EXHIBIT 1.1
EXECUTION
Saxon Asset Securities Company
Mortgage Loan Asset Backed Certificates,
Series 1996-2
UNDERWRITING AGREEMENT
Dated: November 27, 1996
To: Saxon Asset Securities Company (the "Company")
Saxon Mortgage Inc. ("SMI")
Dominion Mortgage Services, Inc. ("Dominion")
Re: Standard Terms to Underwriting Agreement (August 1996 Edition)
Series
Designation: Mortgage Loan Asset Backed Certificates, Series 1996-2, Class
A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5, Class A-6 and
Class R (collectively the "Certificates"). The Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Certificates are referred to herein as the "Underwritten
Certificates."
Underwriting Agreement: Subject to the terms and conditions
set forth and incorporated by reference herein, the Company hereby agrees to
issue and sell to Prudential Securities Incorporated, ▇▇▇▇▇▇ Brothers Inc.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, and PaineWebber
Incorporated, (collectively, the "Underwriters"), and the Underwriters hereby
agree to purchase from the Company, on or about December 5, 1996, the
Underwritten Certificates at the purchase price and on the terms set forth
below; provided, however, that the obligations of the Underwriters are subject
to: (i) receipt by the Company of (a) an "AAA" rating by Standard & Poor's
Rating Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc. ("S&P") and an
"Aaa" rating by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"; together with S&P,
the "Rating Agencies") with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates; (ii) receipt of a Prospectus
Supplement in form and substance satisfactory to the Underwriters; and (iii) the
Sales Agreement dated as of November 1, 1996 by and between the Company and
Saxon Mortgage, Inc. ("SMI") and the Trust Agreement (as defined below) each
being in form and substance satisfactory to the Underwriters.
The Certificates will be issued pursuant to a Trust Agreement,
dated as of November 1, 1996 (the "Trust Agreement"), by and among the Company,
Texas Commerce Bank National Association, as Master Servicer (the "Master
Servicer"), and Citibank, N.A., as Trustee (the "Trustee"). The Certificates
will represent in the aggregate the entire beneficial ownership interest in the
assets of the Trust created under the Trust Agreement (the "Trust"), which will
consist primarily of two pools of conventional, one- to four-family, fully
amortizing, mortgage loans (the "Mortgage
Loans") with original terms to stated maturity of not more than 30 years which
have the characteristics described in the Prospectus Supplement.
The Company, SMI and Dominion specifically covenant to make
available on the Closing Date for sale, transfer and assignment to the Trust,
Mortgage Loans having the characteristics described in the Prospectus
Supplement; provided, however, that there may be immaterial variances from the
description of the Mortgage Loans in the Prospectus Supplement and the actual
Mortgage Loans delivered on the Closing Date. Upon delivery of the Mortgage
Loans to the Company, the Company will deliver such Mortgage Loans to the Trust.
Registration Statement: References in the Agreement (as
defined below) to the Registration Statement shall be deemed to include
registration statement no. 333-4127.
Initial Aggregate Scheduled Principal Balance of Initial
Mortgage Loans: Approximately $353,238,000 (as of the Cut-off Date), including
approximately $125,829,000 of fixed-rate Mortgage Loans and of $227,409,000
variable-rate Mortgage Loans (in each case as of the Cut-off Date).
Cut-Off Date: As of the close of business November 20, 1996
(except that, as further described in the Prospectus Supplement, the interest
portion of the payments due on December 1, 1996 on the Variable Rate Loans will
be retained by the Seller).
Terms of the Certificates:
====================== =================== ================ ==================== ================ ==================
Initial Proposed
Series 1996-2 Principal Pass-Through Ratings by Sale of the
Designation Amount Rate S&P and Moody's CUSIP Number Certificates
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-1 $ 55,500,000 6.375% AAA/Aaa 80559 AD3 (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-2 $ 47,500,000 6.475% AAA/Aaa 80559 AE1 (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-3 $ 17,000,000 6.750% AAA/Aaa 80559 AF8 (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-4 $ 20,500,000 7.025% AAA/Aaa 80559 AG6 (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-5 $ 19,329,000 7.185% AAA/Aaa 80559 AH4 (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class A-6 $278,409,000 5.615% ▇▇▇/▇▇▇ ▇▇▇▇▇ ▇▇▇ (2)
---------------------- ------------------- ---------------- -------------------- ---------------- ------------------
Class R N/A N/A (4) N/A (5)
====================== =================== ================ ==================== ================ ==================
-------------------------
(1) The Variable Rate and Fixed Rate Certificates are, in each case,
subject to a permitted variance of plus or minus 4%.
(2) The Underwritten Certificates will be purchased by the Underwriters
from the Company and will be offered by the Underwriters to the public
from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of sale.
(3) On each Distribution Date, Pass-Through Rate on the Class A-6
Certificates will equal the least of (i) LIBOR plus 0.24%; (ii) the
weighted average of the maximum lifetime Mortgage Interest Rates on the
Mortgage Loans in the Variable Rate Group less 0.582% per annum; and
(iii) the Variable Rate Available Funds Cap for such date (as each such
term is defined in the Prospectus Supplement), subject to increase as
provided in the Prospectus Supplement.
(4) No ratings have been requested by the Underwriters for the Class R
Certificates.
(5) The Class R Certificates will be sold to SMI and Texas Commerce Bank
National Association in a privately negotiated transaction.
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Underwritten Certificates Ratings: An "AAA" rating by S&P and
an "Aaa" rating by Moody's with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates. It is agreed that as a further
condition of the Underwriters' obligation to purchase the Underwritten
Certificates, such ratings by the Rating Agencies on the Underwritten
Certificates shall not have been rescinded and there shall not have occurred any
downgrading, or public notification of a possible downgrading or public notice
of a possible change, without indication of direction, in the ratings accorded
the Underwritten Certificates.
Mortgage Loans: Mortgage Loans having the approximate
characteristics described in the Prospectus Supplement with the final schedule
attached as Schedule I to the Trust Agreement.
Principal and Interest Distribution Dates: Each Distribution
Date shall be the 25th day of each month, or if such day is not a business day,
the next succeeding business day, commencing in December 1996.
REMIC Election: An election will be made to treat the Mortgage
Loans and related assets of the Trust as a real estate mortgage investment
conduit (the "REMIC"). The Underwritten Certificates will be designated as
"regular interests" in the REMIC. The Class R Certificates will be designated as
the "residual interest" in the REMIC.
Purchase Price: The Underwriters hereby agree to purchase each
Class of Underwritten Securities from the Company at the applicable purchase
price set forth below, plus, in the case of the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, accrued interest at the applicable
Pass-Through Rate from the close of business on November 1, 1996 through the
Closing Date. Each such purchase price is expressed as a percentage of the
initial principal amount of the related Mortgage Loan pool.
Purchase Price
Class A-1 99.953125%
Class A-2 99.968750%
Class A-3 99.937500%
Class A-4 99.953125%
Class A-5 100.000000%
Class A-6 100.000000%
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Each of the Underwriters agrees, severally and not jointly, subject to
the terms and conditions contained herein and in the Standard Terms to
Underwriting Agreement (August 1996 Edition), to purchase the principal balances
of the Classes of Certificates specified opposite its name below:(1)
======================== ====================== ====================== ====================== ======================
▇▇▇▇▇▇▇ ▇▇▇▇▇,
Series 1996-2 Prudential Security ▇▇▇▇▇▇ Brothers ▇▇▇▇▇▇, ▇▇▇▇▇▇ & PaineWebber
Designation(1) Incorporated Inc. ▇▇▇▇▇ Incorporated Incorporated
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-1 $ 33,300,000 -- $22,200,000 --
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-2 $ 28,500,000 -- $19,000,000 --
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-3 $ 10,200,000 -- $ 6,800,000 --
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-4 $ 12,300,000 -- $ 8,200,000 --
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-5 $ 11,597,400 -- $ 7,731,600 --
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Class A-6 $111,363,600 $83,522,700 -- $83,522,700
======================== ====================== ====================== ====================== ======================
--------------------
(1) Each Class of Certificates is subject to a permitted variance of plus
or minus 4%.
Closing Date and Location: 10:00 a.m. Eastern Time on December
5, 1996, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇. The Company will deliver the Underwritten
Certificates in book-entry form only through the same day funds settlement
system of the relevant Depositories, and the Class R Certificates in
certificated, fully registered form on December 5, 1996.
Due Diligence: At any time prior to the Closing Date, the
Underwriters have the right to inspect the Mortgage Loan files, the related
mortgaged properties and the loan origination procedures to ensure conformity
with the Prospectus and the Prospectus Supplement.
Controlling Agreement: This Underwriting Agreement, together
with the Standard Terms to Underwriting Agreement (August 1996 Edition)
(together, the "Agreement"), completely sets forth the agreements between the
Company, SMI and Dominion and the Underwriters and fully supersedes all prior
agreements, both written and oral, relating to the issuance of the Underwritten
Certificates and all matters set forth herein. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Agreement.
Information Provided by the Underwriters: It is understood and
agreed that the information set forth under the heading "Underwriting" in the
Prospectus Supplement and the sentence regarding the Underwriters's intention to
establish a market in the Underwritten Certificates on the inside front Cover
Page of the Prospectus Supplement is the only information furnished by the
Underwriters to the Company for inclusion in the Registration Statement and the
Final Prospectus.
Collateral Term Sheets, Structural Term Sheets and
Computational Materials: The Underwriters hereby represent and warrant that (i)
a hard copy of the information provided by the
4
Underwriters to the Company in electronic form and attached hereto as
Exhibit A, if any, constitutes all "Collateral Term Sheets" or "Structural
Term Sheets" (that are required to be filed with the Commission within two
business days of first use under the terms of the Public Securities Association
letter) disseminated by the Underwriters to investors in connection with the
Underwritten Certificates and (ii) a hard copy of the information provided by
the Underwriters to the Company and attached hereto as Exhibit B, if
any, constitutes all "Computational Materials" disseminated by it in
connection with the Underwritten Certificates.
Trustee: Citibank, N.A. will act as Trustee of the Trust.
Custodian: Texas Commerce Bank National Association will
act as custodian of the Mortgage Loans.
Blue Sky Qualifications: The Underwriters specifies, and
the parties intend to qualify the Underwritten Certificates in no
jurisdictions pursuant to the Agreement.
State Law Tax Opinion: At Closing, the Underwriters shall have
received from ▇▇▇▇▇ & ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇ opinions dated the Closing Date
and satisfactory in form and substance to the Underwriters, as to the tax
treatment of the Certificates under New York and Texas law, respectively.
Applicable Law: THE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
Notices: All communications hereunder, if sent to the
Underwriters, will be mailed, delivered or telegraphed and confirmed to
Prudential Securities Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Variances: The Company shall obtain prior approval of the
Underwriters if, at any time after the Prospectus Supplement and Prospectus are
filed with the Securities and Exchange Commission pursuant to its Rule 424 under
the Securities Act of 1933, as amended, and before or on the Closing Date, the
initial aggregate principal amount of the Underwritten Securities is to be
increased or decreased by more than 4% to reflect a change in the actual
Scheduled Principal Balance of the Mortgage Loans as of the Cut-off Date and the
amount deposited into the Pre-Funding Account.
* * * * *
5
The Underwriters agree, subject to the terms and provisions of
the Agreement, a copy of which is attached, and which is incorporated by
reference herein in its entirety and made a part hereof to the same extent as if
such provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
PRUDENTIAL SECURITIES INCORPORATED
on behalf of the Underwriters
By:______________________________________
Name:
Title:
Accepted and Acknowledged
As of the Date First Above
Written:
SAXON ASSET SECURITIES COMPANY
By:__________________________________
Name:
Title:
SAXON MORTGAGE, INC.
By:__________________________________
Name:
Title:
DOMINION MORTGAGE SERVICES, INC.
By:__________________________________
Name:
Title:
6
The Underwriters agrees, subject to the terms and provisions
of the Agreement, a copy of which is attached, and which is incorporated by
reference herein in its entirety and made a part hereof to the same extent as if
such provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Accepted and Acknowledged
As of the Date First Above
Written:
SAXON ASSET SECURITIES COMPANY
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
SAXON MORTGAGE, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
DOMINION MORTGAGE SERVICES, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES
STANDARD TERMS TO TRUST AGREEMENT
(November 1996 Edition)
TABLE OF CONTENTS
ARTICLE I.........................................................................................................1
Section 1.01. Defined Terms...............................................................................1
Section 1.02. Section References; Calculations; Ratings..................................................20
ARTICLE II.......................................................................................................20
Section 2.01. Mortgage Loan Files........................................................................20
Section 2.02. Acceptance by the Trustee..................................................................21
Section 2.03. Purchase or Substitution of Mortgage Loans by the Seller, a Servicer or....................24
Section 2.04. Representations and Warranties of Saxon....................................................27
Section 2.05. Representations and Warranties of the Master Servicer......................................29
ARTICLE III......................................................................................................30
Section 3.01. Master Servicer Custodial Account..........................................................30
Section 3.02. Asset Proceeds Account.....................................................................31
Section 3.03. Issuing REMIC Accounts.....................................................................33
Section 3.04. Advances by Master Servicer and Trustee....................................................33
Section 3.05. Month End Interest.........................................................................34
Section 3.06. Trustee to Cooperate; Release of Mortgage Files............................................35
Section 3.07 Reports to the Trustee; Annual Compliance Statements........................................36
Section 3.08. Title, Management and Disposition of REO Properties........................................37
Section 3.09. Amendments to Servicing Agreements; Modification of the Guide..............................40
Section 3.10. Oversight of Servicing.....................................................................40
Section 3.11. Credit Enhancement........................................................................41
ARTICLE IV.......................................................................................................41
Section 4.01. Statements to Certificateholders...........................................................41
Section 4.02. Remittance Reports.........................................................................43
Section 4.03. Compliance with Withholding Requirements...................................................44
Section 4.04. Reports of Certificate Principal Balances to the Clearing Agency...........................44
Section 4.05. Preparation of Regulatory Reports..........................................................44
ARTICLE V........................................................................................................45
Section 5.01. Pooling REMIC Interests....................................................................45
Section 5.02. The Certificates...........................................................................45
Section 5.03. Book-Entry Certificates....................................................................46
Section 5.04. Registration of Transfer and Exchange of Certificates......................................47
Section 5.05. Restrictions on Transfers..................................................................48
Section 5.06. Mutilated, Destroyed, Lost or Stolen Certificates..........................................50
Section 5.07. Persons Deemed Owners......................................................................50
Section 5.08. Paying Agent...............................................................................50
ARTICLE VI.......................................................................................................50
Section 6.01 Liability of, and Indemnification by, Saxon and the Master Servicer.........................50
Section 6.02. Merger or Consolidation of Saxon or the Master Servicer....................................51
Section 6.03. Limitation on Liability of Saxon, the Master Servicer and Others...........................52
Section 6.04. Resignation of the Master Servicer.........................................................52
Section 6.05. Compensation to the Master Servicer........................................................52
Section 6.06. Assignment or Delegation of Duties by Master Servicer......................................53
ARTICLE VII......................................................................................................53
Section 7.01. Termination and Substitution of Servicing Agreements.......................................53
Section 7.02. Termination of Master Servicer; Trustee to Act.............................................54
Section 7.03. Notification to Certificateholders.........................................................56
ARTICLE VIII.....................................................................................................56
Section 8.01. Duties of Trustee..........................................................................56
Section 8.02. Certain Matters Affecting the Trustee......................................................57
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans......................................59
Section 8.04. Trustee May Own Certificates...............................................................59
Section 8.05. Trustee's Fees.............................................................................59
Section 8.06. Eligibility Requirements for Trustee.......................................................60
Section 8.07. Resignation and Removal of the Trustee.....................................................60
Section 8.08. Successor Trustee..........................................................................61
Section 8.09. Merger or Consolidation of Trustee.........................................................61
Section 8.10. Appointment of Trustee or Separate Trustee.................................................61
Section 8.11. Appointment of Custodians..................................................................62
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates..............................62
ARTICLE IX.......................................................................................................63
Section 9.01. Redemption.................................................................................63
Section 9.02. Termination................................................................................63
Section 9.03. Procedure for Redemption or Termination....................................................64
Section 9.04. Additional Termination Requirements........................................................65
ARTICLE X........................................................................................................66
Section 10.01. REMIC Administration......................................................................66
Section 10.02. Prohibited Activities.....................................................................67
ARTICLE XI.......................................................................................................68
Section 11.01. Amendment of Trust Agreement..............................................................68
Section 11.02. Recordation of Agreement; Counterparts....................................................69
Section 11.03. Limitation of Rights of Certificateholders................................................69
Section 11.04. Governing Law.............................................................................70
Section 11.05. Notices...................................................................................70
Section 11.06. Severability of Provisions................................................................70
Section 11.07. Sale of Mortgage Loans....................................................................71
Section 11.08. Notice to Rating Agency...................................................................71
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
ii
PRELIMINARY STATEMENT
Saxon Asset Securities Company ("Saxon"), Texas Commerce Bank National
Association, 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 certain 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.
"Accounting Date": Unless otherwise provided in the Trust Agreement,
with respect to each Distribution Date, the last day of the month preceding the
month in which such Distribution Date occurs.
"Additional Collateral": Any real property (other than the related
Mortgaged Premises), personal property, securities, cash, instruments,
contracts, or other documents constituting or evidencing collateral pledged as
additional security for a Mortgage Loan.
"Administrative Fee": With respect to each Distribution Date and each
Mortgage Loan, the sum of the Servicing Fee, the Master Servicing Fee, the
Trustee Fee and the Credit Enhancement Fee relating thereto.
"Administrative Fee Rate": With respect to each Distribution Date and
each Mortgage Loan, the sum of the Servicing Fee Rate, the Master Servicing Fee
Rate, the Trustee Fee Rate and the Credit Enhancement Fee Rate relating thereto.
"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.
"Asset Value": Unless otherwise provided in the Trust Agreement, with
respect to each Mortgage Loan, the lesser of (i) the Scheduled Principal Balance
and of such Mortgage Loan; and (ii) the present value of remaining Monthly
Payments discounted monthly to the date computed at an interest rate specified
in the Trust Agreement.
"Available Distribution": Unless otherwise provided in the Trust
Agreement, with respect to each Distribution Date, an amount equal to the sum of
the following:
(a) all Monthly Payments with respect to the Mortgage Loans
received by the Trust and due during the preceding Due Period, to the
extent paid by a Borrower, advanced by a Servicer, the Master Servicer,
the Trustee or an Insurer, or deposited in the Asset Proceeds Account
from the Interest Fund (if any);
(b) all amounts deposited in the Asset Proceeds Account on
account of Mortgage Loans sold by the Trust to a Purchaser during the
preceding Prepayment Period; and
(c) all other payments (other than late charges, conversion fees
and similar charges and fees retained by a Servicer pursuant to the
Guide) received by the Trust 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 interest received by the Trust on the
principal portion thereof through the Accounting Date preceding such
Distribution Date, less the sum of (i) expenses associated with such
recovery and (ii) any Advances on such Mortgage Loans;
minus (i) the Administrative Fee allocable to each Mortgage Loan from payments
or Advances on, or proceeds of, such Mortgage Loan, (ii) any Non-Recoverable
Advances to the extent required to be reimbursed, and (iii) any reimbursement of
Saxon or the Master Servicer pursuant to Section 6.03, (iv) an overpayment of
the Purchase Price of a Mortgage Loan and (v) the Credit Enhancement Fee or Fees
payable to the providers of any related Credit Enhancement with respect to such
Distribution Date.
"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).
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"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, holiday or other day on which commercial
banking institutions in the city and state in which the Corporate Trust Office
or the Insurer is located or the city and state in which the principal office of
the Paying Agent or the Custodian, if any, 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 guaranty
insurance policy issued in connection with certificates.
"Certificate Insurer" means any issuer of a Certificate Guaranty
Insurance Policy.
"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) net of the sum of (i) 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 and (ii) the aggregate amount of all Realized Losses, if any, to be
allocated to such Class of Certificates on such Distribution Date pursuant to
the Trust Agreement.
"Certificate Register": The register designated in 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.
"Class Percentage": With respect to each Class of Certificates as of
each Distribution Date, the percentage obtained by dividing the Certificate
Principal Balance of such Class immediately prior to such Distribution Date by
the aggregate Scheduled Principal Balance of the Mortgage Loans as of the
immediately preceding Distribution Date.
"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.
3
"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 the Additional Collateral, if any, securing the indebtedness of the Borrower
under such Mortgage Loan.
"Conventional 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 first,
second, or more junior lien on such residential property.
"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 and 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, financial
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
4
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.
"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-I 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.
5
"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.
"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 on each Interest Adjustment Date to determine the new Mortgage Interest
Rate for such ARM Loan.
"Guide": Unless otherwise provided in the Trust Agreement, the August
1996 Edition of the Saxon Mortgage 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.
"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, on each Interest
Adjustment Date to determine the new 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.
6
"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 or the asset backed certificates of a Series.
"Interest Adjustment Date": With respect to each ARM Loan, the date on
which the related Mortgage Interest Rate adjusts in accordance with the related
Mortgage Note.
"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 the Trust or any REMIC, but shall be for the
benefit of the Certificateholders.
"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
7
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 first day of the
preceding Due Period.
"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.
"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.
8
"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,
Conventional Home Improvement Loans, Title I 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 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, in
form and substance satisfactory to each Rating Agency, issued by an insurance
company, surety company, bank, trust company, savings and loan association,
financial institution or other Person acceptable to each Rating Agency 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 first, second,
or more junior lien on a rental apartment building, a mixed commercial and
residential use property, or a project containing five or more residential
units.
"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.
"Net Rate": Unless otherwise provided in the Trust Agreement, with
respect to each Mortgage Loan, the related Mortgage Interest Rate less the
related Administrative Fee Rate.
"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).
9
"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 of the Trustee
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 and the Master
Servicer. Except with the consent of each Rating Agency, no Opinion of Counsel
may 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.
"Payment Adjustment Date": With respect to each ARM Loan, the date on
which the related payments of principal and interest adjust in accordance with
the related Mortgage Note.
"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": 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
10
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;
(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);
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 ▇▇▇▇▇ 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": Unless otherwise provided in the Trust Agreement:
(i) the period from but excluding the Cut-Off Date to and including the 17th day
of the month in which the first Distribution Date occurs and (ii) each period
thereafter from and including the 18th day of a month to and including the 17th
day of the following month.
11
"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.
"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 must, on the date of such
substitution: (i) have an Unpaid Principal Balance not greater than (and not
more than $10,000 less than) the Unpaid Principal Balance of the Deleted
Mortgage Loan, (ii) have 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) have a Net Rate equal to the Net Rate of the
Deleted Mortgage Loan, (iv) have a remaining term to maturity not greater than
(and not more than one year less than) the remaining term to maturity of the
Deleted Mortgage Loan, (v) have 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) comply with each applicable representation,
warranty, and covenant pertaining to the Mortgage Loans set forth in the Trust
Agreement and, if a Seller is effecting the substitution, comply with each
applicable representation, warranty, or covenant pertaining to the Mortgage
Loans set forth in the related Sales Agreement; provided, however, that no ARM
Loan may 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, (vii)
has a Minimum Lifetime Mortgage Interest Rate that is not less than the Minimum
Lifetime Mortgage Interest Rate on the Deleted Mortgage Loan, (viii) has a
Maximum Lifetime Mortgage Interest Rate that is not less than the Maximum
Lifetime Mortgage Interest Rate on the Deleted Mortgage Loan, (ix) 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, (x) has a
Gross Margin that is not less than the Gross Margin of the Deleted Mortgage
Loan, (xi) has a Periodic Rate Cap equal to the Periodic Rate Cap on the Deleted
Mortgage Loan, (xii) 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 the next Interest Adjustment Date for the Deleted
Mortgage Loan, (xiii) does not have a permitted increase or decrease in the
Monthly Payment on each Payment Adjustment Date less than the permitted increase
or decrease applicable to the Deleted Mortgage Loan, (xiv) was underwritten on
the basis of credit underwriting standards at least as strict as the credit
underwriting standards used with respect to the
12
Deleted Mortgage Loan; and (xv) 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 a Deleted Mortgage Loan, the amount
described in clause (i) hereof shall be determined on the basis of
aggregate Unpaid Principal Balances, the rates described in clauses (iii),
(vii), (viii), and (ix) hereof shall be determined on the basis of weighted
average Mortgage Interest Rates and Net Rates, as the case may be, the term
described in clause (iv) hereof shall be determined on the basis of weighted
average remaining terms to maturity, provided that no Qualified
Substitute Mortgage Loan may have an original term to maturity beyond the latest
original term to maturity of any Mortgage Loan transferred and assigned to
the Trust on the Closing Date, the Gross Margins described in clause (x) hereof
shall be determined on the basis of weighted average Gross Margins, and the
Interest Adjustment Dates described in clause (xii) hereof 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 60 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; and
(E) such Mortgage Loan must be secured by a valid lien on the related Mortgaged
Premises.
"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 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.
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"Redemption Price": An amount equal to (i) the aggregate Certificate
Principal Balance of the Regular Certificates (and any Residual Certificates
with a Certificate Principal Balance) plus accrued and unpaid interest thereon
through the Accounting Date preceding the Distribution Date fixed for redemption
and (ii) any unreimbursed Advances and Non-Recoverable Advances.
"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": Unless otherwise provided in the Trust Agreement, the
15th day of each month, or the preceding Business Day if such 15th day is not a
Business Day.
"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).
"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.
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"Rule 144A Certificate": Unless otherwise provided in the Trust
Agreement, a Private Certificate.
"Sales Agreement": The Sales Agreement identified in the Trust
Agreement.
"Saxon": Saxon Asset Securities Company, a Virginia corporation.
"Saxon Mortgage": Saxon Mortgage, Inc., 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, Saxon Mortgage 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.
"Senior Percentage": The percentage, if any, specified as such
(and calculated as set forth) in the Trust Agreement.
"Senior Prepayment Percentage": The percentage, if any, specified as
such (and calculated as set forth) in the Trust Agreement.
"Series": A group of Certificates issued by a trust originated by
Saxon.
"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 Saxon
Mortgage 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.
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"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 ▇▇▇▇▇ four-family residential property.
"Soldiers' and Sailors' Shortfall": Interest losses on a Mortgage Loan
resulting from the application of the Soldiers' and Sailors' Civil Relief Act of
1940.
"Special Hazard Fund": A Fund consisting of: (i) a surety bond,
insurance policy, Letter of Credit, guarantee or other credit instrument, in
form and substance satisfactory to each Rating Agency, issued by an insurance
company, surety company, bank, trust company, savings and loan association,
financial institution or other Person acceptable to each Rating Agency 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 the Trust or 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.
"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.
"Subordinated Percentage": The percentage, if any, specified as
such (and calculated as set forth) in the Trust Agreement.
"Subordinated Prepayment Percentage": The percentage, if any,
specified as such (and calculated as set forth) in the Trust Agreement.
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"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
Saxon Mortgage 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
hereunder to act as the "tax matters person" (within the meaning of the REMIC
Provisions) of a REMIC.
"Terminating Purchase": The purchase of all Mortgage Loans and each REO
Property owned by the Trust pursuant to Section 9.02 hereof.
"Termination Account": An escrow account maintained by the Paying Agent
into which any Trust funds not distributed on the Distribution Date on which the
earlier of (i) a Terminating Purchase or (ii) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust or the disposition
of the last REO Property remaining in the Trust is made are deposited. The
Termination Account shall be an Eligible Account.
"Termination Price": The greater of (i) 100% of the Unpaid Principal
Balance of each Mortgage Loan remaining in the Trust on the day of a Terminating
Purchase, plus accrued and unpaid interest thereon at the related Mortgage
Interest Rate through the Accounting Date preceding such purchase, plus
unreimbursed Advances of other than principal and interest, and the lesser of
(A) the Unpaid Principal Balance of each Mortgage Loan secured by an REO
Property remaining in the Trust, plus accrued but unpaid interest thereon at the
related Mortgage Interest Rate through the Accounting Date preceding such
purchase, and (B) the current appraised value of any such REO Property, such
appraisal to be conducted by an appraiser satisfactory to the Master Servicer
(net of liquidation expenses to be incurred in connection with the disposition
of such REO Property, estimated in good faith by the Master Servicer), and (ii)
the sum of the aggregate fair market value of all the assets of the Trust (as
determined by the Master Servicer based upon bids from at least three recognized
broker/dealers that deal in similar assets as of the close of business on the
third Business Day preceding the date upon which notice of any such termination
is furnished to Certificateholders pursuant to Section 9.03 hereof). The fair
market value of the assets in the Trust or the appraised value of any REO
Property shall be based upon the inclusion of accrued interest through the
Accounting Date preceding repurchase at the applicable Mortgage Interest Rate on
the Scheduled Principal Balance of each Mortgage Loan (including any Mortgage
Loan secured by an REO Property as to which an REO Disposition has not
occurred).
"Title I Loan": A mortgage loan that is: (i) originated under the Title
I credit insurance program created under the National Housing Act of 1934 by the
Federal Housing Administration, (ii) made to finance actions or items that
substantially protect or improve the basic livability or utility of a property,
and (iii) secured by a lien on such property.
"Title Insurance Policy":
"Transferee Agreement": An agreement substantially in the form of
Exhibit E attached hereto.
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"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.
"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;
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(e) an original Title Insurance Policy, Certificate of Title Insurance
or a written commitment to issue such 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;
(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 the Certificate
Guaranty Insurance Policy).
"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
(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.
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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).
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.
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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.
(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;
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(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).
(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
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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 the 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.
(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
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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.
(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.
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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
25
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.
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 monies 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.
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Section 2.04. Representations and Warranties of Saxon
Saxon hereby represents and warrants to the Trustee 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;
27
(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.
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
28
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.
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;
29
(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;
(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 Servicer as a part of the Servicer
Compensation on or before each Distribution Date, unless the Trust Agreement
provides that such net investment income is to be applied to the payment of
Month End Interest Shortfall or other amounts due from the Master Servicer. 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).
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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) Withdrawal. Unless otherwise provided in the Trust Agreement, on
each Distribution Date, the Paying Agent shall withdraw all monies 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;
(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
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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.
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(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.
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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.
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
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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.
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.
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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.
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
36
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.
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;
37
(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.
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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 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.
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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
the Trustee a Monthly Statement and (ii) on the Distribution Date following each
Master Servicer Reporting Date, the Trustee shall forward a copy of such Monthly
Statement by mail to each Certificateholder. Each Monthly Statement shall
contain the following information:
(a) the amount of the distribution to be made on such Distribution Date
to be applied to reduce the Certificate Principal Balance of each Class of
Certificates, separately identifying the amounts, if any, of any prepayments;
(b) the amount of the distribution to be made on such Distribution Date
allocable to interest with respect to each Class of Certificates, and the
Pass-Through Rate applicable to each Class of Certificates;
(c) the amount of the Master Servicing Fee to be paid to the Master
Servicer on such Distribution Date, the amount of the Trustee Fee to be paid to
the Trustee on such Distribution Date, the amount of the Servicing Fees to be
paid to the Servicers on such Distribution Date, the amount of any Credit
Enhancement Fees to be paid to the providers of any related Credit Enhancement
on such Distribution Date, and such other customary information as the Master
Servicer deems necessary or desirable, or which a Certificateholder reasonably
requests, to enable Certificateholders to prepare their tax returns;
(d) the aggregate amount of outstanding Advances, together with
Non-Recoverable Advances, if any, at the close of business on such Distribution
Date;
(e) the aggregate Scheduled Principal Balance of the Mortgage Loans as
of such Distribution Date and the number of Mortgage Loans outstanding on such
Distribution Date;
(f) the number and aggregate principal balance of Mortgage Loans (i)
delinquent two months (i.e., 60 to 89 days), (ii) delinquent three months (i.e.,
90 days or longer) and (iii) as to which foreclosure proceedings have been
commenced;
(g) the number and aggregate Unpaid Principal Balance of Mortgage
Loans that are secured by REO Properties;
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(h) the aggregate Certificate Principal Balance of each Class of
Certificates after giving effect to the distribution to be made on such
Distribution Date, separately identifying any reduction thereof on account of
Realized Losses;
(i) the amount of Realized Losses incurred during the preceding
Prepayment Period and since the Cut-Off Date, separately identifying any
Mortgagor Bankruptcy Losses, Special Hazard Losses and Fraud Losses, if such
losses are separately allocated;
(j) the amount of Month End Interest Shortfall, Soldiers' and Sailors'
Shortfall and Realized Interest Shortfall incurred during the preceding Due
Period;
(k) the aggregate amount of interest remaining unpaid, if any, for each
Class of Certificates (exclusive of Interest Shortfalls and Realized Interest
Shortfall allocated to such Class), after giving effect to the distribution to
be made on such Distribution Date;
(l) the aggregate amount of payments made, if any, since the Closing
Date under each form of Credit Enhancement and the amount, if any, remaining
available under each form of Credit Enhancement;
(m) the Senior Percentage and the Senior Prepayment Percentage, if any,
after giving effect to the distribution to be made, and Realized Losses to be
allocated, on such Distribution Date;
(n) the Subordinated Percentage and the Subordinated Prepayment
Percentage, if any, after giving effect to the distribution to be made, and
Realized Losses to be allocated, on such Distribution Date; and
(o) if a REMIC election has been or will be made with respect to the
Trust, any reports required to be provided to Certificateholders by the REMIC
Provisions.
In the case of information furnished pursuant to clauses (a) and (b)
above, the amounts shall be expressed with respect to any Certificate as a
dollar amount per $1,000 denomination; provided, however, that if any Class of
Certificates does not have a Certificate Principal Balance, then the amounts
shall be expressed as a dollar amount per 10% Percentage Interest.
In addition to the Monthly Statement specified above, the Master
Servicer shall prepare and deliver to the Trustee prior to each Distribution
Date, and the Trustee 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 Master
Servicer, and deliver a statement containing the information set forth in
clauses (a) through (c) above, 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
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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.
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 of Certificate Principal Balances to the Clearing Agency
If and for so long as any Certificate is held by the Clearing Agency, on
each Distribution Date, the Paying Agent shall provide a copy of the Remittance
Report prepared by the Master Servicer to The Depository Trust Company (and
shall promptly thereafter confirm in writing) the following: (i) the amount to
be reported pursuant to clauses (a) and (b) of the statement to be provided to
Certificateholders pursuant to Section 4.01 hereof in respect of the next
succeeding distribution, (ii) the Record Date for such distribution, (iii) the
Distribution Date for such distribution and (iv) the aggregate Certificate
Principal Balance of each Class of Certificates to be reported pursuant to
clause (h) of such statement.
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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.
(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.
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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.
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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.
(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 the Corporate Trust
Office of the Certificate Registrar 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 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.
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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.
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.
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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. Neither Saxon, the Trustee, the Certificate Registrar nor 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, if the Certificate to be
transferred is a Rule 144A Certificate, 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 a proposed transfer does not involve a
Rule 144A Certificate or the transferee of a Rule 144A Certificate does not
certify to facts which, if true, would mean that the proposed transferee is a
Qualified Institutional Buyer, the Certificate Registrar shall require that the
transferor and the 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 transfer of the Private
Certificates and no Opinion of Counsel shall be required in connection with the
transfer of the Private Certificates by a broker or dealer, if such broker or
dealer was the initial transferee.
Saxon shall provide to any Holder of a Rule 144A Certificate and any
prospective transferee 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.
(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.
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(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). 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 transfer 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.
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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.
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 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 and
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
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Saxon or the Trustee shall be from such entity's own funds, without
reimbursement therefor. The provisions of this Section 6.01 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.
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 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 the Certificateholders
offer to Saxon or the Master Servicer, as the case may be, reasonable security
or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby.
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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.
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 to the Trustee or Saxon under the Trust
Agreement.
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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 a Servicing Agreement, the Master Servicer shall promptly deliver to
Saxon and the Trustee a certification by an Officer that an event has occurred
that may justify termination of such Servicing Agreement, describing the
circumstances surrounding such event and directing what action should be taken
by the Trustee with respect to such Servicer. If the Master Servicer directs
that such Servicing Agreement be terminated, the Master Servicer's certification
must state that the breach is material and not merely technical in nature. Upon
written direction of the Master Servicer and the consent of Saxon, based upon
such certification and consent, the Trustee, as assignee of such Servicing
Agreement, shall promptly consent to the termination of such Servicing Agreement
and, as provided in the succeeding paragraph, the Master Servicer shall
concurrently therewith appoint another Servicer to enter into a substitute
Servicing Agreement.
The Master Servicer shall indemnify the Trustee and hold the Trustee
harmless from and against all claims, liabilities, costs and expenses
(including, but not limited to, reasonable attorneys' fees) arising out of, or
assessed against the Trustee in connection with, termination of any Servicing
Agreement at the direction of the Master Servicer. If the Trustee terminates any
such Servicing Agreement, the Master Servicer shall enter into a substitute
Servicing Agreement with another mortgage loan service company acceptable to the
Master Servicer and each Rating Agency under which such mortgage loan service
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 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 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 hereof. 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 Servicer would have been entitled if the
Servicing Agreement with the Servicer had not been terminated.
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
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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. 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. If an Event of Default described in
clauses (e) and (f) of this Section 7.02 shall occur, the Trustee may, 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. 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.
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.
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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, the Trustee may, upon the occurrence of an
Event of Default, if it 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 the 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.
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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.
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
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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;
(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;
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(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 the 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.
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.
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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 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.
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 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
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the successor trustee. Saxon shall also deliver a copy of such instrument to
the Certificateholders, the Master Servicer and each Servicer.
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.
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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 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 pursuant to a Custody
Agreement satisfactory in form and substance to the Trustee. 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.
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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
REDEMPTION OF CERTIFICATES AND TERMINATION OF THE TRUST
Section 9.01. Redemption
Unless otherwise provided in the Trust Agreement, either Saxon or the
Holders of the majority of the Percentage Interest in the Residual Certificates
(or each Class of Residual Certificates, if more than one), may, at their
respective options, make or cause a Person to make a Redeeming Purchase for the
Redemption Price on any Distribution Date on or after the earlier of (i) the
Distribution Date on which, after taking into account distributions of principal
to be made on such Distribution Date, the aggregate Certificate Principal
Balance of the Certificates is equal to or less than 10% of the initial
aggregate Certificate Principal Balance of such Certificates, or (ii) the
Redemption Date. The Trustee will not be obligated to redeem the Certificates at
the request of Saxon or the Holders of a majority of the Percentage Interest in
the Residual Certificates (or each Class of Residual Certificates, if more than
one) unless the Trustee shall have first received cash in an amount equal to the
Redemption Price. Unclaimed funds otherwise distributable to Certificateholders
on a Distribution Date on which a Redeeming Purchase is made shall be deposited
in the Redemption Account. Upon redemption of the Certificates, the redeeming
party, at its option, may either (a) make or cause a Person to make a
Terminating Purchase for the Termination Price as described in Section 9.02
hereof or (b) hold such Certificates or resell such Certificates (in which
event, no party other than the Holders of a majority of the Percentage Interest
in the Residual Certificates may redeem the Certificates subsequent to such
redemption), provided that such redeeming party pays all administrative costs
and expenses of the Master Servicer following such redemption in excess of the
Master Servicing Fee.
Section 9.02. Termination
Whether or not the Certificates have been redeemed, unless otherwise
provided in the Trust Agreement, either Saxon or the Holders of the majority of
the Percentage Interest in the Residual Certificates (or each Class of Residual
Certificates, if more than one), may, at their respective options, make or cause
a Person to make a Terminating Purchase for the Termination Price on any
Distribution Date upon which a Redeeming Purchase may be made. Upon such
Terminating Purchase or the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan remaining in the Trust or the
disposition of the last REO Property remaining in the Trust, the respective
obligations and responsibilities under the Trust Agreement of Saxon, the Master
Servicer and the Trustee (other than the obligations of the Trustee to make
payments to Certificateholders as hereafter set forth) shall terminate upon
payment to the Certificateholders of all amounts held by or on behalf of the
Trustee and required hereunder to be so paid, payment of all administrative
expenses associated with the Trust and any related REMICs, and deposit of
unclaimed funds otherwise distributable to the Certificateholders in the
Termination Account; provided, however, that in no event shall the Trust
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
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The Trust also may be terminated and the Certificates retired if the
Master Servicer determines, based upon an Opinion of Counsel, that the REMIC
status of any related REMIC has been lost or that a substantial risk exists that
such REMIC status will be lost for the then-current taxable year.
Section 9.03. Procedure for Redemption or Termination
The requisite Residual Certificateholders or Saxon shall each advise the
Trustee and the Paying Agent of its election to cause a Redeeming Purchase or
Terminating Purchase on or before the Distribution Date in the month preceding
the Distribution Date on which the Redeeming Purchase or Terminating Purchase
will occur. The Master Servicer shall advise the Paying Agent of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust or
the disposition of the last REO Property remaining in the Trust at least two
Business Days prior to the Remittance Date in the month in which the Trust will
terminate. Notice of the Distribution Date on which any such redemption or
termination shall occur (the "Final Distribution Date") shall be given promptly
by the Paying Agent by letter to the Certificateholders mailed (i) if such
notice is given in connection with a Redeeming Purchase or a Terminating
Purchase, not earlier than the 15th day and not later than the last day of the
month preceding the month of such final distribution or (ii) otherwise during
the month of such final distribution on or before the Remittance Date in such
month, in each case specifying (A) the Final Distribution Date and that final
payment of the Certificates will be made upon presentation and surrender of
Certificates at the office of the Paying Agent therein designated on that date,
(B) the amount of any such final payment and (C) that the Record Date otherwise
applicable to such Final Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Paying Agent. The Paying Agent shall give such notice to the Certificate
Registrar at the time such notice is given to Certificateholders. If such notice
is given in connection with a Redeeming Purchase or a Terminating Purchase, the
purchaser shall deliver to the Paying Agent for deposit in the Asset Proceeds
Account on the Business Day preceding the Final Distribution Date an amount in
next day funds equal to the Redemption Price or the Termination Price, as the
case may be.
Upon presentation and surrender of the Certificates on a Distribution
Date by Certificateholders, the Paying agent shall distribute to
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with a Redeeming Purchase or a Terminating Purchase,
or (ii) if in connection with a Redeeming Purchase or a Terminating Purchase, an
amount determined as follows: with respect to each Certificate with an
outstanding Certificate Principal Balance, the outstanding Certificate Principal
Balance thereof, if any, plus interest thereon through the Accounting Date
preceding the Distribution Date fixed for redemption or termination and any
previously unpaid interest, net of any unreimbursed Advances and any Realized
Losses, Realized Interest Shortfall and Interest Shortfalls allocable to such
Certificate on the Distribution Date fixed for redemption or termination; and in
addition, with respect to each Residual Certificate, the Percentage Interest
evidenced thereby multiplied by the difference between the Redemption Price or
the Termination Price, as applicable, and the aggregate amount to be distributed
as provided in the first clause of this sentence and the next succeeding
sentence. The Paying Agent also shall pay each Servicer, the Master Servicer or
itself the amount of their respective unreimbursed Advances.
Upon the deposit of the Redemption Price in the Asset Proceeds Account,
the Trustee (or any Custodian) shall retain possession of the Mortgage Loans and
shall release the Certificates to the person effecting the Redeeming Purchase.
Upon the deposit of the Termination Price in the Asset Proceeds Account, the
Trustee (or any Custodian) shall promptly release to the purchaser the Trustee
Mortgage Loan Files for the remaining Mortgage Loans, and the Trustee shall
execute all assignments, endorsements and other instruments, in each case
without recourse, necessary to effectuate such transfer.
If not all the Certificates shall have been surrendered within six
months after the Final Distribution Date specified in the above-mentioned
written notice, the Paying Agent shall give a second written notice to the
remaining Certificateholders to surrender their Certificates and receive the
final distribution with respect thereto, net of the cost of such second written
notice. If within one year after the second written notice, not all the
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Certificates shall have been surrendered, the Paying Agent may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the amounts otherwise payable on such
Certificates. Any funds payable to Certificateholders that are not distributed
on the Final Distribution Date shall be deposited in the Redemption Account or
the Termination Account, as the case may be, each of which shall be an Eligible
Account, to be held for the benefit of Certificateholders not presenting and
surrendering their Certificates in the aforesaid manner, and shall be disposed
of in accordance with this Section 9.03. Funds on deposit in such Redemption
Account or such Termination Account, as the case may be, shall not be invested,
and the Trustee shall have no liability to any Person for interest thereon. The
Trust shall terminate immediately following the deposit of funds in the
Termination Account as provided below.
Section 9.04. Additional Termination Requirements
(a) In the event of a Terminating Purchase as provided in Section 9.02
hereof, the Trust shall be terminated in accordance with the following
additional requirements, unless the Trustee receives (i) a Special Tax Opinion
and (ii) a Special Tax Consent from each Holder of a Residual Interest (unless
the Special Tax Opinion specially provides that no REMIC-level tax will result
from the Terminating Purchase):
(A) Within 90 days prior to the Final Distribution Date, Saxon on
behalf of each related REMIC shall adopt a plan of complete liquidation
meeting the requirements of a qualified liquidation under the REMIC
Provisions (which plan may be adopted by the Trustee's attachment of a
statement specifying the first day of the 90-day liquidation period to
each REMIC's final federal income tax return);
(B) Upon making final payment on the Regular Certificates or the
deposit of any unclaimed funds otherwise distributable to the holders of
the Regular Certificates in the Termination Account on the Final
Distribution Date, the Trustee shall distribute or credit, or cause to
be distributed or credited, to the Holders of the Residual Certificates
all cash on hand relating to the REMIC after such final payment (other
than cash retained to meet claims), and the REMIC shall terminate at
that time; and
(C) In no event may the final payment on the Certificates be made
after the 90th day from the date on which the plan of complete
liquidation is adopted. A payment into the Termination Account with
respect to any Certificate pursuant to Section 9.03 hereof shall be
deemed a final payment on, or final distribution with respect to, such
Certificate for the purposes of this clause.
(b) By its acceptance of a Residual Certificate, the Holder thereof
hereby (i) authorizes such action as may be necessary to adopt a plan of
complete liquidation of any related REMIC and (ii) agrees to take such action as
may be necessary to adopt a plan of complete liquidation of any related REMIC
upon the written request of the Master Servicer, which authorization shall be
binding upon all successor Holders of Residual Certificates.
(c) By its acceptance of a Residual Certificate, the Holder thereof
hereby authorizes (i) the Holders of the majority of the Percentage Interest in
the Residual Certificates of the related Class to effect a Terminating Purchase
or a Redeeming Purchase on behalf of all Holders of such Class of Residual
Certificates in accordance with Section 9.01 or 9.02 hereof and (ii) the
reimbursement of the Holders of the majority of the Percentage Interest in the
Residual Certificates for reasonable costs and expenses incurred in connection
with the related Terminating Purchase or Redeeming Purchase (including, but not
limited to, the payment of interest on the funds advanced at the Net Rate
applicable to the related Mortgage Loans).
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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.
(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.
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(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;
(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.
65
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 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 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.
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.
66
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
the Certificateholders 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
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.
67
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.
68
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:
(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.
69
Exhibit A-1
FORM OF INITIAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 examination 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
A-1-1
(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.
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:_________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF FINAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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
Original Recorded Assignment of
Security Instrument Security Instrument
Saxon Loan Number 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
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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
D-1
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.
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
D-1-1
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.
_____ 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.
D-1-2
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-1-3
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-1-4
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
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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-1
(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;
(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
E-2
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee, pursuant to which the Purchased Certificates were issued.
E-3
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-4
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 ▇▇▇▇
▇▇-▇ 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
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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;
G-1
(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.
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;
G-2
(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.
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
G-3
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 #__________________
▇-▇
▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇ ▇▇ ▇▇▇-▇.▇. 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
H-1-1
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.
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 ▇▇▇▇▇▇'▇ 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[_].
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
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 ▇▇▇▇▇▇'▇ 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.
H-2-1
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.
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
SAXON ASSET SECURITIES COMPANY
ASSET BACKED CERTIFICATES
STANDARD TERMS TO UNDERWRITING AGREEMENT
(JANUARY 1997 EDITION)
PRELIMINARY STATEMENT
Saxon Asset Securities Company, a Virginia corporation (the
"Depositor"), proposes to issue Asset Backed Certificates (the "Certificates")
in various series (each, a "Series") in one or more offerings on terms
determined at the time of sale. The Certificates of each Series will be issued
pursuant to a Trust Agreement with respect to such Series among the Depositor, a
bank or mortgage banking company, as master servicer (in such capacity, the
"Master Servicer"), and a bank or trust company, as trustee (in such capacity,
the "Trustee"), which Trust Agreement will incorporate by reference certain
Standard Terms to Trust Agreement identified therein (each such Trust Agreement
with the Standard Terms so incorporated, the "Trust Agreement").
The Depositor is a wholly owned limited purpose financing subsidiary of
Dominion Mortgage Services, Inc. ("DMSI").
The Certificates of each Series will evidence beneficial ownership
interests in one or more segregated pools of mortgage-related assets (the
"Mortgage Assets") and certain other assets transferred by the Depositor to one
or more trusts (collectively, a "Trust"). The Mortgage Assets included in each
Trust on the Closing Date as hereinafter defined will consist of the mortgage
loans (the "Mortgage Loans") or mortgage-backed securities (the "Mortgage
Certificates") identified in the related Trust Agreement.
The Depositor will transfer the Mortgage Assets acquired by it to the
related Trust for each Series of Certificates in exchange for the Certificates
of such Series. Certain of the Mortgage Assets may have been acquired by the
Depositor from Saxon Mortgage, Inc. ("SMI"), a subsidiary of DMSI, or one or
more unaffiliated sellers (each, in such capacity, a "Seller"), in each case
pursuant to a sales agreement (each, a "Sales Agreement") between the Depositor
and the Seller of such Mortgage Assets. The net proceeds to the Depositor from
the sale of each Series of Certificates will be used principally to pay the
purchase price of the Mortgage Assets acquired for the related Trust. The
Mortgage Loans will be serviced pursuant to separate servicing agreements (each,
a "Servicing Agreement") with one or more servicers, which may be an affiliate
of the Depositor (each, in such capacity, a "Servicer"), each of which must be
(i) approved by the Master Servicer and (ii) either (A) approved by and in good
standing with the Federal Home Loan Mortgage Corporation ("FHLMC") or the
Federal National Mortgage Association ("FNMA") or (B) an institution the
deposits of which are insured by the Federal Deposit Insurance Corporation
("FDIC").
The Certificates are more fully described in the Registration Statement
(as hereinafter defined). Each Series of Certificates, and each class of
Certificates within such Series, may vary, among other things, as to number and
types of classes, aggregate principal amount, stated maturity dates, interest
rates, timing of interest payments, redemption provisions, if any, and any other
variable terms set forth in the Trust Agreement and in the Certificates of such
Series.
The Depositor may, from time to time, enter into one or more
underwriting agreements (each, an "Underwriting Agreement"), each substantially
in the form of Exhibit A attached hereto, that provide for the sale of all or a
portion of the Certificates of a Series (such Certificates to be so purchased
being herein collectively referred to as the "Underwritten Certificates") to the
underwriter(s) named in the Underwriting Agreement (the "Underwriters"). The
standard provisions set forth herein are to be incorporated by reference in any
such Underwriting Agreement. An Underwriting Agreement, including the standard
provisions set forth herein incorporated therein by reference, is herein
referred to as the "Agreement." Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings assigned to them in the Agreement and
if not defined therein shall have the meanings assigned to them in the Trust
Agreement.
The Underwriting Agreement relating to each offering of Underwritten
Certificates shall specify the exact or approximate principal amount of
Certificates to be issued and their respective interest rates or methods of
determining such interest rates, the price or prices at which the Certificates
are to be purchased by the Underwriters from the Depositor, the initial public
offering prices or the method by which the prices at which the Certificates are
to be sold will be determined, the names of the firms, if any, designated as
representatives of the Underwriters (collectively, the "Representative"), the
principal amount of Certificates to be purchased by each Underwriter and the
date, time and manner of delivery of the Certificates and payment therefor. Each
such offering of Underwritten Certificates shall be governed by the Agreement,
which shall inure to the benefit of and be binding upon the Underwriters
participating in the offering of such Underwritten Certificates. If a
Representative is designated in the Underwriting Agreement, the Representative
shall act on behalf of the Underwriters and the
parties to the Underwriting Agreement shall be entitled to rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by the Representative.
If on the Closing Date (as hereinafter defined) for a Series of
Certificates the Mortgage Assets being transferred to the Trustee pursuant to
the Trust Agreement do not include Mortgage Loans, then all references in the
Agreement to Mortgage Loans and to any agreements, instruments or entities
related thereto shall be disregarded, and all representations and warranties,
opinions and other documents relating to the foregoing shall be deemed to be
deleted from the Agreement for purposes of such Series. If on the Closing Date
for a Series of Certificates the Mortgage Assets being transferred to the
Trustee pursuant to the Trust Agreement do not include Mortgage Certificates,
then all references in the Agreement to each type of Mortgage Certificate not
included and to any agreements, instruments or entities related thereto shall be
disregarded, and all representations and warranties, opinions and other
documents relating to the foregoing shall be deemed deleted from the Agreement
for purposes of such Series.
1. REPRESENTATIONS AND WARRANTIES. (a) The Depositor represents and
warrants to, and agrees with, each Underwriter that:
(i) The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 for
the registration of the Certificates under the Securities Act of 1933,
as amended (the "Act"), and has filed such amendments thereto and such
additional registration statements as may have been required prior to
the date hereof. Such registration statement, as amended at the date
hereof, meets the requirements set forth in Rule 415 under the Act and
complies in all other material respects with the Act and the rules and
regulations thereunder. The registration statement has been declared
effective by the Commission. The Depositor proposes to file with the
Commission pursuant to Rule 424 under the Act a supplement to the form
of prospectus included in such registration statement relating to the
Certificates and the plan of distribution thereof. Such registration
statement, including the exhibits thereto, as amended at the date
hereof, and including all information, if any, filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference therein, is
hereinafter called the "Registration Statement"; the prospectus in the
form most recently revised and filed with the Commission pursuant to
Rule 424 is hereinafter called the "Basic Prospectus"; and the form of
prospectus supplement specifically relating to the Certificates, in the
form in which it shall be first filed with the Commission pursuant to
Rule 424 (including the Basic Prospectus as so supplemented and the
information, if any, filed with the Commission pursuant to the Exchange
Act and incorporated by reference therein) is hereinafter called the
"Final Prospectus." Any preliminary form of the Final Prospectus that
has heretofore been filed pursuant to Rule 424 or, prior to the
effective date of the Registration Statement, pursuant to Rule 402(a),
424(a) or 430A, is hereinafter called a "Preliminary Final Prospectus."
(ii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date (as hereinafter defined), any amendment to
the Registration Statement becomes effective, when any supplement to
the Final Prospectus is filed with the Commission, and at the Closing
Date, (A) the Registration Statement, as amended as of any such time,
and the Final Prospectus, as amended or supplemented as of any such
time, complies and will comply in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder and (B) the Registration Statement, as amended as of any
such time, does not contain and will not contain any untrue statement
of a material fact and does not omit and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and the Final Prospectus,
as amended or supplemented as of any such time, does not and will not
include an untrue statement of a material fact and does not omit and
will not omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that the Depositor makes
no representations or warranties as to the information contained in or
omitted from the Registration Statement or the Final Prospectus or any
amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Depositor by or
on behalf of any Underwriter, any Credit Enhancer or any unaffiliated
Servicer specifically for use in connection with the preparation of the
Registration Statement and the Final Prospectus.
2
(iii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date, any amendment to the Registration Statement
becomes effective, when any supplement to the Final Prospectus is filed
with the Commission, and at the Closing Date, there has not and will
not have been, to the knowledge of the Depositor, (A) any request by
the Commission for any further amendment of the Registration Statement
or the Final Prospectus or for any additional information, (B) any
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat
of any proceeding for that purpose, or (C) any notification with
respect to the suspension of the qualification of the Underwritten
Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(iv) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia with full corporate power and authority to own
its properties and conduct its business as now conducted by it and to
enter into and perform its obligations under the Agreement and each
Sales Agreement and has qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
that requires such qualification wherein it owns or leases material
properties, except where the failure to so qualify would not have a
material adverse effect on the Depositor.
(v) The execution and delivery by the Depositor of the
Agreement, each Sales Agreement, the Trust Agreement and the
Certificates, and the transfer of the Trust Estate (as that term is
defined in the Trust Agreement) to the Trustee pursuant to the Trust
Agreement, are within the corporate power of the Depositor and have
been or will have been duly authorized by all necessary corporate
action on the part of the Depositor, and neither the execution and
delivery by the Depositor of such agreements and instruments nor the
consummation by the Depositor of the transactions therein contemplated
nor compliance by the Depositor with the provisions thereof will (A)
violate the articles of incorporation or bylaws of the Depositor, (B)
result in a breach of, or constitute a default under, any law,
governmental rule or regulation, any judgment, decree or order binding
on the Depositor or its properties, or any provision of any material
indenture, mortgage, deed of trust, contract or other instrument to
which the Depositor is a party or by which it is bound, or (C) 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 except the lien
created by the Trust Agreement which violation, breach, default or
creation of any lien, charge or encumbrance would have a material
adverse effect upon the financial condition of the Depositor.
(vi) The Agreement and each Sales Agreement have been duly
executed and delivered by the Depositor, and, as of the Closing Date,
the Trust Agreement will have been duly executed and delivered by the
Depositor, and, assuming the due authorization, execution and delivery
by the other parties thereto, each constitutes, or will constitute, a
legal, valid and binding agreement of the Depositor, enforceable
against the Depositor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other 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, and except that with respect to the Agreement and
each Sales Agreement the provisions relating to indemnification and
contribution may be unenforceable as against public policy.
(vii) The Underwritten Certificates and the Trust Agreement
will conform in all material respects to the descriptions thereof
contained in the Final Prospectus, and the Underwritten Certificates,
when duly and validly executed, authenticated, issued and delivered as
contemplated hereby and by the Trust Agreement, will constitute legal,
valid and binding obligations of the Depositor, enforceable against the
Depositor in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other 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.
(viii) Since the date as of which information is given in the
Registration Statement and the Final Prospectus, there has not been any
material adverse change or development involving a prospective material
adverse change in the business, operations, financial condition,
properties or assets of the Depositor.
3
(ix) There are no actions, suits or proceedings against, or
investigations of, the Depositor pending, or, to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Agreement, any Sales
Agreement, any Servicing Agreement, the Trust Agreement or the
Underwritten Certificates, (B) seeking to prevent the issuance of the
Underwritten Certificates or the consummation of any of the
transactions contemplated by the Agreement, any Sales Agreement, any
Servicing Agreement or the Trust Agreement, (C) that might materially
and adversely affect the performance by the Depositor of its
obligations under the Agreement, any Sales Agreement, the Trust
Agreement or the Underwritten Certificates, or (D) seeking to affect
adversely the federal income tax attributes of the Underwritten
Certificates as described in the Final Prospectus.
(x) No filing or registration with, notice to, qualification
of or with, or consent, approval, authorization or order or other
action of any person, corporation or other organization or of any
court, supervisory or governmental authority or agency is required for
the valid and proper transfer of the Trust Estate to the Trustee
pursuant to the Trust Agreement or for the valid and proper
authorization, issuance and sale of the Certificates pursuant to the
Agreement and the Trust Agreement except (A) such as have been, or will
have been prior to the Closing Date, obtained under the Act, or state
securities laws or Blue Sky laws, or from the National Association of
Securities Dealers, Inc., in connection with the purchase and
distribution of the Underwritten Certificates by the Underwriters or
(B) any recordation of the assignment of Mortgage Loans to the Trustee
that may be required pursuant to the Trust Agreement.
(xi) At or prior to the Closing Date, the Depositor will have
transferred to the Trustee pursuant to the Trust Agreement assets that
had a Scheduled Principal Balance (as defined in the Trust Agreement)
of not less than the initial principal amount of the Underwritten
Certificates and upon (A) the delivery to the Trustee of the Mortgage
Certificates in certificated form (the "Certificated Mortgage
Certificates"), (B) the delivery of the Mortgage Loans duly endorsed or
assigned and the recording of the assignment thereof, and (C) the
registration in the name of the Trustee's custodial bank, and the
transfer to the Trustee's custody account, of the Mortgage Certificates
in book-entry form (the "Book-Entry Mortgage Certificates") and
compliance with all other legal requirements necessary to perfect an
ownership interest in such Book-Entry Mortgage Certificates, the
Trustee will be vested with the legal title that the transfer purports
to convey.
(xii) As of the Closing Date, the Depositor will own the
Mortgage Assets to be transferred to the Trustee pursuant to the Trust
Agreement, free and clear of any lien, mortgage, pledge, charge,
security interest or other encumbrance, except the lien of the Trust
Agreement (which lien relates solely to the Series of Certificates
issued under the Trust Agreement and to no other Series of
Certificates).
(xiii) As of the Closing Date, the Mortgage Certificates
constituting part of the Trust Estate will have been duly and validly
transferred to the Trustee and (A) in the case of the Book-Entry
Mortgage Certificates, registered in the name of the Trustee's
custodial bank and transferred to the Trustee's custody account, and
all other legal requirements necessary to transfer an ownership
interest therein will have been complied with, and (B) in the case of
the Certificated Mortgage Certificates, either duly and validly
registered in the name of the Trustee, its nominee or its agent, or
delivered to the Trustee for registration in the name of the Trustee,
its nominee or its agent, and all other steps required, other than the
registration of such Mortgage Certificates in the name of the Trustee,
its nominee or its agent, will have been taken in order to effect such
registration; and the Trustee will have acquired, when such
registration is effected, an ownership interest in all such Mortgage
Certificates subject to no prior lien, mortgage, security interest,
pledge, charge or other encumbrance.
(xiv) As of the Closing Date, the Mortgage Loans constituting
part of the Trust Estate will be duly and validly transferred to the
Trustee and, where required in order to transfer an ownership interest
in a Mortgage Loan, upon the recordation of such assignments in the
public records in which the related mortgage or deed of trust shall
have been recorded (which recordation shall be effected by the
Depositor unless the Underwriters shall have received an opinion of
counsel satisfactory to them, and at the expense of the Depositor, that
such recordation is not required to perfect the interest of the Trustee
in the related Mortgaged Premises), the Trustee will have acquired
(assuming no intervening recordation) an ownership
4
interest in each such Mortgage Loan, subject to no prior lien,
mortgage, security interest, pledge, charge or other encumbrance,
except as permitted under the Trust Agreement.
(xv) Under generally accepted accounting principles, the
Depositor will report its transfer of the Mortgage Assets to the
Trustee pursuant to the Trust Agreement and the sale of the
Certificates as a sale of its interest in the Mortgage Assets. The
Depositor has been advised by its independent certified public
accountants, that they concur with such treatment under generally
accepted accounting principles. For federal income tax purposes, the
Depositor will treat the transfer of the Mortgage Assets to the Trustee
pursuant to the Trust Agreement and the sale of the Certificates either
as a transaction in which it acts as the agent of one or more Sellers
or as a sale of its interest in the Mortgage Assets.
(xvi) As of the Closing Date, the cash and Permitted
Investments included in any accounts or funds constituting part of the
Trust Estate with respect to the Certificates will be duly and validly
transferred to the Trustee pursuant to the Trust Agreement, and the
Trustee will either own such assets or have acquired a duly and validly
perfected security interest in such assets subject to no prior lien,
security interest, pledge, charge or other encumbrance.
(xvii) Each Seller has been duly incorporated or otherwise
formed and is validly existing and, if a corporation, is in good
standing under the laws of the jurisdiction of its incorporation or
formation and duly qualified to do business under the laws of each
jurisdiction that 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 such Seller).
(xviii) At the time of the execution and delivery of a Sales
Agreement by a Seller, such execution and delivery by such Seller will
be within the legal power of such Seller and will have been duly
authorized by all necessary action on the part of such Seller, and
neither the execution and delivery of such Sales Agreement by such
Seller, nor the consummation by such Seller of the transactions therein
contemplated, nor compliance with the provisions thereof by such
Seller, will (A) violate the articles of incorporation, bylaws,
partnership agreement or other organizational agreement of such Seller,
(B) result in a breach of, or constitute a default under, any law,
governmental rule or regulation, any judgment, decree or order binding
on such Seller or its properties, or any of the provisions of any
material indenture, mortgage, deed of trust, contract or other material
instrument to which such Seller is a party or by which it is bound, or
(C) result in the creation or imposition of any lien, charge or
encumbrance upon any of its properties pursuant to the terms of any
such material indenture, mortgage, deed of trust, contract or other
material instrument.
(xix) Each Sales Agreement, when executed and delivered as
contemplated thereby, will have been duly executed and delivered by the
Seller that is a party thereto, and such Sales Agreement will
constitute, when so executed and delivered, a legal, valid and binding
agreement, enforceable against such Seller 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, and except that the provisions relating
to indemnification and contribution may be unenforceable as against
public policy.
(xx) Under generally accepted accounting principles, each
Seller will report its transfer of the Mortgage Assets pursuant to the
Sales Agreement as a sale of its interest in the Mortgage Assets. Each
Seller has been advised by its independent certified public accountants
that they concur with such treatment under generally accepted
accounting principles and, if applicable, regulatory accounting
principles. Each Seller also will so report the transfer in all
financial statements and reports to the regulatory and supervisory
agencies and authorities to which it reports, if any. For federal
income tax purposes, each Seller will treat the transfer of the
Mortgage Assets pursuant to the Sales Agreement as a sale of its
interest in the Mortgage Assets represented by the Certificates and an
exchange of the remaining interest in the Mortgage Assets for any
Certificates of any other class of the same Series retained by such
Seller.
(xxi) At the Closing Date, each Mortgage Note and Security
Instrument will constitute a legal, valid and binding instrument,
enforceable in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general
5
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law. At the Closing Date, each Mortgage Note
and Security Instrument will meet the criteria for selection described
in the Final Prospectus.
(xxii) At the Closing Date, any agreement relating to credit
enhancement will have been duly and validly authorized, executed and
delivered by, and will constitute the legal, valid and binding
obligation of, the related Credit Enhancer, subject to bankruptcy,
insolvency, reorganization, moratorium or other 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.
(xxiii) Unless otherwise specified in the Final Prospectus,
each Mortgage Loan was originated by an entity that met the
requirements of Section 3(a)(41) of the Exchange Act at the time of
origination.
(xxiv) Each Servicer has been duly incorporated, is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to do business under the laws of
each jurisdiction that 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 its Servicing Agreement would
require such qualification (except where the failure so to qualify
would not have a material adverse effect on the Servicer's performance
under the Servicing Agreement); and unless otherwise specified in the
Final Prospectus, each Servicer is approved by the U.S. Department of
Housing and Urban Development and either (i) is approved by and in good
standing with FHLMC or FNMA or (ii) is an institution the deposits of
which are insured by the FDIC.
(xxv) At the time of the execution and delivery of a Servicing
Agreement by a Servicer, such execution and delivery by such Servicer
will be within the corporate power of such Servicer and will have been
duly authorized by all necessary corporate action on the part of such
Servicer, and neither the execution and delivery of such Servicing
Agreement by such Servicer, nor the consummation by such Servicer of
the transactions therein contemplated, nor compliance with the
provisions thereof by such Servicer, will (A) violate the articles of
incorporation, bylaws, partnership agreement or other organizational
agreement of such Servicer, (B) result in a breach of or constitute a
default under, any law, governmental rule or regulation, any judgment,
decree or order binding on such Servicer or its properties, or any of
the provisions of any material indenture, mortgage, deed of trust,
contract or other material instrument to which such Servicer is a party
or by which it is bound or (C) result in the creation or imposition of
any lien, charge or encumbrance upon any of its properties pursuant to
the terms of any such material indenture, mortgage, deed of trust,
contract or other material instrument.
(xxvi) Each Servicing Agreement, when executed and delivered
as contemplated thereby, will have been duly executed and delivered by
the Servicer that is a party thereto, and such Servicing Agreement will
constitute a legal, valid and binding agreement, enforceable against
such Servicer in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other 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.
(xxvii) At the Closing Date, the Trust Agreement will have
been duly executed and delivered by the Master Servicer and will
constitute 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, moratorium or other
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.
(xxviii) At the Closing Date, each GNMA Certificate, FHLMC
Certificate and FNMA Certificate will be issued and guaranteed by GNMA,
FHLMC, and FNMA, respectively, as described in the Final Prospectus.
(xxix) At the Closing Date, each Mortgage Certificate (other
than a GNMA Certificate, FHLMC Certificate, or FNMA Certificate) will
have been duly authorized, executed and delivered by the issuer of such
Mortgage Certificate and will constitute a legal, valid and binding
instrument, enforceable in accordance with its terms, subject to
bankruptcy, insolvency reorganization, moratorium or other 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.
6
(xxx) Unless otherwise noted in the Final Prospectus, each of
the Underwritten Certificates, when issued, will constitute a "mortgage
related security" as such term is defined in Section 3(a)(41) of the
Exchange Act for so long as such Certificate is rated in one of the two
highest rating categories by a nationally recognized statistical rating
organization.
(xxxi) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Agreement
and the Trust Agreement and the execution, delivery and sale of the
Certificates have been or will be paid at or prior to the Closing Date.
(xxxii) The Depositor is not, and the issuance and sale of the
Certificates in the manner contemplated by the Final Prospectus will
not cause the Depositor to become, subject to registration or
regulation as an investment company or an affiliate of an investment
company under the Investment Company Act of 1940, as amended.
(xxxiii) Immediately prior to the delivery of the Underwritten
Certificates to the Underwriters, the Depositor will own the
Underwritten Certificates free and clear of any lien, adverse claim,
pledge, encumbrance or other security interest, and will not have
assigned to any person any of its right, title or interest in the
Underwritten Certificates, and, upon consummation of the transactions
contemplated in the Agreement, the Depositor will transfer all its
right, title and interest in the Underwritten Certificates to the
Underwriters.
(xxxiv) At the Closing Date, the representations and
warranties made by the Depositor in the Trust Agreement will be true
and correct in all material respects.
(b) DMSI and SMI each represent and warrant to, and agrees with, each
Underwriter, with respect to itself only (and not the other party), that:
(i) DMSI and SMI have been duly incorporated and are validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia with full corporate power and authority to
their respective properties and conduct their businesses as now
conducted, and to enter into and perform their respective obligations
under the Agreement, and has qualified to do business as a foreign
corporation and are in good standing under the laws of each
jurisdiction which requires such qualification wherein the own or lease
material properties except when the failure to so qualify would not
have a material adverse effect on DMSI and SMI.
(ii) The execution of the Agreement is within the corporate
power of DMSI and SMI. The Agreement has been duly and validly
authorized by all necessary action on the part of DMSI and SMI; and
neither the execution and delivery of the Agreement nor the
consummation of the transactions herein contemplated nor compliance by
DMSI and SMI with the provisions hereof will (A) violate the articles
of incorporation or by-laws of either DMSI or SMI, (B) result in a
breach of, or constitute a default under, any law, governmental rule or
regulation, any judgment, decree or order binding on DMSI or SMI or
their respective properties, or any provision of any indenture,
mortgage, deed of trust, contract or other material instrument to which
either DMSI or SMI is a party or by which either of them is bound, or
(C) result in the creation of any lien, charge, or encumbrance upon any
of its properties pursuant to the terms of any such material indenture,
mortgage, deed of trust, contract or other instrument which violation,
breach, default or creation of any lien, charge or encumbrance would
have a material adverse effect upon the financial condition of DMSI or
SMI.
(iii) The Agreement has been duly executed and delivered by
DMSI and SMI, and, assuming the due authorization, execution and
delivery by the other parties thereto, constitutes a legal, valid and
binding obligation of DMSI and SMI, enforceable against DMSI or SMI in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other 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, and except
that the provisions relating to indemnification and contribution may be
unenforceable as against public policy.
(iv) There are no actions, suits or proceedings against, or
investigations of, DMSI or SMI pending, or, to the knowledge of DMSI or
SMI, threatened, before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Agreement, (B) seeking to
prevent the issuance of the
7
Underwritten Certificates or the consummation of any of the
transactions contemplated by the Agreement or each Sales Agreement,
each Servicing Agreement or the Trust Agreement or (C) that might
materially and adversely affect the performance by either DMSI or SMI
of their obligations under the Agreement.
(v) No filing or registration with, notice to, qualification
of or with, or consent, approval, authorization or order or other
action of any person, corporation or other organization or of any
court, supervisory or governmental authority or agency is required for
the consummation by DMSI or SMI of the transactions contemplated by the
Agreement or each Sales Agreement except such as have been, or will
have been prior to the Closing Date, obtained under the Act, or state
securities laws or Blue Sky laws, or from the National Association of
Securities Dealers, Inc., in connection with the purchase and
distribution of the Underwritten Certificates by the Underwriters, or
any recordation of the assignment of the Mortgage Loans to the Trustee
pursuant to the Trust Agreement that have not yet been completed.
(vi) As of the Closing Date, each Servicing Agreement will
have been duly executed and delivered by the Depositor and, assuming
the due authorization, execution and delivery by the other parties
thereto, each constitutes, or will constitute, a legal, valid and
binding agreement of the Depositor, enforceable against the Depositor
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and to general principals of equity regardless of whether
enforcement is sought in a proceeding in equity or at law.
The Depositor shall be deemed not to have made the representations and
warranties contained in clauses (xvii) through (xxvii), inclusive, of this
Section 1 with respect to, and to the extent of, representations and warranties
made to the Underwriters by any Seller, any Servicer, the Master Servicer or any
Credit Enhancer as to the matters covered in such clauses in a certificate,
opinion of counsel or agreement in form satisfactory to counsel for the
Underwriters delivered to the Underwriters on the Closing Date; PROVIDED,
HOWEVER, that the foregoing shall in no way limit the rights of the Underwriters
to indemnification and contribution as otherwise provided in Section 8 hereof.
Any certificate signed by a Seller, the Master Servicer, a Servicer or
a Credit Enhancer and delivered to the Underwriters or to counsel for the
Underwriters in connection with an offering of the Certificates shall state that
it is a representation and warranty as to the matters covered thereby by such
Seller, the Master Servicer, such Servicer or such Credit Enhancer, as the case
may be, to each Underwriter to whom the representations and warranties in this
Section 1 are made.
2. PURCHASE AND SALE. Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Depositor
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Depositor, at the applicable purchase prices
set forth in the Agreement (plus accrued interest as therein set forth),
Underwritten Certificates in the aggregate approximate principal amounts,
notional amounts or percentage interests, as the case may be, of the various
classes of Certificates set forth in the Agreement or opposite such
Underwriter's name in an attachment to the Agreement.
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten
Certificates shall be made at the office, on the date and at the time specified
in the Agreement, which date and time may be postponed by agreement between the
Underwriters and the Depositor or as provided in Section 10 hereof (such date
and time of delivery and payment for the Underwritten Certificates being herein
called the "Closing Date"). Delivery of the Underwritten Certificates shall be
made to the Underwriters against payment by the Underwriters of the purchase
price therefor to or upon the order of the Depositor in the type of funds
specified in the Agreement. The Underwritten Certificates shall be registered in
such names and in such authorized denominations as the Underwriters may request
not less than two full business days in advance of the Closing Date.
If the Underwritten Certificates are to be delivered in certificated
form, the Depositor agrees to have the Underwritten Certificates available for
inspection, checking and packaging by the Underwriters in New York, New York (or
such other location within the continental United States requested by the
Underwriters), not later than 1:00 p.m. on the Business Day prior to the Closing
Date.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Underwritten Certificates for sale to the
public as set forth in the Final Prospectus.
5. AGREEMENTS. (a) The Depositor covenants and agrees with the several
Underwriters that:
8
(i) Substantially contemporaneously with the execution of the
Agreement, the Depositor will prepare the supplement to the Basic
Prospectus setting forth the principal amount of Certificates covered
thereby and the material terms thereof, the initial public offering
price of the Underwritten Certificates or the manner of offering such
Certificates, the price at which the Underwritten Certificates are to
be purchased by the Underwriters from the Depositor, the selling
concessions and reallowance, if any, and such other information as the
Underwriters and the Depositor deem appropriate in connection with the
offering of the Underwritten Certificates. The Depositor will not file
any amendment to the Registration Statement or supplement to the Basic
Prospectus (including the supplement relating to the Underwritten
Certificates included in the Final Prospectus) unless the Depositor has
furnished the Underwriters a copy for their review prior to filing and
will not file any such proposed amendment or supplement to which the
Underwriters reasonably object. Subject to the foregoing sentence, the
Depositor will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 under the Act and a report on Form 8-K
will be filed with the Commission within 15 days following the Closing
Date setting forth specific information concerning the Certificates and
the Mortgage Assets and including, as an exhibit, a copy of the Trust
Agreement. In addition, to the extent that any Underwriter provides
Computational Materials to the Depositor as contemplated herein, the
Depositor will file or cause to be filed with the Commission a report
on Form 8-K containing such Computational Materials, concurrently with,
or prior to, the filing of the Final Prospectus pursuant to Rule 424.
The Depositor will promptly advise the Underwriters (A) when the Final
Prospectus shall have been filed with the Commission pursuant to Rule
424 and the Form 8-K containing Computational Materials shall have been
filed with the Commission, (B) when any amendment to the Registration
Statement shall have become effective, (C) of any request by the
Commission for any amendment of the Registration Statement or the Final
Prospectus or for any additional information, (D) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose and (E) of the receipt by the Depositor of
any notification with respect to the suspension of the qualification of
the Underwritten Certificates for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Depositor will use its reasonable efforts to prevent the issuance of
any such stop order or suspension and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event
occurs as a result of which in the opinion of counsel to the Depositor
or the Underwriters, the Final Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Final Prospectus to comply with the Act or the rules and regulations
thereunder, the Depositor will promptly prepare and file with the
Commission, subject to the preceding paragraph, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement
is required to be contained in a post-effective amendment of the
Registration Statement, will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible and will promptly file all reports and any definitive proxy or
information statements required to be filed by the Depositor pursuant
to Sections 13, 14, and 15 of the Exchange Act subsequent to the date
of the Prospectus for so long as the delivery of a Prospectus is
required in connection with the offering or sale of the Certificates;
PROVIDED, HOWEVER, that any such amendment or update prepared more than
nine months after the Closing Date shall be at the expense of the
Underwriters.
(iii) The Depositor will furnish to counsel for the
Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and each amendment thereto that
shall become effective on or prior to the Closing Date, and to each
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and each such amendment and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as
many copies of any Final Prospectus and any amendments thereof and
supplements thereto as the Underwriters may reasonably request.
(iv) The Depositor will apply the net proceeds from the sale
of the Underwritten Certificates in the manner set forth in the Final
Prospectus.
9
(v) The Depositor will pay all the fees and disbursements of
its counsel and of independent accountants for the Depositor relating
to legal review, opinions of counsel for the Depositor, audits, review
of unaudited financials, cold comfort review or otherwise; the costs
and expenses of printing (or otherwise reproducing) and delivering the
Agreement, the Trust Agreement and the Certificates; the initial fees,
costs and expenses of the Trustee under the Trust Agreement and its
counsel; the initial fees, costs and expenses of any custodian of the
Mortgage Assets under a custodian agreement and such custodian's
counsel; the costs and expenses incident to the preparation, printing,
distribution and filing of the Registration Statement (including
exhibits thereto), the Basic Prospectus and the Final Prospectus, and
all amendments of and supplements to the foregoing; and the fees of
rating agencies. Except as provided in Section 7 hereof, the
Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with their purchase and sale of the
Underwritten Certificates, including, without limitation, the fees and
expenses of counsel to the Underwriters.
(vi) The Depositor will use its reasonable efforts to arrange
for the qualification of the Underwritten Certificates for sale under
the laws of such jurisdictions as the Underwriters may reasonably
designate in the Underwriting Agreement, to maintain such
qualifications in effect so long as required for the distribution of
the Certificates and to arrange for the determination of the legality
of the Certificates for purchase by investors; PROVIDED, HOWEVER, that
the Depositor shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
which would subject it to general or unlimited service of process in
any jurisdiction where it is not now so subject; and PROVIDED FURTHER,
that the Underwriters shall pay all costs and expenses associated
therewith.
(vii) So long as any Certificates are outstanding, the
Depositor will cause the Master Servicer or the Trustee to furnish to
the Underwriters, as soon as available, a copy of (A) the annual
statement of compliance delivered by the Master Servicer to the Trustee
under the Trust Agreement, (B) the annual independent public
accountants' servicing report furnished to the Trustee pursuant to the
Trust Agreement, (C) each report, statement or other document regarding
the Certificates filed with the Commission under the Exchange Act or
mailed to the holders of the Certificates pursuant to the Trust
Agreement or otherwise, (D) any reports provided by certified public
accountants pursuant to the Trust Agreement regarding the reports,
statements or other documents included in (B) above, and (E) from time
to time, such other information concerning the Certificates as the
Underwriters may reasonably request and that may be furnished by the
Depositor or the Master Servicer without undue expense. In addition,
the Depositor shall make or cause the Trustee to make generally
available to the Holders of the Certificates as soon as practicable,
but in any event not later than sixteen months from the date of the
Agreement, an earnings statement of the issuer of the Certificates
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission (including, at the option
of the Depositor, Rule 158 under the Act).
(viii) Without the consent of the Underwriters, which shall
not be unreasonably withheld, the Depositor will not waive any of the
conditions to its obligations to purchase Mortgage Loans pursuant to a
Sales Agreement.
(ix) Following the Closing Date, the Depositor will use its
reasonable efforts to take all action required to preserve and protect
the ownership interest of the Trustee in the Trust Estate during the
term of the Trust Agreement.
(b) Each of DMSI and SMI agrees that it shall jointly and severally
have primary responsibility for all financial obligations of the Depositor
pursuant to the Agreement, including without limitation, those set forth in
Section 5(a)(v), Section 7 and Section 8, and the Underwriters acknowledge that
they may assert any claim against each of DMSI and SMI at any time and may not
assert any claim directly against the Depositor for payment of such obligations
until 91 days after payment in full of all securities now or hereafter issued by
the Depositor or by trusts established by it.
(c) Each Underwriter represents, warrants, covenants and agrees with
the Depositor and SMI that:
(i)(A) The information attached to the Underwriting Agreement
as Exhibits A and B constitutes all Collateral Term Sheets, Structural
Term Sheets and Computational Materials (collectively, "Underwriter
Materials"), that are required to be filed with the Commission pursuant
to responses of the
10
staff of the Commission to No-Action Requests from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
Co. Incorporated and ▇▇▇▇▇▇ Structured Asset Corporation and Public
Securities Association (as made generally available May 20, 1994, and
March 9, 1995, respectively); (B) all Underwriter Materials contain a
legend substantially as follows (or in such other form as may be agreed
upon prior to the date of the Underwriting Agreement):
This information does not constitute either an offer to sell or
a solicitation of an offer to buy any of the securities referred to
herein. Information contained herein is confidential and provided for
information only, does not purport to be complete and should not be
relied upon in connection with any decision to purchase the
securities. This information supersedes any prior versions hereof and
will be deemed to be superseded by any subsequent versions including,
with respect to any description of the securities or the underlying
assets, the information contained in the final Prospectus and
accompanying Prospectus Supplement. Offers to sell and solicitations
of offers to buy the securities are made only by the final Prospectus
Supplement and the related Prospectus.
and (C) the Underwriter Materials do not contain any untrue
statement of a material fact necessary to make the statements
therein, in the the circumstances under which they were made, not
misleading.
(ii) The Underwriters (at their own expense) further agree to
provide to the Depositor any accountants' letters relating to the
Underwriter Materials, which accountants' letters shall be addressed to
the Depositor.
(iii) The Underwriters (at their own expense) will make the
Underwriter Materials available in electronic form to the Depositor in
order for the Depositor to file the Underwriter Materials with the
Commission. The Depositor (at its expense) shall promptly format (as
necessary) and file the Computational Materials with the Commission on
the Electronic Data Gathering and Retrieval System ("▇▇▇▇▇").
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the Underwriters hereunder to purchase the Underwritten Certificates shall be
subject to the following conditions:
(a) To the accuracy in all material respects on the date
hereof and on the Closing Date (as if made on such Closing Date) and as
of the date of the effectiveness of any amendment to the Registration
Statement filed prior to the Closing Date of the representations and
warranties on the part of the Depositor, SMI and DMSI contained herein,
and to the extent that the Depositor is deemed, pursuant to Section 1
hereof, not to make the representations and warranties in clauses
(a)(xvii) through (xxvii) inclusive of Section 1 hereof, or portions
thereof, to the accuracy in all material respects of the
representations and warranties provided by the parties making such
representations and warranties as of the date thereof and on the
Closing Date (as if made on such Closing Date).
(b) The Registration Statement shall have become effective,
and no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and not
withdrawn, and no proceedings for that purpose shall have been
instituted or threatened, and the Final Prospectus shall have been
filed with the Commission in accordance with Rule 424 under the Act,
and all actions required to be taken and all filings required to be
made by the Depositor under the Act prior to the sale of the
Certificates shall have been duly taken or made.
(c) CERTIFICATES.
(i) The Depositor shall have delivered to the Underwriters a
certificate, signed by the President or any Vice President or Assistant
Vice President of the Depositor and dated the Closing Date, to the
effect that the signer of such certificate has carefully examined the
Registration Statement, the Final Prospectus, and the Agreement and
that: (A) the representations and warranties of the Depositor in the
Agreement are true and correct in all material respects at and as of
the Closing Date with the same effect as if made on the Closing Date;
(B) the Depositor has complied in all material respects with all the
agreements and satisfied in all material respects all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(C) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Depositor's knowledge, threatened; (D) nothing
has come to such officer's attention that would lead him or her to
11
believe that the Final Prospectus contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and (E) there has been no
material adverse change or development involving a prospective material
adverse change in the business, operations, financial condition,
properties or assets of the Depositor.
(ii) Each of SMI and DMSI shall have delivered to the
Underwriters a certificate, signed by its President or any of its Vice
Presidents or Assistant Vice Presidents and dated the Closing Date, to
the effect that the signer of such certificate has carefully examined
the Agreement and that: (A) its representations and warranties in the
Agreement are true and correct in all material respects at and as of
the Closing Date with the same effect as if made on the Closing Date;
and (B) there has been no material adverse change or development
involving a prospective material adverse change in its business,
operations, financial condition, properties or assets.
(iii) Each Seller shall have delivered to the Underwriters a
certificate, signed by the President or any Vice President or Assistant
Vice President of such Seller and dated the Closing Date, to the effect
that the signer of such certificate has examined the Sales Agreement to
which such Seller is a party and that: (A) the representations and
warranties of the Seller in the Sales Agreement are true and correct in
all material respects at and as of the Closing Date with the same
effect as if made on the Closing Date; and (B) the Seller has complied
in all material respects with all the agreements and satisfied in all
material respects all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(iv) The Master Servicer shall have delivered to the
Underwriters a certificate, signed by the President or any Vice
President or Assistant Vice President of the Master Servicer and dated
the Closing Date, to the effect that the signer of such certificate has
examined the Trust Agreement and that: (A) the representations and
warranties of the Master Servicer in the Trust Agreement are true and
correct in all material respects at and as of the Closing Date with the
same effect as if made on the Closing Date; and (B) the Master Servicer
has complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date.
12
(d) ACCOUNTING COMFORT.
(i) The Underwriters shall have received a letter from a
nationally recognized independent accounting firm, dated the date of
the Agreement and delivered at such time, satisfactory in form and
substance to the Underwriters relating to statistical or financial
information contained in the Prospectus Supplement regarding the
Mortgage Assets and the Certificates, including any declination tables,
yield tables, and modeling assumptions.
(ii) The Underwriters shall have received from the Depositor's
independent certified public accountants, a letter dated the Closing
Date and satisfactory in form and substance to the Underwriters and
counsel for the Underwriters, reconfirming or updating the letter dated
the date hereof, to the further effect that they have performed certain
procedures as a result of which they have determined that (i) the
Mortgage Loans listed in Schedule I to the Trust Agreement (A) conform
with the description thereof in the Prospectus Supplement under the
caption "The Mortgage Loan Pool" and (B) conform with the information
set forth in the Depositor's report on Form 8-K with respect to such
Mortgage Loans, (ii) and that a sampling of the Mortgage Loan files
relating to the Mortgage Loans conforms with the information contained
on the mortgage loan data file tape upon which the information in the
Prospectus Supplement under the heading "The Mortgage Loan Pool" was
based, and (iii) covering such other matters relating to the Trust as
the Underwriters may reasonably request.
(iii) The Underwriters shall have received from the
independent certified public accountants of the Seller or the Servicer,
as applicable, a letter or letters dated the date hereof and
satisfactory in form and substance to the Underwriters and counsel to
the Underwriters to the effect that they have performed certain
specified procedures as a result of which they determined that certain
information of an accounting, financial and statistical nature set
forth in the Final Prospectus under the caption (A) "The Mortgage Loan
Pool--Acquisitions" (or other caption relating to the Seller's
origination activities) agrees with the records of the Seller; and (B)
"The Mortgage Loan Pool--Servicing of the Mortgage Loans" (or other
caption relating to the Servicer's servicing activities) agrees with
the records of the Servicer.
(iv) The Underwriters shall have received a certificate of an
accounting officer of the Depositor stating that the transfer of the
Mortgage Assets from the Seller to the Depositor pursuant to the Sales
Agreement will be classified as a sale of the Seller's interest in the
Mortgage Assets under generally accepted accounting principles and, if
applicable, under regulatory accounting principles.
(e) OPINIONS.
(i) The Underwriters shall have received opinions of outside
counsel to the Depositor, dated the Closing Date and reasonably
satisfactory in form and substance to counsel for the Underwriters, as
to (1) the corporate status and authorizations of the Depositor, SMI
and DMSI; (2) the Certificates, the Trust Agreement, the Agreement, the
Registration Statement, the Final Prospectus and other related matters
as the Underwriters may reasonably require; and (3) the applicable
federal income tax treatment of the Certificates.
(ii) The Underwriters shall have received copies of any
opinions of counsel furnished to the Rating Agencies (upon which the
Underwriters shall be entitled to rely) with respect to the "true sale"
of the Mortgage Assets and the non-consolidation of the Depositor with
its affiliates.
(iii) The Underwriters shall have received from counsel for
the Underwriters such opinion or opinions, dated the Closing Date, with
respect to the validity of the Certificates, the Agreement, the Trust
Agreement, the Registration Statement, the Final Prospectus and such
other related matters as the Underwriters may reasonably require, and
the Depositor shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon
such matters.
(iv) The Underwriters shall have received from counsel to each
Seller an opinion, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters, as to the due authorization,
execution and delivery of the Sales Agreement entered into by the
Seller and its enforceability against the Seller.
13
(v) The Underwriters shall have received from counsel to the
Master Servicer an opinion, dated the Closing Date and satisfactory in
form and substance to counsel for the Underwriters, as to the due
authorization, execution and delivery of the Trust Agreement by the
Master Servicer and its enforceability against the Master Servicer.
(vi) The Underwriters shall have received from counsel to the
Trustee an opinion, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters, as to the due authorization,
execution and delivery of the Trust Agreement by the Trustee and its
enforceability against the Trustee.
(vii) The Underwriters shall have received from counsel to any
Credit Enhancer an opinion, dated the Closing Date and satisfactory in
form and substance to counsel for the Underwriters, as to the due
issuance and enforceability of the policies or other credit enhancement
issued by such Credit Enhancer.
(f) The Underwritten Certificates shall have been assigned the ratings
set forth in the Underwriting Agreement, which shall be in one of the four
highest rating categories, by one or more "nationally recognized statistical
rating organizations," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act, designated in the Underwriting Agreement and
requested by the Depositor to rate the Underwritten Certificates. On the Closing
Date, (i) such rating or ratings shall not have been rescinded and there shall
not have been any downgrading, or public notification of a possible downgrading
or public notice of a possible change, without indication of direction, and (ii)
no downgrading, or public notification of a possible downgrading or public
notification of a possible change, without indication of direction, shall have
occurred in the rating accorded any of the debt securities of any person,
including the Depositor, providing any form of credit enhancement for the
Certificates by any "nationally recognized statistical rating organization"
designated in the Underwriting Agreement.
(g) If applicable, and subject to the conditions set forth in the Trust
Agreement, any reserve fund to be established for the benefit of the
Certificateholders shall have been established by the Depositor with the Trustee
and any initial deposit thereto shall have been delivered to the Trustee for
deposit therein as contemplated by the Trust Agreement.
(h) On the Closing Date, there shall not have occurred any change, or
any development involving a prospective change, in or affecting the business or
properties of the Depositor since the date of the Underwriting Agreement that,
in the reasonable judgment of the Underwriters, materially impairs the
investment quality of the Underwritten Certificates so as to make it impractical
or inadvisable to proceed with the public offering or the delivery of the
Underwritten Certificates as contemplated by the Final Prospectus.
(i) All proceedings in connection with the transactions contemplated by
the Agreement and all documents incident hereto shall be reasonably satisfactory
in form and substance to the Representative and counsel for the Underwriters,
and the Underwriters and counsel for the Underwriters shall have received such
information, certificates and documents as they may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in the Agreement,
if the Depositor, SMI or DMSI is in breach in any material respect of any
covenants or agreements contained herein or if any of the opinions and
certificates mentioned above or elsewhere in the Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, the Agreement and all obligations
of the Underwriters hereunder may be canceled by the Underwriter at, or at any
time prior to, the Closing Date. Notice of such cancellation shall be given to
the Depositor in writing or by telephone or telegraph and confirmed in writing.
If the Depositor is advised prior to the Closing Date that the
documentation for some of the Mortgage Loans is incomplete or defective and such
defects cannot be remedied prior to the Closing Date, the Depositor may upon
notice of the Underwriters nevertheless deliver the Mortgage Loans to the
Trustee with an amount equal to the principal amount of the incomplete or
defective Mortgage Loans as of the Cut-Off Date plus interest on each such
Mortgage Loan at the Mortgage Interest Rate specified in the related Mortgage
Note (less the applicable Servicing Fee Rate) to the Distribution Date specified
by the Depositor. If the incomplete or defective documentation for a Mortgage
Loan is remedied prior to such Distribution Date, the amount deposited with the
14
Trustee on account thereof shall be returned to the Depositor. If the incomplete
or defective documentation for a Mortgage Loan is not remedied prior to such
Distribution Date, the amount will be applied as a distribution of principal
with respect to the Certificates and the Mortgage Loan released to the
Depositor.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If for any reason (other
than a default by the Underwriters in their obligations hereunder) the sale of
the Underwritten Certificates provided for herein is not consummated, the
Depositor or SMI will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been reasonably incurred by them in connection with their
investigation, the preparation to market and the marketing of the Underwritten
Certificates, or in contemplation of the performance by them of their
obligations hereunder.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Depositor, DMSI and SMI,
jointly and severally, hereby agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act as follows:
(i) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the Final Prospectus, or any amendment or
supplement thereto, or any related Preliminary Final Prospectus, or
arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and to
reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that
(A) the Depositor, DMSI and SMI will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or omission, or alleged untrue
statement or omission, made in any of such documents in reliance upon
and in conformity with written information furnished to the Depositor
by an Underwriter, specifically for use therein, including, without
limitation, any Computational Materials, except to the extent that any
untrue statement or alleged untrue statement therein results (or is
alleged to have resulted) from an error in the written information
concerning the Mortgage Loans furnished by the Depositor to the
Underwriters for use in the preparation of any Computational Materials,
which error was not superseded or corrected by the delivery to the
Underwriters of corrected written or electronic information or for
which the Depositor provided written notice of such error to the
Underwriters, in both cases at least one Business Day, prior to the
confirmation of the sale of the Certificates in accordance with the
notice provisions of the Underwriting Agreement (any such uncorrected
mortgage loan information a "Mortgage Pool Error"), and (B) such
indemnity with respect to any Preliminary Final Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim,
damage or liability purchased the Certificates which are the subject
thereof if such person did not receive a copy of the Final Prospectus
(or the Final Prospectus as amended or supplemented, excluding any
documents incorporated therein by reference) at or prior to the
confirmation of the sale of such Certificates to such person in any
case where such delivery is required by the Act and the untrue
statement or omission of a material fact contained in such Preliminary
Final Prospectus was corrected in the Final Prospectus (or the Final
Prospectus as amended or supplemented, excluding any documents
incorporated therein by reference);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any untrue statement or omission, or any such
alleged untrue statement or omission, for which indemnification is
provided by the Depositor, DMSI and SMI under clause (i) above, if such
settlement is effected with the written consent of the Depositor; and
(iii) against any and all expense whatsoever (including the
fees and disbursements of counsel chosen by any Underwriter or
controlling person of such Underwriter), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any untrue
15
statement or omission, for which indemnification is provided by the
Depositor, DMSI and SMI under clause (i) above, or any such alleged
untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above.
This indemnity will be in addition to any liability that the Depositor may
otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Depositor, DMSI and SMI, each of their directors, each of the
Depositor's officers who have signed the Registration Statement and
each person, if any, who controls the Depositor, DMSI or SMI within the
meaning of the Act or the Exchange Act, against any and all losses,
claims, expenses, damages or liabilities to which the Depositor, DMSI
or SMI or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities, (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Final
Prospectus or any amendment or supplement thereto, or any related
Preliminary Final Prospectus, or arise out of, or are based upon, the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Depositor, DMSI or
SMI by such Underwriter specifically for use therein, including,
without limitation, Computational Materials; PROVIDED, HOWEVER, the
Underwriters will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of a Mortgage Pool Error
which is reflected in the Computational Material; and will reimburse
any legal or other expenses reasonably incurred by the Depositor, DMSI
or SMI or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action (except that no such indemnity shall be
available for any losses, claims, damages or liabilities, or actions in
respect thereof, resulting from any Mortgage Pool Error). This
indemnity agreement will be in addition to any liability that such
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under the Agreement. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume (at its own expense) the defense thereof,
with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to
such indemnified party under this Section 8, such indemnifying party
shall not be liable for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If recovery is not available under the foregoing
indemnification provisions of this Section 8, for any reason other than
as specified therein, the parties entitled to indemnification by the
terms thereof shall be entitled to contribution to the amount paid or
payable by such indemnified party as a result of the losses, claims,
expenses, damages or liabilities referred to in subsection (a) or (b)
above, except to the extent that contribution is not permitted under
Section 11(f) of the Act. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Depositor or the Underwriters, the parties'
relative knowledge and access to information concerning the matter with
respect to which the claim was asserted, the opportunity to correct and
prevent any untrue statement or omission, and any other equitable
considerations appropriate under the circumstances. The Depositor and
the Underwriters agree that it would not be equitable if the amount of
such contribution were to be determined by PRO RATA or PER CAPITA
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method that does not take account of the
equitable considerations referred to in the second sentence of this
16
subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter or person controlling such Underwriter
shall be obligated to make a contribution hereunder that in the
aggregate exceeds an amount equal to the excess of the total public
offering price of the Certificates purchased by such Underwriter under
the Agreement over the purchase price paid to the Depositor by such
Underwriter for such Certificates, less the aggregate amount of any
damages which such Underwriter and its controlling persons have
otherwise been required to pay by reason of such untrue statement or
alleged untrue statement or omission. The Underwriters' obligations to
contribute shall be several in proportion to their respective
underwriting obligations and not joint.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall
fail to purchase and pay for any of the Certificates of any Class agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under the Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions that the portion
of the Certificates of such Class set forth opposite their names in the
Agreement bears to the aggregate amount of Certificates of such Class set forth
opposite the names of the remaining Underwriters) the Certificates of such Class
that the defaulting Underwriter or Underwriters agreed but failed to purchase;
PROVIDED, HOWEVER, that in the event that the amount of Certificates of such
Class that the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Certificates of such Class
as set forth in the Final Prospectus, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any of,
the Certificates of such Class, and if such non-defaulting Underwriters do not
purchase all the Certificates of such Class, the Agreement will terminate
without liability to any non-defaulting Underwriter or the Depositor. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date for such Class of Certificates shall be postponed for such period,
not exceeding seven days, as the Underwriters shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in the
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Depositor and any non-defaulting Underwriter for damages occasioned by its
default hereunder.
10. TERMINATION. The Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Depositor prior
to delivery of and payment for all Underwritten Certificates if prior to such
time (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or limited, or minimum prices shall have been established on
such Exchange, (ii) a banking moratorium shall have been declared by either
federal or New York State authorities, or (iii) there shall have occurred any
outbreak or material escalation of major hostilities, any declaration of war by
Congress, or any other substantial national or international calamity or crisis,
the effect of which on the financial markets of the United States is such as to
make it, in the judgment of the Underwriter, impracticable or inadvisable to
market the Certificates.
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Depositor, SMI and DMSI or their respective officers and the Underwriters set
forth in or made pursuant to the Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Depositor, DMSI or SMI or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Underwritten Certificates. The provisions of this Section 11 and Sections
5(a)(v) and (vi), 7 and 8 hereof shall survive the termination or cancellation
of the Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only upon receipt and, if sent to the Underwriters, will be mailed,
delivered or telecopied and confirmed to it at the office or offices set forth
in the Underwriting Agreement; or, if sent to the Depositor or SMI, will be
mailed, delivered or telecopied and confirmed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or if sent to DMSI, will be mailed,
delivered or telecopied and confirmed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, respectively.
13. SUCCESSORS. The Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and their
successors and assigns, and no other person will have any right or obligation
hereunder.
17
14. APPLICABLE LAW. THE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE JURISDICTION SPECIFIED IN THE AGREEMENT. THE
AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL FOR
ALL PURPOSES BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH SHALL TOGETHER
CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.
15. MISCELLANEOUS. Time shall be of the essence of the Agreement. The
Agreement supersedes all prior or contemporaneous agreements and understandings
relating to the subject matter hereof. Neither the Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a writing signed by
the party against whom enforcement of such change, waiver, discharge or
termination is sought. The Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
18
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 199[ ]-[ ]
UNDERWRITING AGREEMENT
Dated: __________________
TO: Saxon Asset Securities Company (the "Depositor")
Saxon Mortgage Inc. ("SMI")
Dominion Mortgage Services, Inc. ("DMSI")
RE: Standard Terms to Underwriting Agreement (January 1997 Edition)
(the "Standard Terms")
Series Designation: Mortgage Loan Asset Backed Certificates,
Series 199[ ]-[ ], __________, __________,
__________, __________, __________, ____________,
__________ and __________ (collectively the
"Certificates"). The __________, __________,
__________, __________, __________, and ____________
Certificates are referred to herein as the
"Underwritten Certificates".
1. UNDERWRITING AGREEMENT: Subject to the terms and conditions set
forth and incorporated by reference herein, the Depositor hereby agrees to issue
and sell to _______________________________________, (collectively, the
"Underwriters"), and the Underwriters hereby agree to purchase from the
Depositor, on or about ______________ the Underwritten Certificates at the
purchase price and on the terms set forth below; provided, however, that the
obligations of the Underwriters are subject to: (i) receipt by the Depositor of
(a) an "[ ]" rating by ____________________________ and an "[ ]" rating by
___________________________; (the "Rating Agencies") with respect to the
Underwritten Certificates; (ii) receipt of a Prospectus Supplement in form and
substance satisfactory to the Underwriters; and (iii) the Sales Agreement dated
as of __________________, by and between the Depositor and ___ and the Trust
Agreement (as defined below) each being in form and substance satisfactory to
the Underwriters.
The Certificates will be issued pursuant to a Trust Agreement dated as
of __________________ 199[ ] (the "Trust Agreement"), by and among the
Depositor, ________________________, as Master Servicer (the "Master Servicer"),
and _________________, as Trustee (the "Trustee"). The Certificates will
represent in the aggregate the entire beneficial ownership interest in the
assets of the Trust created under the Trust Agreement (the "Trust"), which will
consist primarily of [ ] pool[s] of conventional, one- to four-family, fully
amortizing, mortgage loans (the "Mortgage Loans") with original terms to stated
maturity of not more than [ ] years which have the characteristics described in
the Prospectus Supplement.
The Depositor will make available on the Closing Date for sale,
transfer and assignment to the Trust, Mortgage Loans having the characteristics
described in the Prospectus Supplement; PROVIDED, HOWEVER, that there may be
immaterial variances from the description of the Mortgage Loans in the
Prospectus Supplement and the actual Mortgage Loans delivered on the Closing
Date. Upon delivery of the Mortgage Loans to the Depositor, the Depositor will
deliver such Mortgage Loans to the Trust.
2. REGISTRATION STATEMENT: References in the Agreement (as defined
below) to the Registration Statement shall be deemed to include registration
statement no. 333-____.
3. AGGREGATE SCHEDULED PRINCIPAL BALANCE OF INITIAL MORTGAGE LOANS: The
Initial Mortgage Loans will have an aggregate scheduled principal balance of
approximately $__________ (as of the Cut-off Date), including approximately
$__________ of fixed-rate Mortgage Loans and of $__________ variable-rate
Mortgage Loans (in each case as of the Cut-off Date), subject to a permitted
variance of plus or minus __% within each group (the "Permitted Variance").
4. CUT-OFF DATE: As of the close of business ____________, 199[ ].
5. TERMS OF THE CERTIFICATES:
==================== ------------------ ------------------- ------------------ ------------------ ===================
Initial
Series 199[ ]-__ Principal Pass-Through Proposed Sale of the
Designation Amount(1) Rate Ratings CUSIP Number Certificates
==================== ------------------ ------------------- ------------------ ------------------ ===================
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ------------------ ------------------- ------------------ ------------------ ===================
Class ___ (3) (2)
------------------ ------------------- ------------------ ------------------ ===================
==================== ================== =================== ================== ================== ===================
Class R N/A N/A (4) N/A (5)
==================== ================== =================== ================== ================== ===================
(1) The Underwritten Certificates are, in each case, subject to the
Permitted Variance.
(2) The Underwritten Certificates will be purchased by the Underwriters
from the Depositor and will be offered by the Underwriters to the
public from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale.
(3) On each Distribution Date, the Pass-Through Rate on the ________
Certificates will equal the least of -------.
(4) No ratings have been requested for the Class R Certificates.
(5) The Class R Certificates will be sold to SMI and ___________________ in
a privately negotiated transaction.
6. UNDERWRITTEN CERTIFICATES RATINGS: As a further condition of the
Underwriters' obligation to purchase the Underwritten Certificates, the ratings
by the Rating Agencies on the Underwritten Certificates referred to in Sections
1 and 5 hereof shall not have been rescinded and there shall not have occurred
any downgrading, or public notification of a possible downgrading or public
notice of a possible change, without indication of direction, in the ratings
accorded the Underwritten Certificates.
7. MORTGAGE LOANS: Mortgage Loans having the approximate
characteristics described in the Prospectus Supplement with the final schedule
attached as Schedule I to the Trust Agreement.
8. PRINCIPAL AND INTEREST DISTRIBUTION DATES: Each Distribution Date
shall be the 25th day of each month, or if such day is not a business day, the
next succeeding business day, commencing on the first applicable day following
the Closing Date.
9. REMIC ELECTION: An election will be made to treat the Mortgage Loans
and related assets of the Trust as a real estate mortgage investment conduit
(the "REMIC"). The Underwritten Certificates will be designated as "regular
interests" in the REMIC. The Class R Certificates will be designated as the
"residual interest" in the REMIC.
10. PURCHASE PRICE: The Underwriters hereby agree to purchase each
Class of Underwritten Securities from the Depositor at the applicable purchase
price set forth below, plus, in the case of the Class ____, Class ____, Class
____, Class ____ and Class ____ Certificates, accrued interest at the applicable
Pass-Through Rate from the close of business on ______________, through the
Closing Date. Each such purchase price is expressed as a percentage of the
initial principal amount of the related Mortgage Loan pool.
2
Purchase Price
Class ____ %
Class ____
Class ____
Class ____
Class ____
Class ____
Each of the Underwriters agrees, severally and not jointly, subject to the terms
and conditions contained herein and in the Standard Terms, to purchase (subject
to the Permitted Variance) the principal balances of the Classes of Certificates
specified below its name:
======================== ---------------------- ---------------------- ---------------------- ======================
Series 1997-__
Designation(1)
======================== ---------------------- ---------------------- ---------------------- ======================
Class ____ $____________ $___________ $___________ $____________
======================== ---------------------- ---------------------- ---------------------- ======================
Class ____ $____________ $___________ $___________ $____________
======================== ---------------------- ---------------------- ---------------------- ======================
Class ____ $____________ $___________ $___________ $____________
======================== ---------------------- ---------------------- ---------------------- ======================
Class ____ $____________ $___________ $___________ $____________
======================== ---------------------- ---------------------- ---------------------- ======================
Class ____ $____________ $___________ $___________ $____________
======================== ====================== ====================== ====================== ======================
Class ____ $____________ $___________ -- $____________
======================== ====================== ====================== ====================== ======================
--------------------
(1) Each Class of Certificates is subject to the Permitted Variance.
11. CLOSING DATE AND LOCATION: 10:00 a.m. Eastern Time on __________,
199_, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇. The Depositor will deliver the Underwritten
Certificates in book-entry form only through the same day funds settlement
system of the relevant Depositories.
12. DUE DILIGENCE: At any time prior to the Closing Date, the
Underwriters have the right to inspect the Mortgage Loan files and the loan
origination procedures to ensure conformity with the Prospectus and the
Prospectus Supplement.
13. CONTROLLING AGREEMENT: This Underwriting Agreement, together with
the Standard Terms (together, the "Agreement"), completely sets forth the
agreement between the Depositor, SMI and DMSI and the Underwriters with respect
to the Underwritten Certificates and fully supersedes all prior agreements, both
written and oral, relating to the Underwritten Certificates and all matters set
forth herein. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement.
14. INFORMATION PROVIDED BY THE UNDERWRITERS: It is understood and
agreed that the information set forth under the heading "Underwriting" in the
Prospectus Supplement and the sentence regarding the Underwriters' intention to
establish a market in the Underwritten Certificates on the inside front cover
page of the Prospectus Supplement is the only information furnished by the
Underwriters to the Depositor for inclusion in the Registration Statement and
the Final Prospectus.
15. COLLATERAL TERM SHEETS, STRUCTURAL TERM SHEETS AND COMPUTATIONAL
MATERIALS: The Underwriters hereby represent and warrant that (i) a hard copy of
the information provided by the Underwriters to the Depositor attached hereto as
Exhibit A, if any, constitutes all "Collateral Term Sheets" or "Structural Term
Sheets" (that are required to be filed with the Commission within two business
days of first use under the terms of the Public Securities Association letter)
disseminated by the Underwriters to investors in connection with the
Underwritten Certificates and (ii) a hard copy of the information provided by
the Underwriters to the Depositor and attached hereto as Exhibit B, if any,
constitutes all "Computational Materials" disseminated by the Underwriters in
connection with the Underwritten Certificates.
16. TRUSTEE: _____________________ will act as Trustee of the Trust.
17. CUSTODIAN: ____________________ will act as custodian of the
Mortgage Loans.
18. REPRESENTATIVE: ____________ will act as Representative of the
Underwriters.
19. BLUE SKY QUALIFICATIONS. The Underwriters specify, and the parties
intend to qualify the Underwritten Certificates in ________________ pursuant to
the Agreement.
20. STATE LAW TAX OPINION. At Closing, the Underwriters shall have
received from [Issuer's counsel and Trustees counsel opinions dated the Closing
Date and satisfactory in form and substance to the Underwriters as to the tax
treatment of the Certificates under ____________ and ______________ law,
respectively.
21. APPLICABLE LAW: THE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
22. NOTICES: All communications hereunder, if sent to the Underwriters,
will be mailed, delivered or telegraphed and confirmed to
____________________________________________________________, Attention:
23. VARIANCES: The Depositor shall obtain prior approval of the
Underwriters if, at any time after the Prospectus Supplement and Prospectus are
filed with the Securities and Exchange Commission pursuant to its Rule 424 under
the Securities Act of 1933, as amended, and before or on the Closing Date, the
initial aggregate principal amount of the Underwritten Securities is to be
increased or decreased by more than the Permitted Variance.
4
The Underwriters agree, subject to the terms and provisions of the
Agreement, a copy of which is attached, and which is incorporated by reference
herein in its entirety and made a part hereof to the same extent as if such
provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
------------------------------------------
on behalf of the Underwriters
By:________________________________________
Name:
Title:
Accepted and Acknowledged As
of the Date First Above Written:
SAXON ASSET SECURITIES COMPANY
By:__________________________________
Name:
Title:
SAXON MORTGAGE, INC.
By:__________________________________
Name:
Title:
DOMINION MORTGAGE SERVICES, INC.
By:__________________________________
Name:
Title:
5
