Exhibit 4.1
SAXON ASSET SECURITIES TRUST 1996-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1996-1
TRUST AGREEMENT
dated as of August 1, 1996,
among
SAXON ASSET SECURITIES COMPANY,
as Seller
Texas Commerce Bank National Association
as Master Servicer, Custodian, Certificate Registrar and Paying Agent
and
Citibank, N.A.
as Trustee
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms........................................... 1
Section 1.02. Modification of Standard Terms........................... 2
Section 1.03. Defined Terms............................................ 7
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance to the Trustee................................ 23
Section 2.02. Acceptance by the Trustee................................ 24
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. The Certificate Insurance Policies....................... 24
Section 3.02. Distributions............................................ 25
Section 3.03. Report to SASCO.......................................... 27
Section 3.04. Reports by Master Servicer............................... 28
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates......................................... 30
Section 4.02. Denominations............................................ 30
Section 4.03. Interest Fund............................................ 30
ARTICLE V
TERMINATION OF THE TRUST
Section 5.01. Termination of Trust..................................... 31
Section 5.02. Termination Upon Option of Holders of Class R
Certificates; Servicer Termination....................... 31
Section 5.03. Termination Upon Loss of REMIC Status.................... 32
Section 5.04. Disposition of Proceeds.................................. 33
Section 5.05. Article V Controls....................................... 34
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01. Request for Opinions..................................... 34
Section 6.02. Form of Certificates..................................... 34
Section 6.03. Schedules and Exhibits................................... 34
Section 6.04. Governing Law............................................ 34
Section 6.05. REMIC Administration..................................... 34
Section 6.06. Master Servicer; Month-End Interest...................... 34
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Schedule I: The Mortgage Loans
A. Fixed Rate Mortgage Loans
B. Variable Rate Mortgage Loans
Schedule II: Sales/Servicing Agreements
A. Sales Agreement
B. Servicing Agreement
Schedule III: Mortgage Loans for which first payment to the Trust will be
after August 1, 1996
Exhibit A-1: Form of Class A-1 Certificate
Exhibit A-2: Form of Class A-2 Certificate
Exhibit A-3: Form of Class A-3 Certificate
Exhibit R: Form of Class R Certificate
Exhibit X: Certificate Insurance Policies
-ii-
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of August 1, 1996 (this "Agreement"), is
hereby executed by and among Saxon Asset Securities Company, a Virginia
corporation ("SASCO"), Texas Commerce Bank National Association, as Master
Servicer, Custodian, Certificate Registrar and Paying Agent (in such capacities,
the "Master Servicer", the "Custodian", the "Certificate Registrar" and the
"Paying Agent"), Citibank, N.A., a national banking association, as Trustee (in
such capacity, the "Trustee"), under this Agreement and the Standard Terms to
Trust Agreement (August 1996 Edition) (the "Standard Terms"), all the provisions
of which, unless otherwise specified herein, are incorporated herein and shall
be a part of this Agreement as if set forth herein in full (this Agreement with
the Standard Terms so incorporated, the "Trust Agreement").
PRELIMINARY STATEMENT
The Board of Directors of SASCO has duly authorized the formation
of a trust (the "Trust") to issue a series of asset backed certificates with an
aggregate initial Certificate Principal Balance of $234,089,000 to be known as
the Saxon Asset Securities Trust 1996-1, Mortgage Loan Asset Backed
Certificates, Series 1996-1 (the "Certificates"). The Certificates in the
aggregate evidence the entire beneficial ownership in the Trust. The
Certificates consist of the following four classes: the Class A-1 Certificates
(the "Class A-1 Certificates"), the Class A-2 Certificates (the "Class A-2
Certificates"), the Class A-3 Certificates (the "Class A-3 Certificates") and
the Class R Certificates (the "Class R Certificates").
In accordance with Section 10.01 of the Standard Terms, the Trustee will
make an election to treat certain assets of the Trust as a real estate mortgage
investment conduit (the "REMIC") for federal income tax purposes. The assets of
the REMIC will consist of the Mortgage Loans listed on Schedule I hereto and the
Asset Proceeds Account. The "startup day" of the REMIC for purposes of the REMIC
Provisions will be the Closing Date.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, SASCO, the Master Servicer
and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms.
SASCO, the Master Servicer, the Custodian, the Certificate Registrar, the
Paying Agent and the Trustee acknowledge that the Standard Terms prescribe
certain duties, responsibilities and obligations of SASCO, the Master Servicer
and the Trustee with respect to the Certificates. SASCO, the Custodian, the
Master Servicer, the Certificate Registrar, the Paying Agent and the Trustee
agree to observe and perform such duties, responsibilities and obligations to
the extent they are not inconsistent with the provisions of this Agreement and
acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Section
1.02 hereof, are and shall be a part of this Agreement to the same extent as if
set forth herein in full.
Section 1.02. Modification of Standard Terms.
The modifications set out herein apply to the Series 1996-1 Trust only.
(a) The Standard Terms are hereby amended as follows:
(i) Rights of the Certificate Insurer to Exercise Certain
Rights of Certificateholders. Unless a Certificate Insurer Default
exists, the Certificate Insurer shall have the right to exercise
the following rights without any further consent of the
Certificateholders:
(A) the right to give notice to the Master Servicer and the
Trustee pursuant to Section 7.02(a) of the Standard Terms;
(B) the right to direct, pursuant to Section 7.02 of the
Standard Terms, the Trustee to terminate the rights and obligations
of the Master Servicer under the Agreement upon the occurrence of
an Event of Default by the Master Servicer;
(C) the right, pursuant to Section 7.02 of the Standard
Terms, to direct the Trustee to appoint, or petition a court of
competent jurisdiction to appoint, an established mortgage loan
servicing company acceptable to each Rating Agency and the
Certificate Insurer and having a net worth of not less than
$15,000,000 as the successor to the Master Servicer;
(D) the right to make a request to the Trustee pursuant to
Section 8.02(a) of the Standard Terms;
(E) the right to remove the Trustee pursuant to Section
8.07 of the Standard Terms;
(F) the right to consent to the amendment of the Agreement
pursuant to Section 11.01 of the Standard Terms;
(G) the right to request or direct the Trustee to institute
any suit, action or proceeding in the name of the Trustee pursuant
to Section 11.03 of the Standard Terms;
(H) the right to institute an action, suit, or proceeding in
equity or at law upon or under or with respect to the Agreement;
and
(I) the right to exercise all Voting Rights of the Class A
Certificateholders, and the Class A Certificateholders may not
exercise such rights without the prior written consent of the
Certificate Insurer; provided, however, that the requisite
percentage of the Holders of the Certificates shall have the right
to consent to amendments to the Trust Agreement pursuant to Section
11.01 of the Standard Terms.
In addition, unless a Certificate Insurer Default exists, the
Certificate Insurer's prior written consent will be required prior
to, among other things, (i) the removal of any Trustee, Custodian,
Master Servicer or Servicer, (ii) the appointment of any successor
Trustee, Custodian, Master Servicer or Servicer or (iii) any
amendment to the Agreement or the Guide; provided, however, that
the Certificate Insurer shall not unreasonably withhold its
consent. Unless a Certificate Insurer Default exists, the rights
specifically set forth above may be exercised by the
Certificateholders only with the prior written consent of the
Certificate Insurer.
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(ii) Trustee To Act Solely with Consent of the Certificate
Insurer. Unless a Certificate Insurer Default exists, the Trustee
shall not exercise the right to:
(A) terminate the rights and obligations of the Master
Servicer as Master Servicer or consent to the resignation of the
Master Servicer pursuant to Section 6.04 of the Standard Terms;
(B) terminate the rights and obligations of the Servicer
pursuant to the Servicing Agreement or consent to the resignation
of the Servicer pursuant to the Servicing Agreement;
(C) agree to any amendment of the Agreement pursuant to
Section 11.01 of the Standard Terms;
(D) undertake any litigation pursuant to the Agreement or
incur any expenses reimbursable pursuant to Section 6.03 of the
Standard Terms;
(E) exercise any of the remedies set forth in Section 7.01
or Section 7.02 of the Standard Terms;
(F) resign pursuant to Section 8.07 without giving notice
to the Certificate Insurer;
(G) appoint co-trustees or separate trustees pursuant to
Section 8.10 or one or more Custodians pursuant to Section 8.11 of
the Standard Terms; or
(H) grant any waiver of rights under, the Sales Agreement,
the Servicing Agreement or Custody Agreement in a manner that may
reasonably be expected to materially adversely affect the rights
and interests of the Certificate Insurer; or
(I) agree to any amendment to the Sales Agreement, the
Servicing Agreement or the Custody Agreement;
without the prior written consent of the Certificate Insurer.
(iii) The indemnities in Sections 5.05, 5.06 and 6.01 of the
Standard Terms shall run to the Certificate Insurer.
(iv) Neither SASCO nor the Master Servicer shall incur any expenses
reimbursable pursuant to Section 6.03 of the Standard Terms without the
consent of the Certificate Insurer.
(v) The Master Servicer shall not without the prior written consent
of the Certificate Insurer approve the transfer or other assignment of
the Servicing Agreement to any other servicer pursuant to Section 3.10 of
the Standard Terms.
(vi) Trust Estate and Accounts Held for Benefit of the Certificate
Insurer and the Certificateholders. The Trustee shall hold the Trust
Estate and the Trustee Mortgage Loan Files for the benefit of the
Certificateholders and the Certificate Insurer and, unless a Certificate
Insurer Default exists, all references in the Agreement and in the
Certificates to "the benefit of the Certificateholders" (and "for the
exclusive use and benefit of all present and future Certificateholders"
and "for the benefit of all the Holders of the Certificates") shall be
deemed to include the Certificate Insurer. Unless a Certificate Insurer
Default exists, the Trustee shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under the Agreement
and the Certificates.
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References in the Agreement to "the interest of the Trust" or "the
interest of the Certificateholders" shall be deemed to include the
interest of the Certificate Insurer. The Master Servicer and the Trustee
shall promptly notify the Certificate Insurer upon learning of any event
which could, with the passage of time or the giving of notice, give rise
to the obligation to repurchase or substitute any Mortgage Loan.
(vii) Trustee to Cooperate. Unless a Certificate Insurer Default
exists, the Trustee shall cooperate in all respects with any reasonable
request by the Certificate Insurer for action to preserve or enforce the
Certificate Insurer's rights or interests hereunder without limiting the
rights or affecting the interests of the Holders as otherwise set forth
herein.
(viii) Servicing Requirements. Section 7.01 of the Standard Terms
is replaced in its entirety by the following provisions:
Upon the occurrence of any event for which the Servicer may be terminated
pursuant to a Servicing Agreement, the Master Servicer shall promptly deliver to
the Certificate Insurer, with copies to SASCO, the Master Servicer and the
Trustee, a certification by an Officer that an event has occurred that may
justify termination of Servicing Agreement, describing the circumstances
surrounding such event. The Certificate Insurer or, if a Certificate Insurer
Default exists, the Master Servicer may terminate the Servicing Agreement at any
time if (i) the Servicer Termination Test is not satisfied or (ii) Dominion
Capital, Inc., ceases to own, directly or indirectly through one or more
subsidiaries, 51% of the issued and outstanding common stock of the Servicer or
Saxon Mortgage or (iii) any other event for which the Servicer may be terminated
by the Master Servicer pursuant to the Servicing Agreement shall have occurred
and, in the reasonable judgment of the Certificate Insurer (unless a Certificate
Insurer Default exists, in which case in the reasonable judgment of the Master
Servicer), such default is material and not technical in nature. Unless a
Certificate Insurer Default exists, the Master Servicer may not terminate the
Servicing Agreement without the prior written consent of the Certificate
Insurer.
If the Servicing Agreement is terminated, the Master Servicer shall enter
into a substitute Servicing Agreement with another mortgage loan service company
acceptable to the Master Servicer, the Certificate Insurer 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 of the Standard Terms. As compensation to the Master
Servicer for any servicing obligations fulfilled or assumed by the Master
Servicer, the Master Servicer shall be entitled to any servicing compensation to
which the Servicer would have been entitled if the Servicing Agreement with the
Servicer had not been terminated.
(ix) Surrender and Cancellation. The Trustee shall surrender the
Certificate Insurance Policies to the Certificate Insurer for
cancellation upon termination of the Trust pursuant to Article V hereof.
(x) Reports to the Certificate Insurer. All notices, statements,
reports, certificates or opinions required by the Agreement to be sent to
any party hereto or to any of the Class A Certificateholders shall also
be sent to the Certificate Insurer. The Trust and the Trustee shall make
available to the Certificate Insurer their books and records for the
purpose of copying and inspection of any information about the Class A
Certificates, the Trust Estate or the Certificateholders.
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(xi) Third-Party Beneficiary. The Certificate Insurer shall be a
third-party beneficiary of the Agreement, entitled to enforce the
provisions thereof as if a party thereto.
(xii) The first sentence of Section 2.03(d) of the Standard Terms
is amended by deleting the words "one year" and inserting in lieu thereof
the words "nine months".
(xiii) Costs and Expenses. The Certificate Insurer shall not be
responsible for any costs or expenses relating to the Trust Estate or the
Mortgage Loans except for the payment of amounts pursuant to the
Certificate Insurance Policies.
(xiv) Opinions of Counsel. While the Certificate Insurance Policies
are in effect, each Opinion of Counsel and Special Tax Opinion rendered
pursuant to the Agreement also shall be addressed and delivered to, and
be acceptable to, the Certificate Insurer and be delivered by counsel
acceptable to the Certificate Insurer. Except with the consent of the
Certificate Insurer, no Opinion of Counsel or Special Tax Opinion may be
delivered by in-house counsel of the entity required to deliver such
opinion.
(b) Section 11.05 of the Standard Terms is hereby amended by replacing
the word "and" preceding subparagraph (c) with ";" and deleting the period at
the end of subparagraph (c) and adding the following paragraph:
and (d) in the case of the Certificate Insurer, MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management - SF (SASCO 96-1), Tel:
(914) 765-3111; Fax: (914) 765-3919
(c) Notwithstanding anything to the contrary in the Standard Terms,
including particularly Section 2.01 of the Standard Terms and the definition of
"Trustee Mortgage Loan File" in Section 1.01 of the Standard Terms, in the event
that, within 60 days of the Closing Date, each Rating Agency confirms in writing
that the ratings of the Class A Certificates will not be downgraded (without
regard to the existence of the Certificate Insurance Policies) and the
Certificate Insurer approves in writing, SASCO shall not be required to complete
endorsements of the Notes to the Trustee or to record assignments of the
Security Instruments to the Trustee, but rather, will be required to deliver to
the Custodian (i) the Notes endorsed in blank or to the Trustee or Custodian and
(ii) either (x) Assignments of the Security Instruments to the Servicer, with
further Assignments of such Security Instruments from the Servicer in blank or
(y) Assignments of the Security Instruments to the Trustee or Custodian. In
which event, each of the definitions of "Trustee Mortgage Loan File" at Section
1.01 and Section 2.01 of the Standard Terms shall be amended and restated to
read in their entireties as follows: provided that (x) SASCO shall notify the
Underwriters and the Certificate Insurer promptly upon receipt of such
confirmations from the Rating Agencies and (y) SASCO shall take all action
required to comply with the terms of such amended and restated provisions within
15 Business Days following receipt of such confirmation from the Rating
Agencies:
"Trustee Mortgage Loan File": With respect to each Mortgage Loan,
unless otherwise provided in the Trust Agreement, collectively, 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 Note, endorsed in blank or to the Trustee or
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 Interest 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
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appropriate governmental recording office or, if the original
Security Instrument has been submitted for recordation but
has not been returned from the applicable public recording
office, a photocopy of the Security Instrument certified by
an Officer of the Master 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 complete 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 Servicer (or the
Trustee or Custodian), 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
Assignment certified by an Officer of the Master Servicer to
be a true and complete copy of the recorded Assignment or the
Assignment submitted for recordation;
(d) if an Assignment of the Security Instrument to the
Servicer has been recorded or sent for recordation, an
original Assignment of the Security Instrument from the
Servicer in blank to the Trustee or Custodian in recordable
form;
(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 such Title Insurance Policy or such Certificate of Title
Insurance certified as true and correct by the applicable
Insurer;
(f) if indicated on a Schedule to the Trust 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 delivered to the Trustee or the Custodian
and required by the Rating Agencies as a condition to
confirmation that the ratings on the Certificates will not be
downgraded (without regard to the existence of the
Certificate Insurance Policies).
* * *
Section 2.01. Mortgage Loan Files. Pursuant to a Trust Agreement, SASCO
has sold to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer without recourse all the right, title and interest of SASCO
in and to the Mortgage Loans, any and all rights, privileges and benefits
accruing to SASCO under the Sales Agreement and the Servicing Agreement with
respect to the Mortgage Loans (except, in the case of the Sales Agreement, any
rights of SASCO to fees and indemnification of SASCO 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 and the Certificate Insurer as set forth in
the conveyance clause of the Trust Agreement. Such assignment includes all of
SASCO's rights to the Monthly Payments on the Mortgage Loans due after the
Cut-off Date, and all other payments of principal (and interest) made after the
Cut-off Date, and all other payments of principal (and interest) made after the
Cut-off Date that are reflected in the initial aggregate Certificate Principal
Balance of the Certificates for a Trust.
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In connection with such transfer and assignment, SASCO shall deliver, or
cause to be delivered, to the Trustee or Custodian on or before the Closing
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 Closing Date, SASCO shall
cause each such original recorded document, or a certified copy thereof, to be
delivered to the Trustee or the Custodian promptly following its recordation.
SASCO shall cause to be delivered to the Trustee or the Custodian any other
original Mortgage Loan Documents to be included in the Trustee Mortgage Loan
File if a copy thereof initially was delivered.
SASCO has delivered or cause to be delivered to the Servicer, on or
before the Closing Date, a Servicer File with respect to each Mortgage Loan
serviced by such Servicer. All such documents shall be held by the Servicer in
trust for the benefit of the Trustee on behalf of the Certificateholders and the
Certificate Insurer.
Section 1.03. Defined Terms.
Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein the definition herein shall control.
"Accrual Period": With respect to the Fixed Rate Certificates and any
Distribution Date, the calendar month immediately preceding such Distribution
Date; a "calendar month" shall be deemed to be 30 days. With respect to the
Variable Rate Certificates and any Distribution Date, the period commencing on
the immediately preceding Distribution Date (or in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
the current Distribution Date. All calculations of interest on the Fixed Rate
Certificates will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months and all calculations of interest on the Variable Rate
Certificates will be made on the basis of the actual number of days elapsed in
the related Interest Accrual Period and in a year of 360 days.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) (i) the
weighted average Pass-Through Rates of the Class A-1 and Class A-2 Certificates
in the case of Mortgage Loans in Group I or (ii) the Class A-3 Pass- Through
Rate in the case of Mortgage Loans in Group II, plus (b) any portion of the
Premium Amount (calculated as an annual rate based on the outstanding principal
amount of the Certificates) then accrued and outstanding.
"Available Distribution": The definition of Available Distribution in
the Standard Terms is not used in this Trust Agreement.
"Available Funds": With respect to Group I, the Group I Available Funds
and, with respect to Group II, the Group II Available Funds.
"Available Funds Shortfall": Any of the Group I Available Funds
Shortfall or the Group II Available Funds Shortfall.
"Book-Entry Certificates": The Class A-1, Class A-2 and Class A-3
Certificates, except to the extent provided in Section 5.03 of the Standard
Terms.
"Business Day": Any day that is not a Saturday, Sunday, holiday, or other
day on which commercial banking institutions in Houston, Texas, or the city and
state in which the Corporate Trust Office of the Trustee or the Paying Agent is
located are authorized or obligated by law or executive order to be closed.
"Certificate": Any of the Class A-1, Class A-2, Class A-3 or Class R
Certificates.
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"Certificate Insurance Policies": The Fixed Rate Certificate Insurance
Policy and the Variable Rate Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation or any successor
thereto, as issuer of the Certificate Insurance Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policies in accordance with their terms; or
(b)(i) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, rehabilitation, reorganization or other similar
law or (B) a decree or order adjudging the Certificate Insurer as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
rehabilitation, arrangement, adjustment or composition of or in respect of the
Certificate Insurer under any applicable United States federal or state law, or
appointing a custodian, receiver, liquidator, rehabilitator, assignee, trustee,
sequestrator or other similar official of any substantial part of the
Certificate Insurer's property, or ordering the winding-up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60 consecutive
days; or
(ii) the commencement by the Certificate Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the consent by the Certificate
Insurer to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Certificate Insurer of any substantial part of its
property, or the failure of the Certificate Insurer to pay debts generally as
they become due, or the admission by the Certificate Insurer in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Certificate Insurer in furtherance of any such action.
"Certificate Principal Balance": As to the Class A-1 Certificates, the
Class A-1 Certificate Principal Balance, as to the Class A-2 Certificates, the
Class A-2 Certificate Principal Balance and, as to the Class A-3 Certificates,
the Class A-3 Certificate Principal Balance.
"Certificate Register": the Certificate Register maintained by the
Certificate Registrar.
"Certificate Registrar": Texas Commerce Bank National Association.
"Class": All the Class A-1 Certificates, all the Class A-2 Certificates,
all the Class A-3 Certificates or all the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, the Class
A-2 Certificates, or the Class A-3 Certificates.
"Class A Distribution Amount": Any of the Class A-1 Distribution Amount,
the Class A-2 Distribution Amount or Class A-3 Distribution Amount.
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"Class A-1, Class A-2 and Class A-3 Definitions":
"Class A-1 Certificate": Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.
"Class A-2 Certificate": Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
"Class A-3 Certificate": Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto representing
the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Closing Date of the
Class A-1 Certificates, less any amounts actually distributed with respect to
the Class A-1 Principal Distribution Amount (except, for purposes of effecting
the Certificate Insurer's subrogation rights, that portion of Insured Payments
made with respect to principal).
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Closing Date of the
Class A-2 Certificates, less any amounts actually distributed with respect to
the Class A-2 Principal Distribution Amount (except, for purposes of effecting
the Certificate Insurer's subrogation rights, that portion of Insured Payments
made with respect to principal).
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Closing Date of the
Class A-3 Certificates, less any amounts actually distributed with respect to
the Class A-3 Principal Distribution Amount (except, for purposes of effecting
the Certificate Insurer's subrogation rights, that portion of Insured Payments
made with respect to principal).
"Class A-1 Certificate Termination Date": The Distribution Date on which
the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-2 Certificate Termination Date": The Distribution Date on which
the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-3 Certificate Termination Date": The Distribution Date on which
the Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Distribution Date, the
aggregate amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Distribution Date during the related Accrual
Period at the Class A-1 Pass- Through Rate plus any Class A-1 Current Interest
remaining unpaid from previous Distribution Dates.
"Class A-2 Current Interest": With respect to any Distribution Date, the
aggregate amount of interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Distribution Date during the related Accrual
Period at the Class A-2 Pass- Through Rate plus any Class A-2 Current Interest
remaining unpaid from previous Distribution Dates.
"Class A-3 Current Interest: With respect to any Distribution Date, the
aggregate amount of interest accrued on the Class A-3 Certificate Principal
Balance immediately prior to such Distribution Date during the related Accrual
Period at the Class A-3 Pass-Through Rate plus any Class A-3 Current Interest
remaining unpaid from previous Distribution Dates. Class A-3 Current Interest
shall not include any Class A-3 Certificates Carryover.
9
"Class A-1 Distribution Amount": As to any Distribution Date, the sum of
(x) the Class A-1 Current Interest and (y) the Group I Principal Distribution
Amount.
"Class A-2 Distribution Amount": As to any Distribution Date, the sum of
(x) the Class A-2 Current Interest and (y) after the Class A-1 Certificate
Principal Amount has been reduced to zero, the Group I Principal Distribution
Amount.
"Class A-3 Distribution Amount": As to any Distribution Date, the sum of
(x) the Class A-3 Current Interest and (y) the Group II Principal Distribution
Amount.
"Class A-1 Pass- Through Rate": 7.38% per annum.
"Class A-2 Pass- Through Rate": The lesser of (a) 8.06% per annum and (b)
the Class A-2 Available Funds Cap.
"Class A-3 Pass- Through Rate": For the initial Distribution Date,
5.76188%. As of any Distribution Date thereafter, the lesser of (x) One Month
LIBOR plus, in the case of any Distribution Date prior to the Initial Optional
Termination Date, 0.34% per annum, or in the case of any Distribution Date that
occurs on or after the Initial Optional Termination Date, plus 0.68% per annum
and (y) the Class A-3 Available Funds Cap for such Distribution Date.
"Class A-2 Available Funds Cap": As of any Distribution Date, the
weighted average of the Group I Mortgage Interest Rates less the sum of (i) the
Group I Servicing Fee Rate therefor, (ii) the Group I Master Servicing Fee Rate,
and (iii) the Premium Percentage (as defined in the Insurance Agreement).
"Class A-3 Certificates Carryover": If on any Distribution Date the Class
A-3 Pass-Through Rate is based upon the Class A-3 Available Funds Cap, the
excess of (i) the amount of interest the Variable Rate Certificates would be
entitled to receive on such Distribution Date had the Class A-3 Pass-Through
Rate been calculated based on One Month LIBOR plus the applicable margin over
(ii) the amount of interest such Certificates received on such Distribution Date
based on the Class A-3 Available Funds Cap, together with the unpaid portion of
any such excess from prior Distribution Dates (and interest accrued thereon at
the then applicable Pass-Through Rate, without giving effect to the Class A-3
Available Funds Cap).
"Class A-3 Available Funds Cap": As of any Distribution Date, the
weighted average of the Mortgage Interest Rates on the Mortgage Loans in Group
II less .672% per annum prior to the thirteenth Distribution Date and 1.172% per
annum thereafter.
"Class R Certificate": Any of those Certificates designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit R hereto and evidencing
an interest designated as the "residual interest" in the Trust for purposes of
the REMIC Provisions.
"Closing Date": August 15, 1996.
"Credit Enhancement": The Certificate Insurance Policies.
"Current Interest": As of any Distribution Date, the sum of the Class A-1
Current Interest, Class A-2 Current Interest and Class A-3 Current Interest, due
on the related Distribution Date.
"Custodian": Texas Commerce Bank National Association.
"Cut-Off Date": As of the close of business on July 17, 1996.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the last day of the Prepayment Period
immediately following the day such payment is scheduled to be due. A Mortgage
Loan is "30 days Delinquent" if such payment has not been received by the close
of business on the last day of the Prepayment Period of the month immediately
succeeding the month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Excess Subordinated Amount": With respect to Group I, the Group I Excess
Subordinated Amount and, with respect to Group II the Group II Excess
Subordinated Amount.
"Fixed Rate and Variable Rate Definitions":
"Fixed Rate Certificate": Any of the Class A-1 or Class A-2
Certificates.
"Fixed Rate Certificate Insurance Policy": The certificate guaranty
insurance policy (number 21803) dated August 15, 1996, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Fixed Rate
Certificates.
"Fixed Rate Certificate Principal Balance": The sum of the Class A-1
Certificate Principal Balance and the Class A-2 Certificate Principal
Balance.
"Fixed Rate Current Interest": The sum of the Class A-1 Current Interest
and the Class A-2 Current Interest.
"Variable Rate Certificate": Any of the Class A-3 Certificates.
"Variable Rate Certificate Insurance Policy": The certificate guaranty
insurance policy (number 21804) dated August 15, 1996, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Variable Rate
Certificates.
"Variable Rate Certificate Principal Balance": The Class A-3 Certificate
Principal Balance.
"Variable Rate Current Interest": The Class A-3 Current Interest.
"Final Scheduled Distribution Date": With respect to each Class of
Certificates, the date so designated in the table in Section 4.01 of this
Agreement.
Group Definitions:
"Group I": The pool of Mortgage Loans identified in the related Schedules
of Mortgage Loans as having been assigned to Group I, including any Qualified
Substitute Mortgage Loans delivered in replacement thereof.
"Group I Available Funds": With respect to any Master Servicer Remittance
Date, the sum of (i) the Group I Interest Funds (as increased, for the first
Distribution Date by $119,341.33, withdrawn from the Interest Account) and (ii)
the Group I Principal Funds.
"Group I Available Funds Shortfall": With respect to Group I and any
Distribution Date, the excess of (i) the Group I Distribution Amount (calculated
only with reference to clause (y) of the definition of Group I Principal
Distribution Amount and without any Subordination Increase Amount) over (ii) the
Group I Available Funds.
"Group I Deficiency Amount": As defined in the Fixed Rate Certificate
Insurance Policy.
"Group I Distribution Amount": With respect to any Distribution Date, the
sum of (a) the Class A-1 Distribution Amount and (b) the Class A-2 Distribution
Amount.
"Group I Excess Subordinated Amount": With respect to Group I and any
Distribution Date, the excess of (x) the Group I Subordinated Amount that would
apply to Group I on such Distribution Date after taking into account the payment
of the related Group I Distribution Amount on such Distribution Date (except for
any distributions of the Group I Subordination Reduction Amounts on such
Distribution Date) over (y) the Group I Specified Subordinated Amount for such
Distribution Date.
"Group I Initial Specified Subordinated Amount": 1.65% of the Fixed Rate
Certificate Principal Balance as of any date specified.
"Group I Insured Payment": As defined in the Fixed Rate Certificate
Insurance Policy.
"Group I Interest Funds": With respect to Group I and any Master Servicer
Remittance Date, the sum, without duplication, of (i) all scheduled interest
collected during the related Due Period less the Group I Servicing Fee and the
Group I Master Servicing Fee, (ii) all Advances relating to interest, (iii) all
Month End Interest (limited to the amount of the Group I Servicing Fee) and (iv)
Liquidation Proceeds (to the extent such Liquidation Proceeds relate to
interest) less all Non-Recoverable Advances relating to interest and expenses
pursuant to Section 6.03 of the Standard Terms.
"Group I Master Servicing Fee": With reference to each Master Servicer
Remittance Date, an amount payable (or allocable) to the Master Servicer equal
to the product of one-twelfth of the Master Servicing Fee Rate and the aggregate
Scheduled Principal Balance of the Mortgage Loans in Group I on the first day of
the Due Period preceding such Master Servicer Remittance Date.
"Group I Master Servicing Fee Rate": 0.052% per annum.
"Group I Original Collateral Amount": $52,960,000.
"Group I Preference Amount": As defined in the Fixed Rate Certificate
Insurance Policy.
"Group I Premium Amount": With respect to any Distribution Date, the
product of (x) one-twelfth of the Premium Percentage (as defined in the
Insurance Agreement) and (y) the Fixed Rate Certificate Principal Balance
(before taking into account any distributions of principal to be made to the
Holders of the Fixed Rate Certificates on such Distribution Date).
"Group I Principal Distribution Amount": With respect to the Fixed Rate
Certificates and any Distribution Date, the lesser of:
(x) the Group I Total Available Funds plus any Group I Deficiency
Amount minus the Fixed Rate Current Interest and Group I Premium Amount for such
Distribution Date; and
(y) (i) the sum, without duplication, of:
(a) the principal portion of all Monthly Payments on the Mortgage
Loans in Group I due during the related Due Period, to the extent actually
received by the Trustee on or prior to the related Master Servicer Remittance
Date or to the extent advanced on or prior to the related Master Servicer
Remittance Date and the principal portion of all full and partial principal
prepayments made by the respective Borrowers during the related Prepayment
Period;
(b) the Scheduled Principal Balance of each Mortgage Loan in Group
I that was repurchased during the related Prepayment Period to the extent an
amount representing such Scheduled Principal Balance is actually received by the
Trustee on or before the related Master Servicer Remittance Date;
(c) any Substitution Shortfall delivered in connection with a
substitution of a Mortgage Loan in Group I during the related Prepayment Period
to the extent an amount representing such Substitution Shortfall is actually
received by the Trustee on or before the related Master Servicer Remittance
Date;
(d) all Liquidation Proceeds actually collected by the Servicer
with respect to the Mortgage Loans in Group I during the related Prepayment
Period to the extent such Liquidation Proceeds relate to principal and were
actually received by the Trustee on or before the related Master Servicer
Remittance Date;
(e) the amount of any Group I Subordination Deficit;
(f) the proceeds received by the Trustee with respect to Group I
(to the extent such amount relates to principal) on any termination of the
Trust; and
(g) the amount of any Subordination Increase Amount with respect to
Group I for such Distribution Date, to the extent of any Total Monthly Excess
Cashflow available for such purpose;
minus
(ii) the amount of any Group I Subordination Reduction Amount for such
Distribution Date.
"Group I Principal Funds": With respect to any Master Servicer Remittance
Date, the sum, without duplication, of (i) the scheduled principal actually
collected by the Servicer with respect to Mortgage Loans in Group I during the
related Due Period or advanced on or before such Master Servicer Remittance
Date, (ii) the prepayments collected by the Servicer in the related Prepayment
Period, (iii) the Scheduled Principal Balance of each Mortgage Loan in Group I
that was repurchased to the extent such Scheduled Principal Balance was actually
deposited in the Master Servicer Custodial Account on the related Master
Servicer Remittance Date, (iv) any Substitution Shortfall delivered by the
Seller in connection with a substitution of a Mortgage Loan in Group I to the
extent such Substitution Shortfall was actually deposited in the Master Servicer
Custodial Account on such Master Servicer Remittance Date and (v) all
Liquidation Proceeds actually collected by the Servicer with respect to Mortgage
Loans in Group I during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) to the extent deposited in the Master
Servicer Custodial Account on such Master Servicer Remittance Date less all
NonRecoverable Advances relating to principal reimbursed during the related Due
Period.
"Group I Reimbursement Amount": With respect to any Distribution Date,
the sum of (x)(i) all Group I Insured Payments previously received by the
Trustee and not previously repaid to the Certificate Insurer plus (ii) interest
accrued on each such Group I Insured Payment not previously repaid calculated at
the Late Payment Rate from the date the Trustee received the related Group I
Insured Payment to, but not including, such Distribution Date and (y)(i) any
amounts then due and owing to the Certificate Insurer relating to Group I under
the Insurance Agreement plus (ii) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and SASCO of the amount
of any Group I Reimbursement Amount.
"Group I Servicing Fee": With respect to each Mortgage Loan in Group I
and each Remittance Date, the product of (x) one-twelfth of the Servicing Fee
Rate and (y) aggregate Scheduled Principal Balance of such Mortgage Loan as of
the opening of business on the first day of the Due Period preceding such
Remittance Date.
"Group I Servicing Fee Rate": With respect to each Mortgage Loan in Group
I, the fixed per annum rate payable to the Servicer of that Mortgage Loan as set
out on Schedule IA.
"Group I Specified Subordinated Amount":
(a) for any Distribution Date occurring during the period commencing on the
Closing Date and ending on the later of:
(i) the date upon which principal equal to one-half of the Group I
Original Collateral Amount has been received, and
(ii) the thirtieth Distribution Date following the Closing Date,
the greater of:
(A) the Group I Initial Specified Subordinated Amount as of the
Closing Date, and
(B) the product of (x) the Loss Factor and (y) the excess of (I)
one-half of the aggregate Scheduled Principal Balances of all Mortgage
Loans in Group I which are 91 or more days Delinquent (including REO
Properties) over (II) five times the Group I Total Monthly Excess
Cashflow as of such Distribution Date; and
(b) for any Distribution Date occurring after the end of the period in clause
(a) above, the greatest of:
(i) the lesser of (A) the Group I Initial Specified Subordinated
Amount as of the Closing Date and (B) two times the Group I Initial
Specified Subordinated Amount as of such Distribution Date stated as a
percentage of the Initial Certificate Principal Balance of the Fixed Rate
Certificates times the Fixed Rate Certificate Principal Balance as of
such Distribution Date,
(ii) the product of (x) the Loss Factor and (y) the excess of (A)
one-half of the aggregate Scheduled Principal Balances of all Mortgage
Loans in Group I which are 91 or more days Delinquent (including REO
Properties) over (B) five times the Group I Monthly Excess Cashflow as of
such Distribution Date and
(iii) an amount equal to 0.50% of the Group I Original Collateral
Amount;
provided, however, notwithstanding the above, if any Group I Insured Payment or
Group II Insured Payment is made by the Certificate Insurer, the amount
described in this clause (b) shall remain equal to the Group I Initial Specified
Subordinated Amount as of the Closing Date; and provided, further, that
notwithstanding the above in either clause (a) or clause (b), as of any
Distribution Date on which Realized Losses equal to or exceeding 9.65% of the
Original Collateral Amount have been paid from Total Monthly Excess Cashflow,
the Group I Specified Subordinated Amount shall be zero.
"Group I Subordinated Amount": As of any Distribution Date, the excess of
(x) the aggregate Scheduled Principal Balances (minus the principal portion of
all Monthly Payments due but not paid by the Borrowers as of the last day of the
related Prepayment Period) of the Mortgage Loans in Group I as of the close of
business on the last day of the related Due Period over (y) the Fixed Rate
Certificate Principal Balance as of such Distribution Date (after taking into
account the payment of the Group I Principal Distribution Amount (except for any
portion thereof related to an Insured Payment) on such Distribution Date--).
"Group I Subordination Deficit": With respect to Group I and any
Distribution Date, the excess of (x) the Fixed Rate Certificate Principal
Balance, after taking into account the payment of the Group I Principal
Distribution Amount on such Distribution Date (except any payments as to
principal from the proceeds of the Fixed Rate Certificate Insurance Policy to be
made on such Distribution Date) over (y) the aggregate Scheduled Principal
Balances of the Mortgage Loans in Group I as of the close of business on the
last day of the related Due Period.
"Group I Subordination Deficiency Amount": With respect to Group I and
any Distribution Date, the excess of (i) the Group I Specified Subordinated
Amount applicable to such Distribution Date over (ii) the Group I Subordinated
Amount applicable to such Distribution Date prior to taking into account the
payment of any Group I Subordination Increase Amount on such Distribution Date.
"Group I Subordination Increase Amount": With respect to Group I and any
Distribution Date, the lesser of (i) the Group I Subordination Deficiency Amount
(after taking into account the payment of the Group I Principal Distribution
Amount on such Distribution Date (except for any Group I Subordination Increase
Amount)) and (ii) the aggregate amount of Total Monthly Excess Cashflow to be
allocated to Group I pursuant to Sections 3.02(c)(v) and (d)(vi) on such
Distribution Date.
"Group I Subordination Reduction Amount": With respect to Group I and any
Distribution Date, the lesser of (x) the Group I Excess Subordinated Amount for
such Distribution Date and (y) the Group I Principal Distribution Amount with
respect to the related Master Servicer Remittance Date.
"Group I Total Available Funds": With respect to Group I and any
Distribution Date, the sum of (i) Group I Available Funds and (ii) any amount of
Group II Total Monthly Excess Cashflow to be applied to the Fixed Rate
Certificates on such Distribution Date.
"Group I Total Available Funds Shortfall": With respect to Group I and
any Distribution Date, the excess of (i) the sum of (a) Fixed Rate Current
Interest and (b) the Group I Subordination Deficit over (ii) Group I Total
Available Funds.
"Group I Total Monthly Excess Cashflow": With respect to Group I and any
Distribution Date, the sum of (a) Group I Total Monthly Excess Spread and (b)
any Group I Subordination Reduction Amount.
"Group I Total Monthly Excess Spread": With respect to Group I and any
Distribution Date, the excess of (i) the Group I Interest Funds over (ii) the
sum of (x) the Fixed Rate Current Interest and (y) the Group I Premium Amount.
"Group II": The pool of Mortgage Loans identified in the related
Schedules of Mortgage Loans as having been assigned to Group II, including any
Qualified Substitute Mortgage Loans delivered in replacement thereof.
"Group II Available Funds": With respect to any Master Servicer
Remittance Date, the sum of (i) the Group II Interest Funds (as increased, for
the first Distribution Date by $70,765.31, withdrawn from the Interest Account)
and (ii) the Group II Principal Funds.
"Group II Available Funds Shortfall": With respect to Group II and any
Distribution Date, the excess of (i) the Group II Distribution Amount
(calculated only with reference to clause (y) of the definition of Group II
Principal Distribution Amount and without any Subordination Increase Amount)
over (ii) the Group II Available Funds.
"Group II Deficiency Amount": As defined in the Variable Rate
Certificate Insurance Policy.
"Group II Distribution Amount": With respect to any Distribution Date,
the Class A-3 Distribution Amount.
"Group II Excess Subordinated Amount": With respect to Group II and any
Distribution Date, the excess of (x) the Group II Subordinated Amount that would
apply to Group I on such Distribution Date after taking into account the payment
of the related Group II Distribution Amount on such Distribution Date (except
for any distributions of the Group II Subordination Reduction Amounts on such
Distribution Date) over (y) the Group II Specified Subordinated Amount for such
Distribution Date.
"Group II Initial Specified Subordinated Amount": 2.00% of the Variable
Rate Certificate Principal Balance as of any date specified.
"Group II Insured Payment": As defined in the Variable Rate Certificate
Insurance Policy.
"Group II Interest Funds": With respect to Group II and any Master
Servicer Remittance Date, the sum, without duplication, of (i) all scheduled
interest collected during the related Due Period less the Group II Servicing Fee
and the Group II Master Servicing Fee, (ii) all Advances relating to interest,
(iii) all Month End Interest (limited to the amount of the Group II Servicing
Fee) and (iv) Liquidation Proceeds (to the extent such Liquidation Proceeds
relate to interest) less all Non-Recoverable Advances relating to interest and
expenses pursuant to Section 6.03 of the Standard Terms.
"Group II Master Servicing Fee": With reference to each Master Servicer
Remittance Date, an amount payable (or allocable) to the Master Servicer equal
to the product of one-twelfth of the Master Servicing Fee Rate and the aggregate
Scheduled Principal Balance of the Mortgage Loans in Group II on the first day
of the Due Period preceding such Master Servicer Remittance Date.
"Group II Master Servicing Fee Rate": 0.052% per annum.
"Group II Original Collateral Amount": $181,489,000.
"Group II Preference Amount": As defined in the Variable Rate
Certificate Insurance Policy.
"Group II Premium Amount": With respect to any Distribution Date, the
product of (x) one-twelfth of the Premium Percentage (as defined in the
Insurance Agreement) and (y) the Variable Rate Certificate Principal Balance
(before taking into account any distributions of principal to be made to the
Holders of the Variable Rate Certificates on such Distribution Date).
"Group II Principal Distribution Amount": With respect to the Variable
Rate Certificates and any Distribution Date, the lesser of:
(x) the Group II Total Available Funds plus any Group II Deficiency
Amount minus the Variable Rate Current Interest and Group II Premium Amount for
such Distribution Date; and
(y) (i) the sum, without any duplication, of:
(a) the principal portion of all Monthly Payments on the Mortgage
Loans in Group II due during the related Due Period, to the extent actually
received by the Trustee on or prior to the related Master Servicer Remittance
Date or to the extent advanced on or prior to the related Master Servicer
Remittance Date and the principal portion of all full and partial principal
prepayments made by the respective Borrowers during the related Prepayment
Period;
(b) the Scheduled Principal Balance of each Mortgage Loan in Group
II that was repurchased during the related Prepayment Period to the extent an
amount representing such Scheduled Principal Balance is actually received by the
Trustee on or before the related Master Servicer Remittance Date;
(c) any Substitution Shortfall delivered in connection with a
substitution of a Mortgage Loan in Group II during the related Prepayment Period
to the extent an amount representing such Substitution Shortfall is actually
received by the Trustee on or before the related Master Servicer Remittance
Date;
(d) all Liquidation Proceeds actually collected by the Servicer
with respect to the Mortgage Loans in Group II during the related Prepayment
Period to the extent such Liquidation Proceeds relate to principal and were
actually received by the Trustee on or before the related Master Servicer
Remittance Date;
(e) the amount of any Group II Subordination Deficit;
(f) the proceeds received by the Trustee with respect to Group II
(to the extent such amount relates to principal) on any termination of the
Trust; and
(g) the amount of any Subordination Increase Amount with respect to
Group II for such Distribution Date, to the extent of any Total Monthly Excess
Cashflow available for such purpose;
minus
(ii) the amount of any Group II Subordination Reduction Amount with
respect to Group II for such Distribution Date.
"Group II Principal Funds": With respect to any Master Servicer
Remittance Date, the sum, without duplication, of (i) the scheduled principal
actually collected by the Servicer with respect to Mortgage Loans in Group II
during the related Due Period or advanced on or before such Master Servicer
Remittance Date, (ii) the prepayments collected by the Servicer in the related
Prepayment Period, (iii) the Scheduled Principal Balance of each Mortgage Loan
in Group II that was repurchased to the extent such Scheduled Principal Balance
was actually deposited in the Master Servicer Custodial Account on the related
Master Servicer Remittance Date, (iv) any Substitution Shortfall delivered by
the Seller in connection with a substitution of a Mortgage Loan in Group II to
the extent such Substitution Shortfall was actually deposited in the Master
Servicer Custodial Account on such Master Servicer Remittance Date and (v) all
Liquidation Proceeds actually collected by the Servicer with respect to Mortgage
Loans in Group II during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) to the extent deposited in the Master
Servicer Custodial Account on such Master Servicer Remittance Date less all
NonRecoverable Advances relating to principal reimbursed during the related Due
Period.
"Group II Reimbursement Amount": With respect to any Distribution Date,
the sum of (x)(i) all Group II Insured Payments previously received by the
Trustee and not previously repaid to the Certificate Insurer plus (ii) interest
accrued on each such Group II Insured Payment not previously repaid calculated
at the Late Payment Rate from the date the Trustee received the related Group II
Insured Payment to, but not including, such Distribution Date and (y)(i) any
amounts then due and owing to the Certificate Insurer relating to Group II under
the Insurance Agreement plus (ii) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and SASCO of the amount
of any Group II Reimbursement Amount.
"Group II Servicing Fee": With respect to each Mortgage Loan in Group II
and each Remittance Date, the product of (x) one-twelfth of the Servicing Fee
Rate and (y) aggregate Scheduled Principal Balance of such Mortgage Loan as of
the opening of business on the first day of the Due Period preceding such
Remittance Date.
"Group II Servicing Fee Rate": With respect to each Mortgage Loan in
Group II, the fixed per annum rate payable to the Servicer of that Mortgage Loan
as set out on Schedule IB.
"Group II Specified Subordinated Amount":
(a) for any Distribution Date occurring during the period commencing on the
Closing Date and ending on the later of:
(i) the date upon which principal equal to one-half of the Group
II Original Collateral Amount has been received, and
(ii) the thirtieth Distribution Date following the Closing Date,
the greater of:
(A) the Group II Initial Specified Amount Requirement as of the
Closing Date, and
(B) the product of (x) the Loss Factor and (y) the excess of (I)
one-half of the aggregate Scheduled Principal Balances of all Mortgage
Loans in Group II which are 91 or more days Delinquent (including REO
Properties) over (II) three times the Group II Total Monthly Excess
Cashflow as of such Distribution Date; and
(b) for any Distribution Date occurring after the end of the period in clause
(a) above, the greatest of:
(i) the lesser of (A) the Group II Initial Specified Subordinated
Amount as of the Closing Date and (B) two times the Group II Initial
Specified Subordinated Amount as of such Distribution Date stated as a
percentage of the Initial Certificate Principal Balance of the Variable
Rate Certificates times the Variable Rate Certificate Principal Balance
as of such Distribution Date,
(ii) the product of (x) the Loss Factor and (y) the excess of (A)
one-half of the aggregate Scheduled Principal Balances of all Mortgage Loans in
Group II which are 91 or more days Delinquent (including REO Properties) over
(B) three times the Group II Monthly Excess Cashflow as of such Distribution
Date and
(iii) an amount equal to 0.50% of the Group II Original
Collateral Amount;
provided, however, notwithstanding the above, if any Group I Insured Payment or
Group II Insured Payment is made by the Certificate Insurer, the amount
described in this clause (b) shall remain equal to the Group II Specified
Subordinated Amount as of the Closing Date; and provided, further, that
notwithstanding the above in either clause (a) or clause (b), as of any
Distribution Date on which Realized Losses equal to or exceed 9.65% of the
Original Collateral Amount have been paid from Total Monthly Excess Cashflow,
the Group II Specified Subordinated Amount shall be zero.
"Group II Subordinated Amount": As of any Distribution Date, the excess
of (x) the aggregate Scheduled Principal Balances (minus the principal portion
of all Monthly Payments due but not paid by the Borrowers as of the last day of
the related Prepayment Period) of the Mortgage Loans in Group II as of the close
of business on the last day of the related Due Period over (y) the Variable Rate
Certificate Principal Balance as of such Distribution Date (after taking into
account the payment of the Group II Principal Distribution Amount (except for
any portion thereof related to an Insured Payment) on such Distribution Date--).
"Group II Subordination Deficit": With respect to Group II and any
Distribution Date, the excess of (x) the Variable Rate Certificate Principal
Balance, after taking into account the payment of the Group II Principal
Distribution Amount on such Distribution Date (except any payments as to
principal from the proceeds of the Variable Rate Certificate Insurance Policy to
be made on such Distribution Date) over (y) the aggregate Scheduled Principal
Balances of the Mortgage Loans in Group II as of the close of business on the
last day of the related Due Period.
"Group II Subordination Deficiency Amount": With respect to Group II and
any Distribution Date, the excess of (i) the Group II Specified Subordinated
Amount applicable to such Distribution Date over (ii) the Group II Subordinated
Amount applicable to such Distribution Date prior to taking into account the
payment of any Group II Subordination Increase Amount on such Distribution Date.
"Group II Subordination Increase Amount": With respect to Group II and
any Distribution Date, the lesser of (i) the Group II Subordination Deficiency
Amount (after taking into account the payment of the Group II Principal
Distribution Amount on such Distribution Date (except for any Group II
Subordination Increase Amount)) and (ii) the aggregate amount of Total Monthly
Excess Cashflow to be allocated to Group II pursuant to Sections 3.02(c)(vi) and
(d)(v) on such Distribution Date.
"Group II Subordination Reduction Amount": With respect to Group II and
any Distribution Date, the lesser of (x) the Group II Excess Subordinated Amount
for such Distribution Date and (y) the Group II Principal Distribution Amount
with respect to the related Master Servicer Remittance Date.
"Group II Total Available Funds": With respect to Group II and any
Distribution Date, the sum of (i) Group II Available Funds and (ii) any amount
of Group I Total Monthly Excess Cashflow to be applied to the Variable Rate
Certificates on such Distribution Date.
"Group II Total Available Funds Shortfall": With respect to Group I and
any Distribution Date, the excess of (i) the sum of (a) Variable Rate Current
Interest and (b) the Group II Subordination Deficit over (ii) Group II Total
Available Funds.
"Group II Total Monthly Excess Cashflow": With respect to Group II and
any Distribution Date, the sum of (a) Group II Total Monthly Excess Spread and
(b) any Group II Subordination Reduction Amount.
"Group II Total Monthly Excess Spread": With respect to Group II and any
Distribution Date, the excess of (i) the Group II Interest Funds over (ii) the
sum of (x) the Variable Rate Current Interest and (y) the Group II Premium
Amount.
"Initial Optional Termination Date": The Distribution Date immediately
following the Due Period on which the aggregate Scheduled Principal Balance of
the Mortgage Loans has declined to 10% or less of the Original Collateral
Amount.
"Insurance Agreement": The Insurance Agreement dated as of August 1,
1996, among SASCO, Saxon Mortgage, the Servicer, Dominion Mortgage Services,
Inc., the Master Servicer, the Trustee and the Certificate Insurer, as it may be
amended from time to time.
"Insured Payment": A Group I Insured Payment or a Group II Insured
Payment.
"Interest Determination Date": With respect to any Accrual Period for
the Variable Rate Certificates, the second London Business Day preceding such
Accrual Period.
"Late Payment Rate": The meaning set forth in the Insurance Agreement.
"Latest Termination Date": The latest to occur of (i) the Class A-1
Certificate Termination Date, (ii) the Class A-2 Certificate Termination Date
and (iii) the Class A-3 Certificate Termination Date.
"London Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
10
"Loss Factor": With respect to any Distribution Date, the Loss Factor
shall be equal to one unless the aggregate amount of Realized Losses with
respect to the Mortgage Loans since the Cut-Off Date as a percentage of the
Original Collateral Amount exceeds, for the Remittance Date with respect to the
applicable Distribution Date, as specified below, the percentages set out below,
in which case the Loss Factor shall be equal to two:
Cumulative Loss
Period Percentage
August 25, 1996, to July 25, 1998 0.75%
August 25, 1998, to July 25, 1999 1.30%
August 25, 1999, to July 25, 2000 1.85%
August 25, 2000, and thereafter 2.40%
"Master Servicer": Texas Commerce Bank National Association, a national
banking association, and its successors, in its capacity as administrative agent
of the Trust.
"Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.
"Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.
"Master Servicing Fee": As applicable, the Group I Master Servicing Fee
or the Group II Master Servicing Fee.
"Moody's": Moody's Investors Service, Inc., and its successors (99
Church Street, New York, New York 10007).
"Mortgage Loan Group": Either Group I or Group II. References herein to
the related Class of Class A Certificates, when used with respect to a Mortgage
Loan Group, shall mean (A) in the case of Group I, the Fixed Rate Certificates
and (B) in the case of Group II, the Variable Rate Certificates.
"One Month LIBOR": As of any Interest Determination Date, the rate for
deposits in United States dollars for one-month U.S. dollar deposits which
appears in the Telerate Page 3750, as of 11:00 a.m., (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for that day will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period equal to the relevant Accrual Period (commencing
on the first day of such Accrual Period). The Trustee will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be the
arithmetic-mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that day will be the arithmetic-mean of the rates quoted
by major banks in New York City, selected by the Trustee, at approximately 11:00
a.m., New York City time, on that day for loans in United States dollars to
leading European banks for a period equal to the relevant Accrual Period
(commencing on the first day of such Accrual Period). On behalf of the Trustee,
the Master Servicer shall review Telerate Page 3750 at the required time, make
the required requests to the principal offices of the Reference Banks and
selections of major banks in New York City and shall advise the Trustee of the
rate which constitutes One Month LIBOR for each Interest Determination Date. The
Trustee shall be entitled to rely on the Master Servicer.
"Original Collateral Amount": $234,089,480.75.
11
"Pass-Through Rate": As to the Class A-1 Certificates, the Class A-1
Pass-through Rate, as to the Class A-2 Certificates, the Class A-2 Pass-Through
Rate, and, as to the Variable Rate Certificates, the Class A-3 Pass- Through
Rate.
"Paying Agent": Texas Commerce Bank National Association.
"Percentage Interest": As to any Class A Certificate, that percentage,
expressed as a fraction, the numerator of which is the Certificate Principal
Balance set forth on such Certificate as of the Closing Date and the denominator
of which is the Initial Certificate Principal Balance of all Class A
Certificates of the same Class as of the Closing Date; and as to any Class R
Certificate, that Percentage Interest set forth on such Class R Certificate.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preference Amount": Either of the Group I Preference Amount or the
Group II Preference Amount.
"Premium Amount": As to any Distribution Date, the Group I Premium
Amount and the Group II Premium Amount.
"Principal Funds": As applicable, the Group I Principal Funds or the
Group II Principal Funds.
"Private Certificate": The Class R Certificates.
"Private Subordinated Certificate": The Class R Certificates.
"Rating Agency": Each of Moody's and S&P (or, if any such agency or a
successor is no longer in existence, such other nationally recognized
statistical rating agency, or other comparable Person, designated by SASCO, with
the consent of the Certificate Insurer, notice of which designation shall be
given to the Trustee and the Master Servicer).
"Reference Banks" means leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market. On behalf of the Trustee, Master Servicer shall make the required
selections.
"Regular Certificates": Any of the Class A-1, Class A-2 or Class A-3
Certificates which represent the "Regular Interests" in the REMIC for purposes
of the REMIC Provisions.
"Reimbursement Amount": A Group I Reimbursement Amount or a Group II
Reimbursement Amount.
"Remittance Date": The 21st day of each month or the preceding day if
such 21st day is not a Business Day.
"Residual Certificates": The Class R Certificates, which represent the
"Residual Interest" in the REMIC for purposes of the REMIC Provisions.
"S&P": Standard & Poor's Ratings Services, and its successors (26
Broadway, New York, New York 10004).
"Sales Agreement": The Sales Agreement dated August 8, 1996, by and
between SASCO and Saxon Mortgage regarding the sale of the Mortgage Loans.
12
"Servicing Agreement": The Servicing Agreement listed on Schedule II
hereto which shall be deemed to be a "Servicing Agreement" for purposes of the
Standard Terms.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Meritech Mortgage Services, Inc., a Texas corporation, and
its permitted successors and assigns.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if:
(i) the 90+ Delinquency Percentage (Rolling Three Month) is less than
6.0%; the 90+ Delinquency Percentage (Rolling Three Month) is the average of
three fractions, each expressed as a percent, determined for each of the three
immediately preceding Remittance Periods the numerators of which are the
aggregate Scheduled Principal Balance of 90-Day Delinquent Loans (including any
Mortgage Loans which have gone into foreclosure or have been discharged by
reason of bankruptcy) as of the last day of the first, second and third
preceding Prepayment Periods, respectively, and the denominators of which are
the aggregate Scheduled Principal Balance of all the Mortgage Loans as of the
last day of the third preceding Prepayment Period;
(ii) the Annual Loss Percentage (Rolling Twelve Month Average) is not
greater than 1%; the Annual Loss Percentage (Rolling Twelve Month) is a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the Realized Losses that occurred with respect to the Mortgage Loans during the
twelve immediately preceding Prepayment Periods and the denominator of which is
the Scheduled Principal Balances of the Mortgage Loans on the last day of the
twelfth preceding Prepayment Period; and
(iii) the Cumulative Loss Percentage does not exceed the percentage set
out below for the applicable period:
Cumulative Loss
Period Percentage
August 2, 1996 - August 1, 1997 1.30%
August 2, 1997 - August 1, 1998 1.65%
August 2, 1998 - August 1, 1999 2.05%
August 2, 1999 - August 1, 2000 2.50%
August 2, 2000 and thereafter 3.00%
The Cumulative Loss Percentage is defined as the aggregate amount of Realized
Losses since the Cut-Off Date as a percentage of the Original Collateral Amount.
"State": New York
"Tax Matters Person": Texas Commerce Bank National Association.
"Telerate Page 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Total Available Funds Shortfall": As applicable, the Group I Total
Available Funds Shortfall and the then Group II Total Available Funds Shortfall.
13
"Total Monthly Excess Spread": With respect to any Distribution Date,
the sum of the Group I Total Monthly Excess Spread and the Group II Total
Monthly Excess Spread.
"Total Monthly Excess Cash Flow": With respect to any Distribution
Date, the sum of Group I Total Monthly Excess Cashflow and Group II Total
Monthly Excess Cashflow.
"Trust Estate": As defined in Section 2.01.
"Trustee": Citibank, N.A., a national banking association, its successor
in interest or any successor trustee appointed in accordance with the Trust
Agreement.
"Trustee Fee": The fee payable monthly to the Trustee by the Master
Servicer.
"Underwriters": Lehman Brothers, Inc. and PaineWebber Incorporated.
"Underwriting Agreement": The Underwriting Agreement dated as of August
8, 1996, among the Underwriters, SASCO, Saxon Mortgage and Dominion Mortgage
Services, Inc.
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance to the Trustee.
(a) To provide for the distribution of the principal of and interest on
the Certificates in accordance with their terms, the distribution of all other
sums distributable under the Trust Agreement with respect to the Certificates
and the performance of the covenants contained in the Trust Agreement, SASCO
hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Certificateholders and the
Certificate Insurer as their interests may appear, all SASCO's right, title and
interest in and to any and all benefits accruing to SASCO from: (i) the Mortgage
Loans listed on Schedule I hereto, which SASCO is causing to be delivered to the
Trustee (or the Custodian) herewith (and all Qualified Substitute Mortgage Loans
substituted therefor as provided by Section 2.03 of the Standard Terms and
pursuant to the terms of the Sales Agreement), together with the related Trustee
Mortgage Loan Files and SASCO's interest in any Collateral that secured a
Mortgage Loan but that is acquired by foreclosure or deed-in-lieu of foreclosure
after the Closing Date, and all Monthly Payments due after the Cut-Off Date and
all curtailments or other principal prepayments received with respect to the
Mortgage Loans paid by the Borrower after the Cut-Off Date (except for any
prepayments received after the Cut-Off Date but reflected in the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date) and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (ii) the
Servicing Agreement; (iii) the Sales Agreement, except that SASCO does not
assign to the Trustee any of its rights under Sections 9 and 12 of the Sales
Agreement; (iv) the Asset Proceeds Account, whether in the form of cash,
instruments, securities or other properties; and (v) all proceeds of any of the
foregoing (including, but not limited to, all proceeds of any mortgage
insurance, hazard insurance, or title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables, which at any time
constitute all or part or are included in the proceeds of any of the foregoing)
to pay the Certificates and the Certificate Insurer as specified herein (items
(i) through (v) above, collectively, the "Trust Estate").
SASCO hereby assigns to the Master Servicer all right, title and
interest of SASCO in and to (i) the Interest Fund and all amounts as are
deposited and maintained therein from time to time pursuant to the Trust
Agreement and (ii) all proceeds of the foregoing of every kind and nature
whatsoever, including, but not limited to, proceeds of proceeds and the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquidated
14
property. The Master Servicer hereby pledges to the Trust and grants to the
Trustee, on behalf of the Certificateholders, a first priority security interest
in and to (i) the Interest Fund and all amounts as are deposited and maintained
therein from time to time pursuant to the Trust Agreement, excluding, however,
any earnings thereon, which are payable to the Servicer, and (ii) all proceeds
of the foregoing of every kind and nature whatsoever, including, but not limited
to, proceeds of proceeds and the conversion, voluntary or involuntary, of any of
the foregoing into cash or other liquidated property in trust, subject to the
limitation set forth above with respect to earnings, to have and to hold in
trust to secure the Certificates. The Trustee acknowledges this grant and agrees
to hold the pledged property in accordance with the terms hereof.
The Trustee acknowledges the sales, assignments and pledges created by
the foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
and the Certificate Insurer may be adequately and effectively protected in
accordance with the terms and conditions of this Agreement.
(b) The Trustee agrees that it will hold the Certificate Insurance
Policies in trust and that it will hold any proceeds of any claim made upon such
Certificate Insurance Policies solely for the use and benefit of the Holders of
the Class A Certificates in accordance with the terms of the Trust Agreement and
of such Policies.
Section 2.02. Acceptance by the Trustee.
By its execution of this Agreement, the Trustee acknowledges and
declares that it holds and will hold or has agreed to hold all documents
delivered to it from time to time with respect to the Mortgage Loans and all
assets included in the Trust Estate in trust for the exclusive use and benefit
of all present and future Certificateholders.
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. The Certificate Insurance Policies. (a) Three Business
Days prior to each Distribution Date the Master Servicer shall determine:
(i) The Group I Available Funds, the Group I Total Available Funds
and, if applicable, the Group I Total Available Funds Shortfall; and
(ii) The Group II Available Funds, the Group II Total Available Funds
and, if applicable, the Group II Total Available Funds Shortfall.
(b) (i) If there will be a Deficiency Amount (as defined in the Fixed
Rate Certificate Insurance Policy or the Variable Rate Certificate
Insurance Policy) for any Distribution Date, the Master Servicer shall
before 9:00 a.m., New York City time, two Business Days prior to such
Distribution Date advise, the Trustee.
(ii) If the Trustee receives notice from the Master Servicer that
there will be a Deficiency Amount (as defined in the appropriate
Certificate Insurance Policy) for such Distribution Date, the Trustee
shall complete a notice in the form of Exhibit A to the appropriate
Certificate Insurance Policy (a "Notice") and submit such Notice to the
Certificate Insurer or its agent, as set forth in the Certificate
Insurance Policy, not later than 12:00 noon New York City time on the
second Business Day preceding such Distribution Date as a claim for an
Insured Payment in an amount equal to such Deficiency Amount.
(iii) The Trustee (or the Paying Agent on behalf of the Trustee)
shall (i) receive as attorney-in-fact of each Class A Certificateholder
any Insured Payment from the Certificate Insurer or on behalf of
15
the Certificate Insurer and (ii) disburse such Insured Payment as set
forth in Section 3.02 hereof for the benefit of the related Class A
Certificateholders. Any Insured Payment received by the Trustee (or the
Paying Agent on behalf of the Trustee) shall be held by the Trustee (or
the Paying Agent on behalf of the Trustee) uninvested. Insured Payments
disbursed by the Trustee (or the Paying Agent on behalf of the Trustee)
from proceeds of a Certificate Insurance Policy shall not be considered
payment by the Trust with respect to the Certificates, nor shall such
payments discharge the obligation of the Trust with respect to such
Class A Certificates, and the Certificate Insurer shall become the owner
of such unpaid amounts due from the Trust in respect of such Insured
Payments as the deemed assignee and subrogee of such Class A
Certificateholders and shall be entitled to receive the Reimbursement
Amount in respect thereof. Each of the Trustee and the Paying Agent
hereby agree on behalf of each Certificateholder for the benefit of the
Certificate Insurer that, to the extent the Certificate Insurer makes
Insured Payments for the benefit of the Class A Certificateholders, the
Certificate Insurer will be entitled to receive the related
Reimbursement Amount in accordance with the priority of distributions
set forth in Section 3.02 hereof.
(iv) The Trustee (or the Paying Agent on behalf of the Trustee)
shall keep a complete and accurate record of the amount of interest and
principal paid in respect of any Class A Certificates from moneys
received under a Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior written notice to
the Trustee (or the Paying Agent on behalf of the Trustee). If the
Certificate Insurer has paid the entire outstanding Certificate
Principal Balance of a Class A Certificate, the Certificate Registrar
shall re-register such Class A Certificate in the name of the
Certificate Insurer.
(v) Each of the Trustee and the Paying Agent shall promptly
notify the Certificate Insurer of any proceeding or the institution of
any action, of which an Officer of the Paying Agent or the Trustee,
respectively, has actual knowledge, which has or is likely to give rise
to a Preference Amount in respect of any distribution made on the
Certificates. Each Class A Certificateholder that pays any Preference
Amount on account of a Class A Certificate will be entitled to receive
reimbursement for such Preference Amount from the Certificate Insurer in
accordance with the terms of the related Certificate Insurance Policy.
Each Class A Certificateholder, by its purchase of Class A Certificates,
and each of the Trustee and the Paying Agent hereby agree that, the
Certificate Insurer (so long as no Certificate Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Amount direct all matters relating to such Preference Amount,
including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Amount and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In
addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Trustee and each Class
A Certificateholder, including, without limitation, all rights of any
party to any adversary proceeding action with respect to any court order
issued in connection with any such Preference Amount.
(vi) Each Class A Certificateholder, by its purchase of any Class
A Certificate, and each of the Trustee and the Paying Agent hereby agree
that, unless a Certificate Insurer Default exists, the Certificate
Insurer shall have the right to direct all matters relating to the Class
A Certificates in any proceeding in a bankruptcy of the Trust, including
without limitation any proceeding relating to a premium claim, any
appeal of any order relating to a premium claim and the posting of any
surety or bond pending any such appeal.
Section 3.02. Distributions. On each Distribution Date, the Trustee (or
the Paying Agent on behalf of Trustee) shall make the following allocations,
disbursements and transfers with respect to amounts deposited in the Asset
Proceeds Account for each Mortgage Loan Group in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
16
(a) On each Distribution Date, prior to any distributions
provided for in this Section 3.02, the Trustee (or the Paying Agent on
behalf of the Trustee) shall withdraw from the Group I Available Funds
and Group II Available Funds, for distribution to the Certificate
Issuer, the Group I Premium Amount and Group II Premium Amount,
respectively.
(b) On each Distribution Date, the Trustee (or the Paying Agent
on behalf of the Trustee) shall distribute (i) to the Class A-1 and
Class A-2 Certificates, respectively, from the Group I Total Available
Funds, Class A-1 Current Interest and Class A-2 Current Interest, and
(ii) to the Class A-3 Certificates, from the Group II Total Available
Funds, Class A-3 Current Interest; (in each case after giving effect to
the withdrawals described in clause (a) above). Following such
distribution, the Trustee (or the Paying Agent on behalf of the Trustee)
shall distribute, in reduction of the related Certificate Principal
Balances, (i) from remaining Group I Total Available Funds, the Group I
Principal Distribution Amount to the Fixed Rate Certificates until the
Certificate Principal Balances of the Fixed Rate Certificates have been
reduced to zero; provided however, that no amounts in respect of the
Group I Principal Distribution Amount shall be distributed to the Class
A-2 Certificates until the Certificate Principal Balances of the Class
A-1 Certificates have been reduced to zero; and (ii) from remaining
Group II Total Available Funds, to the Class A-3 Certificates, the Group
II Principal Distribution Amount until the Certificate Principal
Balances of the Class A-3 Certificates have been reduced to zero; and
(c) On each Distribution Date, Group I Total Monthly Excess
Cashflow (in the cases of clauses (i) and (ii) below, by allocation as
part of Group I Total Available Funds in clause (b) above) shall be
distributed in the following order of priority:
(i) to the Fixed Rate Certificates, in respect of any
Group I Available Funds Shortfall on such Certificates;
(ii) to the Class A-3 Certificates, in respect of any
Group II Available Funds Shortfall on such Certificates;
(iii) to the Certificate Insurer, in respect of any Group
I Reimbursement Amount on such Distribution Date;
(iv) to the Certificate Insurer, in respect of any Group
II Reimbursement Amount on such Distribution Date;
(v) to the Fixed Rate Certificates, applied as a part of
the Group I Principal Distribution Amount for such Distribution
Date, any Group I Subordination Increase Amount for such
Distribution Date;
(vi) to the Class A-3 Certificates, applied as a part of
the Group II Principal Distribution Amount for such Distribution
Date, any Group II Subordination Increase Amount for such
Distribution Date; and
(vii) to the Class R Certificates, the balance of such
Group I Total Monthly Excess Cashflow for such Distribution Date,
(d) On each Distribution Date, Group II Total Monthly Excess
Cashflow (in the cases of clauses (i) and (ii) below, by allocation as
part of Group II Total Available Funds in clause (b) above) shall be
distributed in the following order of priority:
17
(i) to the Class A-3 Certificates, in respect of any
Group II Available Funds Shortfall on such Certificates;
(ii) to the Fixed Rate Certificates, in respect of any
Group I Available Funds Shortfall on such Certificates;
(iii) to the Certificate Insurer, in respect of any Group
II Reimbursement Amount on such Distribution Date;
(iv) to the Certificate Insurer, in respect of any Group
I Reimbursement Amount on such Distribution Date;
(v) to the Class A-3 Certificates, applied as a part of
the Group II Principal Distribution Amount for such Distribution
Date, any Group II Subordination Increase Amount in for such
Distribution Date;
(vi) to the Fixed Rate Certificates, applied as a part of
the Group I Principal Distribution Amount for such Distribution
Date, any Group II Subordination Increase Amount in for such
Distribution Date;
(vii) to the Class A-3 Certificates, in respect of any
Class A-3 Certificates Carryover; and
(viii) to the Class R Certificates, the balance of such
Group II Total Monthly Excess Cashflow for such Distribution
Date.
Section 3.03. Report to SASCO. On or before the Business Day preceding
each Distribution Date, the Master Servicer shall notify SASCO and the
Certificate Insurer and the Trustee of the following information with respect to
the next Distribution Date (which notification may be given by facsimile, or by
telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Asset Proceeds
Account;
(2) The Class A Distribution Amount (broken down into principal
and interest), with respect to each Class individually, and all Classes
in the aggregate, on the next Distribution Date;
(3) The amount of any Group I or Group II Subordination
Increase Amount;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Distribution Date;
(5) The application of the amounts described in clauses (1), (3)
and (4) preceding to the allocation and distribution of the related
Class A Distribution Amounts on such Distribution Date in accordance
with Section 3.02 hereof;
(6) The Certificate Principal Balance of each Class of Class A
Certificates, the aggregate amount of the principal of each Class of the
Class A Certificates to be paid on such Distribution Date and the
remaining Certificate Principal Balance of each Class of Class A
Certificates following any such payment;
18
(7) The Group I Available Funds, the Group I Total Available
Funds and, if applicable, the Group I Total Available Funds Shortfall;
(8) The Group I Reimbursement Amount;
(9) The Group II Available Funds, the Group II Total Available
Funds and, if applicable, the Group II Total Available Funds Shortfall.
(10) The Group II Reimbursement Amount;
(11) The amount, if any, of any Realized Losses for the related
Prepayment Period;
(12) The amount of any Group I Subordination Reduction Amount
or Group II Subordination Reduction Amount; and
(13) whether the Servicer Termination Test has been satisfied
stating separately each component thereof and a computation of the Group
I and Group II Specified Subordination Amount and stating the provision
of the definition thereof relied upon in such computation and the reason
therefor.
Section 3.04. Reports by Master Servicer.
(a) On each Distribution Date the Master Servicer shall report in
writing to each Holder, with copies to SASCO (in hard copy and electronic
diskette format), each Holder of a Class A Certificate, the Certificate Insurer,
the Underwriters and the Trustee and their designees (designated in writing to
the Master Servicer) and the Rating Agencies:
(i) the amount of the distribution with respect to Holder's
Certificates (based on a Class A Certificate in the original principal
amount of $1,000);
(ii) the amount of such Holder's distributions allocable to
principal, separately identifying the aggregate amount of any
prepayments or other recoveries of principal included therein, and any
Subordination Increase Amount with respect to the related Mortgage Loan
Group;
(iii) the amount of such Holder's distributions allocable to
interest (based on a Class A Certificate in the original principal
amount of $1,000);
(iv) if the distribution to the Holders of any Class of the Class
A Certificates on such Distribution Date was less than the related Class
A Distribution Amount on such Distribution Date, the allocation thereof
to the related Classes of the Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Holders of Class A Certificates on such Distribution
Date;
(vi) the Certificate Principal Balance of each Class of Class A
Certificates and the aggregate Scheduled Principal Balance of each
Group, in each case after giving effect to any distribution of principal
on such Distribution Date;
(vii) the Subordinated Amount or Subordination Deficit, if any,
for each Group remaining after giving effect to all distributions and
transfers on such Distribution Date;
19
(viii) such information as may be required by Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Holders in computing their market discount;
(ix) the total of any Substitution Shortfalls and any
repurchase amounts included in such distribution with respect to each
Group;
(x) the weighted average Net Rate of the Mortgage Loans with
respect to each Group;
(xi) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Mortgage Loans;
(xii) the largest Mortgage Loan balance outstanding in each
Group;
(xiii) the Servicing Fees, Master Servicing Fees and Premium
Amount allocable to each Group; and
(xiv) One-Month LIBOR on the most recent Interest Determination
Date;
(xv) the Pass-through Rates for the Class A-2 and Class A-3
Certificates for the Current Accrual Period.
(b) In addition, on each Distribution Date the Master Servicer will
distribute to SASCO, each Holder, the Certificate Insurer, the Underwriters and
the Rating Agencies and the Trustee, together with the information described in
subsection (a) preceding, the following information with respect to each
Mortgage Loan Group in hard copy or tape format:
(i) the number and aggregate principal balances of Mortgage
Loans in each Group (a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent, as of the close of business on the
related Remittance Date.
(ii) the numbers and aggregate Scheduled Principal Balances of
all Mortgage Loans in each Group as of such Distribution Date and the
percentage that each of the amounts represented by clauses (a), (b) and
(c) of paragraph (i) above represent as a percentage of the respective
amounts in this paragraph (ii);
(iii) the number and dollar amounts of all Mortgage Loans in each
Group in foreclosure proceedings as of the close of business on the
related Remittance Date, separately stating, for this purpose, all
Mortgage Loans in each Group with respect to which foreclosure
proceedings were commenced in the immediately preceding Prepayment
Period;
(iv) the number of Mortgagors and the Scheduled Principal
Balances of Mortgage Loans in each Group involved in bankruptcy
proceedings as of the close of business on the related Remittance Date;
(v) the existence and status of any REO Properties in each
Group, as of the close of business on the related Remittance Date;
(vi) the book value of any REO Property in each Group as of the
close of business on the related Remittance Date;
(vii) the Cumulative Loss Percentage (as defined in the Servicer
Termination Test) for each Group, the amount of Cumulative Realized
Losses (as defined in the Servicer Termination Test) for each Group, the
current period Realized Losses and the Annual Loss Percentage (as
defined in the Servicer Termination Test) for such Group, in each case
as of the related Remittance Date; and
20
(viii) the 90+ Delinquency Percentage and the number and amount
by principal balance of 90 Day Delinquent Loans in each Group (as
defined in the Servicer Termination Test), in each case as of the
related Remittance Date.
(c) On each Distribution Date, the Master Servicer shall deliver to the
Certificate Insurer a list of all Mortgage Loans Delinquent 90 or more days
(including the Borrower's name, principal balance and the Loan to Value Ratio of
each such Mortgage Loan).
(d) Section 3.04(b) supersedes in its entirety Section 4.01 of the
Standard Terms.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
The Certificates shall be designated generally as the Mortgage Loan
Asset Backed Certificates, Series 1996-1. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $234,089,000, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates and the Pass-Through
Rate, the initial Certificate Principal Balance, and the Final Scheduled
Distribution Date for each such Class:
Pass-Through Initial Certificate Final Scheduled
Class Rate Principal Balance Distribution Date
----- ---- ----------------- -----------------
A-1 7.38% $ 43,000,000 February 25, 2024
A-2 (1) $ 9,600,000 September 27, 2027
A-3 (2) $181,489,000 September 27, 2027
R (3) (3)
(1) As calculated for each Distribution Date based on the definition of
Class A-2 Interest Rate.
(2) As calculated for each Distribution Date based on the definition of
Class A-3 Interest Rate.
(3) The Class R Certificates have no stated principal balance or
Pass-Through Rate and are not entitled to any scheduled distributions of
principal or interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The Class R Certificates shall be issued in certificated,
fully-registered form in minimum Percentage Interests of 25% and integral
multiples of 1% in excess thereof, except that two Class R Certificates may be
issued in different denominations.
Section 4.03. Interest Fund.
An Interest Fund shall be established by the Trustee (or the Paying
Agent on behalf of the Trustee). The Interest Fund shall initially consist of
cash in the amount of $190,106.64 (of which $119,341.33 is allocated to Group I
and $70,765.31 is allocated to Group II) representing 30 days interest at the
Mortgage Interest Rate (less
21
the Servicing Fee Rate) for each Mortgage Loan for which no payment is due to
SASCO or its assignee until after August 1, 1996, as identified on Schedule II
hereto. The Interest Fund shall be an Eligible Account and, as soon as
practicable after the Closing Date, the Trustee shall invest any monies on
deposit in the Interest Fund in Permitted Investments at the direction of the
Master Servicer. On the Business Day preceding the August 26, 1996, Distribution
Date, the Trustee shall withdraw the entire amount from the Interest Fund
(excluding any earnings thereon) and deposit such amount into the Asset Proceeds
Account. Such entire amount shall be used to make distributions of interest on
such Distribution Date and to cover applicable administrative costs (which do
not include the Servicing Fees) relating to the Mortgage Loans with no payments
due to SASCO on August 1, 1996. Any earnings on the Interest Fund shall be
payable on such date to the Servicer.
ARTICLE V
TERMINATION OF THE TRUST
Section 5.01. Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Holders of all Certificates
(including the Certificate Insurer, pursuant to its subrogation and
reimbursement rights), from amounts other than those available under the
Certificate Insurance Policies, of all amounts held by the Trustee and required
to be paid to such Holders pursuant to this Agreement upon the later to occur of
(a) the final payment or other liquidation (or any advance made with respect
thereto) of the last Mortgage Loan in the Trust Estate, (b) the disposition of
all property acquired in respect of any Mortgage Loan remaining in the Trust
Estate and (c) at any time when a Qualified Liquidation of both Mortgage Loan
Groups included within the REMIC Estate is effected as described below. To
effect a termination of this Agreement pursuant to clause (c) above, the Holders
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and as
prepared by the Master Servicer and (ii) provide to the Trustee and the
Certificate Insurer an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee
either shall sell the Mortgage Loans and distribute the proceeds of the
liquidation of the Trust Estate, or shall distribute equitably in kind all the
assets of the Trust Estate to the remaining Holders of the Certificates each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of this Agreement occur no later than the close of the 90th day after the date
of adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. The Holders of the Certificates agree, by acceptance of
the Certificates, that there may be no claim under the Certificate Insurance
Policies following termination of the Trust pursuant to clause (c) of the first
sentence of this Section 5.01. In no event, however, will the Trust created by
this Agreement continue beyond the expiration of twenty-one (21) years from the
death of the last survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of Saint James's, living on the
date hereof. The Trustee shall give written notice of termination of the
Agreement to each Holder and the Certificate Insurer in the manner set forth in
Section 11.05 of the Standard Terms.
Section 5.02. Termination Upon Option of Holders of Class R
Certificates; Servicer Termination.
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, the Holders of a majority of the Percentage Interests
of the Class R Certificates then outstanding may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans
and all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the Mortgage
Loans during the current Remittance Period, plus one month's interest on such
amount computed at the Adjusted
22
Pass-Through Rate, plus in all cases all accrued and unpaid Servicing Fees and
Master Servicing Fees plus any unpaid Reimbursement Amounts plus the aggregate
amount of any unreimbursed Advances and any Advances which the Servicer or the
Master Servicer has theretofore failed to remit; but in any event such purchase
amount shall be sufficient to retire the Class A Certificates in full. In
connection with such purchase, the Master Servicer shall remit to the Trustee
(or the Paying Agent on behalf of the Trustee) all amounts then on deposit in
the Master Servicer Custodial Account for deposit to the Asset Proceeds Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) In connection with any such purchase, such Holders of the Class R
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the REMIC, a plan of complete liquidation for all the Mortgage Loan
Groups acceptable to the Certificate Insurer, as contemplated by Section
860F(a)(4) of the Code and as prepared by the Master Servicer, and shall provide
to the Trustee and the Certificate Insurer an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that such purchase and liquidation constitutes, as to the REMIC, a
Qualified Liquidation. In addition, such Holders of the Class R Certificates
shall provide to the Trustee and the Certificate Insurer an Opinion of Counsel
acceptable to the Trustee and the Certificate Insurer to the effect that such
purchase and liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
(c) The purchase option reserved to the Holders of a majority of the
Percentage Interests represented by the Class R Certificates may be exercised by
the Certificate Insurer if (i) the purchase option is not exercised by such
Holders and (ii)(A) the Servicer as of the Closing Date is no longer the
Servicer or (B) the aggregate Scheduled Principal Balance of the Mortgage Loans
has declined to 5% or less of the Original Collateral Amount.
(d) Promptly following any purchase described in this Section 5.02, the
Trustee will release the Trustee Mortgage Loan File to the Holders of the Class
R Certificates (or to the Certificate Insurer, as applicable) or otherwise upon
their order. Upon such release, the servicing of the Mortgage Loans shall remain
with the Servicer (unless the Certificate Insurer has purchased the Mortgage
Loans and directs otherwise), subject to the servicing provisions provided for
herein.
Section 5.03. Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal may
be taken, to the effect that the REMIC Estate does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Holders of
a majority in Percentage Interests of the Class A Certificates then outstanding
with the consent of the Certificate Insurer may direct the Trustee on behalf of
the Trust to adopt a plan of complete liquidation, as contemplated by Section
860F(a)(4) of the Code and as prepared by the Master Servicer and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a price equal to the sum of (x) the greater of (i) 100% of the
aggregate Scheduled Principal Balances of the Mortgage Loans as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account
representing collections of principal on the Mortgage Loans during the current
Remittance Period, and (ii) the fair market value of such Mortgage Loans
(disregarding accrued interest), (y) one month's interest on such amount
computed at the Adjusted Pass-Through Rate and (z) the aggregate amount of any
unreimbursed Advances and any Advances which the Servicer or Master Servicer has
theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Servicer and the Holders of the Class R Certificates of
such election to liquidate or such determination to purchase, as the case may
23
be (the "Termination Notice"). The Holders of a majority of the Percentage
Interest of the Class R Certificates then Outstanding may, within 60 days from
the date of receipt of the Termination Notice (the "Purchase Option Period"), at
their option, purchase from the Trust all (but not fewer than all) Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a purchase price equal to the aggregate Scheduled Principal
Balances of all Mortgage Loans as of the date of such purchase, plus (a) one
month's interest on such amount at the Adjusted Pass- Through Rate, (b) the
aggregate amount of any unreimbursed Advances and unpaid Servicing Fees and
Master Servicing Fees, (c) any Advances which the Servicer or Master Servicer
has theretofore failed to remit and (d) any outstanding Reimbursement Amount.
If, during the Purchase Option Period, the Holders of the Class R
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period (i)
in the event that the Certificate Insurer or the Holders of the Class A
Certificates with the consent of the Certificate Insurer have given the Trustee
the direction described in clause (a)(i) above, the Trustee shall sell the
Mortgage Loans and reimburse the Servicer or Master Servicer for unreimbursed
Advances and Servicing Fees and distribute the remaining proceeds of the
liquidation of the Trust Estate, each in accordance with the plan of complete
liquidation, such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 60th day, or such later day as
the Certificate Insurer or the Holders of the Class A Certificates with the
consent of the Certificate Insurer shall permit or direct in writing, after the
expiration of the Purchase Option Period and (ii) in the event that the
Certificate Insurer has given the Trustee notice of the Certificate Insurer's
determination to purchase the Trust Estate described in clause (a)(ii) above,
the Certificate Insurer shall, within 60 days, purchase all (but not fewer than
all) Mortgage Loans and all property theretofore acquired by foreclosure, deed
in lieu of foreclosure or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate. In connection with such purchase, the Master
Servicer shall remit to the Trustee (or the Paying Agent on behalf of the
Trustee) all amounts then on deposit in the Master Servicer Custodial Account
for deposit to the Asset Proceeds Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
selected by the Holders of the Class R Certificates which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Mortgage Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a purchase price equal to the aggregate Scheduled Principal
Balances of all Mortgage Loans as of the date of such purchase, plus (a) one
month's interest on such amount computed at the Adjusted Pass-Through Rate, (b)
the aggregate amount of unreimbursed Advances, Servicing Fees and Master
Servicing Fees, (c) the interest portion of any Advances which the Servicer or
Master Servicer has theretofore failed to remit and (d) any outstanding
Reimbursement Amount. In connection with such purchase, the Master Servicer
shall remit to the Trustee (or the Paying Agent on behalf of the Trustee) all
amounts then on deposit in the Master Servicer Custodial Account for deposit to
the Asset Proceeds Account, which deposit shall be deemed to have occurred
immediately preceding such purchase. The foregoing opinion shall be deemed
satisfactory unless the Certificate Insurer gives the Holders of a majority of
the Percentage Interest of the Class R Certificates notice that such opinion is
not satisfactory within thirty days after receipt of such opinion. In connection
with any such purchase, such Holders shall direct the Trustee to adopt a plan of
complete liquidation acceptable to the Certificate Insurer, as contemplated by
Section 860F(a)(4) of the Code and as prepared by the Master Servicer, and shall
provide to the Trustee and the Certificate Insurer an Opinion of Counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
24
Section 5.04. Disposition of Proceeds.
The Trustee (or the Paying Agent on behalf of the Trustee) shall, upon
receipt thereof, deposit the proceeds of any liquidation of the Trust Estate
pursuant to this Article V to the Asset Proceeds Account for application as
provided in Section 3.02 hereof; provided, however, that any amounts
representing unrecovered Advances which the Master Servicer determined to be
non-recoverable and unreimbursed Advances and Servicing Fees theretofore funded
by the Servicer from the Servicer's own funds shall be paid by the Trustee (or
the Paying Agent on behalf of the Trustee) to the Servicer from the proceeds of
the Trust Estate.
Section 5.05. Article V Controls.
This Article supersedes, in its entirety, Article IX of the Standard
Terms.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01. Request for Opinions.
(a) SASCO hereby requests and authorizes Arter & Hadden, as its counsel
in this transaction, to issue on behalf of SASCO such legal opinions to the
Trustee, the Certificate Insurer and each Rating Agency as may be (i) required
by any and all documents, certificates or agreements executed in connection with
the Trust or (ii) requested by the Trustee, the Certificate Insurer, any Rating
Agency or their respective counsels.
(b) The Trustee and the Master Servicer hereby request and authorize
their respective counsel to issue on behalf of the Trustee and the Master
Servicer such legal opinions to SASCO, the Master Servicer, the Trustee, the
Certificate Insurer and each Rating Agency as may be required by any and all
documents, certificates or agreements executed in connection with the
establishment of the Trust and the issuance of the Certificates.
Section 6.02. Form of Certificates.
The Class A-1 Certificates shall be substantially in the form of Exhibit
A-1 hereto. The Class A-2 Certificates shall be substantially in the form of
Exhibit A-2 hereto. the Class A-3 Certificates shall be in substantially the
form of Exhibit A-3 hereto. The Class R Certificates shall be substantially in
the form of Exhibit R hereto. All Certificates shall be dated the date of their
execution.
Section 6.03. Schedules and Exhibits.
Each of the Schedules and Exhibits attached hereto or referenced herein
is incorporated herein by reference as contemplated by the Standard Terms.
Section 6.04. Governing Law.
In accordance with Section 11.04 of the Standard Terms, this Agreement
shall be construed in accordance with and governed by the laws of the State of
New York.
Section 6.05. REMIC Administration.
For purposes of the REMIC Provisions, the Regular Certificates shall be
designated as the "regular interests" in the REMIC and the Residual Certificates
shall be designated as the "residual interest" in the REMIC.
25
Section 6.06. Master Servicer; Month-End Interest. Texas Commerce Bank
National Association is hereby appointed (a) as administrative agent of the
Trust to perform the duties and responsibilities of the Master Servicer
hereunder, (b) Custodian, (c) Certificate Registrar and (d) Paying Agent.
Notwithstanding anything in the Trust Agreement to the contrary, neither the
Master Servicer nor the Trustee shall be obligated to pay Month-End Interest
under any circumstance, including without limitation, the failure of the
Servicer to do so.
26
IN WITNESS WHEREOF, SASCO, the Master Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers thereunto
duly authorized and their respective signatures duly attested all as of the
August 1, 1996.
SAXON ASSET SECURITIES COMPANY
By:
--------------------------------------------
Name:
Title:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Master Servicer,
Custodian, Certificate Registrar,
and Paying Agent
By:
--------------------------------------------
Name:
Title:
CITIBANK, N.A.
not in its individual capacity but solely as trustee
under the Trust Agreement
By:
--------------------------------------------
Name:
Title:
27
COMMONWEALTH OF VIRGINIA )
) ss.:
CITY OF RICHMOND )
The foregoing instrument was acknowledged before me this [____] day of
[________], 1996, by [____________________], [____________________] of Saxon
Asset Securities Company, a Virginia corporation, on behalf of the corporation.
----------------------------------------
Notary Public
My Commission expires:
28
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this [____] day
of [________], 1996, by [____________________], [____________________] of Texas
Commerce Bank National Association, a national banking association, on behalf of
the bank.
----------------------------------------
Notary Public
My Commission expires:
29
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this [____] day
of [________], 1996, by [____________________], [____________________] of
Citibank, N.A. a national banking association, on behalf of the corporation.
----------------------------------------
Notary Public
My Commission expires:
30
Schedule I
Mortgage Loans
A. Fixed Rate Mortgage Loans.
B. Variable Rate Mortgage Loans.
31
Schedule II
Sales/Servicing Agreements
32
Schedule III
Mortgage Loans for which first payment to the Trust will
be after August 1, 1996
33
Exhibit A-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SELLER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-1 CERTIFICATE
(7.38% Pass-Through Rate)
THE PRINCIPAL OF THIS CLASS A-1 CERTIFICATE IS SUBJECT TO PREPAYMENT FROM TIME
TO TIME WITHOUT SURRENDER OF OR NOTATION ON THIS CERTIFICATE. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET
FORTH BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE.
THIS CLASS A-1 CERTIFICATE REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL
INCOME TAX PURPOSES.
SERIES 1996-1 INITIAL PRINCIPAL BALANCE OF THE
CLASS A-1 CERTIFICATES AS OF THE
CLOSING DATE: $43,000,000.00
APPROXIMATE AGGREGATE SCHEDULED
PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE OF MORTGAGE LOANS HELD BY THE
TRUST: $234,089,000
DENOMINATION: $43,000,000.00
DATE OF TRUST AGREEMENT:
AS OF AUGUST 1, 1996
CLOSING DATE: MASTER SERVICER, PAYING AGENT AND
August 15, 1996 CERTIFICATE REGISTRAR:
Texas Commerce Bank National Association
FIRST DISTRIBUTION DATE: TRUSTEE:
August 26, 1996 Citibank, N.A.
NO. A-1-1 CUSIP NO. 805559 AA9
A-1-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-1 CERTIFICATE
(7.08% Pass-Through Rate)
evidencing a beneficial ownership interest in a Trust consisting primarily of a
pool of Mortgage Loans (collectively, the "Mortgage Loans") formed and sold by
SAXON ASSET SECURITIES COMPANY
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SAXON ASSET
SECURITIES COMPANY, THE MASTER SERVICER, ANY SERVICER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
Cede & Co.
is the registered owner of the Percentage Interest evidenced by this Certificate
in the Class A-1 Certificates issued by the Trust (the "Trust") created pursuant
to a trust agreement dated as specified above (the "Trust Agreement"), among
Saxon Asset Securities Company (herein called "SASCO," which term includes any
successor entity under the "Trust Agreement"), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
herein. To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Trust Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement to
which Trust Agreement the Holder of this Certificate, by virtue of the
acceptance hereof, assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates, Series 1996-1 (herein
called the "Certificates"), and represents a Percentage Interest in the Class
A-1 Certificates equal to the quotient, expressed as a percentage, obtained by
dividing the denomination of this Certificate specified on the face hereof by
the aggregate initial principal balance of the Class A-1 Certificates. The
Certificates are issued in three Classes designated as specifically set forth in
the Trust Agreement. The Certificates will evidence in the aggregate 100% of the
beneficial ownership of the Trust.
To the extent and subject to the limitations set forth in the Trust
Agreement, the Holders of the Class A-1 Certificates are entitled to receive the
Class A-1 Distribution Amount on the 25th day of each month or, if such 25th day
is not a Business Day, the next succeeding Business Day (each a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). Class A-1 Distribution Amounts allocated to
this Certificate on any Distribution Date will be an amount equal to this
Certificate's Percentage Interest. All sums distributable on this Certificate
are payable in the coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts.
[This Certificate was issued on August 15, 1996, at a price equal to (i)
[___________]% of its original principal amount plus (ii) accrued interest at
closing equal to [____________]% of its original principal amount. Based on that
issue price, this Certificate was issued with original issue discount ("OID")
for federal income tax purposes in an amount equal to [_____________]% of its
original principal amount. The monthly yield to maturity of this Certificate
expressed on an annual basis is approximately [___]% and the amount of OID
allocable to the short first accrual period ([________ __, 1996 through
[________ __, 1996) as a percentage of the original principal amount of this
Certificate is approximately [_____________]%. The stated interest rate on this
Certificate is [___]% per annum. In computing both the monthly yield to maturity
and the OID amounts specified above, SASCO has used (i) a method embodying an
economic accrual of income, (ii) a prepayment assumption of [___% ___] (as
defined in the Prospectus) and (iii) [a 30 days per month/360 days per year
accounting convention]. The actual yield to maturity and OID amounts may differ
from the projected amounts.]
A-1-2
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Trust Agreement. As provided in the Trust Agreement, withdrawals from the
Asset Proceeds Account and related accounts shall be made from time to time for
purposes other than distributions to Holders of the Certificates, such purposes
including reimbursement of Advances made, or certain expenses incurred, with
respect to the Mortgage Loans and administration of the Trust.
So long as this Certificate is registered in the name of a Clearing
Agency or its nominee, the Paying Agent will make distributions on this
Certificate by wire transfer of immediately available funds to the Clearing
Agency or its nominee. Otherwise, all distributions under the Trust Agreement
will be made by the Paying Agent either (i) by check mailed to the address of
the Holder as it appears on the Certificate Register on the related Record Date
or (ii) upon request to the Paying Agent in writing by the Record Date
immediately prior to the Distribution Date of any Holder of Certificates of this
Class having an aggregate initial principal amount equal to or in excess of
$1,000,000, by wire transfer of immediately available funds to the account of
such Holder. A fee may be charged by the Paying Agent to a Certificateholder for
any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Paying
Agent of a pendency of such distribution and only upon presentation and
surrender of this Certificate at its principal Corporate Trust Office or such
other offices or agencies appointed by the Paying Agent for that purpose and
such other locations provided in the Trust Agreement.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy, to make Insured Payments available to the Trustee
(directly or through a Paying Agent) on or prior to the related Distribution
Date for distribution to the Holders.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Holders of the Class A-1 Certificates, the Trustee shall distribute in
accordance with the Trust Agreement such amounts (directly or through a Paying
Agent) to the Holders of the Class A-1 Certificates.
The Trustee will duly and punctually make distributions with respect to
this Certificate in accordance with the terms hereof and the Trust Agreement.
Amounts properly withheld under the Code by any Person from a distribution to
any Holder shall be considered as having been distributed to such Holder for all
purposes of the Trust Agreement.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
SASCO and the Trustee and the rights of the Holders of the Certificates under
the Trust Agreement at any time by SASCO, the Master Servicer and the Trustee
with consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates. Unless there is a Certificate Insurer Default, the
Certificate Insurer is entitled to exercise all Voting Rights of the Class A
Certificateholders.
As provided in the Trust Agreement and subject to any limitations on
transfer of this Certificate by a Clearing Agency or its nominee and certain
limitations set forth in the Trust Agreement, the transfer of this Certificate
is registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the principal Corporate Trust Office of the
Certificate Registrar or such other offices or agencies appointed by the Trustee
for that purpose and such other locations provided in the Trust Agreement, duly
endorsed by or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Certificate Registrar and
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in the
same aggregate principal balance will be issued to the designated transferee or
transferees.
Subject to the terms of the Trust Agreement, the Certificates of this
Class will be registered as one or more certificates held by a Clearing Agency
or its nominee and beneficial interests will be held by Beneficial Owners
A-1-3
through the book-entry facilities of such Clearing Agency or its nominee in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for a new Certificate of the
same Class in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SASCO, the Master Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of SASCO, the Master Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
SASCO, the Master Servicer, the Trustee, the Paying Agent, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The Trust Agreement provides that the obligations created thereby will
terminate upon the earlier of (i) the payment to the Holders of all Certificates
from amounts other than those available under the related Certificate Insurance
Policy of all amounts held by the Trustee and required to be paid to such
Holders pursuant to the Trust Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a qualified liquidation of the Trust Estate is effected as
described in the Agreement.
The Trust Agreement additionally provides that (i) the Holders of a
majority of the Class R Certificates may, at their option, purchase from the
Trust all remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date after the Initial Optional Redemption Date and (ii) under
certain circumstances relating to the qualification of the REMIC as a REMIC
under the Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
The Trustee has executed this Certificate on behalf of the Trust not in
its individual capacity but solely as Trustee under the Trust Agreement, and the
Trustee shall be liable hereunder only in respect of the assets of the Trust.
Capitalized terms used and not defined herein have the meaning given
them in the Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its official seal.
Dated: August 15, 1996 CITIBANK, N.A.
NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE
BY:
------------------------------------
Authorized Officer
[SEAL]
ATTEST:
-------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
THIS IS THE CLASS A-1 CERTIFICATE REFERRED TO IN THE WITHIN-MENTIONED
TRUST AGREEMENT.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS CERTIFICATE REGISTRAR
BY:
------------------------------------
Authorized Signatory
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE----___________________________________________________________________
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby irrevocably constitute and appoint
_________________________ (Attorney) to transfer the said Certificate in the
Certificate Register of the within-named Trust, with full power of substitution
in the premises.
Dated: _______________
- ----------------------------------------
NOTICE: The signature
to this assignment
must correspond with
the name as written
upon the face of this
Certificate in every
particular without
alteration or
enlargement or any
change whatever.
- --------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM .. as tenants in common UNIT GIFT MIN ACT -....Custodian....
TEN ENT.. as tenants by the (Cus)(Minors)
entireties Under Uniform Gifts to Minors Act
JT TEN... as joint tenants with ...........................
rights of survivor- [State]
ship and not as Tenants
in Common
Additional abbreviations may also be used though not in the above list.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds, to _________________, for the account of
____________, account number _______________, or, if mailed by check, to
_____________. Applicable reports and statements should be mailed to
___________. This information is provided by _____________________, the assignee
named above, or _____________________, as its agent.
A-1-6
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a certificate
guaranty insurance policy containing the following provisions, such Policy being
on file at Citibank, N.A., New York, New York, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the premium and subject
to the terms of the Certificate Guaranty Insurance Policy (the "Policy"),
thereby unconditionally and irrevocably guarantees to any Owner (as defined
below) that an amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the Owners on behalf
of the Owners from the Insurer, for distribution by the Trustee (directly or
through the Paying Agent) to each Owner of each Owner's proportionate share of
the Insured Payment. The Insurer's obligations under the Policy with respect to
a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in the Policy, and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer. "Obligations" shall mean:
$234,089,000.00
Saxon Securities Asset Trust 1996-1
Mortgage Loans Asset Backed Certificates, Series 1996-1
Class A-1, Class A-2 and Class A-3
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, the REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the second Business Day following receipt on a Business Day by the Fiscal Agent
(as described below) of (i) a certified copy of the order requiring the return
of a preference payment, (ii) an opinion of counsel satisfactory to the Insurer
that such order is final and not subject to appeal, (iii) an assignment in such
form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment, (iv) appropriate instruments to effect
the appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer and (v) a Notice (as described below), provided that
if such documents are received after 12:00 noon New York City time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of the court exercising jurisdiction on behalf of the Owner
and not to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in bankruptcy, in
which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy no later
than 12:00 noon, New York City time on the later of the Distribution Date on
which the related Class A Distribution Amount is due or the second Business Day
following receipt in New York, New York on a Business Day by State Street Bank
and Trust Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal
agent appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York City
time on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim under the
Policy, it shall be deemed not to have been received by the Fiscal Agent for
purposes of this paragraph, and the Insurer or the Fiscal Agent, as the case may
be, shall promptly so advise the Trustee and the Trustee may submit an amended
Notice.
Insured Payments due under the Policy, unless otherwise stated in the
Policy, will be disbursed by the Fiscal Agent to the Trustee (or, upon written
request of the Trustee, to the Paying Agent) on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to the Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive distributions on the Obligations to the
extent of any payment by the Insurer under the Policy and shall be entitled to
direct reimbursement of payments made under the policy according to the terms
and in the priority set forth in the Agreement.
A-1-7
As used in the Policy, the following terms shall have the following
meanings:
"Agreement" means the Trust Agreement dated as of August 1, 1996,
among Saxon Asset Securities Company, as Seller, Texas Commerce Bank National
Association, as Master Servicer, and the Trustee as Trustee, without regard to
any amendment or supplement thereto, unless the Insurer shall have consented in
writing thereto.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee or the Paying Agent under the Agreement is
located are authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the related Mortgage
Loan Group and any Distribution Date (i) the excess, if any, of (a) the sum of
the related Class A Current Interest and the related Subordination Deficit, if
any, over (b) the related Total Available Funds (after applying the cross
collateralization provisions of the Agreement, after deducting the Certificate
Insurer premium and without regard to any Insured Payment to be made with
respect to such Distribution Date which would otherwise be included in the
related Total Available Funds).
"Insured Payment" means (i) as of any Distribution Date, any
Deficiency Amount (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Distribution Date.
"Owner" means each Owner (as defined in the Agreement) of a Class
A Certificate who, on the applicable Distribution Date, is entitled under the
terms of the applicable Class A Certificate to payment thereunder.
"Paying Agent" means Texas Commerce Bank National Association,
and its successors and assigns.
"Preference Amount" means any amount previously distributed to a
Owner on the Class A Certificates that is recoverable and sought to be recovered
as a voidable preference by a trustee in bankruptcy pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined in
the Policy shall have the respective meanings set forth in the Agreement as of
the date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th
Floor, New York, New York 10006, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
A-1-8
EXHIBIT A-2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SELLER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-2 CERTIFICATE
(Pass-Through Rate: the lesser of (i) 8.06% per annum and
(ii) the Fixed Rate Funds Cap)
THE PRINCIPAL OF THIS CLASS A-2 CERTIFICATE IS SUBJECT TO PREPAYMENT FROM TIME
TO TIME WITHOUT SURRENDER OF OR NOTATION ON THIS CERTIFICATE. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET
FORTH BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE.
THIS CLASS A-2 CERTIFICATE REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL
INCOME TAX PURPOSES.
SERIES 1996-1 INITIAL PRINCIPAL BALANCE OF THE
CLASS A-2 CERTIFICATES AS OF THE
CLOSING DATE: $9,600,000.00
APPROXIMATE AGGREGATE SCHEDULED
PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE OF MORTGAGE LOANS HELD BY THE
TRUST: $234,089,000
DENOMINATION: $9,600,000.00
DATE OF TRUST AGREEMENT:
AS OF AUGUST 1, 1996
CLOSING DATE: MASTER SERVICER, PAYING AGENT AND
August 15, 1996 CERTIFICATE REGISTRAR:
Texas Commerce Bank National Association
FIRST DISTRIBUTION DATE: TRUSTEE:
August 26, 1996 Citibank, N.A.
NO. A-2-1 CUSIP NO. 805559 AB7
A-2-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-2 CERTIFICATE
(Pass-Through Rate: the lesser of (i) 8.06% per annum and
(ii) the Fixed Rate Funds Cap)
evidencing a beneficial ownership interest in a Trust consisting primarily of a
pool of Mortgage Loans (collectively, the "Mortgage Loans") formed and sold by
SAXON ASSET SECURITIES COMPANY
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SAXON ASSET
SECURITIES COMPANY, THE MASTER SERVICER, ANY SERVICER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
Cede & Co.
is the registered owner of the Percentage Interest evidenced by this Certificate
in the Class A-2 Certificates issued by the Trust (the "Trust") created pursuant
to a trust agreement dated as specified above (the "Trust Agreement"), among
Saxon Asset Securities Company (herein called "SASCO," which term includes any
successor entity under the "Trust Agreement"), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
herein. To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Trust Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement to
which Trust Agreement the Holder of this Certificate, by virtue of the
acceptance hereof, assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates, Series 1996-1 (herein
called the "Certificates"), and represents a Percentage Interest in the Class
A-2 Certificates equal to the quotient, expressed as a percentage, obtained by
dividing the denomination of this Certificate specified on the face hereof by
the aggregate initial principal balance of the Class A-2 Certificates. The
Certificates are issued in three Classes designated as specifically set forth in
the Trust Agreement. The Certificates will evidence in the aggregate 100% of the
beneficial ownership of the Trust.
To the extent and subject to the limitations set forth in the Trust
Agreement, the Holders of the Class A-2 Certificates are entitled to receive the
Class A-2 Distribution Amount on the 25th day of each month or, if such 25th day
is not a Business Day, the next succeeding Business Day (each a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). Class A-2 Distribution Amounts allocated to
this Certificate on any Distribution Date will be an amount equal to this
Certificate's Percentage Interest. All sums distributable on this Certificate
are payable in the coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts.
[This Certificate was issued on August 15, 1996, at a price equal to (i)
[___________]% of its original principal amount plus (ii) accrued interest at
closing equal to [____________]% of its original principal amount. Based on that
issue price, this Certificate was issued with original issue discount ("OID")
for federal income tax purposes in an amount equal to [_____________]% of its
original principal amount. The monthly yield to maturity of this Certificate
expressed on an annual basis is approximately [___]% and the amount of OID
allocable to the short first accrual period ([________ __, 1996 through
[________ __, 1996) as a percentage of the original principal amount of this
Certificate is approximately [_____________]%. The stated interest rate on this
Certificate is [___]% per annum. In computing both the monthly yield to maturity
and the OID amounts specified above, SASCO has used (i) a method embodying an
economic accrual of income, (ii) a prepayment assumption of [___% ___] (as
defined in the Prospectus) and (iii) [a 30 days per month/360 days per year
accounting convention]. The actual yield to maturity and OID amounts may differ
from the projected amounts.]
A-2-2
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Trust Agreement. As provided in the Trust Agreement, withdrawals from the
Asset Proceeds Account and related accounts shall be made from time to time for
purposes other than distributions to Holders of the Certificates, such purposes
including reimbursement of Advances made, or certain expenses incurred, with
respect to the Mortgage Loans and administration of the Trust.
So long as this Certificate is registered in the name of a Clearing
Agency or its nominee, the Paying Agent will make distributions on this
Certificate by wire transfer of immediately available funds to the Clearing
Agency or its nominee. Otherwise, all distributions under the Trust Agreement
will be made by the Paying Agent either (i) by check mailed to the address of
the Holder as it appears on the Certificate Register on the related Record Date
or (ii) upon request to the Trustee in writing by the Record Date immediately
prior to the Distribution Date of any Holder of Certificates of this Class
having an aggregate initial principal amount equal to or in excess of
$1,000,000, by wire transfer of immediately available funds to the account of
such Holder. A fee may be charged by the Paying Agent to a Certificateholder for
any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Paying
Agent of a pendency of such distribution and only upon presentation and
surrender of this Certificate at its principal Corporate Trust Office or such
other offices or agencies appointed by the Paying Agent for that purpose and
such other locations provided in the Trust Agreement.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy, to make Insured Payments available to the Trustee
(directly or through a Paying Agent) on or prior to the related Distribution
Date for distribution to the Holders.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Holders of the Class A-2 Certificates, the Trustee shall distribute in
accordance with the Trust Agreement such amounts (directly or through a Paying
Agent) to the Holders of the Class A-2 Certificates.
The Trustee will duly and punctually make distributions with respect to
this Certificate in accordance with the terms hereof and the Trust Agreement.
Amounts properly withheld under the Code by any Person from a distribution to
any Holder shall be considered as having been distributed to such Holder for all
purposes of the Trust Agreement.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
SASCO and the Trustee and the rights of the Holders of the Certificates under
the Trust Agreement at any time by SASCO, the Master Servicer and the Trustee
with consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates. Unless there is a Certificate Insurer Default, the
Certificate Insurer is entitled to exercise all Voting Rights of the Class A
Certificateholders.
As provided in the Trust Agreement and subject to any limitations on
transfer of this Certificate by a Clearing Agency or its nominee and certain
limitations set forth in the Trust Agreement, the transfer of this Certificate
is registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the principal Corporate Trust Office of the
Certificate Registrar or such other offices or agencies appointed by the Trustee
for that purpose and such other locations provided in the Trust Agreement, duly
endorsed by or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Certificate Registrar and
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in the
same aggregate principal balance will be issued to the designated transferee or
transferees.
Subject to the terms of the Trust Agreement, the Certificates of this
Class will be registered as one or more certificates held by a Clearing Agency
or its nominee and beneficial interests will be held by Beneficial Holders
A-2-3
through the book-entry facilities of such Clearing Agency or its nominee in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for a new Certificate of the
same Class in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SASCO, the Master Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of SASCO, the Master Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
SASCO, the Master Servicer, the Trustee, the Paying Agent, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The Trust Agreement provides that the obligations created thereby will
terminate upon the earlier of (i) the payment to the Holders of all Certificates
from amounts other than those available under the related Certificate Insurance
Policy of all amounts held by the Trustee and required to be paid to such Owners
pursuant to the Trust Agreement upon the later to occur of (a) the final payment
or other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a qualified liquidation of the Trust Estate is effected as
described in the Agreement.
The Trust Agreement additionally provides that (i) the Holders of a
majority of the Class R Certificates may, at their option, purchase from the
Trust all remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date after the Initial Optional Redemption Date and (ii) under
certain circumstances relating to the qualification of the REMIC as a REMIC
under the Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
The Trustee has executed this Certificate on behalf of the Trust not in
its individual capacity but solely as Trustee under the Trust Agreement, and the
Trustee shall be liable hereunder only in respect of the assets of the Trust.
Capitalized terms used and not defined herein have the meaning given
them in the Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-2-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its official seal.
Dated: August 15, 1996 CITIBANK, N.A.
NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE
BY:
---------------------------------
Authorized Officer
[SEAL]
ATTEST:
------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
THIS IS THE CLASS A-2 CERTIFICATE REFERRED TO IN THE WITHIN-MENTIONED
TRUST AGREEMENT.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS CERTIFICATE REGISTRAR
BY:
--------------------------------
Authorized Signatory
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE___________________________________________________________________
- -----------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby irrevocably constitute and appoint
_________________________ (Attorney) to transfer the said Certificate in the
Certificate Register of the within-named Trust, with full power of substitution
in the premises.
Dated: _______________
- ----------------------------------------
NOTICE: The signature to
this assignment must
correspond with the name
as written upon the face
of this Certificate in
every particular without
alteration or enlargement
or any change whatever.
- --------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM .. as tenants in common UNIT GIFT MIN ACT -....Custodian....
TEN ENT.. as tenants by the (Cus)(Minors)
entireties Under Uniform Gifts to Minors Act
JT TEN... as joint tenants with .............................
rights of survivor- [State]
ship and not as Tenants
in Common
Additional abbreviations may also be used though not in the above
list.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds, to _________________, for the account of
____________, account number _______________, or, if mailed by check, to
_____________. Applicable reports and statements should be mailed to
___________. This information is provided by _____________________, the
ssignee named above, or _____________________, as its agent.
A-2-6
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a certificate
guaranty insurance policy containing the following provisions, such Policy being
on file at Citibank, N.A., New York, New York, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the premium and subject
to the terms of the Certificate Guaranty Insurance Policy (the "Policy"),
thereby unconditionally and irrevocably guarantees to any Owner (as defined
below) that an amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the Owners on behalf
of the Owners from the Insurer, for distribution by the Trustee (directly or
through the Paying Agent) to each Owner of each Owner's proportionate share of
the Insured Payment. The Insurer's obligations under the Policy with respect to
a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in the Policy, and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer. "Obligations" shall mean:
$234,089,000.00
Saxon Securities Asset Trust 1996-1
Mortgage Loans Asset Backed Certificates, Series 1996-1
Class A-1, Class A-2 and Class A-3
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, the REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the second Business Day following receipt on a Business Day by the Fiscal Agent
(as described below) of (i) a certified copy of the order requiring the return
of a preference payment, (ii) an opinion of counsel satisfactory to the Insurer
that such order is final and not subject to appeal, (iii) an assignment in such
form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment, (iv) appropriate instruments to effect
the appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer and (v) a Notice (as described below), provided that
if such documents are received after 12:00 noon New York City time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of the court exercising jurisdiction on behalf of the Owner
and not to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in bankruptcy, in
which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy no later
than 12:00 noon, New York City time on the later of the Distribution Date on
which the related Class A Distribution Amount is due or the second Business Day
following receipt in New York, New York on a Business Day by State Street Bank
and Trust Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal
agent appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York City
time on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim under the
Policy, it shall be deemed not to have been received by the Fiscal Agent for
purposes of this paragraph, and the Insurer or the Fiscal Agent, as the case may
be, shall promptly so advise the Trustee and the Trustee may submit an amended
Notice.
Insured Payments due under the Policy, unless otherwise stated in the
Policy, will be disbursed by the Fiscal Agent to the Trustee (or, upon written
request of the Trustee, to the Paying Agent) on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to the Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive distributions on the Obligations to the
extent of any payment by the Insurer under the Policy and shall be entitled to
direct reimbursement of payments made under the policy according to the terms
and in the priority set forth in the Agreement.
A-2-7
As used in the Policy, the following terms shall have the following
meanings:
"Agreement" means the Trust Agreement dated as of August 1, 1996,
among Saxon Asset Securities Company, as Seller, Texas Commerce Bank National
Association, as Master Servicer, and the Trustee as Trustee, without regard to
any amendment or supplement thereto, unless the Insurer shall have consented in
writing thereto.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee or the Paying Agent under the Agreement is
located are authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the related Mortgage
Loan Group and any Distribution Date (i) the excess, if any, of (a) the sum of
the related Class A Current Interest and the related Subordination Deficit, if
any, over (b) the related Total Available Funds (after applying the cross
collateralization provisions of the Agreement, after deducting the Certificate
Insurer premium and without regard to any Insured Payment to be made with
respect to such Distribution Date which would otherwise be included in the
related Total Available Funds).
"Insured Payment" means (i) as of any Distribution Date, any
Deficiency Amount (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Distribution Date.
"Owner" means each Owner (as defined in the Agreement) of a Class
A Certificate who, on the applicable Distribution Date, is entitled under the
terms of the applicable Class A Certificate to payment thereunder.
"Paying Agent" means Texas Commerce Bank National Association,
and its successors and assigns.
"Preference Amount" means any amount previously distributed to a
Owner on the Class A Certificates that is recoverable and sought to be recovered
as a voidable preference by a trustee in bankruptcy pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined in
the Policy shall have the respective meanings set forth in the Agreement as of
the date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th
Floor, New York, New York 10006, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
A-2-8
Exhibit A-3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SELLER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-3 CERTIFICATE
(Variable Pass-Through Rate)
THE PRINCIPAL OF THIS CLASS A-3 CERTIFICATE IS SUBJECT TO PREPAYMENT FROM TIME
TO TIME WITHOUT SURRENDER OF OR NOTATION ON THIS CERTIFICATE. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET
FORTH BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE.
THIS CLASS A-3 CERTIFICATE REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL
INCOME TAX PURPOSES.
SERIES 1996-1 INITIAL PRINCIPAL BALANCE OF THE
CLASS A-3 CERTIFICATES AS OF THE
CLOSING DATE: $181,489,000.00
APPROXIMATE AGGREGATE SCHEDULED
PRINCIPAL BALANCE AS OF THE CUT-OFF
DATE OF MORTGAGE LOANS HELD BY THE
TRUST: $234,089,000
DENOMINATION: $181,489,000.00
DATE OF TRUST AGREEMENT:
AS OF AUGUST 1, 1996
CLOSING DATE: MASTER SERVICER, PAYING AGENT AND
August 15, 1996 CERTIFICATE REGISTRAR:
Texas Commerce Bank National Association
FIRST DISTRIBUTION DATE: TRUSTEE:
August 26, 1996 Citibank, N.A.
NO. A-3-1 CUSIP NO. 805559 AC5
A-3-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS A-3 CERTIFICATE
(Variable Pass-Through Rate):
evidencing a beneficial ownership interest in a Trust consisting primarily of a
pool of Mortgage Loans (collectively, the "Mortgage Loans") formed and sold by
SAXON ASSET SECURITIES COMPANY
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SAXON ASSET
SECURITIES COMPANY, THE MASTER SERVICER, ANY SERVICER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
Cede & Co.
is the registered owner of the Percentage Interest evidenced by this Certificate
in the Class A-3 Certificates issued by the Trust (the "Trust") created pursuant
to a trust agreement dated as specified above (the "Trust Agreement"), among
Saxon Asset Securities Company (herein called "SASCO," which term includes any
successor entity under the "Trust Agreement"), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
herein. To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Trust Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement to
which Trust Agreement the Holder of this Certificate, by virtue of the
acceptance hereof, assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates, Series 1996-1 (herein
called the "Certificates"), and represents a Percentage Interest in the Class
A-3 Certificates equal to the quotient, expressed as a percentage, obtained by
dividing the denomination of this Certificate specified on the face hereof by
the aggregate initial principal balance of the Class A-3 Certificates. The
Certificates are issued in three Classes designated as specifically set forth in
the Trust Agreement. The Certificates will evidence in the aggregate 100% of the
beneficial ownership of the Trust.
To the extent and subject to the limitations set forth in the Trust
Agreement, the Holders of the Class A-3 Certificates are entitled to receive the
Class A-3 Distribution Amount on the 25th day of each month or, if such 25th day
is not a Business Day, the next succeeding Business Day (each a "Distribution
Date"), commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). Class A-3 Distribution Amounts allocated to
this Certificate on any Distribution Date will be an amount equal to this
Certificate's Percentage Interest. All sums distributable on this Certificate
are payable in the coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts.
[This Certificate was issued on August 15, 1996, at a price equal to (i)
[___________]% of its original principal amount plus (ii) accrued interest at
closing equal to [____________]% of its original principal amount. Based on that
issue price, this Certificate was issued with original issue discount ("OID")
for federal income tax purposes in an amount equal to [_____________]% of its
original principal amount. The monthly yield to maturity of this Certificate
expressed on an annual basis is approximately [___]% and the amount of OID
allocable to the short first accrual period ([________ __, 1996 through
[________ __, 1996) as a percentage of the original principal amount of this
Certificate is approximately [_____________]%. The stated interest rate on this
Certificate is [___]% per annum. In computing both the monthly yield to maturity
and the OID amounts specified above, SASCO has used (i) a method embodying an
economic accrual of income, (ii) a prepayment assumption of [___% ___] (as
defined in the Prospectus) and (iii) [a 30 days per month/360 days per year
accounting convention]. The actual yield to maturity and OID amounts may differ
from the projected amounts.]
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Trust Agreement. As provided in the Trust Agreement, withdrawals from the
Asset Proceeds Account and related accounts shall be made from time to time for
purposes other than distributions to Holders of the Certificates, such purposes
including reimbursement of Advances made, or certain expenses incurred, with
respect to the Mortgage Loans and administration of the Trust.
So long as this Certificate is registered in the name of a Clearing
Agency or its nominee, the Paying Agent will make distributions on this
Certificate by wire transfer of immediately available funds to the Clearing
Agency or its nominee. Otherwise, all distributions under the Trust Agreement
will be made by the Paying Agent either (i) by check mailed to the address of
the Holder as it appears on the Certificate Register on the related Record Date
or (ii) upon request to the Paying Agent in writing by the Record Date
immediately prior to the Distribution Date
A-3-2
of any Holder of Certificates of this Class having an aggregate initial
principal amount equal to or in excess of $1,000,000, by wire transfer of
immediately available funds to the account of such Holder. A fee may be charged
by the Trustee to a Certificateholder for any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Paying Agent of a pendency of such distribution and
only upon presentation and surrender of this Certificate at its principal
Corporate Trust Office or such other offices or agencies appointed by the Paying
Agent for that purpose and such other locations provided in the Trust Agreement.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy, to make Insured Payments available to the Trustee
(directly or through a Paying Agent) on or prior to the related Distribution
Date for distribution to the Holders.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Holders of the Class A-3 Certificates, the Trustee shall distribute in
accordance with the Trust Agreement such amounts (directly or through a Paying
Agent) to the Holders of the Class A-3 Certificates.
The Trustee will duly and punctually make distributions with respect to
this Certificate in accordance with the terms hereof and the Trust Agreement.
Amounts properly withheld under the Code by any Person from a distribution to
any Holder shall be considered as having been distributed to such Holder for all
purposes of the Trust Agreement.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
SASCO and the Trustee and the rights of the Holders of the Certificates under
the Trust Agreement at any time by SASCO, the Master Servicer and the Trustee
with consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Trust Agreement and subject to any limitations on
transfer of this Certificate by a Clearing Agency or its nominee and certain
limitations set forth in the Trust Agreement, the transfer of this Certificate
is registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the principal Corporate Trust Office of the
Certificate Registrar or such other offices or agencies appointed by the Trustee
for that purpose and such other locations provided in the Trust Agreement, duly
endorsed by or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Certificate Registrar and
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in the
same aggregate principal balance will be issued to the designated transferee or
transferees.
Subject to the terms of the Trust Agreement, the Certificates of this
Class will be registered as one or more certificates held by a Clearing Agency
or its nominee and beneficial interests will be held by Beneficial Holders
through the book-entry facilities of such Clearing Agency or its nominee in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for a new Certificate of the
same Class in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SASCO, the Master Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of SASCO, the Master Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
SASCO, the Master Servicer, the Trustee, the Paying Agent, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The Trust Agreement provides that the obligations created thereby will
terminate upon the earlier of (i) the payment to the Holders of all Certificates
from amounts other than those available under the related Certificate Insurance
Policy of all amounts held by the Trustee and required to be paid to such
Holders pursuant to the Trust Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a qualified liquidation of the Trust Estate is effected as
described in the Agreement.
A-3-3
The Trust Agreement additionally provides that (i) the Holders of a
majority of the Class R Certificates may, at their option, purchase from the
Trust all remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date after the Initial Optional Redemption Date and (ii) under
certain circumstances relating to the qualification of the REMIC as a REMIC
under the Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
The Trustee has executed this Certificate on behalf of the Trust not in
its individual capacity but solely as Trustee under the Trust Agreement, and the
Trustee shall be liable hereunder only in respect of the assets of the Trust.
Capitalized terms used and not defined herein have the meaning given
them in the Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-3-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its official seal.
Dated: August 15, 1996 CITIBANK, N.A.
NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE
BY:
--------------------------------
Authorized Officer
[SEAL]
ATTEST:
------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
THIS IS THE CLASS A-3 CERTIFICATE REFERRED TO IN THE WITHIN-MENTIONED
TRUST AGREEMENT.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS CERTIFICATE REGISTRAR
BY:
----------------------------------------
Authorized Signatory
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE___________________________________________________________________
- -----------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby irrevocably constitute and appoint
_________________________ (Attorney) to transfer the said Certificate in the
Certificate Register of the within-named Trust, with full power of substitution
in the premises.
Dated: _______________
- ----------------------------------------
NOTICE: The signature
to this assignment
must correspond with
the name as written
upon the face of this
Certificate in every
particular without
alteration or
enlargement or any
change whatever.
- --------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM .. as tenants in common UNIT GIFT MIN ACT -....Custodian....
TEN ENT.. as tenants by the (Cus)(Minors)
entireties Under Uniform Gifts to Minors Act
JT TEN... as joint tenants with ..........................
rights of survivor- [State]
ship and not as Tenants
in Common
Additional abbreviations may also be used though not in the above
list.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds, to _________________, for the account of
____________, account number _______________, or, if mailed by check, to
_____________. Applicable reports and statements should be mailed to
___________. This information is provided by _____________________, the assignee
named above, or _____________________, as its agent.
A-3-6
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a certificate
guaranty insurance policy containing the following provisions, such Policy being
on file at Citibank, N.A., New York, New York, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the premium and subject
to the terms of the Certificate Guaranty Insurance Policy (the "Policy"),
thereby unconditionally and irrevocably guarantees to any Owner (as defined
below) that an amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the Owners on behalf
of the Owners from the Insurer, for distribution by the Trustee (directly or
through the Paying Agent) to each Owner of each Owner's proportionate share of
the Insured Payment. The Insurer's obligations under the Policy with respect to
a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in the Policy, and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer. "Obligations" shall mean:
$234,089,000.00
Saxon Securities Asset Trust 1996-1
Mortgage Loans Asset Backed Certificates, Series 1996-1
Class A-1, Class A-2 and Class A-3
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, the REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the second Business Day following receipt on a Business Day by the Fiscal Agent
(as described below) of (i) a certified copy of the order requiring the return
of a preference payment, (ii) an opinion of counsel satisfactory to the Insurer
that such order is final and not subject to appeal, (iii) an assignment in such
form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment, (iv) appropriate instruments to effect
the appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer and (v) a Notice (as described below), provided that
if such documents are received after 12:00 noon New York City time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of the court exercising jurisdiction on behalf of the Owner
and not to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in bankruptcy, in
which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy no later
than 12:00 noon, New York City time on the later of the Distribution Date on
which the related Class A Distribution Amount is due or the second Business Day
following receipt in New York, New York on a Business Day by State Street Bank
and Trust Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal
agent appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York City
time on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim under the
Policy, it shall be deemed not to have been received by the Fiscal Agent for
purposes of this paragraph, and the Insurer or the Fiscal Agent, as the case may
be, shall promptly so advise the Trustee and the Trustee may submit an amended
Notice.
Insured Payments due under the Policy, unless otherwise stated in the
Policy, will be disbursed by the Fiscal Agent to the Trustee (or, upon written
request of the Trustee, to the Paying Agent) on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to the Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive distributions on the Obligations to the
extent of any payment by the Insurer under the Policy and shall be entitled to
direct reimbursement of payments made under the policy according to the terms
and in the priority set forth in the Agreement.
A-3-7
As used in the Policy, the following terms shall have the following
meanings:
"Agreement" means the Trust Agreement dated as of August 1, 1996,
among Saxon Asset Securities Company, as Seller, Texas Commerce Bank National
Association, as Master Servicer, and the Trustee as Trustee, without regard to
any amendment or supplement thereto, unless the Insurer shall have consented in
writing thereto.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee or the Paying Agent under the Agreement is
located are authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the related Mortgage
Loan Group and any Distribution Date (i) the excess, if any, of (a) the sum of
the related Class A Current Interest and the related Subordination Deficit, if
any, over (b) the related Total Available Funds (after applying the cross
collateralization provisions of the Agreement, after deducting the Certificate
Insurer premium and without regard to any Insured Payment to be made with
respect to such Distribution Date which would otherwise be included in the
related Total Available Funds).
"Insured Payment" means (i) as of any Distribution Date, any
Deficiency Amount (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Distribution Date.
"Owner" means each Owner (as defined in the Agreement) of a Class
A Certificate who, on the applicable Distribution Date, is entitled under the
terms of the applicable Class A Certificate to payment thereunder.
"Paying Agent" means Texas Commerce Bank National Association,
and its successors and assigns.
"Preference Amount" means any amount previously distributed to a
Owner on the Class A Certificates that is recoverable and sought to be recovered
as a voidable preference by a trustee in bankruptcy pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined in
the Policy shall have the respective meanings set forth in the Agreement as of
the date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th
Floor, New York, New York 10006, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
A-3-8
Exhibit R-1
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS R RESIDUAL CERTIFICATE
THIS CLASS R CERTIFICATE MAY NOT BE TRANSFERRED TO A DISQUALIFIED ORGANIZATION,
WHICH GENERALLY INCLUDES ANY ENTITY THAT WOULD BE EXEMPT FROM FEDERAL INCOME
TAXATION (INCLUDING THE TAX ON UNRELATED BUSINESS TAXABLE INCOME) ON INCOME
DERIVED FROM THIS CLASS R CERTIFICATE. IN ADDITION, NO TRANSFER OF LESS THAN THE
ENTIRE INTEREST IN THIS CLASS R CERTIFICATE MAY BE MADE UNLESS (1) THE INTEREST
TRANSFERRED IS AN UNDIVIDED INTEREST OR (2) THE TRANSFEROR OR THE TRANSFEREE HAS
PROVIDED THE MASTER SERVICER AND THE CERTIFICATE REGISTRAR WITH AN OPINION OF
COUNSEL THAT SUCH TRANSFER WILL NOT JEOPARDIZE THE REMIC STATUS OF THE RELATED
REMIC. ANY TRANSFEREE OF THIS CLASS R CERTIFICATE MUST DELIVER TO THE
CERTIFICATE REGISTRAR AND THE MASTER SERVICER (I) A RESIDUAL TRANSFEREE
AGREEMENT RELATING TO VARIOUS TAX MATTERS, (II) A BENEFIT PLAN AFFIDAVIT
RELATING TO VARIOUS ERISA MATTERS, AND (III) A DISQUALIFIED ORGANIZATION
AFFIDAVIT RELATING TO VARIOUS TAX MATTERS.
THIS CLASS R CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN A REMIC FOR FEDERAL
INCOME TAX PURPOSES.
SERIES 1996-1 SCHEDULED PRINCIPAL BALANCE AS
OF THE CUT-OFF DATE OF THE
MORTGAGE LOANS HELD BY THE
TRUST: $234,089,000
PERCENTAGE INTEREST: %
DATE OF TRUST AGREEMENT: MASTER SERVICER, PAYING AGENT
AS OF August 1, 1996 AND CERTIFICATE REGISTRAR:
Texas Commerce Bank National Association
CLOSING DATE: TRUSTEE:
August 15, 1996 Citibank, N.A.
FIRST DISTRIBUTION DATE;
August 26, 1996
NO. R-1
R-1-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1996-1
CLASS R RESIDUAL CERTIFICATE
evidencing a beneficial ownership interest in a Trust consisting primarily of a
pool of Mortgage Loans (collectively, the "Mortgage Loans") formed and sold by
SAXON ASSET SECURITIES COMPANY
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SAXON ASSET
SECURITIES COMPANY, THE MASTER SERVICER, ANY SERVICER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
is the registered owner of the Percentage Interest evidenced by this Certificate
in the Class R Certificates (the "Class R Certificates") issued by the Trust
(the "Trust") created pursuant to a trust agreement dated as specified above
(the "Trust Agreement"), among Saxon Asset Securities Company ("SASCO," which
term includes any successor entity under the Trust Agreement), the Master
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth herein. To the extent not defined herein, the capitalizations
used herein have the meanings assigned to them in the Trust Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate, by virtue of the acceptance hereof, assents and by which such
Holder is bound.
The Holder of this Class R Certificate is not entitled to any scheduled
distributions of principal or interest.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates, Series 1996-1 (herein
called the "Certificates"), and representing the Percentage Interest in the
Class R Certificates specified on the face hereof. The Certificates are issued
in three classes designated as specifically set forth in the Trust Agreement.
The Certificates will evidence in the aggregate 100% of the beneficial ownership
of the Trust.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Trust Agreement. As provided in the Trust Agreement, withdrawals from the
Asset Proceeds Account and related accounts shall be made from time to time for
purposes other than distributions to Holders, such purposes including
reimbursement of Advances made, or certain expenses incurred, with respect to
the Mortgage Loans and administration of the Trust.
Distributions on this Certificate, if any, will be made by or on behalf
of the Trustee either (i) by check mailed to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register or
(ii) by wire transfer of immediately available funds, upon request to the Paying
Agent in writing by the Record Date immediately prior to the related
Distribution Date by the Holder of this Certificate. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Paying Agent of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the Paying Agent's principal Corporate Trust
Office or such other offices or agencies appointed by the Trustee for that
purpose and such other locations provided in the Trust Agreement.
An election will be made to treat certain assets of the Trust as a real
estate mortgage investment conduit (the "REMIC") under the Internal Revenue Code
of 1986, as amended (the "Code"). Assuming that such election is made properly
and that certain qualification requirements concerning the assets of the Trust
and the Certificates are met, the Holder of this Class R Certificate will be
treated for federal income tax purposes as the beneficial owner of a "residual
interest" in the REMIC. Accordingly, the Holder of this Class R Certificate will
be taxed on its pro rata share of the REMIC's taxable income or net loss. The
requirement that the Holder of this Class R Certificate report its pro rata
share of such income or loss will continue until there are no Certificates of
any Class outstanding.
Pursuant to the Trust Agreement, the Master Servicer or one of its
affiliates, as agent of the REMIC, will provide each Holder of a Class R
Certificate with information sufficient to enable such Holder to prepare (i) its
federal income tax and information returns and (ii) any reports required by the
Code regarding the Certificates, except where such information is otherwise
provided to each such Holder pursuant to the Trust Agreement. As the Holder of a
residual interest in the REMIC, the Holder of this Class R Certificate will have
continuing administrative rights and obligations generally similar to those of a
partner with respect to its partnership. Such rights and obligations principally
concern the REMIC's federal income taxes and information returns and the
representation of the REMIC in administrative or judicial proceedings involving
the Internal Revenue Service. The Master Servicer or one of its affiliates,
however, will purchase a Class R Certificate and will act on behalf of the
R-1-2
Holders of the Class R Certificates as the representative of the REMIC for such
proceedings. The federal tax and information returns of the REMIC will be
prepared by the Master Servicer or its affiliate, and signed and filed by the
Trustee.
By accepting this Certificate, the Holder of this Certificate agrees to
be bound by all the provisions of the Trust Agreement and, in particular, agrees
that it shall (i) take any action required by the Code or Treasury regulations
thereunder in order to create or maintain the REMIC status of the REMIC and (ii)
refrain from taking any action that could endanger such status.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
SASCO and the Trustee and the rights of the Holders under the Trust Agreement at
any time by SASCO, the Master Servicer and the Trustee with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereafter or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Trust Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
Unless there is a Certificate Insurer Default, the Certificate Insurer is
entitled to exercise all Voting Rights of the Class A Certificateholders.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the principal Corporate Trust Office of the Certificate Registrar or
such other office or agency appointed by the Trustee for that purpose and such
other locations provided in the Trust Agreement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing and thereupon
one or more new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
The Securities of this Class are issuable in fully-registered,
certificated form without coupons in minimum Percentage Interests of [ ]% and
increments of 1% in excess thereof. Two Certificates of this Class may be issued
in a different Percentage Interest than specified above.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in the same aggregate Percentage Interest as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
This Class R Certificate (including any beneficial interest therein) may
not be transferred to a Disqualified Organization (i.e., the United States, any
state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing, any organization (other than a farmers' cooperative described 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),
any rural electrical or telephone cooperative described in Section 1381(a)(2)(C)
of the Code or any other entity designated as a disqualified organization by
legislation enacted after the date hereof (a corporation will not be treated as
an instrumentality of the United States or of any 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)). In addition, this Class R Certificate
(including any beneficial interest therein) may not 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 this Class R 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 the related REMIC).
Furthermore, (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 this Class R Certificate by a non-Affiliate of SASCO from SASCO
or an Affiliate of SASCO, 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 this Class R Certificate except upon notification of such transfer
to the Master Servicer. Any attempted transfer of this Class R Certificate in
violation of the foregoing restrictions will be null and void and will not be
recognized by the Certificate Registrar.
R-1-3
If a tax or a reporting cost is borne by the REMIC as a result of the
transfer of this Class R Certificate, or any beneficial interest therein, in
violation of the restrictions set forth herein or in the Trust Agreement, the
Trustee upon notification from the Master Servicer, may pay such tax or
reporting cost with amounts that otherwise would have been paid to the
transferee of this Class R Certificate (or beneficial interest therein). In that
event, neither the transferee nor the transferor shall have any right to seek
repayment of such amounts from the Trustee, the Certificate Registrar, the
Paying Agent, SASCO, the Trust, the Servicer, the Master Servicer, or the other
Holders. The Master Servicer shall make, or cause to be made, available the
information necessary for the application of Section 860E(e) of the Code.
SASCO, the Master Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of SASCO, the Master Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
SASCO, the Master Servicer, the Trustee, the Certificate Registrar or any such
agent shall be affected by notice to the contrary.
Pursuant to the terms of the Trust Agreement, either SASCO or the
Holders of the majority of the Percentage Interest in the Class R Certificates,
at their respective options, subject to the limitations imposed by the Trust
Agreement, may redeem the Certificates, in whole but not in part, on any
Distribution Date on or after (i) Distribution Date on which the aggregate
Scheduled Principal Balance of the Mortgage Loans in the Trust has declined to
10% or less of the Scheduled Principal Balance of the Mortgage Loans in the
Trust as of the Cut-Off Date, at a redemption price equal to 100% of the then
Certificate Principal Balance of the Class A Certificates, plus accrued interest
thereon. If the Certificates are redeemed, the purchase price distributable with
respect to each Class of such Certificates will be 100% of the then Certificate
Principal Balance of such Class, plus interest thereon. Upon redemption and at
the option of the redeeming party, (i) the REMIC may be terminated, thereby
causing the sale of the Mortgage Loans and other related assets of the Trust and
the retirement of the Certificates or (ii) the Certificates may be held or
resold by the redeeming party. Notice of optional redemption of the Certificates
will be mailed to the Holders according to the procedures set out in the Trust
Agreement. The REMIC also may be terminated and the Certificates retired on any
Distribution Date upon the Master Servicer's determination, based upon an
Opinion of Counsel, that the REMIC status of the REMIC has been lost or that a
substantial risk exists that such status will be lost for the then current
taxable year. Upon the termination of the REMIC, payment of all amounts due on
the Certificates and payment of all administrative expenses associated with the
REMIC, any remaining assets of the REMIC shall be sold and the proceeds
therefrom shall be distributed pro rata to the Holders of the Class R
Certificates, as set forth in the Trust Agreement.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
The Trustee has executed this Certificate on behalf of the Trust not in
its individual capacity but solely as Trustee under the Trust Agreement, and the
Trustee shall be liable hereunder only in respect of the assets of the Trust.
Capitalized terms used and not defined herein have the meaning given
them in the Trust Agreement.
R-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its official seal.
Dated:
CITIBANK, N.A., NOT IN ITS INDIVIDUAL CAPACITY,
BUT SOLELY AS TRUSTEE
BY: ______________________________________
AUTHORIZED OFFICER
[SEAL] ATTEST:
--------------------------------------
AUTHORIZED OFFICER
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS R CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED TRUST AGREEMENT.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, AS CERTIFICATE REGISTRAR
BY: _______________________________
AUTHORIZED SIGNATORY
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned
hereby sells, assigns and transfers unto
- -----------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE___________________________________________________________________
- -----------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby irrevocably constitute and appoint
_________________________ (Attorney) to transfer the said Certificate in the
Certificate Register of the within-named Trust, with full power of substitution
in the premises.
Dated: _______________ _______________________________
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of
this Certificate in every particular
without alteration or enlargement or
any change whatever.
- --------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM .. as tenants in common UNIT GIFT MIN ACT -....Custodian....
TEN ENT.. as tenants by the (Cus)(Minors)
entireties Under Uniform Gifts
to Minors Act
JT TEN... as joint tenants with ..............................
rights of survivor-[State]
ship and not as Tenants
in Common
Additional abbreviations may also be used though not in the above list.
DISTRIBUTION INSTRUCTIONS
The assignee should include the
following for purposes of distribution:
Distributions shall be made, by wire
transfer or otherwise, in immediately available funds, to _________________, for
the account of ____________, account number _______________, or, if mailed by
check, to _____________. Applicable reports and statements should be mailed to
___________. This information is provided by _____________________, the assignee
named above, or _____________________, as its agent.
A-1-1
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES
STANDARD TERMS TO TRUST AGREEMENT
(August 1996 Edition)
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................................... 1
Section 1.01. Defined Terms................................................... 1
Section 1.02. Section References; Calculations; Ratings....................... 19
ARTICLE II MORTGAGE LOAN FILES............................................................ 19
Section 2.01. Mortgage Loan Files............................................. 19
Section 2.02. Acceptance by the Trustee....................................... 19
Section 2.03. Purchase or Substitution of Mortgage Loans by the Seller,
a Servicer or SASCO............................................. 22
Section 2.04. Representations and Warranties of SASCO......................... 25
Section 2.05. Representations and Warranties of the Master Servicer........... 26
ARTICLE III ADMINISTRATION OF THE TRUST................................................... 27
Section 3.01. Master Servicer Custodial Account............................... 27
Section 3.02. Asset Proceeds Account.......................................... 29
Section 3.03. Issuing REMIC Accounts.......................................... 30
Section 3.04. Advances by Master Servicer and Trustee......................... 30
Section 3.05. Month End Interest.............................................. 32
Section 3.06. Trustee to Cooperate; Release of Mortgage Files................. 32
Section 3.07 Reports to the Trustee; Annual Compliance Statements............ 33
Section 3.08. Title, Management and Disposition of REO Properties............. 34
Section 3.09. Amendments to Servicing Agreements; Modification of the Guide... 36
Section 3.10. Oversight of Servicing.......................................... 36
Section 3.11. Credit Enhancement.............................................. 37
ARTICLE IV REPORTING/REMITTING TO CERTIFICATEHOLDERS...................................... 38
Section 4.01. Statements to Certificateholders................................ 38
Section 4.02. Remittance Reports.............................................. 39
Section 4.03. Compliance with Withholding Requirements........................ 40
Section 4.04. Reports of Certificate Principal Balances to The Depository Trust
Company......................................................... 40
Section 4.05. Preparation of Regulatory Reports............................... 40
ARTICLE V THE POOLING INTERESTS AND THE CERTIFICATES...................................... 41
Section 5.01. Pooling REMIC Interests......................................... 41
Section 5.02. The Certificates................................................ 41
Section 5.03. Book-Entry Certificates......................................... 42
Section 5.04. Registration of Transfer and Exchange of Certificates........... 43
Section 5.05. Restrictions on Transfers....................................... 43
Section 5.06. Mutilated, Destroyed, Lost or Stolen Certificates............... 45
Section 5.07. Persons Deemed Owners........................................... 46
Section 5.08. Paying Agent.................................................... 46
ARTICLE VI SASCO AND THE MASTER SERVICER.................................................. 46
Section 6.01 Liability of, and Indemnification by, SASCO and the
Master Servicer................................................. 46
Section 6.02. Merger or Consolidation of SASCO or the Master Servicer......... 47
Section 6.03. Limitation on Liability of SASCO, the Master Servicer and Others 47
Section 6.04. Resignation of the Master Servicer.............................. 47
Section 6.05. Compensation to the Master Servicer............................. 48
Section 6.06. Assignment or Delegation of Duties by Master Servicer........... 48
ARTICLE VII TERMINATION OF SERVICING AND MASTER SERVICING ARRANGEMENTS.................... 48
Section 7.01. Termination and Substitution of Servicing Agreements............ 48
Section 7.02. Termination of Master Servicer; Trustee to Act.................. 49
Section 7.03. Notification to Certificateholders.............................. 51
ARTICLE VIII CONCERNING THE TRUSTEE....................................................... 51
Section 8.01. Duties of Trustee............................................... 51
Section 8.02. Certain Matters Affecting the Trustee........................... 52
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans........... 53
Section 8.04. Trustee May Own Certificates.................................... 54
Section 8.05. Trustee's Fees.................................................. 54
Section 8.06. Eligibility Requirements for Trustee............................ 54
Section 8.07. Resignation and Removal of the Trustee.......................... 54
Section 8.08. Successor Trustee............................................... 55
Section 8.09. Merger or Consolidation of Trustee.............................. 55
Section 8.10. Appointment of Trustee or Separate Trustee...................... 55
Section 8.11. Appointment of Custodians....................................... 56
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates... 56
ARTICLE IX REDEMPTION OF CERTIFICATES AND TERMINATION OF THE TRUST........................ 57
Section 9.01. Redemption...................................................... 57
Section 9.02. Termination..................................................... 57
Section 9.03. Procedure for Redemption or Termination......................... 57
Section 9.04. Additional Termination Requirements............................. 59
ARTICLE X REMIC TAX PROVISIONS............................................................ 59
Section 10.01. REMIC Administration........................................... 59
Section 10.02. Prohibited Activities.......................................... 60
ARTICLE XI MISCELLANEOUS PROVISIONS....................................................... 61
Section 11.01. Amendment of Trust Agreement................................... 61
Section 11.02. Recordation of Agreement; Counterparts......................... 62
Section 11.03. Limitation of Rights of Certificateholders..................... 62
Section 11.04. Governing Law.................................................. 63
Section 11.05. Notices........................................................ 63
Section 11.06. Severability of Provisions..................................... 63
Section 11.07. Sale of Mortgage Loans......................................... 64
Section 11.08. Notice to Rating Agency........................................ 64
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 ("SASCO"), a banking or a mortgage banking
company, as administrative agent (in such capacity, the "Master Servicer"), and
a bank or trust company, as trustee (the "Trustee"), have entered into a Trust
Agreement (the "Trust Agreement") that provides for the issuance of a series of
asset backed certificates (the "Certificates") that in the aggregate evidence
the entire interest in 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, SASCO, 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 SASCO 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; (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
SASCO 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 SASCO, 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 SASCO, a Servicer, the Master Servicer
or the Trustee or (iii) result in, or be treated as, a prohibited transaction
under Section 406 or
2
407 of ERISA or section 4975 of the Code (which opinion shall not be a cost or
expense of SASCO, the Master Servicer, the Tax Matters Person or the Trustee).
"Book-Entry Certificates": Each Class of Certificates, if any, specified
as such in the Trust Agreement.
"Borrower": With respect to each Mortgage Loan, the individual or
individuals or any Servicer obligated to repay the related Mortgage Note.
"Business Day": Unless otherwise provided in the Trust Agreement, any day
that is not a Saturday, Sunday, holiday or other day on which commercial banking
institutions in the city and state in which the Corporate Trust Office 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 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.
"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.
3
"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 SASCO with respect to
the Certificates.
"Credit Enhancement Fee": With respect to each form of Credit
Enhancement, the monthly premium or fee that is payable to the provider of such
Credit Enhancement as specified in the Trust Agreement.
"Credit Enhancement Fee Rate": With respect to each form of Credit
Enhancement, each Mortgage Loan and each Distribution Date, an amount equal to
the Credit Enhancement Fee with respect to the related Certificates, divided by
the aggregate Scheduled Principal Balance of the related Mortgage Loans.
"Custodian": The Custodian identified in the Trust Agreement that shall
hold all or a portion of the Trustee Mortgage Loan Files with respect to the
Certificates.
"Cut-Off Date": The date specified as such in the Trust Agreement.
"Defect Discovery Date": With respect to a Mortgage Loan, the date on
which either the Trustee or the Master Servicer first discovers a Qualification
Defect affecting such Mortgage Loan.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, or any use of such REO Property in a trade or business
conducted by the Trust, in each case other than through an Independent
Contractor; provided, however, that the Trustee or the Master Servicer on behalf
of the Trust shall not be considered to Directly Operate an REO Property solely
because the Trustee or the Master Servicer on behalf of the Trust establishes
rental terms, chooses tenants, enters into or renews leases, deals with taxes
and insurance, or makes decisions as to repairs or maintenance with respect to
such REO Property.
"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
4
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 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) 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, in a manner acceptable to each
Rating Agency in respect of mortgage pass-through certificates rated in one of
its two highest rating categories. Eligible Accounts may be interest-bearing
accounts or the funds therein may be invested in Permitted Investments. If
qualified under this definition, accounts maintained with the Trustee may
constitute Eligible Accounts.
"ERISA": The Employee Retirement Income Securities Act of 1974, as
amended.
"Event of Default": An event with respect to the Master Servicer
described in Section 7.02 hereof.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Final Certification": A certification as to the completeness of each
Trustee Mortgage Loan File substantially in the form of Exhibit A-2 attached
hereto provided by the Trustee (or the Custodian) on or before the first
anniversary of the Closing Date pursuant to Section 2.02(c) hereof.
"Final Distribution Date": The meaning set forth in Section 9.03 hereof.
5
"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.
"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.
6
"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 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.
7
"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 in full 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 Liquidation Proceeds received on account of any Mortgage Loan during
the period from the first day of a month through the last day of the Prepayment
Period ending during such month.
"Month End Interest Shortfall": The amount of Month End Interest not
paid by a Servicer or the Master Servicer.
"Monthly Payment": With respect to any Mortgage Loan and any month, the
scheduled payment of principal and interest due in such month under the terms of
the related Mortgage Note.
"Monthly Statement": The statement required to be prepared and delivered
to the Trustee by the Master Servicer on or before each Master Servicer
Reporting Date as described in Section 4.01 hereof.
"Mortgage Interest Rate": With respect to any Mortgage Loan, the annual
interest rate required to be paid by the related Borrower under the terms of the
related Mortgage Note.
"Mortgage Loan": Any of the Single Family Loans, Multi-Family Loans,
Conventional Home Improvement Loans, Title I Loans, or Cooperative Loans sold by
SASCO to the Trust and listed on the Mortgage Loan Schedule to the Trust
Agreement, and any loans substituted therefor pursuant to the terms of the Trust
Agreement.
"Mortgage Loan Schedule": The list of Mortgage Loans sold by SASCO to the
Trust, which schedule is attached to the Trust Agreement and sets forth for each
Mortgage Loan (i) the Servicer (SASCO) 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.
"Mortgage Note": The note or other evidence of indebtedness of a
Borrower with respect to a Mortgage Loan.
8
"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).
"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, 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
9
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 SASCO 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 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 (with regard to the
existence of any Credit Enhancement);
10
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 Keogh 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.
"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.
"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 SASCO, but only if the affected Mortgage Loan would cease to qualify
as a "qualified mortgage" for purposes of the REMIC
11
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
SASCO 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 Deleted Mortgage Loan; and (xv)
is not convertible to a fixed Mortgage Interest Rate unless the Deleted Mortgage
Loan is so convertible. In the event that 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,
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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 SASCO.
"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.
"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.
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"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.
"Rule 144A Certificate": Unless otherwise provided in the Trust
Agreement, a Private Certificate.
"Sales/Servicing Agreement": Each of the Sales/Servicing Agreements
identified in the Trust Agreement.
"SASCO": 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.
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"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 SASCO 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 SASCO.
"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 SASCO relating to the servicing of Mortgage Loans which is in form
and substance satisfactory to the Master Servicer.
"Servicing Fee": Unless otherwise provided in the Trust Agreement, with
respect to each Distribution Date and each Mortgage Loan, an amount equal to
one-twelfth of the applicable Servicing Fee Rate multiplied by the Scheduled
Principal Balance of such Mortgage Loan as of the first day of the preceding Due
Period.
"Servicing Fee Rate": The rate specified as such in the Trust Agreement.
"Single Family Loan": A mortgage loan that is secured by a first, second,
or more junior lien on a one- to four-family residential property.
"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)
15
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 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.
"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
16
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.
"Transferee Agreement": An agreement substantially in the form of
Exhibit E attached hereto.
"Treasury": The United States Treasury Department.
"Trust": The trust formed pursuant to the Trust Agreement.
"Trust Agreement": The Trust Agreement among SASCO, 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 to
the Trustee for the benefit of the Certificateholders by SASCO 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
17
the applicable public recording office, a photocopy of such Security
Instrument certified by an Officer of the Master 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 Master Servicer
to be a true and correct copy of the recorded assignment or the
assignment submitted for recordation;
(d) if an assignment of the Security Instrument to the related Servicer
has been recorded or sent for recordation, an original assignment of the
Security Instrument from such Servicer in blank or to the Trustee or the
Custodian in recordable form;
(e) 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 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.
18
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.
ARTICLE II
MORTGAGE LOAN FILES
Section 2.01. Mortgage Loan Files
Pursuant to the Trust Agreement, SASCO has sold to the Trustee, for the
benefit of the Certificateholders without recourse all the right, title and
interest of SASCO in and to the Mortgage Loans, any and all rights, privileges
and benefits accruing to SASCO under the Sales Agreement and Servicing
Agreements with respect to the Mortgage Loans (except, in the case of the Sales
Agreement, any rights of SASCO 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 SASCO's rights
to Monthly Payments on the 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.
In connection with such sale, SASCO 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 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, SASCO shall cause each such
original recorded document, or a certified copy thereof, to be delivered to the
Custodian promptly following its recordation. SASCO 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.
SASCO has delivered or caused to be delivered to each Servicer, on or
before the Closing 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 Mortgage Loans on
behalf of the Trust from SASCO 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
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,
19
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 SASCO and the Master Servicer, on the
Closing Date, 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 Mortgage
Loan that includes each of the documents required to be included therein. Before
delivering the Initial Certification, the Custodian shall have examined each
Trustee Mortgage Loan File to confirm that (except as specifically noted on a
schedule of exceptions thereto):
(i) except for the endorsement required pursuant to clause (a) of
the definition of Trustee Mortgage Loan File, the Mortgage Note, on the
face or the reverse side thereof, does not contain evidence of any
unsatisfied claims, liens, security interests, encumbrances or
restrictions on transfer;
(ii) the Mortgage Note bears an endorsement (which appears to be an
original) as required pursuant to clause (a) of the definition of Trustee
Mortgage Loan File;
(iii) all documents required to be contained in the Trustee
Mortgage Loan File are in its possession or in the possession of a
Custodian on its behalf;
(iv) such documents have been reviewed by it, or by a Custodian on
its behalf, and appear regular on their face and relate to such Mortgage
Loan; and
(v) based on its examination, or the examination by a Custodian on
its behalf, and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule accurately reflects the information
set forth in the Trustee Mortgage Loan File.
It is understood that, before delivering the Initial Certification, the
Custodian shall examine the Mortgage Loan Documents to confirm that:
(A) each Mortgage Note and Security Instrument bears a signature or
signatures that appear to be original and that purport to be that of the Person
or Persons named as the maker and mortgagor/trustor or, if photocopies are
permitted under the definition of Trustee Mortgage Loan File, that such copies
bear a reproduction of such signature or signatures;
(B) except for the endorsement required pursuant to clause (a) of
the definition of Trustee Mortgage Loan File, neither the Security Instrument
nor any assignment, on the face or the reverse side thereof, contains evidence
of any unsatisfied claims, liens, security interests, encumbrances or
restrictions on transfer;
(C) the principal amount of the indebtedness secured by the
Security Instrument is identical to the original principal amount of the
Mortgage Note;
(D) the assignment of the Security Instrument from the Seller is in
the form required pursuant to clause (c) of the definition of Trustee Mortgage
Loan File and bears a signature or signatures that appear to be original and
that purport to be that of the Seller and any other necessary party or, if
photocopies are permitted under the definition of Trustee Mortgage Loan File,
that such copies bear a reproduction of such signature or signatures;
(E) if intervening assignments are to be included in the Trustee
Mortgage Loan File, each such intervening assignment bears a signature or
signatures that appear to be original and that purport to be that of the
Mortgagee and/or the assignee (and any other necessary party) or, if photocopies
are permitted under the definition of Trustee Mortgage Loan File, that such
copies bear a reproduction of such signature or signatures;
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(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 SASCO and the Master Servicer a Final Certification evidencing
the completeness of the Trustee Mortgage Loan File for each Mortgage Loan, with
any applicable exceptions noted on such certification.
(d) In delivering each of the certifications required above, the
Custodian shall be under no duty or obligation (i) to inspect, review or examine
any such documents, instruments, securities or other papers to determine that
they or the signatures thereon are genuine, enforceable, or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face or that any document that
appears to be an original is in fact an original or (ii) to determine whether
any Trustee Mortgage Loan File should include any power of attorney, surety or
guaranty agreement, note assumption rider, buydown agreement, assumption
agreement, modification agreement, written assurance or substitution agreement.
(e) On or before the fifth Business Day of each third month, commencing
the fourth month following the month in which the Closing Date occurs, the
Custodian shall deliver to the Seller a Recordation Report, dated as of the
first day of such month, identifying those Mortgage Loans for which it has not
yet received (i) an original recorded Security Instrument or a copy thereof
certified to be true and correct by the public recording office in possession of
such Security Instrument, (ii) an original recorded assignment of the Security
Instrument to the related Servicer, the Trustee or the Custodian, as applicable,
and any required intervening assignments or copies thereof, in each case,
certified to be a true and correct copy by the public recording office in
possession of such assignment, or (iii) if an assignment of the Security
Instrument to the related Servicer has been recorded or sent for recordation, an
original assignment of the Security Instrument from such Servicer in blank or to
the Trustee or the Custodian in recordable form.
(f) The Trustee may, in accordance with Section 8.11 hereof, appoint one
or more Custodians to hold the Trustee Mortgage Loan Files on its behalf and to
review the Trustee Mortgage Loan Files as provided in this Section 2.02. SASCO
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 SASCO 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.
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Section 2.03. Purchase or Substitution of Mortgage Loans by the Seller, a
Servicer or SASCO
(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 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) SASCO Breach. Within 90 days of the earlier of discovery or receipt
of notice by SASCO 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
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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), SASCO 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 in the event that 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
Master Servicer of the conversion of any ARM Loan to a Converted Mortgage Loan,
the Master Servicer shall enforce the Servicer's obligation, if any, set forth
in the Servicing Agreement or the Seller's obligation, if any, set forth in the
Sales Agreement to purchase such Converted Mortgage Loan from the Trustee. If
the Servicer or the Seller defaults upon its obligation to purchase any
Converted Mortgage Loan, and such default remains unremedied for a period of
five Business Days after written notice of such default shall have been given by
the Master Servicer to the Servicer or the Seller, as applicable, then the
Master Servicer shall use its best efforts to cause such Converted Mortgage Loan
to be sold for settlement on the last day of any month to any Person which the
Master Servicer may in its sole discretion select. The Master Servicer shall not
cause a Converted Mortgage Loan to be sold or otherwise transferred to a Person
other than the Servicer or the Seller (or any other Person who has a preexisting
obligation to purchase such Mortgage Loan) unless (i) upon such sale or other
transfer the Trust would receive a net amount at least equal to the Purchase
Price and (ii) if the Purchase Price exceeds the Basis Limit Amount, the Master
Servicer receives an Opinion of Counsel (which Opinion of Counsel will not be an
expense of the Master Servicer or the Trustee) that such sale or other transfer
will not result in the imposition of a "prohibited transaction" tax (as such
term is defined in the Code) on the related REMIC or jeopardize its status as a
REMIC. Any such Converted Mortgage Loan which is not purchased by the Servicer
or the Seller and which the Master Servicer is unable to sell shall remain in
the Trust.
(f) Delinquent Mortgage Loans. SASCO 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
23
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 SASCO or a Seller substitutes
one or more Qualified Substitute Mortgage Loans, SASCO 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 SASCO to the effect that
each such Qualified Substitute Mortgage Loan complies with the terms of the
Trust Agreement. 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 SASCO 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 SASCO 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 SASCO with
respect to the Mortgage Loans set forth in the Trust Agreement). In addition, in
the case of any substitution effected by a Seller, each Qualified Substitute
Mortgage Loan shall be subject, as of the date of its substitution, to the terms
of the related Sales Agreement (including the representations and warranties of
the Seller with respect to the Mortgage Loans set forth in the Sales Agreement).
The Trustee shall, within five Business Days of its receipt of the documents
referred to above, effect the conveyance of such Deleted Mortgage Loan to SASCO
or the Seller, as the case may be, in accordance with the procedures specified
above.
For any month in which SASCO 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, SASCO 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
24
collect from the applicable Purchaser for payment to the Trustee any
underpayment that resulted from such miscalculation upon the discovery of such
underpayment. Recovery may be made either directly or by set-off of all or any
part of such underpayment against amounts owed by the Trust to such Purchaser.
(j) Qualification Defect. If (i) any Person required to cure, purchase or
substitute for a Mortgage Loan affected by a Qualification Defect under the
terms of the Trust Agreement or a separate agreement fails to perform within the
earlier of (A) 75 days of the Defect Discovery Date or (B) the time limit set
forth in the Trust Agreement or such separate agreement or (ii) no Person is
obligated to cure, purchase or substitute for a Mortgage Loan affected by a
Qualification Defect, the Trustee shall dispose of such Mortgage Loan in such
manner and for such price as the Master Servicer notifies the Trustee in writing
are appropriate, provided that the removal of such Mortgage Loan occurs on or
before the 90th day from the Defect Discovery Date. It is the express intent of
the parties that a Mortgage Loan affected by a Qualification Defect be removed
from the Trust before the 90th day from the Defect Discovery Date so that the
related REMIC(s) will continue to qualify as a REMIC(s). Accordingly, the
Trustee is not required to sell an affected Mortgage Loan for its fair market
value nor shall the Trustee be required to make up any shortfall resulting from
the sale of such Mortgage Loan. The Person failing to cure, purchase, or
substitute for a Mortgage Loan as required under the terms of the Trust
Agreement shall be liable to the Trust for (i) any difference between (A) the
Unpaid Principal Balance of the Mortgage Loan plus accrued and unpaid interest
thereon at the related Mortgage Interest Rate to the date of disposition and (B)
the net amount received by the Trustee from the disposition (after the payment
of related expenses), (ii) interest on such difference at the related Mortgage
Interest Rate from the date of disposition to the date of payment and (iii) any
legal and other expenses incurred by or on behalf of the Trust in seeking such
payments. The Master Servicer shall pursue the legal remedies of the Trust
relating to this Section 2.03(j) on the Trust's behalf, and the Trust shall
reimburse the Master Servicer for any legal or other expenses of the Master
Servicer related to such pursuit not recovered from the Person that failed to
cure, purchase, or substitute for a Mortgage Loan as required under the terms of
the Trust Agreement.
(k) Any Person required under this Section 2.03 to give notice or to make
a request of another Person to give notice shall give such notice or make such
request promptly.
Section 2.04. Representations and Warranties of SASCO
SASCO hereby represents and warrants to the Trustee that as of the
Closing Date or as of such other date specifically provided herein:
(a) SASCO 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 SASCO;
(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 SASCO, enforceable against SASCO 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 SASCO of the Trust
Agreement, nor the consummation by SASCO of the transactions therein
contemplated, nor compliance by SASCO 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 SASCO or any law, governmental rule or regulation or any judgment,
25
decree or order binding on SASCO or any of its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or other
instrument to which SASCO 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, SASCO pending, or, to the knowledge of SASCO,
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) The information set forth in the Mortgage Loan Schedule with
respect to each Mortgage Loan is true and correct in all material
respects at the date or dates with respect to which such information is
furnished;
(f) With respect to each Mortgage Loan, SASCO 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;
(g) SASCO has acquired its ownership of, or security interest in,
each Mortgage Loan in good faith without notice of any adverse claim;
(h) SASCO has not assigned any interest or participation in any
Mortgage Loan (or, if any such interest or participation has been
assigned, it has been released); and
(i) SASCO 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 SASCO, 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 SASCO 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 SASCO 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:
26
(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 SASCO and the Trustee, constitutes a legal, valid and binding
agreement of the Master Servicer, enforceable against the Master Servicer
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium or other
similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law;
(c) Neither the execution and delivery by the Master Servicer of
the Trust Agreement, nor the consummation by the Master Servicer of the
transactions therein contemplated, nor compliance by the Master Servicer
with the provisions thereof, will (i) conflict with or result in a breach
of, or constitute a default under, any of the provisions of the articles
of association or incorporation (or corresponding charter document) or
by-laws of the Master Servicer or any law, governmental rule or
regulation or any judgment, decree or order binding on the Master
Servicer or any of its properties, or any of the provisions of any
indenture, mortgage, deed of trust, contract or other instrument to which
the Master Servicer is a party or by which it is bound or (ii) result in
the creation or imposition of any lien, charge or encumbrance upon any of
its properties pursuant to the terms of any such indenture, mortgage,
deed of trust, contract or other instrument.
(d) There are no actions, suits or proceedings against, or
investigations of, the Master Servicer pending, or, to the knowledge of
the Master Servicer, threatened, before any court, administrative agency
or other tribunal which would prohibit the Master Servicer from entering
into the Trust Agreement or performing its obligations under the Trust
Agreement; and
(e) If the Master Servicer is not a national banking association,
the Master Servicer maintains a Master Servicer Errors and Omissions
Policy and a Master Servicer Fidelity Bond which cover the Master
Servicer's performance under the Trust Agreement, and such policy and
bond are in full force and effect.
Upon the discovery by SASCO, 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
27
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 Master 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:
(i) all Monthly Payments received by such Servicer during the
preceding Due Period, whether paid by the Borrower or advanced by such
Servicer, minus the Servicing Fee due such Servicer to the extent paid by
the Borrower after the payment of Month-End Interest;
(ii) all Monthly Payments made by the Borrower after their Due Date
that were not paid or advanced pursuant to Section 3.01(b)(i) hereof;
(iii) all other payments (other than late charges, conversion fees
and similar charges and fees retained by such Servicer pursuant to the
Servicing Agreement) received by such Servicer in connection with any
unscheduled principal payments or recoveries on such Mortgage Loan during
the preceding Prepayment Period, including Liquidation Proceeds and
Insurance Proceeds, together with any interest thereon paid by or for the
account of the Borrower minus the sum of (A) expenses associated with
such recovery, (B) any Advances on such Mortgage Loan paid by such
Servicer and (C) the Servicing Fee allocable thereto; and
(iv) the Purchase Price of such Mortgage Loan if such Mortgage Loan
was purchased by the Servicer from the Trust during the preceding
Prepayment Period.
(c) Withdrawals. On each Business Day, the Master Servicer may withdraw
from the appropriate Master Servicer Custodial Account (to the extent the funds
therein are not invested) any Non-Recoverable Advance and any Advance previously
made with respect to a Mortgage Loan as to which a late payment, Liquidation
Proceeds or Insurance Proceeds have been received (but only to the extent of
such late payment, Liquidation Proceeds or Insurance Proceeds).
On or prior to each Master Servicer Remittance Date, the Master Servicer
shall remit from the funds in the Master Servicer Custodial Account by wire
transfer (or as otherwise instructed by the Trustee) in immediately available
funds to the Asset Proceeds Account an amount 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;
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(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. Net investment
income on the funds in the 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 Servicer shall deposit the amount
of such loss into the Master Servicer Custodial Account on or before the related
Distribution Date.
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;
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(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 SASCO or the Master Servicer for expenses
incurred by or reimbursable to it pursuant to Section 6.03;
(vii) to refund any overpayment of the Purchase Price of a Mortgage
Loan; and
(viii) to make the payments provided for in the Trust Agreement.
(c) Accounting. The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any payment to and from the Asset Proceeds Account.
(d) Investment. No later than the close of business on the day preceding
the Master Servicer Remittance Date, the Master Servicer shall direct the Paying
Agent in writing (which may be in the form of standing instructions) as to the
investment of funds (which funds, if received by noon, Houston time, shall be
invested in Permitted Investments) in the Asset Proceeds Account for the period
from the Master Servicer Remittance Date through the Distribution Date. Net
investment income on funds in the Asset Proceeds Account shall be released to
the Master Servicer as part of the Master Servicer Compensation on or before the
fifth Business Day of the month following the month in which the related
Distribution Date occurs, unless the Trust Agreement provides that such net
investment income is to be applied to the payment of other amounts due from the
Master Servicer.
Section 3.03. Issuing REMIC Accounts
(a) With respect to any Double REMIC Series, the Paying Agent shall
establish one or more Subaccounts of the Distribution Account. Unless otherwise
provided in the Trust Agreement, the Subaccounts will be Regular Interests in
the Pooling REMIC and the Paying Agent shall deposit all payments with respect
to such Regular Interests into such Subaccounts.
(b) With respect to any Double REMIC Series, the Paying Agent may
establish one or more accounts into which the Paying Agent may deposit all
payments on account of the Residual Interest in the Pooling REMIC and any
Regular Interests in the Pooling REMIC that are not considered assets of the
Issuing REMIC and from which the Paying Agent may withdraw funds to pay the
Certificates that do not evidence interests in the Issuing REMIC. In lieu of
establishing such accounts, the Paying Agent may pay on each Distribution Date
to the Holders of the Certificates that do not evidence interests in the Issuing
REMIC the amounts that are due with respect to such Certificates. In addition,
with respect to a Double REMIC Series, upon payment in full of all related
Regular Interests and all administrative costs of the related Trust and each
related REMIC, any amount remaining in the Asset Proceeds Account may be
distributed directly to the Holders of the Certificate representing beneficial
ownership of the Residual Interest in the Pooling REMIC.
Section 3.04. Advances by Master Servicer and Trustee
(a) To the extent not made by the Servicer of a Mortgage Loan, the Master
Servicer shall be obligated to make Advances with respect to such Mortgage Loan
to the extent the Master Servicer determines, in good faith, that such Advances
will be recoverable from Insurance Proceeds, Liquidation Proceeds or subsequent
payments by the Borrower of such Mortgage Loan. If the Master Servicer
determines that all, or a portion of, any Advance required by this Section 3.04
is not so recoverable, the Master Servicer shall promptly deliver to the Trustee
an
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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.
(iii) In the event that 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) In the event that 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
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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. In the event that the Trustee determines that it is prevented by
law from making an Advance, the Trustee will notify the Master Servicer within
one (1) Business Day of such determination.
(e) Notwithstanding anything herein to the contrary, no Advance shall be
required to be made by the Master Servicer or the Trustee to the extent that
making such Advance would result in the amount of aggregate Advances then
outstanding and unreimbursed by the Master Servicer or the Trustee to exceed the
Master Servicer Advance Amount.
Section 3.05. Month End Interest
Unless otherwise provided in the Servicing Agreement, the Servicer shall
pay and deposit into the Servicer Custodial Account, on or before each Servicer
Remittance Date, an amount equal to Month End Interest with respect to the
preceding month, but only to the extent of the Servicer Fee payable with respect
to the preceding month. Such payment will not be considered a Non-Recoverable
Advance. The Servicer shall not be entitled to any recovery or reimbursement of
such payment from the Master Servicer, the Trustee or the Certificateholders.
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, Primary Mortgage Insurance policy, Flood Insurance policy or
Hazard Insurance policy 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
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the Trustee and the Trustee shall, within five Business Days of its receipt of
such Request for Release, release, or cause the Custodian to release, the
related Trustee Mortgage Loan File to the Master Servicer or the Servicer, as
requested by the Master Servicer. Any such Request for Release shall obligate
the Master Servicer or the Servicer, as the case may be, to return each and
every document previously requested from the Trustee Mortgage Loan File to the
Trustee by the twenty-first day following the release thereof, unless (i) the
related Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to such Mortgage Loan have been deposited in the Asset Proceeds Account or the
Servicer Custodial Account or (ii) the Trustee Mortgage Loan File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the related Mortgaged
Premises either judicially or non-judicially, and the Master Servicer has
delivered to the Trustee a certificate of the Master Servicer or the Servicer
certifying as to the name and address of the Person to which such Trustee
Mortgage Loan File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of an Officer's Certificate of the Master Servicer
or the Servicer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation which are
required to be deposited into the Servicer Custodial Account or the Asset
Proceeds Account have been so deposited, or that such Mortgage Loan is secured
by an REO Property, the Request for Release shall be released by the Trustee to
the Master Servicer or the Servicer, as appropriate.
Upon written certification of the Master Servicer or the Servicer, the
Trustee (subject to Section 8.01(e) hereof), shall execute and deliver to the
Master Servicer or the Servicer, as directed by the Master Servicer, court
pleadings, requests for trustee's sale or other documents necessary to a
foreclosure proceeding or trustee's sale in respect of a Mortgaged Premises or
to any legal action brought to obtain judgment against any Borrower on any
Mortgage Note or Security Instrument or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by any Mortgage Note or Security
Instrument or otherwise available at law or in equity. Each such certification
shall include a request that such pleadings, requests or other documents be
executed by the Trustee and a statement as to the reason such pleadings,
requests or other documents are required and that the execution and delivery
thereof by the Trustee will not invalidate or otherwise affect the lien of the
Security Instrument, except for the termination of such a lien upon completion
of the foreclosure proceeding or trustee's sale.
Section 3.07 Reports to the Trustee; Annual Compliance Statements
The Master Servicer shall deliver to the Trustee, on or before April 30
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 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
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 FDIC and (C) remit all related revenues collected (net of such
costs and expenses retained by such Independent Contractor) to the
Servicer on a monthly or more frequent basis; and
(iii) none of the provisions of this Section 3.08 relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee and the Certificateholders with respect to the
conservation, protection and rental of such REO Property.
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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;
(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
35
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 SASCO may, to the extent permitted by the applicable
Servicing Agreement, make such modifications and amendments to the Guide as
SASCO 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 SASCO 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, SASCO 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 SASCO desires to issue and
(iii) the reason or reasons for such proposed modification or amendment.
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
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foregoing, the Master Servicer, acting with the consent of SASCO 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. SASCO 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.
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.
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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;
(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 CutOff 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;
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(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 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.
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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.
In the event 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 of
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. In the event
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 Depository
Trust Company
If and for so long as any Certificate is held by The Depository Trust
Company, on the second Business Day before 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 clause (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.
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 SASCO or the Trustee rather than by the Master Servicer, the Master
Servicer shall be deemed to certify as to each Periodic Report delivered to
SASCO 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
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content appropriate for filing with the SEC. SASCO 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 SASCO or any other Person with respect to
(i) the registration of the Certificates pursuant to the Securities Act, (ii)
the issuance or sale of the Certificates or (iii) compliance with the provisions
of the Securities Act, the Exchange Act or any applicable federal or state
securities or other laws, including, but not limited to, any requirement to
update the registration statement or prospectus relating to the Certificates in
order to render the same not materially misleading to investors.
(d) In connection with the Master Servicer's preparation of any Form 15
or any Periodic Report, the Certificate Registrar shall provide the Master
Servicer with such information as the Master Servicer may reasonably request
concerning the number and identity of the Holders appearing on the Certificate
Register, but the Certificate Registrar shall have no duty or obligation to
provide information which does not appear on the Certificate Register, including
any information concerning the ownership of Persons for whom a nominee is the
Certificateholder of record.
ARTICLE V
THE POOLING INTERESTS AND THE CERTIFICATES
Section 5.01. Pooling REMIC Interests
If an election has been made to treat certain assets of the Trust as a
Pooling REMIC, the Trust Agreement will set forth the terms of the Regular
Interests and the Residual Interest of the Pooling REMIC. Unless otherwise
provided in the Trust Agreement, (i) the Subaccounts will be the Regular
Interests in the Pooling REMIC but will not constitute securities or
certificates of interest in the Trust and (ii) the Trustee will be the owner of
the Subaccounts, which may not be transferred to any person other than a
successor trustee appointed pursuant to Section 8.07 hereof unless the party
desiring the transfer obtains a Special Tax Opinion.
Section 5.02. The Certificates
The Certificates shall be designated in the Trust Agreement. The
Certificates in the aggregate will represent the entire beneficial ownership
interest in the Trust Estate. On the Closing Date, the aggregate Certificate
Principal Balance of the Certificates will be equal to or less than the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off
Date. 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,
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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 SASCO upon receipt by the
Trustee of the documents specified in Section 2.01 hereof. The Certificates
shall be executed and attested by manual or facsimile signature on behalf of the
Trustee by an authorized Officer. Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper Officers of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of such Certificates.
The Certificate shall be authenticated by a manual signature of a duly
authorized signatory of the Certificate Registrar. No Certificate shall be
entitled to any benefit under the Trust Agreement or be valid for any purpose
unless there appears on such Certificate a certificate of authentication
substantially in the form provided in the Trust Agreement executed by the
Certificate Registrar by manual signature, and such certificate of
authentication shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered under the Trust Agreement.
All Certificates shall be dated the date of their execution.
Section 5.03. Book-Entry Certificates
(a) The Book-Entry Certificates shall be represented initially by one or
more certificates registered in the name designated by the Clearing Agency.
SASCO, 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 SASCO, 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 SASCO, 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) SASCO
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 SASCO is unable to locate a qualified successor
within 30 days, or (ii) SASCO, 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
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Certificates. All reasonable costs associated with the preparation and delivery
of certificated Certificates shall be borne by SASCO.
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.
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.
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 SASCO, 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
43
applicable state securities laws or is not made in accordance with such federal
and state laws. Neither SASCO, 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 SASCO from
SASCO or an Affiliate of SASCO, 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 SASCO, 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.
SASCO 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.
(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
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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 SASCO
from SASCO or an Affiliate of SASCO, 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 SASCO, the Trustee, any REMIC, the Master Servicer, the
Certificate Registrar, the Paying Agent or the other Holders of any of the
Certificates, and none of such parties shall have any liability for payment of
any such tax or reporting cost.
Section 5.06. Mutilated, Destroyed, Lost or Stolen Certificates
If (i) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Trustee and the Certificate Registrar receive
evidence to its respective satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee or the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class and of like tenor and Percentage Interest. Upon the issuance of
any new Certificate under this Section 5.06, the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Certificate Registrar) connected therewith. Any
replacement Certificate issued pursuant to this Section 5.06 shall constitute
complete and indefeasible evidence of ownership in the Trust as if originally
issued, whether or not the destroyed, lost or stolen Certificate shall be found
at any time.
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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, 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. 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.
ARTICLE VI
SASCO AND THE MASTER SERVICER
Section 6.01 Liability of, and Indemnification by, SASCO and the Master
Servicer
SASCO 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 SASCO and the Master Servicer under the Trust
Agreement.
The Master Servicer shall indemnify and hold harmless the Trustee and
SASCO 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 SASCO 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.
SASCO 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.
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Section 6.02. Merger or Consolidation of SASCO or the Master Servicer
Subject to the following paragraph, SASCO 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.
SASCO or the Master Servicer may be merged or consolidated with or into
any Person, or transfer all or substantially all of their respective assets to
any Person, in which case any Person resulting from any merger or consolidation
to which SASCO or the Master Servicer shall be a party, or any Person succeeding
to the business of SASCO or the Master Servicer, shall be the successor of SASCO
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 SASCO, the Master Servicer and
Others
Neither SASCO, the Master Servicer nor any of the directors, officers,
employees or agents of SASCO 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. SASCO, the Master Servicer and
any of the directors, officers, employees or agents of SASCO 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 SASCO 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 SASCO 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 SASCO 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.
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 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.
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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 SASCO under the Trust
Agreement.
ARTICLE VII
TERMINATION OF SERVICING AND MASTER
SERVICING ARRANGEMENTS
Section 7.01. Termination and Substitution of Servicing Agreements
Upon the occurrence of any event for which a Servicer may be terminated
pursuant to a Servicing Agreement, the Master Servicer shall promptly deliver to
SASCO 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 SASCO, 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
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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 appointment
of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling 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, marshalling
of assets and liabilities or similar proceeding of or relating to the Master
Servicer or relating to all or substantially all of 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
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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.
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 of 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
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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.
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
SASCO 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;
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(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 SASCO, or involving any allegation
or claim of liability or recovery against the Trustee by the Master Servicer or
by a Seller, the Trustee shall not be held to a greater standard of care than
the Master Servicer or the Seller would be held in such situation. No provision
of the Trust Agreement shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it unless
such risk or liability relates to duties set forth herein (which duties shall
not be deemed to include actions required to be taken by the Trustee arising out
of the failure of another person to take any required action hereunder).
Section 8.02. Certain Matters Affecting the Trustee
(a) Except as otherwise provided in Section 8.01 hereof:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate of auditors or
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties. Further, the Trustee may accept a copy of the
vote of the Board of Directors of any party certified by its clerk or
assistant clerk or secretary or assistant secretary as conclusive
evidence of the authority of any person to act in accordance with such
vote, and such vote may be considered as in full force and effect until
receipt by the Trustee of written notice to the contrary;
(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;
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(v) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by the Trust Agreement;
(vi) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Holders of Certificates entitled to at least 25% of the Voting
Rights; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not assured to the Trustee by the security afforded to it by
the terms of the Trust Agreement, the Trustee may require indemnity
against such expense or liability as a condition to taking any such
action. The expense of every such investigation shall be paid by the
Master Servicer or, if paid by the Trustee, shall be repaid by the Master
Servicer upon demand;
(vii) The Trustee may execute any of the trusts or powers under the
Trust Agreement or perform any duties thereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it under the Trust Agreement;
(viii) Whenever the Trustee is authorized herein to require acts or
documents in addition to those required to be provided it in any matter,
it shall be under no obligation to make any determination whether or not
such additional acts or documents should be required unless obligated to
do so under Section 8.01 hereof;
(ix) The permissive right or authority of the Trustee to take any
action enumerated in the Trust Agreement shall not be construed as a duty
or obligation; and
(x) The Trustee shall not be deemed to have notice of any matter,
including, but limited to, any Event of Default, unless an Officer of the
Trustee has actual knowledge thereof or unless written notice thereof is
received by the Trustee at 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 SASCO, 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 SASCO of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to SASCO 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.
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Section 8.04. Trustee May Own Certificates
The Trustee in its 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.
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. SASCO shall indemnify
and hold harmless the Trustee 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 or any director, officer, employee or agent thereof, or
the performance of any of the Trustee's duties under the Trust Agreement other
than any loss, liability or expense incurred by reason of the Trustee'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 8.05 shall
survive the resignation or removal of the Trustee and the termination of the
Trust 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
SASCO, the Master Servicer and all Certificateholders. Upon receiving such
notice of resignation, SASCO 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. SASCO 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 SASCO, 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 SASCO 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. SASCO 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 SASCO, the Trustee so removed and the successor so
appointed. SASCO 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 SASCO, 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 SASCO, 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, SASCO 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 SASCO 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 SASCO.
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.
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, SASCO, 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
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SASCO, the Master Servicer or the Trustee may consider necessary or desirable.
If SASCO 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 of
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 SASCO or any Seller.
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.
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ARTICLE IX
REDEMPTION OF CERTIFICATES AND TERMINATION OF THE TRUST
Section 9.01. Redemption
Unless otherwise provided in the Trust Agreement, either SASCO 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 SASCO 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 SASCO 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 SASCO, 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 Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
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 SASCO 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
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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) in the event 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. In the event 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 of 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 of the
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.
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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, SASCO 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).
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
59
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 of 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) SASCO, the Master Servicer, the Trustee (to the extent it has been
instructed by SASCO 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) SASCO, the Master Servicer, the Trustee (to the extent it has been
instructed by SASCO or the Master Servicer), and the Holders of the Residual
Certificates shall not take any action required by the Code or REMIC Provisions
or fail to take any action, or cause any REMIC to take any action or fail to
take any action, that, if taken or not taken, could endanger the status of any
such REMIC as a REMIC unless the Trustee and the Master Servicer have received
an Opinion of Counsel (at the expense of the party seeking to take or to fail to
take such action) to the effect that the contemplated action or failure to act
will not endanger such status.
(g) Unless otherwise provided in the Trust Agreement, any taxes that are
imposed upon the Trust or any REMIC by federal or state (including local)
governmental authorities (other than taxes paid by a party pursuant to Section
10.02 hereof or as provided in the following sentence) shall be allocated in the
same manner as Realized Losses are allocated. Any taxes imposed upon the Trust
or any REMIC by the jurisdiction (or any subdivision thereof) in which the
Corporate Trust Office of the Trustee is located that would not have been
imposed on the Trust or such REMIC in the absence of any legal or business
connection between the Trustee and such jurisdiction (or locality), shall be
paid by the Trustee and, notwithstanding anything to the contrary in the Trust
Agreement, such taxes shall be deemed to be part of the Trustee's cost of doing
business and shall not be reimbursable to the Trustee.
(h) Unless otherwise provided in the Trust Agreement, the Master Servicer
or an Affiliate shall acquire a Residual Certificate in each REMIC and will act
as the Tax Matters Person of each REMIC and perform various tax administration
functions of each REMIC as its agent. If the Master Servicer or an Affiliate is
unable for any reason to fulfill its duties as Tax Matters Person for a REMIC,
the holder of the largest Percentage Interest of the Residual Certificates in
such REMIC shall become the successor Tax Matters Person of such REMIC.
Section 10.02. Prohibited Activities
Except as otherwise provided in the Trust Agreement, neither SASCO, 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):
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(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.
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
SASCO, 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
61
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 SASCO, 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 SASCO 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.
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 or all of 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
62
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.
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 (i) in the
case of SASCO, 4880 Cox Road, Glen Allen, Virginia 23060, Attention: President
(telecopy number (804) 747-4294), or such other address or telecopy number as
may hereafter be furnished to each party to the Trust Agreement in writing by
SASCO, (ii) in the case of the Master Servicer, 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 the Master Servicer
and (iii) in the case of the Trustee, 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 the Trustee. 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.
63
Section 11.07. Sale of Mortgage Loans
It is the express intent of SASCO and the Trustee that the conveyance of
the Mortgage Loans by SASCO to the Trustee pursuant to the Trust Agreement be
construed as a sale of the Mortgage Loans by SASCO to the Trustee for the
benefit of the Certificateholders. It is, further, not the intention of SASCO
and the Trustee that such conveyance be deemed a pledge of the Mortgage Loans by
SASCO to the Trustee for the benefit of the Certificateholders to secure a debt
or other obligation of SASCO. However, in the event that, notwithstanding the
intent of the parties, the Mortgage Loans are held to continue to be property of
SASCO 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 SASCO
provided for in the Trust Agreement shall be deemed to be a grant by SASCO to
the Trustee for the benefit of the Certificateholders of a security interest in
all of SASCO'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. SASCO
and the Trustee (to the extent it has been instructed by SASCO or the Master
Servicer) shall, to the extent consistent with the Trust Agreement, take such
actions as may be necessary to ensure that, if the Trust Agreement were deemed
to create a security interest in the Mortgage Loans, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the Trust
Agreement.
Section 11.08. Notice to Rating Agency
(a) The Trustee shall use its best efforts promptly to provide notice to
each Rating Agency with respect to each of the following of which it has actual
knowledge:
(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 SASCO, 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 in the
event it is serving as the Master Servicer pursuant to Section 7.02
hereof;
64
(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.
65
Exhibit A-1
FORM OF INITIAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention: [____________________]
[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 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, it, or a Custodian on its
behalf, 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 or in the possession
of a Custodian on its behalf; (ii) 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 (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 the Mortgage Loan Schedule to the Trust Agreement
accurately reflects the information set forth in the Trustee Mortgage Loan File.
The Trustee further certifies that its review, or the review of its Custodian,
of each Trustee Mortgage Loan File included each of the procedures listed in
clause (b) of Section 2.02 of the Standard Terms.
The Custodian further certifies as to each Mortgage Note that:
(1) except for the endorsement required pursuant to clause (a) of the
definition of Trustee Mortgage Loan File, the Mortgage Note, on the face or the
reverse side(s) thereof, does not contain evidence of any unsatisfied claims,
liens, security interests, encumbrances or restrictions on transfer; and
(2) the Mortgage Note bears an endorsement (which appears to be an
original) as required pursuant to clause (a) of the definition of Trustee
Mortgage Loan File.
A-1-1
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. The Trustee makes no 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
executed by a duly authorized Officer this [____] day of [____________], 199[_].
[TRUSTEE],
as Trustee
By:____________________________
Title:_________________________
A-1-2
Exhibit A-2
FORM OF FINAL CERTIFICATION
[____________], 199[_]
Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
Attention: [____________________]
[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 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 Schedule (other than any Mortgage Loan paid in full
or listed on the attachment hereto) it, or a Custodian on its behalf, 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. The
Trustee makes no 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.
A-2-1
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
executed by a duly authorized Officer this [____] day of [____________], 199[_].
[TRUSTEE],
as Trustee
By:____________________________
Title:_________________________
A-2-2
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
or certified copy or certified copy
SASCO Loan Number thereof thereof*
*Also required with regard to any intervening Assignments.
B-1
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
executed by a duly authorized Officer this [____] day of [____________], 199[_].
[TRUSTEE],
as Trustee
By:____________________________
Title:_________________________
B-2
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
D-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
4880 Cox Road
Glen Allen, Virginia 23060
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, SASCO, 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 SASCO, 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.
3. The Transferee is acquiring the Purchased Certificates for its own
account or for the account of a "qualified institutional buyer," and understands
that such Purchased Certificates may be resold, pledged or transferred only (a)
to a person reasonably believed to be such a qualified institutional buyer that
purchases for its own account or for the account of a qualified institutional
buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A, or (b) pursuant to another exemption from registration
under the Securities Act and under applicable state securities laws. In
addition, such transfer may be subject to additional restrictions, as set forth
in Section 5.05 of the Standard Terms to the Trust Agreement.
D-1
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 by the insurance commissioner or a
similar official or agency of a state, territory or the District
of Columbia.
D-1-1
_____ 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.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Purchased
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
D-1-2
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this [____] day of
[____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Saxon Asset Securities Company,
Mortgage Loan Asset Backed Certificates, Series 199[_]-[_], Class
[___]
D-2-1
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-2-2
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-2-3
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
4880 Cox Road
Glen Allen, Virginia 23060
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, SASCO, 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 SASCO has made available to the
Transferee the opportunity to ask questions of, and receive answers
from, SASCO concerning SASCO, the Trust, the purchase by the Transferee
of the Purchased Certificates and all matters relating thereto, and to
obtain additional information relating thereto that SASCO 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 SASCO, 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 SASCO, 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 SASCO from SASCO or an Affiliate of SASCO, the Master
Servicer or the Trustee may require an Opinion of Counsel (which shall
not be an expense of SASCO, 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 SASCO, the Master Servicer and the
Trustee against any liability that may result if the transfer is not
exempt under federal or applicable state securities laws.
(d) The transfer of the Certificates may be subject to additional
restrictions, as set forth in Section 5.05 of the Standard Terms of the
Trust Agreement.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Trust Agreement, dated as of
[____________], 199[_], which incorporates by reference the Standard Terms
thereto, among Saxon Asset Securities Company, the Master Servicer and the
Trustee, pursuant to which the Purchased Certificates were issued.
E-2
IN WITNESS WHEREOF, the undersigned has caused this Transferee Agreement
to be executed by its duly authorized representative as of the [____] day of
[____________], 199[_].
[TRANSFEREE]
By:____________________________
Name:__________________________
Title:_________________________
E-3
Exhibit F
FORM OF BENEFIT PLAN AFFIDAVIT
Re: Saxon Asset Securities Company
Series 199[_]-[_] Trust (the "Trust")
Mortgage Loan Asset Backed Certificates, Class [___]
STATE OF [____________]
ss:
CITY OF [_____________]
Under penalties of perjury, I, the undersigned, declare that, to the
best of my knowledge and belief, the following representations are true,
correct, and complete.
1. I am a duly authorized officer of [____________] (the "Purchaser"),
whose taxpayer identification number is [____________], and on behalf of which I
have the authority to make this affidavit.
2. That the Purchaser is acquiring a Class [___] Certificate
representing an interest in the Trust, certain assets of which one or more real
estate mortgage investment conduit ("REMIC") elections are to be made under
Section 860D of the Internal Revenue Code of 1986, as amended (the "Code").
3. The Purchaser either:
(i) (A) is not a Plan Investor and (B) either (I) is not an
insurance company or (II) is an insurance company, in which case none of
the funds used by the Purchaser in connection with its purchase of the
Certificates constitute plan assets as defined in the Plan Asset
Regulations ("Plan Assets") and its purchase of the Certificates shall
not result in the Certificates or the assets of the Trust being deemed
to be Plan Assets;
(ii) is an insurance company and either (A) represents that the
funds used to purchase the Certificates are held in an "insurance
company pooled separate account" within the meaning of United States
Department of Labor Prohibited Transaction Class Exemption 90-1 ("PTCE
90-1") and that each of the applicable conditions set forth in PTCE 90-1
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.
E-4
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[_].
E-5
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
4880 Cox Road
Glen Allen, Virginia 23060
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, SASCO, the Master Servicer,
the Trustee, and the Trust as follows:
1. Representations and Warranties. The Transferee represents and
warrants:
(a) The Transferee's taxpayer identification number is as set
forth on the signature page hereof;
(b) The Transferee is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which the Transferee
is organized, is authorized to invest in the Residual Certificates and
to enter into this Agreement, and has duly executed and delivered this
Agreement;
(c) The Transferee represents that (i) it understands that the
Residual Certificates represent for federal income tax purposes a
"residual interest" in one or more real estate mortgage investment
conduits (each, a "REMIC") and that, as the holder of the Residual
Certificates, it will be required to take into account, in determining
its taxable income, its pro rata share of the taxable income of each
such REMIC, (ii) it understands that it may incur federal income tax
liabilities with respect to the Residual Certificates in excess of any
cash flows generated by such Residual Certificates, (iii) it has the
financial wherewithal and intends to pay any tax imposed on the income
that it derives from the Certificates as they become due, and (iv) it
has historically paid its debts as they became due and intends to pay
its debts as they become due in the future;
(d) The Transferee (i) has knowledge in financial and business
matters and is capable of evaluating the merits and risks of an
investment in the Residual Certificates, (ii) has sought such
accounting, legal, and tax advice as it has considered necessary to make
an informed investment decision,
G-1
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 SASCO has made available to the
Transferee the opportunity to ask questions of, and receive answers
from, SASCO concerning SASCO, the Trust, the purchase by the Transferee
of the Residual Certificates and all matters relating thereto, and to
obtain additional information relating thereto that SASCO 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 SASCO or the Trust may deem necessary to ensure that any such
transfer will not result in the imposition of any tax on the Trust;
(e) The Transferee hereby agrees that the Master Servicer or an
affiliate thereof will (i) supervise or engage in any action necessary
or advisable to preserve the status of each related REMIC as a REMIC,
(ii) be, and perform the functions of, each such REMIC's tax matters
person ("TMP"), and (iii) employ on a reasonable basis counsel,
accountants, and professional assistance to aid in the preparation of
tax returns or the performance of the above;
(f) The Transferee hereby agrees to cooperate with the TMP and to
take any action required of it by the REMIC Provisions in order to
create or maintain the REMIC status of each related REMIC;
(g) The Transferee hereby agrees that it will not take any action
that could endanger the REMIC status of any related REMIC or result in
the imposition of tax on any such REMIC unless counsel for, or
acceptable to, the TMP has provided an opinion that such action will not
result in the loss of such REMIC status or the imposition of such tax,
as applicable;
(h) The Transferee hereby agrees to be bound by all of 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
G-2
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
SASCO, 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 SASCO, the
Master Servicer nor the Trust is under any obligation to register the
Certificate or make an exemption from such registration available.
(b) The Transferee acknowledges that if a Residual Certificate is
transferred to a Non-U.S. Person, the transfer will not be recognized by
the Withholding Agent (as defined below) unless the Withholding Agent
has received from the Transferee an affidavit substantially in the form
of Exhibit H-1 attached to the Standard Terms to Trust Agreement.
(c) The Transferee acknowledges that if any United States federal
income tax is due at the time a Non-U.S. Person transfers a Residual
Certificate, the Trustee or its designated Paying Agent or other person
who is liable to withhold federal income tax from a distribution on a
Residual Certificate under sections 1441 and 1442 of the Code and the
Treasury regulations thereunder (the "Withholding Agent") may (i)
withhold an amount equal to the taxes due upon disposition of the
Certificate from future distributions made with respect to the
Certificate to the Transferee (after giving effect to the withholding of
taxes imposed on such Transferee), and (ii) pay the withheld amount to
the Internal Revenue Service unless satisfactory written evidence of
payment of the taxes due by the transferor has been provided to the
Withholding Agent.
(d) The Transferee acknowledges the Withholding Agent may (i)
hold distributions on a Certificate, without interest, pending
determination of amounts to be withheld, (ii) withhold other amounts
required to be withheld pursuant to United States federal income tax
law, if any, from distributions that otherwise would be made to such
Transferee on each Certificate it holds, and (iii) pay to the Internal
Revenue Service all such amounts withheld.
(e) The Transferee acknowledges that the transfer of all or part
of the Residual Certificates that have "tax avoidance potential" (as
defined in Treasury regulations section 1.860G-3(a)(2) or any successor
provision) to a Non-U.S. Person will be disregarded for all federal
income tax purposes, and that Treasury regulations or other
administrative guidance issued by the Treasury may effectively prohibit
the transfer of the Residual Certificates to Non-U.S. Persons.
(f) The Transferee acknowledges that the transfer of the
Residual Certificates to a U.S. Person will be disregarded for all
federal income tax purposes if a significant purpose of the transfer is
to
G-3
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 #__________________
G-4
Exhibit H-1
FORM OF NON-U.S. PERSON AFFIDAVIT
AND AFFIDAVIT PURSUANT TO SECTIONS
860D(a)(6)(A) and 86OE(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Saxon Asset Securities Company
Series 199[_]-[_] Trust (the "Trust")
Mortgage Loan Asset Backed Certificates, Class [R]
STATE OF [____________]
ss:
CITY OF [_____________]
Under penalties of perjury, I, the undersigned, declare that to the best
of my knowledge and belief, the following representations are true, correct and
complete:
1. I am a duly authorized officer of [____________________] (the
"Transferee") and on behalf of which I have the authority to make this
affidavit.
2. The Transferee is acquiring all or a portion of the Class [R]
Certificates (the "Residual Certificates"), which represent a residual interest
in one or more real estate mortgage investment conduits (each, a "REMIC") for
which elections are to be made under Section 860D of the Internal Revenue Code
of 1986, as amended (the "Code").
3. The Transferee is a foreign person within the meaning of Treasury
Regulation Section 1.860G- 3(a)(1) (i.e., a person other than (i) a citizen or
resident of the United States, (ii) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, or (iii) an estate or trust that is subject to United States federal
income tax regardless of the source of its income) who would be subject to
United States income tax withholding pursuant to Section 1441 or 1442 of the
Code and the Treasury regulations thereunder on income derived from the Residual
Certificates (a "Non-U.S. Person").
4. The Transferee agrees that it will not hold the Residual Certificates
in connection with a trade or business in the United States, and the Transferee
understands that it will be subject to United States federal income tax under
sections 871 and 881 of the Code in accordance with section 860G of the Code and
any Treasury regulations issued thereunder on "excess inclusions" that accrue
with respect to the Residual Certificates during the period the Transferee holds
the Residual Certificates.
5. The Transferee understands that the federal income tax on excess
inclusions with respect to the Residual Certificates may be withheld in
accordance with section 860G(b) of the Code from distributions that otherwise
would be made to the Transferee on the Residual Certificates and, to the extent
that such tax has not been imposed previously, that such tax may be imposed at
the time of disposition of any such Residual Certificate pursuant to section
860G(b) of the Code.
6. The Transferee agrees (i) to file a timely United States federal
income tax return for the year in which disposition of a Residual Certificate it
holds occurs (or earlier if required by law) and will pay any United States
federal income tax due at that time and (ii) if any tax is due at that time, to
provide satisfactory written evidence of payment of such tax to the Trustee or
its designated paying agent or other person who is liable to withhold federal
income tax from a distribution on the Residual Certificates under sections 1441
and 1442 of the Code and the Treasury regulations thereunder (the "Withholding
Agent").
H-1-1
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 farmer's 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 of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.
13. The Transferee agrees to consent to any amendment of the Trust
Agreement that shall be deemed necessary by SASCO (upon the advice of counsel to
SASCO) 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[_].
H-1-3
Exhibit H-2
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 farmer's 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 of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.
5. The Transferee agrees to consent to any amendment of the Trust
Agreement that shall be deemed necessary by SASCO (upon the advice of counsel to
SASCO) to constitute a reasonable arrangement to ensure that no interest in a
Residual Certificate will be owned directly or indirectly by a Disqualified
Organization.
6. The Transferee acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain circumstances, on an
agent for the Transferee, with respect to any transfer of any interest in any
Residual Certificate to a Disqualified Organization.
H-2-1
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