agreement or the
duties of the Custodian under any custodial agreement other than any loss,
liability or expense incurred by reason of the willful misfeasance, bad
faith or negligence in the performance of the duties under the Trust
Agreement or by reason of the willful misfeasance, bad faith or gross
negligence of the Custodian under any custodial agreement (including
specifically any loss, liability or expense incurred by the Custodian by reason
of simple negligence under any custodial agreement). The provisions of
this Section 8.05 shall survive the resignation or removal of the Trustee,
the Paying Agent or the Certificate Registrar and the termination of the
Trust Agreement and the resignation or removal of the Custodian under any
custodial agreement. The Trustee may receive an additional indemnity from a
party acceptable to the Trustee.
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE
The Trustee shall at all times be a bank or trust company that:
(i) is not an Affiliate, (ii) is organized and doing business under the laws
of the United States or any state thereof and is authorized under such laws
to exercise corporate trust powers, (iii) has a combined capital and surplus
of at least $50,000,000, and (iv) is subject to supervision or examination by
a federal or state authority. If such bank or trust company publishes reports
of its condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 8.06 the combined capital and surplus of such bank or trust
company shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07 hereof.
SECTION 8.07. RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may at any time resign and be discharged from the
trusts created pursuant to the Trust Agreement by giving written notice
thereof to Saxon, the Master Servicer and all Certificateholders. Upon
receiving such notice of resignation, Saxon shall promptly, subject to
Section 1.03 hereof, appoint a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. Saxon shall deliver a copy of such instrument to
the Certificateholders, the Master Servicer and each Servicer. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
47
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request therefor by Saxon, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
Saxon, subject to Section 1.03 hereof, may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, which instrument
shall be delivered to the Trustee so removed and to the successor trustee.
Saxon shall also deliver a copy of such instrument to the Certificateholders,
the Master Servicer and each Servicer.
Subject to Section 1.03 hereof, the Holders of Certificates entitled
to at least 51% of the Voting Rights may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to each
of Saxon, the Trustee so removed and the successor so appointed. Saxon
shall deliver a copy of such instruments to the Certificateholders, the Master
Servicer and each Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until acceptance of appointment by the
successor trustee as provided in Section 8.08 hereof.
SECTION 8.08. SUCCESSOR TRUSTEE
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to Saxon, the Master Servicer and the
predecessor trustee an instrument accepting such appointment under the Trust
Agreement, and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor thereunder, with the like effect as
if originally named as trustee therein. The predecessor trustee shall
deliver, or cause to be delivered, to the successor trustee all Trustee
Mortgage Loan Files and related documents and statements held by it under the
Trust Agreement, and Saxon, the Master Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof.
Upon acceptance of appointment by a successor trustee as provided
in this Section, Saxon shall mail notice of the succession of such trustee
under the Trust Agreement to all Certificateholders at their addresses as
shown in the Certificate Register. If Saxon fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of Saxon.
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Person succeeding to the business of the Trustee, shall be the successor of
the Trustee under the Trust Agreement provided such Person shall be eligible
under the provisions of Section 8.06 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
48
SECTION 8.10. APPOINTMENT OF TRUSTEE OR SEPARATE TRUSTEE
For the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust or property securing the same may at the time be
located, Saxon, the Master Servicer and the Trustee acting jointly, subject to
Section 1.03 hereof, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee
or trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as Saxon, the Master Servicer or the
Trustee may consider necessary or desirable. If Saxon or the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Trustee alone shall have the power to
make such appointment. No co-trustee(s) or separate trustee(s) hereunder
shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 hereof and no notice to Certificateholders
of the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as Trustee
under the Trust Agreement or as successor to the Master Servicer pursuant to
Section 7.02 hereof), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to the Trust
Agreement and the conditions of this Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject
to all the provisions of the Trust Agreement, specifically including every
provision of the Trust Agreement relating to the conduct of or affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the 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 or
in respect of the Trust Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee. Any expense associated
with the appointment of a separate trustee or co-trustee shall not be an
expense of the Master Servicer.
SECTION 8.11. APPOINTMENT OF CUSTODIANS
The appointment of the Custodian may at any time be terminated and
a substitute Custodian appointed therefor by the Trustee, subject to Section
1.03 hereof, pursuant to a Custody Agreement satisfactory in form and substance
to the Trustee. Subject to Section 1.03 hereof, the Trustee shall terminate
the appointment of any Custodian and appoint a substitute custodian upon
the request of the Master Servicer. The Trustee agrees to comply with the
terms of each custodial agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders. Each
Custodian shall be a depository institution or trust company subject to
supervision by federal or state authority, shall have combined capital and
surplus of at least $10,000,000 and shall be qualified to do business in the
jurisdiction in which it holds any Trustee Mortgage Loan File. Any such
Custodian may not be an affiliate of Saxon or any Seller.
49
SECTION 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES
All rights of action and claims under the Trust Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name or in its capacity as Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been recovered.
ARTICLE IX
TERMINATION OF THE TRUST; PURCHASE OF CERTIFICATES
SECTION 9.01. TERMINATION OF TRUST
The Trust created under a Trust Agreement and all obligations created
thereby will terminate upon the payment to the Holders of all Certificates
(including the Certificate Insurer, pursuant to its subrogation and
reimbursement rights), from amounts other than those available under the
Certificate Insurance Policies, of all amounts held by the Trustee and
required to be paid to such Holders pursuant to this Agreement upon the last
to occur of (a) the final payment or other liquidation (or any advance made
with respect thereto) of the last Mortgage Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate and (c) if an election has been made to treat certain
assets of the Trust as a REMIC, at any time when a Qualified Liquidation of
the REMIC is effected as described below. To effect a termination of this
Agreement pursuant to clause (c) above, the Holders of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the REMIC
to adopt a plan of complete liquidation , as contemplated by Section
860F(a)(4) of the Code and as prepared by the Master Servicer and (ii)
provide to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that such liquidation
constitutes, as to the REMIC, a Qualified Liquidation, and the Trustee either
shall sell the assets constituting the REMIC and distribute the proceeds of
the liquidation of the Trust Estate, or shall distribute equitably in kind
all the assets of the Trust Estate to the remaining Holders of the Certificates
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and
the termination of this Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. The Holders of the
Certificates agree, by acceptance of Certificates, that there may be no
claim under any Certificate Insurance Policy following termination of the
Trust pursuant to clause (c) of the first sentence of this Section 9.01 without
the consent of the Certificate Insurer. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of
twenty-one (21) years from the death of the last survivor of the descendants of
Xxxxxx Xxxxxxx Xxxxxx Xxxx, former President of the United States, living on
the date hereof. The Trustee shall give written notice of termination of
the Agreement to each Holder and Certificate Insurer in the manner set forth
in Section 11.05 hereof.
SECTION 9.02. OPTIONAL TERMINATION
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, Saxon or the Holders of a majority in Percentage
Interests of the Class of Certificates designated in the Trust Agreement (the
"Designated Class") may determine to purchase and may cause the purchase
from the Trust of all (but not fewer than all) Mortgage Loans and all
property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in
the Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the
Mortgage Loans during the current Remittance Period, plus one month's
interest on such amount computed at the Adjusted Pass-Through Rate, plus in
all cases all accrued and unpaid Servicing Fees and Master Servicing Fees plus
any unpaid Reimbursement Amounts plus the aggregate amount of any unreimbursed
Advances and any Advances which a Servicer or the Master Servicer has
theretofore failed to remit; but in any event such purchase amount shall be
sufficient to retire all other Certificates in full. In connection with such
purchase, the Master Servicer shall remit to the Trustee (or the Paying Agent
on behalf of the Trustee) all amounts then on deposit in the Master Servicer
Custodial Account for deposit to the Asset Proceeds Account, which deposit
shall be deemed to have occurred immediately preceding such purchase.
50
(b) If an election has been made to treat certain assets of the
Trust as a REMIC, in connection with any such purchase, Saxon or such
Holders shall direct the Trustee to adopt and the Trustee shall adopt, as to
the REMIC, a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and as prepared by the Master Servicer, and shall
provide to the Trustee an Opinion of Counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that such purchase and
liquidation constitutes, as to the REMIC, a Qualified Liquidation. In
addition, Saxon or such Holders shall provide to the Trustee an Opinion of
Counsel acceptable to the Trustee to the effect that such purchase and
liquidation does not constitute a preference payment pursuant to the United
States Bankruptcy Code.
(c) Promptly following any purchase described in this Section
9.02, the Trustee will release the Trustee Mortgage Loan File to the Holders of
the Designated Certificates or otherwise upon their order.
SECTION 9.03. OPTIONAL PURCHASE
On any Distribution Date on or after the Initial Optional Termination
Date, the Holders of a majority in Percentage Interests of the Designated
Class may purchase the Certificates of all other Classes by depositing with
the Paying Agent on the preceding Master Servicer Remittance Date an
amount equal to the Certificate Principal Balance of such Certificates on such
Distribution Date plus interest thereon to such Distribution Date.
SECTION 9.04. TERMINATION UPON LOSS OF REMIC STATUS
If a REMIC has been formed with respect to all or any portion of the
Trust Estate:
(a) Following a final determination by the Internal Revenue
Service or by a court of competent jurisdiction, in either case from which
no appeal is taken within the permitted time for such appeal, or if any
appeal is taken, following a final determination of such appeal from which no
further appeal may be taken, to the effect that the REMIC does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar
days following such Final Determination (i) the Certificate Insurer or the
Holders of a majority in Percentage Interests of the Regular Certificates
then outstanding with the consent of the Certificate Insurer may direct the
Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
prepared by the Master Servicer, and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect
of any Mortgage Loan then remaining in the Trust Estate at a price equal to
the sum of (x) the greater of (i) 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans as of the day of purchase minus amounts remitted
from the Master Servicer Custodial Account representing collections of
principal on the Mortgage Loans during the current Remittance Period and (ii)
the fair market value of such Mortgage Loans (disregarding accrued interest),
(y) one month's interest on such amount computed at the Adjusted Pass-Through
Rate and (z) the aggregate amount of any unreimbursed Advances and any
Advances which a Servicer or Master Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Servicers and the Holders of the Residual Certificates
of such election to liquidate or such determination to purchase, as the case
may be (the "Termination Notice"). The Holders of a majority of the
Percentage Interest of the Residual Certificates then Outstanding may,
within 60 days from the date of receipt of the Termination Notice (the
"Purchase Option Period"), at their option, purchase from the Trust all (but
not fewer than all) Mortgage Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise in respect of any
Mortgage Loan then remaining in the Trust Estate at a purchase price equal to
the aggregate Scheduled Principal Balances of all Mortgage Loans as of the
date of such purchase, plus (a) one month's interest on such amount at the
Adjusted Pass-Through Rate, (b) the aggregate amount of any unreimbursed
Advances and unpaid Servicing Fees and Master Servicing Fees, (c) any Advances
which a Servicer or Master Servicer has theretofore failed to remit and (d)
any outstanding Reimbursement Amount.
If, during the Purchase Option Period, the Holders of the Residual
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period
(i) if the Certificate Insurer or the Holders of a majority in Percentage
Interests of the Regular Certificates with the consent of the Certificate
Insurer have given the Trustee the direction described in clause (a)(i)
above, the Trustee shall sell the Mortgage Loans and reimburse the Servicers or
Master Servicer for unreimbursed Advances, Master Servicing Fees, and
Servicing Fees and distribute the remaining proceeds of the liquidation of the
Trust Estate, each in accordance with the plan of complete liquidation,
such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 60th day, or such later day as
the Certificate Insurer or Holders with the consent of the Certificate
Insurer shall permit or direct in writing, after the expiration of the
Purchase Option Period and (ii) if the Certificate Insurer has given the
Trustee notice of the Certificate Insurer's determination to purchase the
Trust Estate described in clause (a)(ii) above, the Certificate Insurer
shall, within 60 days, purchase all (but not fewer than all) Mortgage Loans and
all property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate. In connection with such purchase, the Master Servicer shall
remit to the Trustee (or the Paying Agent on behalf of the Trustee) all amounts
then on deposit in the Master Servicer Custodial Account for deposit to the
Asset Proceeds Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
51
(b) Following a Final Determination, the Holders of a majority in
Percentage Interests of the Residual Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an Opinion of
Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer selected by such Holders which opinion shall be reasonably
satisfactory in form and substance to the Certificate Insurer to the effect
that the effect of the Final Determination is to increase substantially the
probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Mortgage Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Scheduled
Principal Balances of all Mortgage Loans as of the date of such purchase,
plus (a) one month's interest on such amount computed at the Adjusted
Pass-Through Rate, (b) the aggregate amount of unreimbursed Advances,
Servicing Fees and Master Servicing Fees, (c) the interest portion of any
Advances which a Servicer or Master Servicer has theretofore failed to remit
and (d) any outstanding Reimbursement Amount. In connection with such
purchase, the Master Servicer shall remit to the Trustee (or the Paying Agent
on behalf of the Trustee) all amounts then on deposit in the Master Servicer
Custodial Account for deposit to the Asset Proceeds Account, which deposit
shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Certificate
Insurer gives such Holders notice that such opinion is not satisfactory
within thirty days after receipt of such opinion. In connection with any
such purchase, such Holders shall direct the Trustee to adopt a plan of
complete liquidation acceptable to the Certificate Insurer, as prepared by
the Master Servicer and shall provide to the Trustee and the Certificate
Insurer an Opinion of Counsel experienced in federal income tax matters
to the effect that such purchase constitutes, as to the REMIC, a Qualified
Liquidation.
SECTION 9.05. DISPOSITION OF PROCEEDS
The Trustee (or the Paying Agent on behalf of the Trustee) shall
deposit the proceeds of any liquidation of the Trust Estate pursuant to this
Article IX to the Asset Proceeds Account for application as provided in the
Trust Agreement; provided, however, that any amounts representing unrecovered
Advances which the Master Servicer determined to be non-recoverable and
unreimbursed Advances, accrued and unpaid Master Servicing Fees, and
Servicing Fees theretofore funded by a Servicer from such Servicer's own
funds shall be paid by the Trustee (or the Paying Agent on behalf of the
Trustee) to the Master Servicer or such Servicer, respectively, from the
proceeds of the Trust Estate.
ARTICLE X
REMIC TAX PROVISIONS
SECTION 10.01. REMIC ADMINISTRATION
(a) Unless otherwise specified in the Trust Agreement, the
Trustee shall elect (on behalf of each REMIC to be created) to have the Trust
(or designated assets thereof) treated as one or more REMICs on Form 1066 or
such other appropriate federal tax or information return for the taxable
year ending on the last day of the calendar year in which the Certificates are
issued as well as on any corresponding state tax or information return
necessary to have the Trust (or such assets) treated as one or more REMICs under
state law.
(b) The Master Servicer shall pay any and all tax related expenses
(not including taxes) of the Trust and each REMIC, including, but not
limited to, any professional fees or expenses related to (i) audits or any
administrative or judicial proceedings with respect to each REMIC that
involve the Internal Revenue Service or state tax authorities or (ii) the
adoption of a plan of complete liquidation.
52
(c) The Master Servicer shall prepare any necessary forms for
election as well as all the Trust's and each REMIC's federal and state tax and
information returns. At the request of the Master Servicer, the Trustee
shall sign and file such returns on behalf of each REMIC. The expenses of
preparing and filing such returns shall be borne by the Master Servicer.
(d) The Master Servicer shall perform all reporting and other
tax compliance duties that are the responsibility of the Trust and each REMIC
under the REMIC Provisions or state or local tax law. Among its other duties,
if required by the REMIC Provisions, the Master Servicer, acting as agent of
each REMIC, shall provide (i) to the Treasury or other governmental authority
such information as is necessary for the application of any tax relating to
the transfer of a Residual Certificate to any Disqualified Organization and
(ii) to the Trustee such information as is necessary for the Trustee to
discharge its obligations under the REMIC Provisions to report tax
information to the Certificateholders.
(e) Saxon, the Master Servicer, the Trustee (to the extent it
has been instructed by Saxon or the Master Servicer), and the Holders of the
Residual Certificates shall take any action or cause any REMIC to take any
action necessary to create or maintain the status of such REMIC as a REMIC
under the REMIC Provisions and shall assist each other as necessary to create
or maintain such status.
(f) Saxon, the Master Servicer, the Trustee (to the extent it
has been instructed by Saxon or the Master Servicer), and the Holders of the
Residual Certificates shall not take any action required by the Code or REMIC
Provisions or fail to take any action, or cause any REMIC to take any action
or fail to take any action, that, if taken or not taken, could endanger the
status of any such REMIC as a REMIC unless the Trustee and the Master Servicer
have received an Opinion of Counsel (at the expense of the party seeking to
take or to fail to take such action) to the effect that the contemplated action
or failure to act will not endanger such status.
(g) Unless otherwise provided in the Trust Agreement, any taxes
that are imposed upon the Trust or any REMIC by federal or state (including
local) governmental authorities (other than taxes paid by a party pursuant to
Section 10.02 hereof or as provided in the following sentence) shall be
allocated in the same manner as Realized Losses are allocated. Any taxes
imposed upon the Trust or any REMIC by the jurisdiction (or any subdivision
thereof) in which the Corporate Trust Office of the Trustee is located
that would not have been imposed on the Trust or such REMIC in the absence of
any legal or business connection between the Trustee and such jurisdiction
(or locality), shall be paid by the Trustee and, notwithstanding anything to
the contrary in the Trust Agreement, such taxes shall be deemed to be part of
the Trustee's cost of doing business and shall not be reimbursable to the
Trustee.
(h) Unless otherwise provided in the Trust Agreement, the Master
Servicer or an Affiliate shall acquire a Residual Certificate in each REMIC
and will act as the Tax Matters Person of each REMIC and perform various tax
administration functions of each REMIC as its agent. If the Master Servicer
or an Affiliate is unable for any reason to fulfill its duties as Tax
Matters Person for a REMIC, the holder of the largest Percentage Interest
of the Residual Certificates in such REMIC shall become the successor Tax
Matters Person of such REMIC.
SECTION 10.02. PROHIBITED ACTIVITIES
Except as otherwise provided in the Trust Agreement, neither Saxon,
the Master Servicer, the Holders of the Residual Certificates, nor the
Trustee shall engage in, nor shall the parties permit, any of the following
transactions or activities unless it has received (i) a Special Tax Opinion
and (ii) a Special Tax Consent from each of the Holders of the Residual
Certificates (unless the Special Tax Opinion specially provides that no
REMIC-level tax will result from the transaction or activity in question):
(i) the sale or other disposition of, or substitution for,
any Mortgage Loan except pursuant to (A) a foreclosure or default with
respect to such Mortgage Loan, (B) the bankruptcy or insolvency of any
REMIC, (C) the termination of any REMIC pursuant to Section 9.02
hereof or (D) a substitution or purchase in accordance with Section 2.03
hereof;
53
(ii) the acquisition of any Mortgage Loan for the Trust after
the Closing Date except (A) during the three-month period beginning
on the Closing Date pursuant to a fixed price contract in effect on the
Closing Date that has been reviewed and approved by tax counsel
acceptable to the Master Servicer or (B) a substitution in accordance
with Section 2.03 hereof;
(iii) the sale or other disposition of any investment in the
Asset Proceeds Account at a gain;
(iv) the sale or other disposition of any asset held in a
Reserve Fund for a period of less than three months (a "Short-Term
Reserve Fund Investment") if such sale or other disposition would
cause 30% or more of a REMIC's income from such Reserve Fund for the
taxable year to consist of gain from the sale or disposition of
Short-Term Reserve Fund Investments;
(v) the withdrawal of any amounts from any Reserve Fund
except (A) for the distribution pro rata to the Holders of the
Residual Certificates or (B) to provide for the payment of expenses
of the related REMIC or amounts payable on the Certificates in the
event of defaults or late payments on the Mortgage Loans or lower
than expected returns on funds held in the Asset Proceeds Account,
as provided under section 860G(a)(7) of the Code;
(vi) the acceptance of any contribution to the Trust except
(A) a cash contribution received during the three month period
beginning on the Closing Date, (B) any transfer of funds from a
Mortgagor Bankruptcy Fund, Special Hazard Fund or Interest Fund
to the Asset Proceeds Account, (C) a cash contribution to a Reserve
Fund owned by a REMIC that is made pro rata by the Holders of the
Residual Certificates, (D) a cash contribution to facilitate a
Terminating Purchase that is made within the 90-day period beginning
on the date on which a plan of complete liquidation is adopted
pursuant to Section 9.04(a)(A) hereof, or (E) any other cash
contribution approved by the Master Servicer after consultation with
tax counsel; or
(vii) any other transaction or activity that is not
contemplated by the Trust Agreement.
Any party causing the Trust to engage in any of the activities
prohibited in this Section 10.02 shall be liable for the payment of any tax
imposed on the Trust pursuant to section 860F(a)(1) or 860G(d) of the Code as
a result of the Trust engaging in such activities.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENT OF TRUST AGREEMENT
The Trust Agreement may be amended or supplemented from time to time
by Saxon, the Master Servicer and the Trustee, subject to Section 1.03
hereof, but without the consent of any of the Certificateholders (i) to cure
any ambiguity, (ii) to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein, (iii) to modify,
eliminate or add to any of its provisions to such extent as shall be
necessary or appropriate to maintain the qualification of the Trust (or
certain assets thereof) either as a REMIC or as a grantor trust, as applicable
under the Code at all times that any Certificates are outstanding or (iv) to
make any other provisions with respect to matters or questions arising
under the Trust Agreement or matters arising with respect to the Trust that
are not covered by the Trust Agreement, provided that such action shall not
adversely affect in any material respect the interests of any
Certificateholder. Any such amendment or supplement shall be deemed not to
adversely affect in any material respect any Certificateholder if there is
delivered to the Trustee written notification from each Rating Agency to
the effect that such amendment or supplement will not cause such Rating
Agency to reduce the then current rating assigned to such Certificates.
The Trust Agreement may also be amended from time to time by Saxon,
the Master Servicer and the Trustee, subject to Section 1.03 hereof, and with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount
of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the
Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other
than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights of
such Class, or (iii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all such Certificates then outstanding. For
purposes of the giving or withholding of consents pursuant to this Section
11.01, Certificates registered in the name of Saxon or an Affiliate shall be
entitled to Voting Rights with respect to matters affecting such Certificates.
54
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
SECTION 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS
To the extent permitted by applicable law, the Trust Agreement
is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in
which any of or all the properties subject to the Security Instruments are
situated, and in any other appropriate public recording office or elsewhere,
only if such recording is deemed necessary by an Opinion of Counsel (which shall
not be an expense of the Master Servicer or the Trustee) to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of the Trust
Agreement as herein provided and for other purposes, the Trust Agreement may
be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
SECTION 11.03. LIMITATION OF RIGHTS OF CERTIFICATEHOLDERS
The death or incapacity of any Certificateholder shall not operate to
terminate the Trust Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up
of the Trust, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to the Trust Agreement pursuant to any provision
thereof.
No Certificateholder shall have any right by virtue of any provision
of the Trust Agreement to institute any suit, action or proceeding in equity
or at law upon or under or with respect to the Trust Agreement unless (i) such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and (ii) the
Holders of Certificates entitled to at least 25% of the Voting Rights shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Trust Agreement and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 15 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding. It is understood and intended, and expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Certificateholders shall have any right in any manner
whatever by virtue of any provision of the Trust Agreement to affect, disturb
or prejudice the rights of any other Certificateholders, or to obtain or
seek to obtain priority over or preference to any other Certificateholders
or to enforce any right under the Trust Agreement, except in the manner
therein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
SECTION 11.04. GOVERNING LAW
55
The Trust Agreement shall be construed in accordance with and
governed by the laws of the State applicable to agreements made and to be
performed therein.
SECTION 11.05. NOTICES
All demands and notices under the Trust Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery
service, to the party concerned at its address set forth in the Trust
Agreement, or such other address or telecopy number as may hereafter be
furnished to each party to the Trust Agreement in writing by any such party.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first-class mail, postage prepaid, or by express delivery service,
at the address of such Certificateholder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in the Trust Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above. A copy of any notice given hereunder to any other party
shall be delivered to the Trustee.
SECTION 11.06. SEVERABILITY OF PROVISIONS
If any one or more of the covenants, agreements, provisions or terms
of the Trust Agreement shall be for any reason whatsoever held invalid,
then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of
the Trust Agreement and shall in no way affect the validity or enforceability
of the other provisions of the Trust Agreement or of the Certificates or the
rights of the Certificateholders.
SECTION 11.07. SALE OF MORTGAGE LOANS
It is the express intent of Saxon and the Trustee that the conveyance
of the Mortgage Loans by Saxon to the Trustee pursuant to the Trust Agreement
be construed as a sale of the Mortgage Loans by Saxon to the Trustee for the
benefit of the Certificateholders. It is, further, not the intention of
Saxon and the Trustee that such conveyance be deemed a pledge of the
Mortgage Loans by Saxon to the Trustee for the benefit of the
Certificateholders to secure a debt or other obligation of Saxon.
Nevertheless, if, notwithstanding the intent of the parties, the Mortgage
Loans are held to continue to be property of Saxon then (i) the Trust
Agreement shall be deemed to be a security agreement within the meaning of
Article 9 of the UCC, (ii) the conveyance by Saxon provided for in the
Trust Agreement shall be deemed to be a grant by Saxon to the Trustee for the
benefit of the Certificateholders of a security interest in all Saxon's right,
title and interest in and to the Mortgage Loans and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, but not limited
to, all amounts, other than investment earnings, from time to time held or
invested in the Master Servicer Custodial Account or Asset Proceeds Account,
whether in the form of cash, instruments, securities or other property, (iii)
the possession by the Trustee or the Custodian of Mortgage Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 of
the UCC of the State and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee for the purpose of perfecting such security interest
under applicable law. Saxon and the Trustee (to the extent it has been
instructed by Saxon or the Master Servicer) shall, to the extent consistent
with the Trust Agreement, take such actions as may be necessary to ensure
that, if the Trust Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of the Trust Agreement.
SECTION 11.08. NOTICE TO RATING AGENCY
(a) The Trustee shall use its best efforts promptly to provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
56
(i) any material change or amendment to the Trust Agreement
or any agreement assigned to the Trust;
(ii) the occurrence of any Event of Default involving the
Master Servicer that has not been cured or any recommendation by
the Master Servicer that a Servicing Agreement with a Servicer
be terminated;
(iii) the resignation, termination or merger of Saxon, the
Master Servicer, the Trustee or any Servicer;
(iv) the purchase or substitution of Mortgage Loans pursuant
to Section 2.03 hereof;
(v) the final payment to Certificateholders;
(vi) any change in the location of any Master Servicer
Custodial Account, Reserve Fund or Asset Proceeds Account;
(vii) any event that would result in the inability of the
Servicer or the Master Servicer to make Advances regarding delinquent
Mortgage Loans or the inability of the Trustee to make any such Advance
if it is serving as the Master Servicer pursuant to Section 7.02 hereof;
(viii) any change in applicable law that would require an
Assignment of a Security Instrument, not previously recorded pursuant
to Section 2.01 hereof, to be recorded in order to protect the right,
title and interest of the Trustee in and to the related Mortgage Loan
or, in case a court should recharacterize the sale of the Mortgage
Loans as a financing, to perfect a first priority security interest
in favor of the Trustee in the related Mortgage Loan.
(b) The Master Servicer shall promptly notify the Trustee of
any of the events listed in Section 11.08(a) of which it has actual knowledge.
In addition, the Trustee shall promptly furnish to each Rating Agency at its
address set forth in the Trust Agreement copies of the following:
(i) each report to Certificateholders described in Section
4.01 hereof; and
(ii) each Annual Compliance Statement.
(c) Any notice pursuant to this Section 11.08 shall be in
writing and shall be deemed to have been duly given if personally delivered
or mailed by first class mail, postage prepaid, or by express delivery
service, to each Rating Agency at the address specified in the Trust Agreement.
57
Exhibit A-1
FORM OF INITIAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: [____________________]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
[MASTER SERVICER]
[-------------------------]
[-------------------------]
Attention: [____________________]
Trust Agreement, dated as of [____________], 199[_]
among Saxon Asset Securities Company,
[____________________], as Master Servicer,
and [____________________]_, as Trustee,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_]
Ladies and Gentlemen:
In accordance with Section 2.02 of the Standard Terms to the
above-captioned Trust Agreement, the Custodian hereby certifies that, as to each
mortgage loan listed in the Mortgage Loan Schedule [to the Trust Agreement
referred to above] [to the Subsequent Sales Agreement dated [ ], 199[ ],
has reviewed the Trustee Mortgage Loan File and determined that, except as noted
on the Schedule of Exceptions attached hereto: (i) all documents required to be
included in the Trustee Mortgage Loan File (as set forth in Section 2.01 of the
Standard Terms) are in its possession; (ii) such documents have been reviewed by
it and appear regular on their face and relate to such Mortgage Loan; and (iii)
based on its examination, or the examination by a Custodian on its behalf, and
only as to such documents, the information set forth on such Mortgage Loan
Schedule accurately reflects the information set forth in the Trustee Mortgage
Loan File. The Custodian further certifies that its review of each Trustee
Mortgage Loan File included each of the procedures listed in clause (b) of
Section 2.02 of the Standard Terms.
The Custodian further certifies as to each Mortgage Note that:
(1) except for the endorsement required pursuant to clause (a) of
the definition of Trustee Mortgage Loan File, the Mortgage Note, on the
face or the reverse side(s) thereof, does not contain evidence of any
unsatisfied claims, liens, security interests, encumbrances or restrictions on
transfer; and
(2) the Mortgage Note bears an endorsement (which appears to be an
original) as required pursuant to clause (a) of the definition of Trustee
Mortgage Loan File.
Except as described herein, neither the Trustee nor any Custodian on
its behalf has made an independent examination of any documents contained in
any Trustee Mortgage Loan File. Neither the Trustee nor the Custodian makes
any representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in any Trustee
Mortgage Loan File for any of the Mortgage Loans listed on the Mortgage Loan
Schedule to the Trust Agreement, (ii) the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Trustee Mortgage Loan File should include any surety or guaranty
agreement, Note Assumption Rider, buydown agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.
A-1-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Trust Agreement.
[CUSTODIAN],
as custodian
By:____________________________
Title:_________________________
X-0-0
Xxxxxxx X-0
FORM OF FINAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: [____________________]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
[MASTER SERVICER]
[-------------------------]
[-------------------------]
Attention: [____________________]
Trust Agreement, dated as of [____________], 199[_]
among Saxon Asset Securities Company,
[____________________], as Master Servicer,
and [____________________]_, as Trustee,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_]
Ladies and Gentlemen:
In accordance with Section 2.02 of the Standard Terms to the
above-captioned Trust Agreement, the Custodian hereby certifies that, except
as noted on the Schedule of Exceptions attached hereto, for each Mortgage Loan
listed in the Mortgage Loan Schedules (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received a complete Trustee
Mortgage Loan File which includes each of the documents required to be included
in the Trustee Mortgage Loan File.
Except as specifically required in the above-captioned Trust
Agreement, neither the Trustee nor any Custodian on its behalf has made an
independent examination of any documents contained in any Trustee Mortgage
Loan File. Neither the Trustee nor the Custodian makes any representations
as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in any Trustee Mortgage Loan
File for any of the Mortgage Loans listed on the Mortgage Loan
Schedule to the Trust Agreement, (ii) the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) whether any
Trustee Mortgage Loan File should include any surety or guaranty agreement,
Note Assumption Rider, buydown agreement, assumption agreement, modification
agreement, written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Trust Agreement.
[CUSTODIAN],
as custodian
By:____________________________
Title:_________________________
A-2-1
Exhibit B
FORM OF RECORDATION REPORT
[____________], 199[_]
[MASTER SERVICER]
[-------------------------]
[-------------------------]
Attention: [____________________]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
Trust Agreement, dated as of [____________], 199[_]
among Saxon Asset Securities Company,
[____________________], as Master Servicer,
and [____________________]_, as Trustee,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_]
Ladies and Gentlemen:
In accordance with Section 2.02(e) of the Standard Terms, the
Custodian hereby notifies you that, as of the date hereof with respect to the
following Mortgage Loans, it has not received the indicated documents.
If a Security Instrument for any Mortgage Loan has not been recorded
and the original recorded Security Instrument or a copy of such recorded
Security Instrument with such evidence of recordation certified to be true and
correct by the appropriate governmental recording office has not been
delivered to the Trustee (or to a Custodian on its behalf), the Seller or
Servicer may be required to purchase such Mortgage Loan from the Trustee if
such defect materially and adversely affects the value of the Mortgage
Loan or the interest of the Trust therein.
[If an Assignment to the Trustee or a Custodian on its behalf, as
applicable, of the Seller's interest in a Security Instrument has not been
recorded within one year of the Closing Date, the Seller or Servicer shall be
required to (i) purchase the related Mortgage Loan from the Trustee or (ii) if
there have been no defaults in the Monthly Payments on such Mortgage Loan,
deposit an amount equal to the Purchase Price into an escrow account
maintained by the Trustee.]
Documents Not Received
-----------------------------------------------------------
Original Recorded
Saxon Loan Number Original Recorded Assignment of
Security Instrument Security Instrument
---------------------------------- ------------------------------- ---------------------------
or certified copy thereof or certified copy thereof
*Also required with regard to any intervening Assignments.
[TRUSTEE],
as Trustee
By:____________________________
Title:_________________________
B-1
Exhibit C
FORM OF REMITTANCE REPORT
Saxon Asset Securities Company
Trust: Mortgage Loan Asset Backed Certificates, Series 199[_]-[_]
Distribution Date: [____________], 199[_]
Reporting Month: [____________] 199[_]
The following class, series and collateral information will be
included on each Remittance Report, as appropriate:
Class Level Collateral Level Series Level
----------- ---------------- ------------
Class Name Asset Proceeds Account - Scheduled Principal
Pass-Through Rate Deposits and Withdrawals Unscheduled Principal
Beginning Balance Balance Information for Scheduled Interest
Interest Distribution Other Accounts Beginning Loan Count
Principal Distribution Advances on Delinquencies Ending Loan Count
Realized Losses Beginning Balance Realized Losses
Ending Balance Interest Distribution Weighted Average Maturity
Aggregate Realized Losses Principal Distribution (WAM)
Original Balance Realized Losses Weighted Average
Record Date Ending Balance Mortgage Note Rate
Interest Distribution Factor Total Distribution Total Distribution
Principal Distribution Factor Aggregate Realized Losses Weighted Average Net Rate
Remaining Principal Factor Original Balance Weighted Average Pass-
Scheduled Principal Remaining Principal Factor Through Rate
Unscheduled Principal Scheduled Principal Delinquency Statistics
Current Interest Unscheduled Principal - 30, 60, and 90 day
Recovery/(Shortfall) Current Interest delinquencies; foreclosures
Accretion Recovery/(Shortfall) and REO's
Accretion
C-1
Exhibit D
FORM OF RULE 144A AGREEMENT-QIB CERTIFICATION
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 199[_]-[_], CLASS [___]
[____________], 199[_]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[-------------------------]
[-------------------------]
Attention: [____________________]
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: [____________________]
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the
captioned Certificates (the "Purchased Certificates"), the undersigned (the
"Transferee") hereby certifies and covenants to the transferor, Saxon, the
Master Servicer, the Trustee and the Trust as follows:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities
Act of 1933, as amended (the "Securities Act") and has completed the form of
certification to that effect attached hereto as Annex A1 (if the Transferee
is not a registered investment company) or Annex A2 (if the Transferee is a
registered investment company). The Transferee is aware that the sale to it
is being made in reliance on Rule 144A.
2. The Transferee understands that the Purchased Certificates
have not been registered under the Securities Act or registered or qualified
under any state securities laws and that no transfer may be made unless the
Purchased Certificates are registered under the Securities Act and under
applicable state law or unless an exemption from such registration is
available. The Transferee further understands that neither Saxon, the Master
Servicer, the Certificate Registrar, the Paying Agent, the Trustee nor the
Trust is under any obligation to register the Purchased Certificates or make
an exemption from such registration available.
3. The Transferee is acquiring the Purchased Certificates for
its own account or for the account of a "qualified institutional buyer," and
understands that such Purchased Certificates may be resold, pledged or
transferred only (a) to a person reasonably believed to be such a qualified
institutional buyer that purchases for its own account or for the account of
a qualified institutional buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, or (b) pursuant
to another exemption from registration under the Securities Act and under
applicable state securities laws. In addition, such transfer may be subject to
additional restrictions, as set forth in Section 5.05 of the Standard Terms to
the Trust Agreement.
4. The Transferee has been furnished with all information
that it requested regarding (a) the Purchased Certificates and distributions
thereon and (b) the Trust Agreement referred to below.
5. If applicable, the Transferee has complied or will
comply in all material respects with applicable regulatory guidelines
relating to the ownership of mortgage derivative products.
D-1
All capitalized terms used but not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee, pursuant to which the Purchased Certificates were issued.
IN WITNESS WHEREOF, the undersigned has caused this Rule 144A
Agreement--QIB Certification to be executed by a duly authorized
representative this [____] day of [____________], 199[_].
[TRANSFEREE]
By:____________________________
Title:_________________________
D-2
Annex A1 to Exhibit D
TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Transferee.
2. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), because (a) the
Transferee owns and/or invests on a discretionary basis at least $100,000,000
in securities or, if the Transferee is a dealer, the Transferee owns and/or
invests on a discretionary basis at least $10,000,000 in securities. The
Transferee owned and/or invested on a discretionary basis at least
$[____________] in securities (except for the excluded securities referred to
in paragraph 3 below) as of [_____________], 199[_] [specify a date on or
since the end of the Transferee's most recently ended fiscal year] (such
amount being calculated in accordance with Rule 144A) and (b) the Transferee
meets the criteria listed in the category marked below.
_____ Corporation. etc. The Transferee is an organization
described in Section 501(c) (3) of the Internal Revenue
Code of 1986, as amended, a corporation (other than a
bank as defined in Section 3(a) (2) of the Securities Act
or a savings and loan association or other similar
institution referenced in Section 3(a) (5) (A) of the
Securities Act), a partnership, or a Massachusetts or
similar business trust.
____ Bank. The Transferee (a) is a national bank or banking
institution as defined in Section 3(a) (2) of the Securities
Act and is organized under the laws of a state, territory or
the District of Columbia. The business of the Transferee
is substantially confined to banking and is supervised by
the appropriate state or territorial banking commission or
similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual
financial statements as of a date not more than 16 months
preceding the date of this certification in the case of a
U.S. bank, and not more than 18 months preceding the date
of this certification in the case of a foreign bank or
equivalent institution, a copy of which financial statements
is attached hereto.
_____ Saving and Loan. The Transferee is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution
referenced in Section 3(a) (5) (A) of the Securities Act.
The Transferee is supervised and examined by a state or
federal authority having supervisory authority over any
such institutions or is a foreign savings and loan
association or equivalent institution and has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements as of a date not more than 16
months preceding the date of this certification in the case
of a U.S. savings and loan association or similar institution,
and not more than 18 months preceding the date of this
certification in the case of a foreign savings and loan
association or equivalent institution, a copy of which
financial statements is attached hereto.
_____ Broker-dealer. The Transferee is a dealer registered
pursuant to Section 15 of the Certificates Exchange Act
of 1934, as amended (the "1934 Act").
_____ Insurance Company. The Transferee is an insurance company
as defined in Section 2(13) of the Securities Act, whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or
agency of a state, territory or the District of Columbia.
_____ State or Local Plan. The Transferee is a plan established
and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees.
_____ ERISA Plan. The Transferee is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Certificate Act of 1974, as amended.
_____ Investment Adviser. The Transferee is an investment
adviser registered under the Investment Advisers Act of
1940, as amended.
D-1-1
_____ Other. The Transferee qualifies as a "qualified
institutional buyer" as defined in Rule 144A on the basis of
facts other than those listed in any of the entries above.
If this response is marked, the Transferee must certify on
additional pages, to be attached to this certification, to
facts that satisfy the Servicer that the Transferee is a
"qualified institutional buyer" as defined in Rule 144A.
3. The term "securities" as used herein does not include
(a) securities of issuers that are affiliated with the Transferee, (b)
securities constituting the whole or part of an unsold allotment to or
subscription by the Transferee, if the Transferee is a dealer, (c) bank
deposit notes and certificates of deposit, (d) loan participations, (e)
repurchase agreements, (f) securities owned but subject to a repurchase
agreement and (g) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee,
the Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial
statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under
the Transferee's direction. However, such securities were not included if
the Transferee is a majority-owned, consolidated subsidiary of another
enterprise and the Transferee is not itself a reporting company under the 1934
Act.
5. The Transferee acknowledges that it is familiar with
Rule 144A and understands that the Transferor and other parties related to
the Purchased Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Transferee may be made
in reliance on Rule 144A.
6. Will the Transferee be purchasing YES NO
the Purchased Certificates only for the Transferee's own account?
If the answer to the foregoing question is "NO", the
Transferee agrees that, in connection with any purchase of
securities sold to the Transferee for the account of a third party
(including any separate account) in reliance on Rule 144A, the
Transferee will only purchase for the account of a third party that
at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the
Transferee will not purchase securities for a third party unless
the Transferee has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by
Rule 144A to conclude that such third party independently meets the
definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Purchased Certificates will constitute a reaffirmation of this certification
as of the date of such purchase. In addition, if the Transferee is a bank or
savings and loan as provided above, the Transferee agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
D-1-2
IN WITNESS WHEREOF, the undersigned has caused this certificate to
be executed by its duly authorized representative this [____] day of
[____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Saxon Asset Securities Company,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_],
Class [___]
D-1-3
Annex A2 to Exhibit D
TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Purchased Certificates (the 'Transferee") or, if the Transferee is part of a
Family of Investment Companies (as defined in paragraph 3 below), is an
officer of the related investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), because (a) the
Transferee is an investment company (a "Registered Investment Company")
registered under the Investment Company Act of 1940, as amended (the "1940
Act") and (b) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to in paragraph 4 below) as of
[____________], 199[_] [specify a date on or since the end of the
Transferee's most recently ended fiscal year]. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities to the Transferee or the
Transferee's Family of Investment Companies was used.
_____ The Transferee owned $[____________] in securities (other
than the excluded securities referred to in paragraph 4
below) as of the end of the Transferee's most recent fiscal
year (such amount being calculated in accordance with Rule
144A).
_____ The Transferee is part of a Family of Investment
Companies which owned in the aggregate $[____________] in
securities (other than the excluded securities referred to
in paragraph 4 below) as of the end of the Transferee's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more Registered Investment Companies except for a unit
investment trust whose assets consist solely of shares of one or more
Registered Investment Companies (provided that each series of a "series
company, as defined in Rule 18f-2 under the 1940 Act, shall be deemed to be a
separate investment company) that have the same investment adviser (or, in
the case of a unit investment trust, the same depositor) or investment
advisers (or depositors) that are affiliated (by virtue of being
majority-owned subsidiaries of the same parent or because one investment
adviser is a majority-owned subsidiary of the other).
4. The term "securities" as used herein does not include
(a) securities of issuers that are affiliated with the Transferee or are part
of the Transferee's Family of Investment Companies, (b) bank deposit notes
and certificates of deposit, (c) loan participations, (d) repurchase
agreements, (e) securities owned but subject to a repurchase agreement and (f)
currency, interest rate and commodity swaps.
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and
will continue to rely on the statements made herein because one or more
sales to the Transferee will be in reliance on Rule 144A. In addition, the
Transferee will only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Transferee's purchase of the Purchased
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
D-2-1
IN WITNESS WHEREOF, the undersigned has caused this certificate to
be executed by its duly authorized representative this [____] of [____________],
199[_].
[TRANSFEREE OR ADVISOR]
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Saxon Asset Securities Company,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_],
Class [___]
IF AN ADVISER:
Print Name of Transferee
Date:__________________________
D-2-2
Exhibit E
FORM OF TRANSFEREE AGREEMENT
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 199[_]-[_], CLASS [___]
[____________], 199[_]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[-------------------------]
[-------------------------]
Attention: [____________________]
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: [____________________]
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the
captioned Certificates (the "Purchased Certificates"), the undersigned (the
"Transferee") hereby certifies and covenants to the transferor, Saxon, the
Master Servicer, the Trustee and the Trust as follows:
1. Representations and Warranties. The Transferee represents and
warrants:
(a) The Transferee is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which the
Transferee is organized, is authorized to invest in the Purchased
Certificates and to enter into this Agreement, and has duly executed
and delivered this Agreement.
(b) The Transferee is acquiring the Purchased
Certificates for its own account as principal and not with a view
to the distribution of the Purchased Certificates, in whole or in
part, in violation of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act").
(c) The Transferee is an "Accredited Investor" as
defined in Rule 501(a) (1), (2), (3) or (7) of Regulation D under the
Securities Act.
(d) The Transferee has knowledge in financial and
business matters and is capable of evaluating the merits and risks of
an investment in the Purchased Certificates; the Transferee has
sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision; and
the Transferee is able to bear the economic risk of an investment
in the Purchased Certificates and can afford a complete loss of such
investment;
(e) The Transferee confirms that Saxon has made
available to the Transferee the opportunity to ask questions of,
and receive answers from, Saxon concerning Saxon, the Trust, the
purchase by the Transferee of the Purchased Certificates and all
matters relating thereto, and to obtain additional information
relating thereto that Saxon possesses or can acquire without
unreasonable effort or expense.
2. Covenants. The Transferee Covenants:
(a) The Transferee will not make a public offering of the
Purchased Certificates, and will not reoffer or resell the Purchased
Certificates in a manner that would render the issuance and sale of
the Purchased Certificates, whether considered together with the
resale or otherwise, a violation of the Securities Act, or any state
securities or "Blue Sky" laws or require registration pursuant thereto;
E-1
(b) The Transferee agrees that, in its capacity as
holder of the Purchased Certificates, it will assert no claim or
interest in the Mortgage Loans by reason of owning the Purchased
Certificates other than with respect to amounts that may be properly
and actually payable to the Transferee pursuant to the terms of the
Trust Agreement and the securities; and
(c) If applicable, the Transferee will comply in all
material respects with respect to the Purchased Certificates with
applicable regulatory guidelines relating to the ownership of
mortgage derivative products.
3. Transfer Restrictions.
(a) The Transferee understands that the Purchased
Certificates have not been registered under the Securities Act or
registered or qualified under any state securities laws and that no
transfer may be made unless the Purchased Certificates are
registered under the Securities Act and under applicable state
law or unless an exemption from such registration is available. If so
requested by the Master Servicer or the Trustee, the Transferee and
the transferor shall certify to Saxon, the Master Servicer and the
Trustee as to the factual basis for the registration or qualification
exemption relied upon. The Transferee further understands that
neither Saxon, the Master Servicer, the Trustee nor the Trust is
under any obligation to register the Purchased Certificates or
make an exemption from such registration available.
(b) In the event that the transfer is to be made
within three years of the date the Purchased Certificates were
acquired by a non-Affiliate of Saxon from Saxon or an Affiliate of
Saxon, the Master Servicer or the Trustee may require an Opinion of
Counsel (which shall not be an expense of Saxon, the Master Servicer
or the Trustee) that such transfer is not required to be registered
under the Securities Act or state securities laws.
(c) Any Certificateholder desiring to effect a transfer
shall, and does hereby agree to, indemnify Saxon, the Master
Servicer and the Trustee against any liability that may result if
the transfer is not exempt under federal or applicable state securities
laws.
(d) The transfer of the Certificates may be subject to
additional restrictions, as set forth in Section 5.05 of the Standard
Terms of the Trust Agreement.
All capitalized terms used but not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee, pursuant to which the Purchased Certificates were issued.
E-2
IN WITNESS WHEREOF, the undersigned has caused this Transferee
Agreement to be executed by its duly authorized representative as of the [____]
day of [____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
E-3
Exhibit F
FORM OF BENEFIT PLAN AFFIDAVIT
Re: Saxon Asset Securities Company
Series 199[_]-[_] Trust (the "Trust")
Mortgage Loan Asset Backed Certificates, Class [___]
STATE OF [____________]
ss:
CITY OF [_____________]
Under penalties of perjury, I, the undersigned, declare that, to
the best of my knowledge and belief, the following representations are true,
correct, and complete.
1. I am a duly authorized officer of [____________]
(the "Purchaser"), whose taxpayer identification number is [____________],
and on behalf of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Class [___]
Certificate representing an interest in the Trust, certain assets of which
one or more real estate mortgage investment conduit ("REMIC") elections are to
be made under Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code").
3. The Purchaser either:
(i) (A) is not a Plan Investor and (B) either (I) is not
an insurance company or (II) is an insurance company, in which case
none of the funds used by the Purchaser in connection with its purchase
of the Certificates constitute plan assets as defined in the Plan
Asset Regulations ("Plan Assets") and its purchase of the
Certificates shall not result in the Certificates or the assets of
the Trust being deemed to be Plan Assets;
(ii) is an insurance company and either (A) represents
that the funds used to purchase the Certificates are held in an
"insurance company pooled separate account" within the meaning of
United States Department of Labor Prohibited Transaction Class
Exemption 90-1 ("PTCE 90-1") and that each of the applicable
conditions set forth in XXXX 00-0 are met with respect to the purchase
and holding of the Certificates, or (B) represents that the funds
used to purchase the Certificates are held in an "insurance
company general account" as defined in United States Department
of Labor Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
and that each of the applicable conditions set forth in PTCE 95-60 are
met with respect to the purchase and holding of the Certificates; or
(iii) has provided a Benefit Plan Opinion, obtained at the
Transferee's expense.
All capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto.
F-1
IN WITNESS WHEREOF, the undersigned has caused this Benefit Plan
Affidavit to be executed by its duly authorized representative as of the [____]
day of [____________], 199[_].
[PURCHASER]
By:____________________________
Name:__________________________
Title:_________________________
Personally appeared before me [____________________], known or
proved to me to be the same person who executed the foregoing instrument and
to be a [____________________] of the Purchaser, and acknowledged to me
that he or she executed the same as his or her free act and deed and as the free
act and deed of the Purchaser.
Subscribed and sworn before me this [____] day of [____________],
199[_].
------------------------------
Notary Public
My commission expires the [____] day of [____________], 199[_].
F-2
Exhibit G
FORM OF RESIDUAL TRANSFEREE AGREEMENT
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 199[_]-[_], CLASS [R]
[____________], 199[_]
[TRUSTEE]
[-------------------------]
[-------------------------]
Attention: [____________________]
[MASTER SERVICER] [CERTIFICATE REGISTRAR]
[-------------------------]
[-------------------------]
Attention: [____________________]
Saxon Asset Securities Company
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: [____________________]
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the
captioned Certificates (the "Residual Certificates"), the undersigned (the
"Transferee") hereby certifies and covenants to the transferor, Saxon, the
Master Servicer, the Trustee, and the Trust as follows:
1. Representations and Warranties. The Transferee represents and
warrants:
(a) The Transferee's taxpayer identification number is
as set forth on the signature page hereof;
(b) The Transferee is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which the
Transferee is organized, is authorized to invest in the Residual
Certificates and to enter into this Agreement, and has duly executed
and delivered this Agreement;
(c) The Transferee represents that (i) it
understands that the Residual Certificates represent for federal
income tax purposes a "residual interest" in one or more real
estate mortgage investment conduits (each, a "REMIC") and that, as
the holder of the Residual Certificates, it will be required to take
into account, in determining its taxable income, its pro rata
share of the taxable income of each such REMIC, (ii) it understands
that it may incur federal income tax liabilities with respect to
the Residual Certificates in excess of any cash flows
generated by such Residual Certificates, (iii) it has the financial
wherewithal and intends to pay any tax imposed on the income that it
derives from the Certificates as they become due, and (iv) it has
historically paid its debts as they became due and intends to pay its
debts as they become due in the future;
(d) The Transferee (i) has knowledge in financial and
business matters and is capable of evaluating the merits and risks of
an investment in the Residual Certificates, (ii) has sought such
accounting, legal, and tax advice as it has considered necessary
to make an informed investment decision, and (iii) is able to bear
the economic risk of an investment in the Residual Certificates and
can afford a complete loss of such investment;
*(e) The Transferee is acquiring the Residual
Certificates for its own account as principal and not with a view to
the resale or distribution thereof, in whole or in part, in
violation of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"); and
*(f) The Transferee confirms that Saxon has made
available to the Transferee the opportunity to ask questions of,
and receive answers from, Saxon concerning Saxon, the Trust, the
purchase by the Transferee of the Residual Certificates and all
matters relating thereto, and to obtain additional information
relating thereto that Saxon possesses or can acquire without
unreasonable effort or expense.
G-1
2. Covenants. The Transferee covenants:
*(a) The Transferee will not make a public offering of
the Residual Certificates, and will not reoffer or resell the
Residual Certificates in a manner that would render the issuance and
sale of the Residual Certificates whether considered together with
the resale or otherwise, a violation of the Securities Act, or any
state securities or "Blue Sky" laws or require registration pursuant
thereto;
(b) The Transferee agrees that, in its capacity as a
holder of the Residual Certificates, it will assert no claim or
interest in the Mortgage Loans by reason of owning the Residual
Certificates other than with respect to amounts that may be properly
and actually payable to the Transferee pursuant to the terms of the
Trust Agreement and the Certificates;
(c) If applicable, the Transferee will comply with
respect to the Residual Certificates in all material respects with
applicable regulatory guidelines relating to the ownership of
mortgage derivative products;
(d) Upon notice thereof, the Transferee agrees to any
future amendment to the provisions of the Trust Agreement relating to
the transfer of the Residual Certificates (or any interest therein)
that counsel to Saxon or the Trust may deem necessary to ensure that
any such transfer will not result in the imposition of any tax on the
Trust;
(e) The Transferee hereby agrees that the Master
Servicer or an affiliate thereof will (i) supervise or engage in any
action necessary or advisable to preserve the status of each related
REMIC as a REMIC, (ii) be, and perform the functions of, each such
REMIC's tax matters person ("TMP"), and (iii) employ on a reasonable
basis counsel, accountants, and professional assistance to aid in the
preparation of tax returns or the performance of the above;
(f) The Transferee hereby agrees to cooperate with the
TMP and to take any action required of it by the REMIC Provisions in
order to create or maintain the REMIC status of each related REMIC;
(g) The Transferee hereby agrees that it will not take
any action that could endanger the REMIC status of any related REMIC
or result in the imposition of tax on any such REMIC unless counsel
for, or acceptable to, the TMP has provided an opinion that such
action will not result in the loss of such REMIC status or the
imposition of such tax, as applicable;
(h) The Transferee hereby agrees to be bound by all the
provisions of the Trust Agreement applicable to the holders of a
Residual Certificate including, but not limited to, Section
5.05(c) of the Standard Terms to the Trust Agreement (which relates to
the transfer of a Residual Certificate), and acknowledges that each
Residual Certificate will bear a legend setting forth the applicable
restrictions on transfer;
(i) The Transferee hereby agrees that it shall pay any tax
or reporting costs borne by a REMIC as result of its purchase of the
Residual Certificates or any beneficial interest therein in
violation of Section 5.05(c) of the Standard Terms to the Trust
Agreement to the extent such tax or reporting costs are not paid by
the Transferor or by the Trustee out of amounts that otherwise
would have been paid to the Transferee;
(j) The Transferee hereby agrees to indemnify and hold
harmless Saxon, the Master Servicer, the Trustee, the Trust and
each other holder of a Residual Certificate from and against
any tax liability or reporting costs arising from its violation of
the restrictions on transfer contained in Section 5.05(c) of the
Standard Terms to the Trust Agreement or its breach of any
of its representations, warranties, or covenants contained herein; and
(k) The Transferee agrees that it will take no action
to question or invalidate the interest of the Trust in the
Mortgage Loans or seek or maintain any claim or interest in the
Mortgage Loans having a priority over the interest of the Trust in such
Mortgage Loans.
G-2
The representations and covenants above marked with an * apply only to
Residual Certificates that are Private Certificates.
3. Acknowledgments.
(a) The Transferee acknowledges that, if the
Residual Certificates are Private Certificates, the Residual
Certificates have not been registered under the Securities Act or
registered or qualified under any state securities laws and that no
transfer may be made unless the Purchased Certificates are
registered under the Securities Act and under applicable state
law or unless an exemption from such registration is available. The
Transferee further understands that neither Saxon, the Master
Servicer nor the Trust is under any obligation to register the
Certificate or make an exemption from such registration available.
(b) The Transferee acknowledges that if a Residual
Certificate is transferred to a Non-U.S. Person, the transfer will
not be recognized by the Withholding Agent (as defined below) unless
the Withholding Agent has received from the Transferee an affidavit
substantially in the form of Exhibit H-1 attached to the Standard Terms
to Trust Agreement.
(c) The Transferee acknowledges that if any United
States federal income tax is due at the time a Non-U.S. Person
transfers a Residual Certificate, the Trustee or its designated
Paying Agent or other person who is liable to withhold federal income
tax from a distribution on a Residual Certificate under sections
1441 and 1442 of the Code and the Treasury regulations thereunder
(the "Withholding Agent") may (i) withhold an amount equal to the
taxes due upon disposition of the Certificate from future
distributions made with respect to the Certificate to the
Transferee (after giving effect to the withholding of taxes imposed
on such Transferee), and (ii) pay the withheld amount to the
Internal Revenue Service unless satisfactory written evidence of
payment of the taxes due by the transferor has been provided to the
Withholding Agent.
(d) The Transferee acknowledges the Withholding
Agent may (i) hold distributions on a Certificate, without interest,
pending determination of amounts to be withheld, (ii) withhold
other amounts required to be withheld pursuant to United States
federal income tax law, if any, from distributions that otherwise
would be made to such Transferee on each Certificate it holds, and
(iii) pay to the Internal Revenue Service all such amounts withheld.
(e) The Transferee acknowledges that the transfer
of all or part of the Residual Certificates that have "tax
avoidance potential" (as defined in Treasury regulations
section 1.860G-3(a)(2) or any successor provision) to a Non-U.S.
Person will be disregarded for all federal income tax purposes, and
that Treasury regulations or other administrative guidance issued
by the Treasury may effectively prohibit the transfer of the Residual
Certificates to Non-U.S. Persons.
(f) The Transferee acknowledges that the transfer of
the Residual Certificates to a U.S. Person will be disregarded for
all federal income tax purposes if a significant purpose of the
transfer is to impede the assessment or collection of the taxes and
expenses associated with such Certificates within the meaning of
Treasury regulation section 1.860E-1(c)(1).
IN WITNESS WHEREOF, the undersigned has caused this Agreement to
be validly executed by its duly authorized representative as of the [____]
day of [____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
Taxpayer ID #__________________
X-0
Xxxxxxx X-0
XXXX XX XXX-X.X. PERSON AFFIDAVIT
AND AFFIDAVIT PURSUANT TO SECTIONS
860D(a)(6)(A) and 86OE(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Saxon Asset Securities Company
Series 199[_]-[_] Trust (the "Trust")
Mortgage Loan Asset Backed Certificates, Class [R]
STATE OF [____________]
ss:
CITY OF [_____________]
Under penalties of perjury, I, the undersigned, declare that to the
best of my knowledge and belief, the following representations are true, correct
and complete:
1. I am a duly authorized officer of [____________________]
(the "Transferee") and on behalf of which I have the authority to make this
affidavit.
2. The Transferee is acquiring all or a portion of the Class
[R] Certificates (the "Residual Certificates"), which represent a residual
interest in one or more real estate mortgage investment conduits (each, a
"REMIC") for which elections are to be made under Section 860D of the Internal
Revenue Code of 1986, as amended (the "Code").
3. The Transferee is a foreign person within the meaning
of Treasury Regulation Section 1.860G-3(a)(1) (i.e., a person other than
(i) a citizen or resident of the United States, (ii) a corporation or
partnership that is organized under the laws of the United States or any
jurisdiction thereof or therein, or (iii) an estate or trust that is subject
to United States federal income tax regardless of the source of its
income) who would be subject to United States income tax withholding pursuant
to Section 1441 or 1442 of the Code and the Treasury regulations thereunder on
income derived from the Residual Certificates (a "Non-U.S. Person").
4. The Transferee agrees that it will not hold the Residual
Certificates in connection with a trade or business in the United States,
and the Transferee understands that it will be subject to United States
federal income tax under sections 871 and 881 of the Code in accordance
with section 860G of the Code and any Treasury regulations issued thereunder
on "excess inclusions" that accrue with respect to the Residual
Certificates during the period the Transferee holds the Residual Certificates.
5. The Transferee understands that the federal income tax on
excess inclusions with respect to the Residual Certificates may be withheld
in accordance with section 860G(b) of the Code from distributions that
otherwise would be made to the Transferee on the Residual Certificates and,
to the extent that such tax has not been imposed previously, that such tax may
be imposed at the time of disposition of any such Residual Certificate pursuant
to section 860G(b) of the Code.
6. The Transferee agrees (i) to file a timely United States
federal income tax return for the year in which disposition of a Residual
Certificate it holds occurs (or earlier if required by law) and will pay any
United States federal income tax due at that time and (ii) if any tax
is due at that time, to provide satisfactory written evidence of payment
of such tax to the Trustee or its designated paying agent or other person
who is liable to withhold federal income tax from a distribution on the
Residual Certificates under sections 1441 and 1442 of the Code and the
Treasury regulations thereunder (the "Withholding Agent").
7. The Transferee understands that until it provides written
evidence of the payment of tax due upon the disposition of a Residual
Certificate to the Withholding Agent pursuant to paragraph 6 above, the
Withholding Agent may (i) withhold an amount equal to such tax from future
distributions made with respect to the Residual Certificate to subsequent
transferees (after giving effect to the withholding of taxes imposed on such
subsequent transferees), and (ii) pay the withheld amount to the Internal
Revenue Service.
H-1-1
8. The Transferee understands that (i) the Withholding Agent
may withhold other amounts required to be withheld pursuant to United States
federal income tax law, if any, from distributions that otherwise would be
made to such transferee on each Residual Certificate it holds and (ii) the
Withholding Agent may pay to the Internal Revenue Service amounts withheld
on behalf of any and all former holders of each Residual Certificate held by
the Transferee.
9. The Transferee understands that if it transfers a
Residual Certificate (or any interest therein) to a United States Person
(including a foreign person who is subject to net United States federal income
taxation with respect to such Residual Certificate), the Withholding Agent may
disregard the transfer for federal income tax purposes if the transfer would
have the effect of allowing the Transferee to avoid tax on accrued excess
inclusions and may continue to withhold tax from future distributions as
though the Residual Certificate were still held by the Transferee.
10. The Transferee understands that a transfer of a Residual
Certificate (or any interest therein) to a Non-U.S. Person (i.e., a foreign
person who is not subject to net United States federal income tax with
respect to such Residual Certificate) will not be recognized unless the
Withholding Agent has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same
agreements and representations.
11. The Transferee understands that distributions on a Residual
Certificate may be delayed, without interest, pending determination of amounts
to be withheld.
12. The Transferee is not a "Disqualified Organization" (as
defined below), and the Transferee is not acquiring a Residual Certificate
for the account of, or as agent or nominee of, or with a view to the
transfer of direct or indirect record or beneficial ownership to, a
Disqualified Organization. For the purposes hereof, a Disqualified
Organization is any of the following: (i) the United States, any State or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing; (ii)
any organization (other than a xxxxxx'x cooperative as defined in Section 521
of the Code) that is exempt from federal income taxation (including taxation
under the unrelated business taxable income provisions of the Code); (iii) any
rural telephone or electrical service cooperative described in Section 1381(a)
(2) (C) of the Code; or (iv) any other entity so designated by Treasury
rulings or regulations promulgated or otherwise in effect as of the date
hereof. In addition, a corporation will not be treated as an instrumentality
of the United States or of any state or political subdivision thereof if all
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 governmental unit.
13. The Transferee agrees to consent to any amendment of the
Trust Agreement that shall be deemed necessary by Saxon (upon the advice of
counsel to Saxon) to constitute a reasonable arrangement to ensure that no
interest in a Residual Certificate will be owned directly or indirectly by a
Disqualified Organization.
14. The Transferee acknowledges that Section 860E(e) of the
Code would impose a substantial tax on the transferor or, in certain
circumstances, on an agent for the Transferee, with respect to any transfer of
any interest in any Residual Certificate to a Disqualified Organization.
H-1-2
Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee.
IN WITNESS WHEREOF, the undersigned has caused this instrument to
be executed by its duly authorized representative as of the [____] day of
[____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
Personally appeared before me [____________________], known or
proved to me to be the same person who executed the foregoing instrument and
to be a [____________________] of the Transferee, and acknowledged to me
that he or she executed the same as his or her free act and deed and as the free
act and deed of the Transferee.
Subscribed and sworn before me this [____] day of [____________],
199[_].
------------------------------
Notary Public
My commission expires the [____] day of [____________], 199[_].
X-0-0
Xxxxxxx X-0
FORM OF U.S. PERSON AFFIDAVIT
PURSUANT TO SECTIONS 860D(a)(6)(A) and 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Saxon Asset Securities Company
Series 199[_]-[_] Trust (the "Trust")
Mortgage Loan Asset Backed Certificates, Class [R]
STATE OF [____________]
ss:
CITY OF [_____________]
Under penalties of perjury, I, the undersigned, declare that to the
best of my knowledge and belief, the following representations are true, correct
and complete:
1. I am a duly authorized officer of [____________________]
(the "Transferee") and on behalf of which I have the authority to make this
affidavit.
2. The Transferee is acquiring all or a portion of the Class
[R] Certificates (the "Residual Certificates"), which represent a residual
interest in one or more real estate mortgage investment conduits (each, a
"REMIC") for which elections are to be made under Section 860D of the Internal
Revenue Code of 1986, as amended (the "Code").
3. The Transferee either is (i) a citizen or resident of the
United States, (ii) a domestic partnership or corporation, (iii) an estate
or trust that is subject to United States federal income tax regardless
of the source of its income, or (iv) a foreign person who would be subject to
United States income taxation on a net basis on income derived from the
Residual Certificates (a "U.S. Person").
4. The Transferee is a not a "Disqualified Organization" (as
defined below), and the Transferee is not acquiring a Residual Certificate
for the account of, or as agent or nominee of, or with a view to the
transfer of direct or indirect record or beneficial ownership to, a
Disqualified Organization. For the purposes hereof, a Disqualified
Organization is any of the following: (i) the United States, any state or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing; (ii)
any organization (other than a xxxxxx'x cooperative as defined in section 521
of the Code) that is exempt from federal income taxation (including taxation
under the unrelated business taxable income provisions of the Code); (iii)
any rural telephone or electrical service cooperative described in
section 1381(a)(2)(C) of the Code; or (iv) any other entity so designated by
Treasury rulings or regulations promulgated or otherwise in effect as of
the date hereof. In addition, a corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof if all 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 governmental unit.
5. The Transferee agrees to consent to any amendment of the
Trust Agreement that shall be deemed necessary by Saxon (upon the advice of
counsel to Saxon) to constitute a reasonable arrangement to ensure that no
interest in a Residual Certificate will be owned directly or indirectly by a
Disqualified Organization.
6. The Transferee acknowledges that Section 860E(e) of the
Code would impose a substantial tax on the transferor or, in certain
circumstances, on an agent for the Transferee, with respect to any transfer of
any interest in any Residual Certificate to a Disqualified Organization.
Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee.
H-2-1
IN WITNESS WHEREOF, the undersigned has caused this instrument to
be executed by its duly authorized representative as of the [____] day of
[____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
Personally appeared before me [____________________], known or
proved to me to be the same person who executed the foregoing instrument and
to be a [____________________] of the Transferee, and acknowledged to me
that he or she executed the same as his or her free act and deed and as the free
act and deed of the Transferee.
Subscribed and sworn before me this [____] day of [____________],
199[_].
------------------------------
Notary Public
My commission expires the [____] day of [____________], 199[_].
H-2-2
