Document:

Exhibit 4.1

SAXON ASSET SECURITIES COMPANY,

Depositor 

SAXON MORTGAGE, INC.,

Master Servicer

SAXON MORTGAGE SERVICES, INC.,

Servicer

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

Trustee

_____________________________________________________

POOLING AND SERVICING AGREEMENT

Dated as of July 1, 2002

_____________________________________________________

SAXON ASSET SECURITIES TRUST 2002-2

MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 2002-2

TABLE OF CONTENTS

Page

ARTICLE 1 

DEFINITIONS

18

Section 1.1

Defined Terms

18

ARTICLE 2 

CONVEYANCE OF MORTGAGE LOANS;

REPRESENTATIONS AND WARRANTIES

43

Section 2.1

Conveyance of Mortgage Loans

43

Section 2.2

Acceptance by Trustee of the Mortgage Loans

46

Section 2.3

Representations, Warranties and Covenants of the Depositor, 

Servicer and Master Servicer

48

Section 2.4

Delivery of Opinion of Counsel in Connection with

Substitutions

54

Section 2.5

Execution and Delivery of Certificates

54

Section 2.6

Purchase of Subsequent Mortgage Loans

54

Section 2.7

Pre-Funding Account

57

ARTICLE 3 

ADMINISTRATION AND SERVICING OF MORTGAGE

LOANS

57

Section 3.1

Servicer to Service Mortgage Loans

57

Section 3.2

Subservicing; Enforcement of the Obligations of Servicers

59

Section 3.3

Rights of the Depositor and the Trustee in Respect of the

Servicer

59

Section 3.4

Master Servicer to Act as Servicer

59

Section 3.5

Collection of Mortgage Loan Payments; Collection Account;

Distribution Account

60

Section 3.6

Collection of Taxes, Assessments and Similar Items; 

Escrow Accounts

63

Section 3.7

Access to Certain Documentation and Information Regarding 

the Mortgage Loans

63

Section 3.8

Permitted Withdrawals from the Collection Account, Master

Servicer Custodial Account and Distribution Account

64

Section 3.9

Maintenance of Hazard Insurance; Maintenance of Primary 

Insurance Policies

66

Section 3.10

Enforcement of Due-on-Sale Clauses; Assumption 

Agreements

67

Section 3.11

Realization Upon Defaulted Mortgage Loans; Repurchase of 

Certain Mortgage Loans

69

Section 3.12

Trustee to Cooperate; Release of Mortgage Files

72

Section 3.13

Documents Records and Funds in Possession of Servicer to 

be Held for the Trustee

73

Section 3.14

Servicing Compensation

74

Section 3.15

Access to Certain Documentation

74

Section 3.16

Annual Statement as to Compliance

74

Section 3.17

Annual Independent Public Accountants’ Servicing Statement;

Financial Statements

75

Section 3.18

Errors and Omissions Insurance; Fidelity Bonds

75

Section 3.19

Advances

75

Section 3.20

Advance Facility

76

Section 3.21

Prepayment Penalties

77

ARTICLE 4 

DISTRIBUTIONS

77

Section 4.1

Priorities of Distribution

77

Section 4.2

Method of Distribution

81

Section 4.3

Allocation of Losses

82

Section 4.4

Reports to the Depositor and the Trustee

82

Section 4.5

Reports by or on Behalf of the Master Servicer

83

Section 4.6

Basis Risk Reserve Fund

85

Section 4.7

The Instrument

86

Section 4.8

The Calculation Agent

86

ARTICLE 5 

THE CERTIFICATES

86

Section 5.1

The Certificates

86

Section 5.2

Certificate Register; Registration of Transfer and Exchange 

of Certificates.

87

Section 5.3

Mutilated, Destroyed, Lost or Stolen Certificates

92

Section 5.4

Persons Deemed Owners

92

Section 5.5

Access to List of Certificateholders’ Names and Addresses

92

Section 5.6

Maintenance of Office or Agency

93

ARTICLE 6 

THE DEPOSITOR, THE SERVICER AND MASTER

SERVICER

93

Section 6.1

Respective Liabilities of the Depositor, Servicer and Master

Servicer

93

Section 6.2

Merger or Consolidation of the Depositor, Servicer and Master

Servicer

93

Section 6.3

Limitation on Liability of the Depositor, the Servicer, the Master

Servicer and Others

94

Section 6.4

Limitation on Resignation of Servicer

94

ARTICLE 7

SERVICER DEFAULT

95

Section 7.1

Events of Default

95

Section 7.2

Notification to Certificateholders

97

ARTICLE 8 

CONCERNING THE TRUSTEE

97

Section 8.1

Duties of Trustee

97

Section 8.2

Certain Matters Affecting the Trustee

99

Section 8.3

Trustee Not Liable for Certificates or Mortgage Loans

100

Section 8.4

Trustee May Own Certificates

100

Section 8.5

Trustee’s Fees and Expenses

100

Section 8.6

Eligibility Requirements for Trustee

101

Section 8.7

Resignation and Removal of Trustee

101

Section 8.8

Successor Trustee

102

Section 8.9

Merger or Consolidation of Trustee

103

Section 8.10

Appointment of Co-Trustee or Separate Trustee

103

Section 8.11

Tax Matters

105

Section 8.12

Periodic Filings

106

ARTICLE 9 

TERMINATION

107

Section 9.1

Termination upon Liquidation or Purchase of all Mortgage

Loans

107

Section 9.2

Final Distribution on the Certificates

108

Section 9.3

Additional Termination Requirements

109

ARTICLE 10 

ADMINISTRATION AND SERVICING OF MORTGAGE 

LOANS BY THE MASTER SERVICER

110

Section 10.1

Duties of the Master Servicer

110

Section 10.2

Compensation to the Master Servicer

110

Section 10.3

Termination of Master Servicer; Trustee to Act

110

Section 10.4

Notification to Certificateholders

112

ARTICLE 11 

MISCELLANEOUS PROVISIONS

113

Section 11.1

Amendment

113

Section 11.2

Recordation of Agreement; Counterparts

114

Section 11.3

Governing Law

115

Section 11.4

Intention of Parties

115

Section 11.5

Notices

115

Section 11.6

Severability of Provisions

116

Section 11.7

Assignment

116

Section 11.8

Limitation on Rights of Certificateholders

117

Section 11.9

Inspection and Audit Rights

117

Section 11.10

Certificates Nonassessable and Fully Paid

118

Section 11.11

Limitations on Actions; No Proceedings

118

SCHEDULES

Schedule I:

Mortgage Loan Schedule (By Group)

S-I-1

Schedule II:

Pass-Through Rate Schedule

S-II-1

Schedule III:

REMIC Structure

S-III-1

EXHIBITS

Exhibit A:

Form of Senior Certificates

A-1

Exhibit B:

Form of Subordinate Certificates

B-1

Exhibit C:

Form of Initial Certification

C-1

Exhibit D:

Form of Final Certification of Custodian

D-1

Exhibit E:

Transfer Affidavit

E-1

Exhibit F:

Form of Transferor Certificate

F-1

Exhibit G-1:

Form of Investment Letter (Non-Rule 144A)

G-1-1

Exhibit G-2:

Benefit Plan Affidavit

G-2-1

Exhibit H:

Form of Rule 144A Letter

H-1

Exhibit I:

Request for Release (for Trustee)

I-1

Exhibit J:

Request for Release (Mortgage Loan)

J-1

Exhibit K:

Form of Remittance Agency Agreement

K-1

Exhibit L:

Form of Security Release Certification

L-1

 

THIS POOLING AND SERVICING AGREEMENT, dated as of July 1, 2002 (this “Agreement”), among SAXON ASSET SECURITIES COMPANY, a Virginia corporation, as depositor (the “Depositor”), SAXON MORTGAGE, INC., a Virginia corporation, as master servicer (the “Master Servicer”), SAXON MORTGAGE SERVICES, INC., a Texas corporation, as servicer (the “Servicer”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as trustee (the “Trustee”),

WITNESSETH THAT

In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

PRELIMINARY STATEMENT

The Depositor is the owner of the assets that are hereby conveyed to the Trustee in return for the Certificates. For federal income tax purposes, the Trust Fund shall comprise multiple REMICs organized in a tiered REMIC structure in the manner set forth in Schedule III hereto.  The Certificates will represent the entire beneficial ownership interest in the Trust Fund.  

The following table sets forth the initial Class Certificate Balances of the Certificates and the minimum denominations (or Percentage Interests) and integral multiples in excess thereof in which such Classes shall be issuable (except that one Certificate of each Class of Certificates may be issued in a different amount and, in addition, one Residual Certificate representing the Tax Matters Person Certificate may be issued in a different Percentage Interest):

	Class Designation

	Initial Class 

Certificate Balance

	Minimum Percentage 

Interest/Denomination

	Integral Multiples in

Excess Minimum

	Class AF-1

	$ 63,540,000 

	$25,000

	$1,000

	Class AF-2

	14,470,000

	25,000

	1,000

	Class AF-3

	36,490,000

	25,000

	1,000

	Class AF-4

	11,770,000

	25,000

	1,000

	Class AF-5

	22,650,000

	25,000

	1,000

	Class AF-6

	16,550,000

	25,000

	1,000

	Class AV

	339,710,000

	25,000

	1,000

	Class A-IO

	Notional1

	1,000,000

	1,000

	Class M-1

	39,330,000

	100,000

	1,000

	Class M-2

	31,760,000

	100,000

	1,000

	Class B

	28,730,000

	100,000

	1,000

	Class C

	N/A

	50%

	N/A

	Class P

	N/A

	100%

	N/A

	Class R

	N/A

	100%

	N/A

_______________________

1The Class A-IO Certificates will be comprised of the Class A-IO-I Component and the Class A-IO-II Component and will accrue interest based on the Notional Principal Balances of such Components.

Account Designation:

Saxon Asset Securities Trust Mortgage Loan Asset Backed Certificates, Series 2002-2.

Assumed Investment Rate:

Not applicable.

Book-Entry Certificates:

All Classes of Certificates other than the Physical Certificates.

Calculation Agent:

Deutsche Bank Trust Company Americas, a New York banking corporation, and its successors and assigns in such capacity.

Calculated Future Losses:

The sum of: (a) the outstanding principal balance of Mortgage Loans 30-59 days delinquent expressed as a percentage of their original balance multiplied by 10.75%; (b) the outstanding principal balance of Mortgage Loans 60-89 days delinquent expressed as a percentage of their original balance multiplied by 21.50%; and (c) the outstanding principal balance of Mortgage Loans 90 days or more delinquent, in foreclosure, or REO property, expressed as a percentage of their original balance multiplied by 43%.

Class C Distribution Amount:

With respect to any Distribution Date, any amounts distributable pursuant to Section 4.1(i) hereof.

Closing Date:

July 10, 2002.

Component Certificates:

Any of the Class A-IO Certificates.

Components:

For purposes of calculating distributions, the Component Certificates will be comprised of multiple payment components having the designations, Initial Notional Principal Balances and Pass-Through Rates set forth below:

	 	 

	Designation

	Initial Notional

Principal Balance

	Pass-Through 

Rate

	 	 	Class A-IO-I Component

	$86,560,000

	5.25%

	 	 	Class A-IO-II Component

	$73,471,000

	5.25% 

Custodial Agreement:

The Custodial Agreement between the Custodian and Trustee dated as of July 1, 2002.

Custodian:

Deutsche Bank Trust Company Americas, and its successors and assigns in such capacity. 

Cut Off Date:  

July 1, 2002.

Delay Certificates:

All interest-bearing Classes of Certificates other than the Non-Delay Certificates.

ERISA-Restricted Certificates:

Any of the Class C, Class P and Class R Certificates.

ERISA Qualifying Underwriting:

A best efforts or firm commitment underwriting that meets the requirements of either Prohibited Transaction Exemption 83-1 or an “Underwriter’s Exemption,” as defined in Section V(h) of Prohibited Transaction Exemption 95-60, except the requirements that the Certificates (i) not be subordinated to the rights and interest of other Certificates issued by the Trust and (ii) have a rating that is one of the top three ratings categories.

Extra Principal Distribution 

Amount:

With respect to any Distribution Date, the lesser of 

(x) 

the Interest Funds available after payment of the amounts set forth in Section 4.1(g)(i) through (v), and: 

(y)

the excess of:

(i)

the Required Overcollateralization Amount for such date, over 

(ii)

the Overcollateralization Amount for such date (assuming that all Principal Funds are distributed as principal to the Certificates on such date).

Funding Period Termination Date:

October 10, 2002.

Group:

Group I and Group II.

Group I:

The pool of Mortgage Loans identified in the Mortgage Loan Schedule as having been assigned to Group I, including any related Subsequent Mortgage Loans and any Substitute Mortgage Loans delivered in replacement of any Mortgage Loan or Subsequent Mortgage Loan.

Group I Certificate:

Any of the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6 Certificates.

Group I Class A Certificate:

Any Group I Certificate.

Group I Class A Certificate

Principal Balance:

For any Distribution Date, the sum of the Certificate Principal Balances for the Group I Class A Certificates.

Group I Net WAC Cap:

For any Distribution Date and each Group I Class A Certificate, a per annum rate equal to the Weighted Average Net Rate of the Mortgage Loans in Group I less, the Pass-Through Rate for the Class A-IO-I Component for such Distribution Date multiplied by a fraction equal to:

(i)

the Notional Principal Balance of the Class A-IO-I Component prior to such Distribution Date divided by;

(ii)

the Assumed Principal Balance for Group I as of such Distribution Date.

For all Group I Certificates other than the Class AF-1 Certificates, the Group I Net WAC Cap derived under the above formula will be adjusted to reflect a 30/360 day count convention.  In the case of the Class AF-1 Certificates, the Group I Net WAC Cap derived under the above formula will be adjusted to reflect an actual/360 day count convention.

Group Subordinate Amount:

For each Group and any Distribution Date is the excess of the Assumed Principal Balance for such Group for the immediately preceding Distribution Date over the aggregate Certificate Principal Balance of the Senior Certificates of such Group immediately prior to such Distribution Date.

Group II:

The pool of Mortgage Loans identified in the Mortgage Loan Schedule as having been assigned to Group II, including any related Subsequent Mortgage Loans and any Substitute Mortgage Loans delivered in replacement of any Mortgage Loan or Subsequent Mortgage Loan.

Group II Certificate:

Any of the Class AV Certificates.

Group II Class A Certificates:

Any Group II Certificate.

Group II Class A Certificate

Principal Balance:

For any Distribution Date, the sum of the Certificate Principal Balances of Group II Class A Certificates.

Group II Net WAC Cap:

For any Distribution Date and each Group II Class A Certificate, a per annum rate equal to the Weighted Average Net Rate of the Mortgage Loans in Group II less, the Pass-Through Rate for the Class A-IO-II Component for such Distribution Date multiplied by a fraction equal to:

(i)

the Notional Principal Balance of the Class A-IO-II Component prior to such Distribution Date divided by;

(ii)

the Assumed Principal Balance for Group II as of such Distribution Date.

The Group II Net WAC Cap derived under the above formula will be adjusted to reflect an actual/360 day count convention.

Initial Distribution Date:

August 26, 2002.

Initial Optional Termination Date:

The first Distribution Date on which the aggregate Assumed Principal Balance of the Mortgage Loans is less than 10% of the aggregate Assumed Principal Balance thereof as of the Cut Off Date.

Interest Determination Date:

With respect to the first Accrual Period for the Variable Rate Certificates, July 8, 2002, and with respect to any subsequent Accrual Period for the Variable Rate Certificates, the second London Business Day preceding such Accrual Period.

Interest Only Certificates:

The Class A-IO Certificates.

Lower Tier Interest:

Any interest created in REMIC 1, REMIC 2, REMIC 3 or REMIC 4.

Master Servicing Fee Rate:

0.05% per annum.

Maximum Cap Rate:

For any Distribution Date and for each Group, a per annum rate that would equal the related Net WAC Cap for such date if such Net WAC Cap were determined under the assumption that (i) each adjustable rate Mortgage Loan in the related Group had an interest rate equal to the maximum rate permitted under the terms of the related mortgage note, and (ii) each fixed rate Mortgage Loan in the related Group had an interest rate equal to its stated fixed rate.

Mortgage Loan Group:

Group I or Group II.

Net Pledged Prepayment Penalties:

For each Distribution Date means the Pledged Prepayment Penalties remaining after payment of any Cap Carryover Amounts for such date.

Net Rate:

As to each Mortgage Loan and Distribution Date, the related Mortgage Rate as of the Determination Date immediately preceding such Distribution Date less the sum of the related Servicing Fee Rate and Master Servicing Fee Rate with respect to each Mortgage Loan.

Net WAC Cap:

For any Distribution Date, is (i) with respect to the Group I Class A Certificates, the Group I Net WAC Cap, (ii) with respect to the Group II Class A Certificates, the Group II Net WAC Cap and (iii) with respect to the Subordinate Certificates, the Subordinate Net WAC Cap.  

Non-Delay Certificates:

Any of the Class AF-1, Class AV, Class M-1, Class M-2 and Class B Certificates.

Notional Amount Certificates:

The Class A-IO Certificates.

Notional Principal Balance:

With respect to each Distribution Date, the Notional Principal Balance of the Class A-IO Certificates will be equal to the sum of (i) the Notional Principal Balance of the Class A-IO-I Component and (ii) the Notional Principal Balance of the Class A-IO-II Component.  With respect to each Distribution Date and for each Component of the Class A-IO Certificates, the Notional Principal Balance will equal the lesser of the related Assumed Principal Balance for such date and the amount determined for such date with reference to the following schedule:

	Distribution Date

	Class A-IO-I

Component

	Class A-IO-II

Component

	1

	                  $86,560,000

	                  $73,471,000

	2

	85,417,000

	73,471,000

	3

	85,417,000

	73,471,000

	4

	84,274,000

	73,471,000

	5

	83,131,000

	73,471,000

	6

	81,989,000

	73,471,000

	7

	80,846,000

	73,471,000

	8

	79,703,000

	73,471,000

	9

	77,417,000

	73,471,000

	10

	72,846,000

	73,471,000

	11

	71,703,000

	73,471,000

	12

	69,417,000

	73,471,000

	13

	68,274,000

	73,471,000

	14

	65,989,000

	73,471,000

	15

	64,846,000

	73,471,000

	16

	63,703,000

	73,471,000

	17

	62,560,000

	73,471,000

	18

	61,417,000

	73,471,000

	19

	59,131,000

	73,471,000

	20

	55,703,000

	73,471,000

	21

	53,720,000

	73,471,000

	22

	50,200,000

	73,471,000

	23

	46,920,000

	73,471,000

	24

	43,840,000

	73,471,000

	25

	40,970,000

	73,471,000

	26

	38,280,000

	72,329,000

	27

	35,780,000

	67,833,000

	28

	33,430,000

	63,970,000

	29

	31,240,000

	59,007,000

	30

	29,190,000

	55,871,000

	31

	27,280,000

	52,246,000

	32

	25,490,000

	48,700,000

	33

	23,810,000

	45,204,000

	34

	22,250,000

	41,749,000

Offered Certificates:

The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV, Class M-1, Class M-2, Class B and Class A-IO Certificates.

Original Pre-Funded Amount:

$113,565,065.18, $42,492,182.86 of which may be applied to the purchase of subsequent fixed rate Mortgage Loans for Group I and $71,072,882.32 of which may be applied to the purchase of subsequent adjustable rate Mortgage Loans for Group II.

Physical Certificates:

The Private Certificates.

Pledged Prepayment Penalties:

For any Distribution Date and each Group of Mortgage Loans, an amount equal to the sum of (i) the lesser of (x) Prepayment Penalties collected on the Mortgage Loans in such Group during the related Prepayment Period and (y) 60% of the Prepayment Penalties owed and not waived by the Servicer for the related Prepayment Period, and (ii) the aggregate amount, if any, by which (i)(y) exceeded (i)(x) for prior Distribution Dates for such Group.

Principal Only Certificates:

None.

Principal Percentage:

With respect to each Distribution Date and Group, the percentage equivalent of a fraction, the numerator of which is the Principal Funds for such Group and date, and the denominator of which is the Principal Funds for all of the Groups and such Distribution Date.

Priority Principal Distribution

Amount:

With respect to any Distribution Date: 

(x)

the product of:

(i)

a fraction the numerator of which is the Certificate Principal Balance of the Class AF-6 Certificates and the denominator of which is the Group I Class A Certificate Principal Balance, in each case, immediately prior to such Distribution Date, 

(ii)

the Senior Principal Distribution Amount for Group I for such Distribution Date, and 

(iii)

the applicable percentage for such Distribution Date set forth below: 

	 	Distribution Date

August 2002 – July 2005

August 2005 – July 2007

August 2007 – July 2008

August 2008– July 2009

August 2009 and thereafter

	Percentage

0%

45%

80%

100%

300%

Private Certificate:

Any Class C, Class P or Class R Certificate.

Rating Agencies:

S&P and Moody’s.

Record Date: 

With respect to Delay Certificates and any Distribution Date, the close of business on the last Business Day of the month preceding the month in which such Distribution Date occurs.  With respect to Non-Delay Certificates and any Distribution Date, the close of business on the Business Day immediately preceding such Distribution Date.

Regular Certificates:

Any of the Offered Certificates and the Class C Certificates.

Required Overcollateralization

Amount:

With respect to any Distribution Date: 

(i)

prior to the Stepdown Date, 1.90% of the Assumed Principal Balance of the Mortgage Loans as of the Cut Off Date;

(ii)

on and after the Stepdown Date, if a Trigger Event is not in effect, the greater of: 

(x)

the lesser of: 

(I)

1.90% of the Assumed Principal Balance for the Mortgage Loans as of the Cut Off Date, and

(II)

3.80% of the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date, and 

(y)

0.50% of the Assumed Principal Balance of the Mortgage Loans as of the Cut Off Date; and

(iii)

if a Trigger Event is in effect, the Overcollateralization Amount as of the preceding Distribution Date.

Required Reserve Fund Deposit:

The sum of (i) for any Distribution Date on which the excess of  (a) the Group I Net WAC Cap, over (b) the weighted average of the rates on the offered certificates, other than the Class A-IO Certificates, is less than 0.25%, an amount that would cause the balance held in the Basis Risk Reserve Fund to equal 0.50% of the Assumed Principal Balance of the Group I Mortgage Loans for such date, and, for any other Distribution Date, the amount that would cause the balance held in the Basis Risk Reserve Fund to equal $1,000, and (ii)  for any Distribution Date on which the excess of (a) the Group II Net WAC Cap, over (b) the weighted average of the rates on the offered certificates, other than the Class A-IO Certificates, is less than 0.25%, an amount that would cause the balance held in the Basis Risk Reserve Fund to equal 0.50% of the Assumed Principal Balance of the Group II Mortgage Loans for such date, and, for any other Distribution Date, the amount that would cause the balance held in the Basis Risk Reserve Fund to equal $1,000.

Residual Certificates:

The Class R Certificates.

Sales Agreement:

The Sales Agreement dated July 10, 2002, between the Depositor and SMI regarding the sale of the Mortgage Loans.

Senior Certificates:

Any Class of Certificates including the letter “A” in its class designation.

Servicing Fee Rate:

With respect to each Distribution Date and each Mortgage Loan, the scheduled principal balance of such Mortgage Loan on the first day of the Due Period with respect to such Distribution Date, multiplied by one-twelfth of:  (i) 0.30% per annum for each of the first through the tenth Distribution Dates, inclusive, following the month of the Closing Date, (ii) 0.40% per annum for each of the eleventh through the thirtieth Distribution Dates, inclusive, following the month of the Closing Date, (iii) 0.65% per annum for each of the thirty-first through the forty-eighth Distribution Dates following the Closing Date and (iv) 0.80% per annum for the forty-ninth Distribution Date following the month of the Closing Date and each Distribution Date thereafter.  

Servicing Trigger Event:

With respect to each determination date, a Servicing Trigger Event exists if Total Calculated Cumulative Losses exceed:  (i) 10.82% on any Determination Date up to, and including, the fifth anniversary of the Cut Off Date; or (ii) 16.23% on any Determination Date from the sixth to, and including, the tenth anniversary of the Cut Off Date.  Following the tenth anniversary of the Cut Off Date, no Servicing Trigger Event shall exist.

Stepdown Date:

The earlier to occur of: 

(i)

the later to occur of: 

(A)

the Distribution Date in August 2005, and 

(B)

the first Distribution Date on which the Group I Class A Certificate Principal Balance and Group II Class A Certificate Principal Balance for such Distribution Date (less the Principal Funds for such Distribution Date) is less than or equal to 63.20% of the Assumed Principal Balance on such date, and

(ii)

the Distribution Date after which the Group I Class A Certificate Principal Balance and Group II Class A Certificate Principal Balance have been reduced to zero.

Subordinate Certificates:

Any Class M-1, Class M-2 and Class B Certificate.

Subordinate Net WAC Cap:

For any Distribution Date and each Subordinate Certificate, a per annum rate equal to the weighted average of the Group I Net WAC Cap and the Group II Net WAC Cap, weighted on the basis of the related Group Subordinate Amount for such Distribution Date and adjusted to reflect an actual/360 day count convention. 

Subsequent Delivery

Requirements:

(a)

After giving effect to the acquisition of 

           all Subsequent Mortgage Loans, the 

           Mortgage Loans in Group I (which shall 

           all be Mortgage Loans bearing interest at 

           fixed rates of interest) as of their 

           respective Cut Off Dates:

(i)

shall have a weighted average Mortgage Rate of not less than 8.80% per annum;

(ii)

shall have a weighted average original combined loan to value ratio not in excess of 76.00%;

(iii)

shall be Mortgage Loans no more than 80.00% of which (by Stated Principal Balance) were made in connection with a cash out refinancing;

(iv)

shall be Mortgage Loans at least 88.00% of which (by Stated Principal Balance) shall be classified by Saxon Mortgage, Inc. as “A-” or better;

(v)

shall be Mortgage Loans at least 74.00% of which (by Stated Principal Balance) will have been originated pursuant to a full documentation program; and

(vi)

shall have a weighted average credit score of not less than 626.

(b)

After giving effect to the acquisition of all the Subsequent Mortgage Loans, the Mortgage Loans in Group II (which shall all be first lien Mortgage Loans bearing interest at adjustable rates) as of their respective Cut Off Dates: 

(i)

shall have a weighted average Mortgage Rate of not less than 9.00% per annum;

(ii)

shall have a weighted average original Loan to Value Ratio not in excess of 80.00%;

(iii)

shall be Mortgage Loans at least 78.00% of which (by Stated Principal Balance) shall be classified by Saxon Mortgage, Inc. as “A-” or better; and

(iv)

shall have a weighted average credit score of not less than 588.

Target Percentage:

For the Senior Certificates, 63.20%; for the Class M-1 Certificates, 76.20%; for the Class M-2 Certificates, 86.70%; and for the Class B Certificates, 96.20%.

Total Calculated Cumulated Losses:

As of any Determination Date, the sum of (i) the aggregate amount of losses that have been experienced as of such Determination Date as a percentage of the Assumed Principal Balance as of the Cut Off Date and (ii) the Calculated Future Losses.

Trigger Event:

With respect to any Distribution Date after the Stepdown Date, a Trigger Event exists if either (x) the quotient (expressed as a percentage) of:

(i)

the Stated Principal Balances of all 60 or more days Delinquent Mortgage Loans (including Mortgage Loans subject to bankruptcy or foreclosure proceedings and REO Property), divided by

(ii)

the Assumed Principal Balance of the Mortgage Loans as of the preceding Determination Date

equals or exceeds 50% of the Senior Credit Enhancement Percentage or (y) Realized Losses occurring since the Closing Date as a percentage of the Assumed Principal Balance as of the Cut Off Date, for the related Distribution Date, are greater than:

	 	Distribution Date

	Cumulative Loss Percentage

	 	                37 to 48

	4.50%

	 	                49 to 60

	5.75%

	 	                61 and thereafter

	7.00%

Trustee Fee Rate:

0.0060% per annum. 

Trustee Series Designation:

Saxon 2002-2(SX0202).

Underwriters:

Credit Suisse First Boston Corporation, Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc. and Wachovia Securities.

Upper Tier REMIC:

REMIC 5.

Variable Rate Certificates:

Any of the Class AF-1, Class AV, Class M-1, Class M-2 and Class B Certificates.

Voting Rights:

The voting rights of the trust will be allocated as follows:  

(i)

1% to the Class A-IO Certificates;

(ii)

0.50% to the Class P Certificates;

(iii)

96.50% to the Group I Certificates and Group II Certificates in proportion to their respective outstanding Certificate Principal Balances; and

(iv)

1% to each of the Class C and Class R Certificates.

With respect to any of the foregoing designations as to which the corresponding reference is “None,” all defined terms and provisions herein relating solely to such designations shall be of no force or effect, and any calculations herein incorporating references to such designations shall be interpreted without reference to such designations and amounts. Defined terms and provisions herein relating to statistical rating agencies not designated above as Rating Agencies shall be of no force or effect.

ARTICLE 1

DEFINITIONS

Section 1.1

Defined Terms

Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

Accrual Period:  With respect to each Lower Tier Interest and each Class of Delay Certificates and any Distribution Date, the calendar month immediately preceding such Distribution Date.  With respect to each Class of Non-Delay 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.

Advance:  Each P&I Advance and Servicing Advance.

Agreement: This Pooling and Servicing Agreement and all amendments or supplements hereto.

Applied Realized Loss Amount: As to any Distribution Date and Class of Subordinate Certificates, the sum of any Realized Losses which have been applied in reduction of the Certificate Principal Balance of such Class of Certificates on such date.

Assumed Principal Balance: As of any Distribution Date, the sum of:

(i)

the aggregate Stated Principal Balances of the Mortgage Loans as of such Distribution Date, plus

(ii)

the aggregate amount on deposit in any Pre-Funding Account (less all amounts representing investment earnings thereon).

Available Funds:  As to any Distribution Date, the sum of all Principal Funds and Interest Funds for such date.

Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as amended.

Basis Risk Payment:  For any Distribution Date, an amount to be deposited into the Basis Risk Reserve Fund equal to the sum of (i) any Cap Carryover Amounts for such Distribution Date and (ii) any Required Reserve Fund Deposit for such Distribution Date, provided however, the amount of the Basis Risk Payment for any Distribution Date cannot exceed the amount available for distribution therefor pursuant to priorities for distributions pursuant to Section 4.1(g).

Basis Risk Reserve Fund:  Any fund created hereunder and held as part of the Trust Fund but not as part of any REMIC created hereunder, to provide a source for payments of Cap Carryover Amounts.  

Blanket Mortgage:  The mortgage or mortgages encumbering a Cooperative Property.

Business Day:  Any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in New York City or the city in which any of the Custodian, the Servicer, the Master Servicer, or the Corporate Trust Office of the Trustee is located are authorized or obligated by law or executive order to be closed.

Cap Carryover Amount:  On any Distribution Date and as to any Class whose Pass-Through Rate is subject to a cap equal to a Net WAC Cap, the sum of: 

(i)

if the Pass-Through Rate for such Distribution Date and Class is based on the applicable Net WAC Cap, the excess of (A) the amount of interest that would have been distributable on such Certificates for such Distribution Date had the interest rate thereon been calculated without regard to the applicable Net WAC Cap, over (B) the amount of interest distributable based on the applicable Net WAC Cap, and 

(ii)

the excess of the amount described in clause (i)(A) above over the amount described in clause (i)(B) above for all prior Distribution Dates, together with interest thereon calculated at the applicable Pass-Through Rate (determined without regard to the applicable Net WAC Cap), reduced by all amounts previously distributed with respect to such Class pursuant to Section 4.1(g) in respect of Cap Carryover Amounts on all such prior Distribution Dates.

Certificate:  Any one of the Certificates executed by the Trustee in substantially the forms attached hereto as exhibits.

Certificate Owner:  With respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate.

Certificate Principal Balance:  With respect to any Certificate (other than the Class A-IO Certificates) and as of any Distribution Date, the Certificate Principal Balance on the date of the initial issuance of such Certificate as set forth on the face thereof, as reduced by:

(i)

all amounts distributed on previous Distribution Dates on such Certificate in reduction of the Certificate Principal Balance thereof; and

(ii)

in the case of a Subordinate Certificate, such Certificate’s pro rata share, if any, of any Applied Realized Loss Amounts for the related Class on previous Distribution Dates.

Certificate Register:  The register maintained pursuant to Section 5.2 hereof.

Certificateholder or Holder:  The person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purpose of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor or any affiliate of the Depositor shall be deemed not to be Outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Percentage Interests necessary to effect such consent has been obtained; provided, however, that if any such Person (including the Depositor) owns 100% of the Percentage Interests evidenced by a Class of Certificates, such Certificates shall be deemed to be Outstanding for purposes of any provision hereof that requires the consent of the Holders of Certificates of a particular Class as a condition to the taking of any action hereunder. The Trustee is entitled to rely conclusively on a certification of the Depositor or any affiliate of the Depositor in determining which Certificates are registered in the name of an affiliate of the Depositor.

Class:  All Certificates or Components bearing the same class designation as set forth in the Preliminary Statement.

Class B Principal Distribution Amount:  With respect to any Distribution Date before the Stepdown Date or for which a Trigger Event is in effect, zero, and with respect to any Distribution Date on and after the Stepdown Date and as long as a Trigger Event is not in effect the excess of:

(i)

the sum of:

(A)

the Group I Class A Certificate Principal Balance and the Group II Class A Certificate Principal Balance (in each case, after giving effect to distributions on that date), 

(B)

the Class Certificate Balance of the Class M-1 Certificates (after giving effect to distributions on that date),

(C)

the Class Certificate Balance of the Class M-2 Certificates (after giving effect to distributions on that date), and 

(D)

the Class Certificate Balance of the Class B Certificates immediately prior to such Distribution Date over 

(ii)

the lesser of: 

(A)

related Target Percentage of the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date, and 

(B)

the excess, if any, of:

(I)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date over 

(II)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date less 0.50% of the Assumed Principal Balance as of the Cut Off Date (but in no event less than zero).

Class Certificate Balance:  With respect to any Class of Certificates and as of any Distribution Date, the aggregate of the Certificate Principal Balances of all Certificates of such Class as of such date.

Class M-1 Principal Distribution Amount:  With respect to any Distribution Date before the Stepdown Date or for which a Trigger Event is in effect, zero, and with respect to any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect the excess of:  

(i)

the sum of: 

(A)

the Group I Class A Certificate Principal Balance and the Group II Class A Certificate Principal Balance (after giving effect to distributions on that date), and 

(B)

the Class Certificate Balance of the Class M-1 Certificates immediately prior to such Distribution Date over 

(ii)

the lesser of:  

(A)

the related Target Percentage of the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date, and

(B)

the excess, if any, of:  

(I)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date over 

(II)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date less 0.50% of the Assumed Principal Balance as of the Cut Off Date (but in no event less than zero).

Class M-2 Principal Distribution Amount:  With respect to any Distribution Date before the Stepdown Date or for which a Trigger Event is in effect, zero, and with respect to any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect the excess of:

(i)

the sum of:

(A)

the Group I Class A Certificate Principal Balance and the Group II Class A Certificate Principal Balance (after giving effect to distributions on that date),

(B)

the Class Certificate Balance of the Class M-1 Certificates (after giving effect to distributions on that date), and 

(C)

the Class Certificate Balance of the Class M-2 Certificates immediately prior to such Distribution Date over 

(ii)

the lesser of:

(A)

the related Target Percentage of the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date, and 

(B)

the excess, if any, of: 

(I)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date over 

(II)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date less 0.50% of the Assumed Principal Balance as of the Cut Off Date (but in no event less than zero).

Class P Prepayment Amount:  As to each Distribution Date, the excess, if any, of Prepayment Penalties collected with respect to the Mortgage Loans during the related Prepayment Period over the Pledged Prepayment Penalties for such Distribution Date.

Code:  The Internal Revenue Code of 1986, including any successor or amendatory provisions.

Collection Account:  The separate Eligible Account or Accounts created and maintained by the Servicer pursuant to Section 3.5 hereof with a depository institution for the benefit of the Trustee on behalf of Certificateholders and designated with the applicable Account Designation.

Compensating Interest: As to any Distribution Date and any Principal Prepayment in Full in respect of a Mortgage Loan that is received during the period from the eighteenth day of the month prior to the month of such Distribution Date through the last day of such month, an additional payment made by the Servicer, to the extent funds are available from the total Servicing Fee payable for such Distribution Date, equal to the amount of interest at the Mortgage Rate (less the applicable Servicing Fee Rate) for that Mortgage Loan from the date of the prepayment through the last day of the month of such Distribution Date.  For the avoidance of doubt, no Compensating Interest payment shall be required in connection with any shortfalls resulting from Principal Prepayments in part or the application of the Relief Act.

Cooperative Corporation: The entity that holds title (fee or an acceptable leasehold estate) to the real property and improvements constituting the Cooperative Property and which governs the Cooperative Property, which Cooperative Corporation must qualify as a Cooperative Housing Corporation under Section 216 of the Code.

Coop Shares: Shares issued by a Cooperative Corporation.

Cooperative Loan: Any Mortgage Loan secured by Coop Shares and a Proprietary Lease.

Cooperative Property: The real property and improvements owned by the Cooperative Corporation, including the allocation of individual dwelling units to the holders of the Coop Shares of the Cooperative Corporation.

Cooperative Unit: A single-family dwelling located in a Cooperative Property.

Corporate Trust Office: The designated office of the Trustee at which at any particular time its corporate trust business with respect to this Agreement shall be administered.

Credit Support Depletion Date: The Distribution Date on which the Certificate Principal Balance of each of the Class M-1, Class M-2 and Class B Certificates has been reduced to zero.

Current Interest: With respect to any Distribution Date and any Class of Certificates or Components, the interest accrued on the Class Certificate Balance (or Notional Principal Balance) thereof immediately prior to such Distribution Date during the related Accrual Period at the applicable Pass-Through Rate; provided, however, that such Current Interest shall be reduced by such Class’s pro rata share (based on the amount of Current Interest distributable on such Class) of any Net Prepayment Interest Shortfalls and Relief Act Shortfalls for such Distribution Date.  All calculations of interest on each Class of Delay 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 each Class of Non-Delay Certificates will be made on the basis of the actual number of days elapsed in the related Accrual Period and a 360-day year.

Debt Service Reduction: With respect to any Mortgage Loan, a reduction by a court of competent jurisdiction in a proceeding under the Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became final and non-appealable, except such a reduction resulting from a Deficient Valuation or any reduction that results in a permanent forgiveness of principal.

Defective Mortgage Loan: Any Mortgage Loan which is required to be repurchased pursuant to Section 2.2 or 2.3.

Deficient Valuation: With respect to any Mortgage Loan, a valuation by a court of competent jurisdiction of the Mortgaged Property in an amount less than the then-outstanding indebtedness under the Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Payment that results in a permanent forgiveness of principal, which valuation or reduction results from an order of such court which is final and non-appealable in a proceeding under the Bankruptcy Code.

Definitive Certificates: Any Certificate evidenced by a Physical Certificate and any Certificate issued in lieu of a Book-Entry Certificate pursuant to Section 5.2(e).

Deleted Mortgage Loan: As defined in Section 2.3(d) hereof.

Delinquent: A Mortgage Loan is “Delinquent” if any payment due thereon is not made by the close of business on the Determination Date 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 Determination Date immediately succeeding the Determination Date on which such payment was categorized as “Delinquent.”  Similarly for “60 days Delinquent,” “90 days Delinquent” and so on.

Denomination: With respect to each Certificate, the amount set forth on the face thereof as the “Initial Certificate Balance of this Certificate” or the Percentage Interest appearing on the face thereof.

Depositor: Saxon Asset Securities Company, a Virginia corporation, or its successor in interest.

Depository: The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., as the registered Holder of the Book-Entry Certificates. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York.

Depository Participant: A broker, dealer, bank or other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository.

Determination Date: As to any Distribution Date, the earlier of (i) the 17th day of the calendar month in which such Distribution Date occurs, or (ii) if such day is not a Business Day, the immediately preceding Business Day.

Distribution Account: The separate Eligible Account created and maintained by the Trustee pursuant to Section 3.5(d) in the name of the Trustee for the benefit of the Certificateholders and designated with the applicable Account Designation.  

Distribution Account Deposit Date: As to any Distribution Date, the Business Day immediately preceding such Distribution Date.

Distribution Date: The 25th day of each calendar month after the initial issuance of the Certificates, or if such 25th day is not a Business Day, the next succeeding Business Day, commencing on the Initial Distribution Date.

Due Date:  With respect to any Distribution Date and each Mortgage Loan, the day of the month in which each Distribution Date occurs on which the related mortgage payment is due (or, in the case of an Odd Due Date Mortgage Loan, such day in the preceding month).

Due Period:  With respect to any Distribution Date, the period from and including the second day of each month through and including the first day of the following month.

Eligible Account: Any of (i) an account or accounts maintained with a federal or state chartered depository institution or trust company the short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company) have the highest short-term ratings of each Rating Agency at the time any amounts are held on deposit therein, or (ii) an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC or the SAIF (to the limits established by the FDIC or the SAIF, as applicable) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating Agency, the Certificateholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (iii) a trust account or accounts maintained with (a) the trust department of a federal or state chartered depository institution or (b) a trust company, acting in its fiduciary capacity or (iv) any other account acceptable to each Rating Agency.  Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee.

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

Escrow Account: The Eligible Account or Accounts established and maintained pursuant to Section 3.6(a) hereof.

Event of Default: As defined in Section 7.1 hereof.

Excess Proceeds: With respect to any Liquidated Mortgage Loan, the amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage Loan received during the Prepayment Period in which such Mortgage Loan became a Liquidated Mortgage Loan, net of any amounts previously reimbursed to the Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan pursuant to Section 3.8(a)(iii), exceeds (i) the unpaid principal balance of such Liquidated Mortgage Loan as of the Due Date in the month in which such Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Certificateholders up to the Due Date applicable to the Distribution Date immediately following the Prepayment Period during which such liquidation occurred.  Notwithstanding the foregoing, Excess Proceeds with respect to any Nonrecoverable Mortgage Loan shall be equal to the amount, if any, by which Subsequent Recoveries with respect to such Nonrecoverable Mortgage Loan exceed the Realized Loss with respect thereto.

FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.

FHLMC: The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto.

FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Fitch: Fitch Inc. or any successor thereto.  If Fitch is designated as a Rating Agency in the Preliminary Statement, the address for notices to Fitch shall be Fitch Inc., One State Street Plaza, New York, New York 10004, Attention: Residential Mortgage Surveillance Group, or such other address as Fitch may hereafter furnish to the Depositor and the Master Servicer.

FNMA: The Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto.

Funding Period: The period commencing on the Closing Date and ending on the earliest to occur of:

(i)

the date on which the amount on deposit in the Pre-Funding Account (exclusive of any investment earnings) is less than $100,000,

(ii)

the date on which an Event of Default occurs, and 

(iii)

the Funding Period Termination Date.

Group: Any grouping of Mortgage Loans described in the Preliminary Statement.

Indirect Participant: A broker, dealer, bank or other financial institution or other Person that clears through or maintains a custodial relationship with a Depository Participant.

Initial Adjustment Date:  As to each adjustable rate Mortgage Loan, the first date upon which the monthly interest rate thereon is reset.

Insurance Policy: With respect to any Mortgage Loan included in the Trust Fund, any insurance policy, including all riders and endorsements thereto in effect, including any replacement policy or policies for any Insurance Policies.

Insurance Proceeds: Proceeds paid by an insurer pursuant to any Insurance Policy, in each case other than any amount included in such Insurance Proceeds in respect of Insured Expenses.

Insured Expenses: Expenses covered by an Insurance Policy or any other insurance policy with respect to the Mortgage Loans.

Interest Carry Forward Amount:  With respect to each Distribution Date and Class, the sum of:

(i)

the excess of:

(A)

Current Interest for such Class with respect to prior Distribution Dates (excluding any Cap Carryover Amount) over 

(B)

the amount actually distributed to such Class (other than in respect of any applicable Cap Carryover Amount) with respect to interest on such prior Distribution Dates, and 

(ii)

interest thereon at the applicable Pass-Through Rate for the related Accrual Period.

Interest Funds: With respect to any Group and any Determination Date, the sum, without duplication, of: 

(i)

all scheduled interest due during the related Due Period (and received by the related Determination Date) with respect to such Group less the related Servicing Fee and the Master Servicing Fee, 

(ii)

all Advances relating to interest with respect to such Group, 

(iii)

any Compensating Interest payment with respect to such Group,  

(iv)

Liquidation Proceeds with respect to such Group (to the extent such Liquidation Proceeds relate to interest) less all Non-Recoverable Advances relating to interest and expenses, and

(v)

any Subsequent Recoveries added to the Interest Funds for such group pursuant to Section 4.1(j).

Last Endorsee:  As defined in Section 2.1(b).

Latest Possible Maturity Date: The Distribution Date following the third anniversary of the scheduled maturity date of the Mortgage Loan having the latest scheduled maturity date as of the Cut Off Date.

Liquidated Mortgage Loan: With respect to any Distribution Date, a defaulted Mortgage Loan (including any REO Property) which was liquidated by the Servicer or Master Servicer in any manner, including but not limited to a disposition pursuant to Section 3.11(i), in the Prepayment Period for such Distribution Date and as to which the Servicer has determined (in accordance with this Agreement) that it has received all amounts it expects to receive in connection with the liquidation of such Mortgage Loan, including the final disposition of an REO Property.

Liquidation Proceeds: Amounts, including Insurance Proceeds, received by the Servicer or Master Servicer in connection with the partial or complete liquidation of defaulted Mortgage Loans, whether through trustee’s sale, foreclosure sale, disposition pursuant to Section 3.11(i), or otherwise or amounts received in connection with any condemnation or partial release of a Mortgaged Property and any other proceeds received in connection with an REO Property, less the sum of related unreimbursed Servicing Fees, Servicing Advances and P&I Advances.

Loan-to-Value Ratio: With respect to any Mortgage Loan and as to any date of determination, the fraction (expressed as a percentage) the numerator of which is the principal balance of the related Mortgage Loan at such date of determination and the denominator of which is the lesser of the purchase price of the related Mortgaged Property and the appraised value of the related Mortgaged Property.

London Business Day: A day on which banks are open for dealing in foreign currency and exchange in London and New York City.

Lost Mortgage Note: Any Mortgage Note the original of which was permanently lost or destroyed and has not been replaced.

Maintenance: With respect to any Cooperative Unit, the rent paid by the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.

Majority in Interest: As to any Class of Regular Certificates, the Holders of Certificates of such Class evidencing, in the aggregate, at least 51% of the Percentage Interests evidenced by all Certificates of such Class.

Master Servicer: Saxon Mortgage, Inc., a Virginia corporation, and its successors and assigns, in its capacity as master servicer hereunder.

Master Servicer Custodial Account:  The separate Eligible Account created and maintained by the Master Servicer pursuant to Section 3.5(c) for the benefit of Certificateholders and designated with the applicable Account Designation.

Master Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount payable out of each full payment of interest received on such Mortgage Loan and equal to one-twelfth of the Master Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the first day of the month prior to the month of such Distribution Date.

Master Servicer Reporting Date: The opening of business on the third Business Day preceding each Distribution Date.

Monthly Statement: The statement delivered to the Certificateholders pursuant to Section 4.5.

Moody’s: Moody’s Investors Service, Inc., or any successor thereto. If Moody’s is designated as a Rating Agency in the Preliminary Statement, the address for notices to Moody’s shall be Moody’s Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention: Residential Pass-Through Monitoring, or such other address as Moody’s may hereafter furnish to the Depositor or the Master Servicer.

Mortgage: The mortgage, deed of trust or other instrument creating a first lien on an estate in fee simple or leasehold interest in real property securing a Mortgage Note.

Mortgage File: The mortgage documents listed in Section 2.1 hereof pertaining to a particular Mortgage Loan and any additional documents delivered to the Trustee to be added to the Mortgage File pursuant to this Agreement.

Mortgage Loan Documents: As defined in Section 2.1 hereof.

Mortgage Loans: Such of the mortgage loans transferred and assigned pursuant to the provisions hereof as from time to time are held as a part of the Trust Fund (including any REO Property), the mortgage loans so held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition of title of the related Mortgaged Property.

Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time amended by the Master Servicer to reflect the addition of Substitute or Subsequent Mortgage Loans and the deletion of Deleted Mortgage Loans pursuant to the provisions of this Agreement) transferred to the Trustee as part of the Trust Fund and from time to time subject to this Agreement, attached hereto as Schedule I, setting forth the following information with respect to each Mortgage Loan:

(i)

the loan number;

(ii)

the Mortgagor’s name;

(iii)

the original principal balance; 

(iv)

the Stated Principal Balance as of the Cut Off Date; 

(v)

Mortgage Rate;

(vi)

Servicing Fee; and 

(vii)

Group.

Mortgage Note: The original executed note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

Mortgage Rate: The annual rate of interest borne by a Mortgage Note from time to time, net of any insurance premium charged by the mortgagee to obtain or maintain any Primary Insurance Policy.

Mortgaged Property: The underlying property securing a Mortgage Loan, which, in the case of a Cooperative Loan, is the related Coop Shares and Proprietary Lease.

Mortgagor: Any obligor on a Mortgage Note.

Net Prepayment Interest Shortfall: As to any Distribution Date and Group, the amount by which the aggregate of Prepayment Interest Shortfalls during the related Prepayment Period for such Group exceeds an amount equal to the Compensating Interest for such Group, if any, for such Distribution Date.

Nonrecoverable Advance: Any portion of any P&I Advance or Servicing Advance previously made or proposed to be made by the Servicer or Master Servicer that, in the good faith judgment of the advancing party, will not be ultimately recoverable by such advancing party from the related Mortgagor, related Liquidation Proceeds or otherwise.

Nonrecoverable Mortgage Loan: Any Mortgage Loan that has been determined to be a Nonrecoverable Mortgage Loan pursuant to Section 3.11(f) hereof and is identified in an Officer’s Certificate signed by a Servicing Officer delivered to the Master Servicer pursuant to Section 3.11(f) hereof.  For the avoidance of doubt, Mortgage Loans represented by REO Property shall not constitute Nonrecoverable Mortgage Loans.

Nonrecoverable Mortgage Loan Purchase Price: As to any Nonrecoverable Mortgage Loan, an amount equal to the sum of (i) the Projected Net Liquidation Value thereof on the date of purchase of such loan pursuant to this Agreement; and (ii) any accrued interest at the applicable Mortgage Rate from the date through which interest was last paid by the Mortgagor to the Due Date occurring in the Due Period immediately preceding the Distribution Date on which the Nonrecoverable Mortgage Loan Purchase Price is to be distributed to Certificateholders.

Notice Address: For purposes hereof, the addresses of the Depositor, the Master Servicer and the Trustee, are as follows:

(i)

If to the Depositor:

Saxon Asset Securities Company

4951 Lake Brook Drive

Glen Allen, Virginia 23060

(ii)

If to the Master Servicer:

Saxon Mortgage, Inc.

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attn:  Master Servicing

(iii)

If to the Trustee:

Deutsche Bank Trust Company Americas 

c/o Deutsche Bank National Trust Company

1761 East St. Andrew Place

Santa Ana, California 92705

Attention:  SX 0202

(iv)

If to the Servicer:

Saxon Mortgage Services, Inc.

P.O. Box 161489

Fort Worth, TX  76161-1489

Attn:  Executive Administration

Notice of Final Distribution: The notice to be provided pursuant to Section 9.2 to the effect that final distribution on any of the Certificates shall be made only upon presentation and surrender thereof.

Odd Due Date Mortgage Loan: Any Mortgage Loan whose monthly payments are due on a day other than the first day of the month.

Officer’s Certificate: A certificate signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a Managing Director, a Vice President (however denominated), an Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the entity required by the terms of this Agreement to deliver such certificate, or by such officer of such entity as may be required to sign such certificate by the terms of this Agreement relating to such particular certificate.

One Month LIBOR: As of any Interest Determination Date, the rate 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 Calculation Agent, as agent for the Master Servicer, will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for that day will be the arithmetic- mean of the quotations.  If fewer than two quotations are provided as requested, the rate for that day will be the arithmetic-mean of the rates quoted by major banks in New York City, selected by the Master Servicer, at approximately 11:00 a.m., New York City time, on that day for loans in United States dollars to leading European banks for a period equal to the relevant Accrual Period (commencing on the first day of such Accrual Period).  The Calculation Agent, as agent for the Master Servicer, shall review Telerate Page 3750 as of the required time, make the required requests to the principal offices of the Reference Banks and selections of major banks in New York City and shall determine the rate which constitutes One Month LIBOR for each Interest Determination Date.

Opinion of Counsel: A written opinion of counsel, who may be counsel for the Depositor, Servicer or the Master Servicer, including, in-house counsel, reasonably acceptable to the Trustee.  

Optional Termination: The termination of the trust created hereunder in connection with the purchase of the Mortgage Loans pursuant to Section 9.1 hereof.

Original Mortgage Loan: The Mortgage Loan refinanced in connection with the origination of a Refinancing Mortgage Loan.

OTS: The Office of Thrift Supervision.

Outstanding: With respect to the Certificates as of any date of determination, all Certificates theretofore executed and authenticated under this Agreement except:

(i)

Certificates theretofore canceled by the Trustee or delivered to the Trustee for cancellation; and

(ii)

Certificates in exchange for which or in lieu of which other Certificates have been executed and delivered by the Trustee pursuant to this Agreement.

Outstanding Mortgage Loan: As of any Determination Date, a Mortgage Loan with a Stated Principal Balance greater than zero which was not the subject of a Principal Prepayment in Full prior to such Determination Date and which did not become a Liquidated Mortgage Loan prior to such Determination Date.

Overcollateralization Amount: With respect to any Distribution Date, the excess, if any, of the Assumed Principal Balance of the Mortgage Loans over the aggregate Certificate Principal Balance of the Certificates after giving effect to principal distributions on such Distribution Date.

Ownership Interest: As to any Residual Certificate, any ownership interest in such Certificate including any interest in such Certificate as the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial.

P&I Advance: The payment required to be made by the Servicer with respect to any Distribution Date pursuant to Section 3.19, the amount of any such payment being equal to the aggregate of payments of principal and interest (net of the related Servicing Fee and any net income in the case of any REO Property) on the Mortgage Loans that were due during the related Due Period and not received as of the close of business on the related Determination Date, less the aggregate amount of any such delinquent payments that the Servicer or Master Servicer has determined would constitute a Nonrecoverable Advance if advanced.

Pass-Through Rate: For any interest bearing Class of Certificates or Component, the per annum rate set forth or calculated in the manner described in the Pass-Through Rate Schedule.

Pass-Through Rate Schedule:  The Schedule setting forth the Pass-Through Rates of the Certificates or Components, attached as Schedule II hereto.

Paying Agent: Deutsche Bank Trust Company Americas, a New York banking corporation, and its successors and assigns in such capacity.

Percentage Interest: As to any Certificate, the percentage interest evidenced thereby in distributions required to be made on the related Class, such percentage interest being set forth on the face thereof or equal to the percentage obtained by dividing the Denomination of such Certificate by the aggregate of the Denominations of all Certificates of the same Class.

Permitted Investments: At any time, any one or more of the following obligations and securities:

(i)

obligations of the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States;

(ii)

general obligations of or obligations guaranteed by any state of the United States or the District of Columbia receiving the highest long-term debt rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

(iii)

commercial or finance company paper which is then receiving the highest commercial or finance company paper rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

(iv)

certificates of deposit, demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or long term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company, but only if Moody’s is not a Rating Agency) are then rated one of the two highest long-term and the highest short-term ratings of each Rating Agency for such securities, or such lower ratings as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by either Rating Agency;

(v)

interest-bearing demand or time deposits or certificates of deposit issued by any bank or trust company or savings institution to the extent that such deposits are fully insured by the FDIC;

(vi)

guaranteed reinvestment agreements issued by any bank, insurance company or other corporation containing, at the time of the issuance of such agreements, such terms and conditions as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by either Rating Agency;

(vii)

repurchase obligations with respect to any security described in clauses (i) and (ii) above, in either case entered into with a depository institution or trust company (acting as principal) described in clause (iv) 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 highest long-term unsecured debt rating categories or its highest short-term unsecured debt rating category, respectively;

(viii)

securities (other than stripped bonds, stripped coupons or instruments sold at a purchase price in excess of 115% of the face amount thereof) bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any state thereof which, at the time of such investment, have one of the two highest ratings of each Rating Agency (except if the Rating Agency is Moody’s, such rating shall be the highest commercial paper rating of Moody’s for any such securities), or such lower rating as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by either Rating Agency as evidenced by a signed writing delivered by each Rating Agency;

(ix)

units of a taxable money-market portfolio having the highest rating assigned by each Rating Agency (except if Fitch is a Rating Agency and has not rated the portfolio, then the highest rating assigned by Moody’s) and restricted to obligations issued or guaranteed by the United States of America or entities whose obligations are backed by the full faith and credit of the United States of America and repurchase agreements collateralized by such obligations; and

(x)

such other investments bearing interest or sold at a discount acceptable to each Rating Agency as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by either Rating Agency, as evidenced by a signed writing delivered by each Rating Agency;

provided that no such instrument shall be a Permitted Investment if such instrument evidences the right to receive interest only payments with respect to the obligations underlying such instrument.

Permitted Transferee: Any person other than a “disqualified organization” as defined in section 860E(e)(5).

Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government, or any agency or political subdivision thereof.

Pool Principal Balance: As to any Distribution Date, the aggregate of the Stated Principal Balances of the Mortgage Loans which were Outstanding Mortgage Loans on the Determination Date in the month preceding the month of such Distribution Date.

Pre-Funded Amount: With respect to any date and Group, the amount remaining on deposit in the Pre-Funding Account with respect to such Group (exclusive of any related Pre-Funding Account Earnings).

Pre-Funding Account: The account created and maintained with the Paying Agent by the Trust pursuant to Section 2.7 hereof.

Pre-Funding Account Earnings: With respect to each Distribution Date to and including the date immediately preceding the Distribution Date immediately following the end of the Funding Period, the actual interest and investment earnings on the Pre-Funded Amount as calculated by the Master Servicer (based on information supplied by the Trustee).

Prepayment Interest Excess: As to any Principal Prepayment in Full received by the Servicer from the first day through the seventeenth day of any calendar month (other than the calendar month in which the Cut Off Date occurs), all amounts paid by the related Mortgagor in respect of interest on such Principal Prepayment.  All Prepayment Interest Excess shall be paid to the Servicer as additional servicing compensation.

Prepayment Interest Shortfall: As to any Distribution Date, Mortgage Loan and Principal Prepayment received (a) during the period from the eighteenth day of the month preceding the month of such Distribution Date through the last day of such month, in the case of a Principal Prepayment in Full, or (b) during the month preceding the month of such Distribution Date, in the case of a partial Principal Prepayment, the amount, if any, by which one month’s interest at the related Mortgage Rate (less the related Servicing Fee) on such Principal Prepayment exceeds the amount of interest actually paid by the Mortgagor in connection with such Principal Prepayment.

Prepayment Penalty: With respect to any Prepayment Period, any prepayment premium, penalty or charge collected by the Servicer or Master Servicer from a Mortgagor pursuant to the terms of the related Mortgage Note.

Prepayment Period: As to each Distribution Date, the period from but excluding the Cut Off Date to and including the 17th day of the month in which the first Determination Date occurs and each period thereafter from and including the 18th day of a month (or, if the prior Prepayment Period ended on a later day, such later day) to and including the Determination Date occurring in the following month.

Primary Insurance Policy: Each policy of primary mortgage guaranty insurance or any replacement policy therefor with respect to any Mortgage Loan.

Principal Distribution Amount: With respect to each Group and Distribution Date, the excess of:

(i)

the sum of:

(A)

the Principal Funds for that Distribution Date and Group, and 

(B)

the related Principal Percentage of any Extra Principal Distribution Amount for that Distribution Date over

(ii)

the related Principal Percentage of the Released Principal Amount for that Distribution Date.

Principal Funds: With respect to each Group of Mortgage Loans and any Determination Date the sum, without duplication, of: 

(i)

all scheduled principal with respect to such Group collected by the Servicer during the related Due Period or advanced on or before such Determination Date, 

(ii)

prepayments with respect to such Group collected by the Servicer in the related Prepayment Period, 

(iii)

the Stated Principal Balance of each Mortgage Loan in such Group repurchased by the Depositor in the related Prepayment Period, 

(iv)

any Substitution Adjustment Amount with respect to such Group for such date, 

(v)

all Liquidation Proceeds with respect to such Group collected by the Servicer during the related Due Period (to the extent such Liquidation Proceeds related to principal) less all non-recoverable Advances relating to principal with respect to such Group reimbursed during the related Due Period, and

(vi)

any remaining related Pre-Funded Amount immediately following the end of the Funding Period.

Principal Prepayment: Any payment of principal by a Mortgagor on a Mortgage Loan that is received in advance of its scheduled Due Date and is not accompanied by an amount representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment. Partial Principal Prepayments shall be applied by the Servicer in accordance with the terms of the related Mortgage Note.

Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor of the entire principal balance of a Mortgage Loan.

Projected Net Liquidation Value: With respect to any Nonrecoverable Mortgage Loan, the amount, set forth in an Officer’s Certificate signed by a Servicing Officer in a form acceptable to the Master Servicer, equal to (i) the fair market value of the related Mortgaged Property as determined by a real estate broker meeting the qualifications, and applying broker’s price opinion methodology generally acceptable to, residential mortgage servicers, or other property valuation opinion methodology customarily used by residential mortgage servicers with respect to defaulted loans, less (ii) the Servicer’s good faith estimate of the total of all related costs of liquidation, Servicing Fees, and Advances reasonably expected to be incurred in the event the Mortgaged Property were the subject of foreclosure or otherwise converted to, and sold as, REO Property.

Proprietary Lease: With respect to any Cooperative Unit, a lease or occupancy agreement between a Cooperative Corporation and a holder of related Coop Shares.

PUD: Planned Unit Development.

Purchase Price: With respect to any Mortgage Loan, an amount equal to the sum of (i) 100% of the unpaid principal balance of such Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at the applicable Mortgage Rate from the date through which interest was last paid by the Mortgagor to the Due Date occurring in the Due Period immediately preceding the Distribution Date on which the Purchase Price is to be distributed to Certificateholders.

Rating Agency: Each of the Rating Agencies specified in the Preliminary Statement. If any such organization or a successor is no longer in existence, “Rating Agency” shall be such nationally recognized statistical rating organization, or other comparable Person, as is designated by the Depositor, notice of which designation shall be given to the Trustee. References herein to a given rating category of a Rating Agency shall mean such rating category without giving effect to any modifiers.

Realized Loss: With respect to any Mortgage Loan (other than a Nonrecoverable Mortgage Loan), the amount by which the unpaid principal balance thereof exceeds the net amount recovered in liquidation thereof (after payment of expenses of liquidation, unpaid Servicing Fees, and reimbursement of Advances), after payment of accrued interest on such Mortgage Loan and after application of any Insurance Proceeds with respect thereto.  With respect to any Nonrecoverable Mortgage Loan, the sum of (i) the amount by which the unpaid principal balance thereof exceeds the Projected Net Liquidation Value thereof and (ii) the amount, if any, by which the Projected Net Liquidation Value thereof exceeds Liquidation Proceeds received in respect thereof.  The Realized Loss in respect of any Nonrecoverable Mortgage Loan calculated pursuant to clause (i) of the preceding sentence shall be given effect as of the Prepayment Period during which the Servicer or Master Servicer classifies such loan as a Nonrecoverable Mortgage Loan.

Recognition Agreement: With respect to any Cooperative Loan, an agreement between the Cooperative Corporation and the originator of such Mortgage Loan which establishes the rights of such originator in the Cooperative Property.

Reference Bank: Leading banks selected by the Master Servicer and engaged in transactions in U.S. dollar deposits in the London interbank market.

Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with the refinancing of an existing mortgage loan.

Released Principal Amount: With respect to any Distribution Date, the amount by which the Overcollateralization Amount (assuming for such purpose that all Principal Funds for such Distribution Date are distributed as principal to the Certificates) exceeds the Required Overcollateralization Amount for such date.

Relief Act: The Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended.

Relief Act Shortfall:  With respect to any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon as a result of application of the Relief Act, any amount by which interest collectible on such Mortgage Loan for the Due Date in the related Due Period is less than interest accrued thereon for the applicable one-month period at the Net Rate without giving effect to such reduction.

REMIC: A “real estate mortgage investment conduit” within the meaning of section 860D of the Code.

REMIC Change of Law: Any proposed, temporary or final regulation, revenue ruling, revenue procedure or other official announcement or interpretation relating to REMICs and the REMIC Provisions issued after the Closing Date.

REMIC Provisions: Provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at sections 860A through 860G of subchapter M of chapter 1 of the Code, and related provisions, and regulations promulgated thereunder, as the foregoing may be in effect from time to time.

Remittance Agency Agreement:  As defined in Section 2.2 hereof.

REO Property: A Mortgaged Property acquired by the Trust Fund through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.

Request for Release: The Request for Release submitted by the Servicer to the Trustee, substantially in the form of Exhibits I and J, as appropriate.

Required Recordation States: The states of Florida and Mississippi.

Responsible Officer: When used with respect to the Trustee, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust Officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of this Agreement and also to whom, with respect to a particular matter, such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

S&P: Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. If S&P is designated as a Rating Agency in the Preliminary Statement, the address for notices to S&P shall be Standard & Poor’s, 26 Broadway, 15th Floor, New York, New York 10004, Attention: Mortgage Surveillance Monitoring, or such other address as S&P may hereafter furnish to the Depositor and the Master Servicer.

Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on any Due Date allocable to principal and/or interest on such Mortgage Loan which, unless otherwise specified herein, shall give effect to any related Debt Service Reduction and any Deficient Valuation that affects the amount of the monthly payment due on such Mortgage Loan.

Securities Act: The Securities Act of 1933, as amended.

Security Release Certification:  As defined in Section 2.2 hereof.

Senior Credit Enhancement Percentage: As of any Distribution Date is equal to a fraction, expressed as a percentage, the numerator of which is the sum of the aggregate Certificate Principal Balance of the Subordinate Certificates for such Distribution Date and the Overcollateralization Amount for such Distribution Date, and the denominator of which is the Assumed Principal Balance of the Mortgage Loans as of such Distribution Date.

Senior Principal Distribution Amount: With respect to each Group and any Distribution Date before the Stepdown Date or as to which a Trigger Event has occurred, 100% of the Principal Distribution Amount for such Group and Distribution Date, and with respect to any Distribution Date on or after the Stepdown Date and as to which a Trigger Event has not occurred, the related Principal Percentage of the excess of: 

(i)

the Group I and Group II Class A Certificate Principal Balances immediately prior to such Distribution Date over 

(ii)

the lesser of: 

(A)

the related Target Percentage of the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date, and 

(B)

the Assumed Principal Balance of the Mortgage Loans on the preceding Determination Date less 0.50% of the Assumed Principal Balance as of the Cut Off Date (but in no event less than zero). 

Servicer: SMS and its permitted successors and assigns.

Servicer Deposit Date:  The twenty-first day of each month, or if such day is not a Business Day, the next succeeding day.

Servicing Advances: All customary, reasonable and necessary “out of pocket” costs and expenses incurred in the performance by the Servicer of its servicing obligations hereunder, including, but not limited to, the cost of (i) the preservation, restoration and protection of a Mortgaged Property, (ii) any expenses reimbursable to the Servicer pursuant to Section 3.11 and any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of any REO Property and (iv) compliance with the obligations under Section 3.1 and Section 3.9.

Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount payable out of each full payment of interest received on such Mortgage Loan and equal to one-twelfth of the Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due Date in of the month prior to the month of such Distribution Date (or, in the case of an Odd Due Date Mortgage Loan, the Due Date occurring in the second month preceding the month of such Distribution Date).

Servicing Officer: Any of the President, any Vice President (however denominated), or Assistant Vice President of the Servicer involved in, or responsible for, the administration and servicing of one or more Mortgage Loans at the time of performance of the relevant activity of the Servicer.

SMI:

Saxon Mortgage, Inc, a Virginia corporation, and its successor and assigns.

SMS: Saxon Mortgage Services, Inc., a Texas corporation.

Startup Day: The Closing Date.

Stated Principal Balance: As to any Mortgage Loan and Determination Date, the unpaid principal balance of such Mortgage Loan as of the applicable Due Date as specified in the amortization schedule at the time relating thereto (before any adjustment to such amortization schedule by reason of any moratorium or similar waiver or grace period) after giving effect to (i) any previous partial Principal Prepayments and Liquidation Proceeds allocable to principal (other than with respect to any Liquidated Mortgage Loan), (ii) the payment of principal due on such Due Date, and (iii) in the case of any Nonrecoverable Mortgage Loan, the amount of any Realized Loss in respect thereof (but otherwise determined, in each case, regardless of any delinquency in payment by the related Mortgagor).

Subservicer: Any person to whom the Servicer (or Master Servicer) has contracted for the servicing of all or a portion of the Mortgage Loans pursuant to Section 3.2 hereof.

Subsequent Cut Off Date: The date specified in a Subsequent Sales Agreement with respect to those Subsequent Mortgage Loans which are transferred and assigned to the Trust Fund pursuant to the related Subsequent Sales Agreement.

Subsequent Mortgage Loans:  The Mortgage Loans listed on a Mortgage Loan Schedule attached to a Subsequent Sales Agreement.

Subsequent Recoveries:  As to any Nonrecoverable Mortgage Loan, the excess of (i) any net Liquidation Proceeds received in respect of such loan; over (ii) the Projected Net Liquidation Value thereof.

Subsequent Sales Agreement: Each Subsequent Sales Agreement dated as of a Subsequent Sales Date by which Subsequent Mortgage Loans are sold and assigned to the Trust.

Subsequent Sales Date: The date specified in each Subsequent Sales Agreement. 

Substitute Mortgage Loan: A Mortgage Loan substituted by the Depositor or Master Servicer for a Deleted Mortgage Loan which must, on the date of such substitution, as confirmed in a Request for Release, substantially in the form of Exhibit I, (i) have a Stated Principal Balance, after deduction of the principal portion of the Scheduled Payment due in the month of substitution, not in excess of, and not more than 10% less than the Stated Principal Balance of the Deleted Mortgage Loan; (ii) accrue interest on the same basis as the Deleted Mortgage Loan and be accruing interest at a rate no lower than and not more than 1% per annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv) not be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative Loan; and (v) comply with each representation and warranty set forth in Section 2.3 hereof.  Any of the characteristics described above may be satisfied in the aggregate by one or more Substitute Mortgage Loans.

Substitution Adjustment Amount: The meaning ascribed to such term pursuant to Section 2.3 hereof.

Tax Matters Person: The person designated as “tax matters person” in the manner provided under Treasury regulation § 1.860F-4(d) and Treasury regulation §301.6231(a)(7)-1. Initially, the Tax Matters Person shall be the Trustee.

Tax Matters Person Certificate: The Class R Certificate with a Denomination of 0.00001%.

Telerate Page 3750: The display page currently so designated on the Bridge Telerate Market Report (or such other page as may replace that page on that service for the purpose of displaying comparable rates or prices).

Transfer: Any direct or indirect transfer or sale of any Ownership Interest in a Residual Certificate.

Trustee: Deutsche Bank Trust Company Americas and its successors and, if a successor trustee is appointed hereunder, such successor.

Trustee Fee: As to any Distribution Date, an amount equal to one-twelfth of the Trustee Fee Rate multiplied by the Pool Principal Balance with respect to such Distribution Date, to be paid from withdrawals by the Trustee from the Distribution Account or from deductions to the  Master Servicing Fee.

Trust Fund: As described in Section 2.1 hereof.

Unpaid Realized Loss Amount: As to any Distribution Date and any Class, the excess of: 

(i)

the Applied Realized Loss Amount for such Class over 

(ii)

the sum of all distributions in reduction of such Applied Realized Loss Amount on all previous Distribution Dates.

Weighted Average Net Rate: With respect to the Mortgage Loans in any Group, the weighted average of the Mortgage Rates of the Mortgage Loans in such Group less the sum of the Servicing Fee Rate and the Master Servicing Fee Rate, as applicable, provided, however, that for the first four Distribution Dates, the Weighted Average Net Rate shall equal the product of (i) the weighted average of the Mortgage Rates of only those Mortgage Loans transferred to the Trust Fund on the Closing Date less the sum of the Servicing Fee Rate and the Master Servicing Fee Rate, as applicable, multiplied by (ii) a fraction, the numerator of which is the aggregate principal balance of the Mortgage Loans in such Group transferred to the Trust Fund on the Closing Date and the denominator of which is the Assumed Principal Balance of such Group as of such Distribution Date.

ARTICLE 2

CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES

Section 2.1

Conveyance of Mortgage Loans Section 2.1

Conveyance of Mortgage Loans.

(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 hereunder with respect to the Certificates and the performance of the covenants contained herein, the Depositor hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust, without recourse and for the exclusive benefit of the Certificateholders as their interests may appear, all the Depositor’s right, title and interest in and to any and all benefits accruing to the Depositor from:  (i) the Mortgage Loans, which the Depositor is causing to be delivered to the Trustee (or the Custodian) herewith (and all Substitute Mortgage Loans substituted therefor), together in each case with the related Mortgage Files and the Depositor’s interest in any collateral that secured a Mortgage Loan but that is acquired by foreclosure or deed-in-lieu of foreclosure after the Closing Date, and all Scheduled Payments due after the Cut Off Date and all principal prepayments received with respect to the Mortgage Loans paid by the borrower after the Cut Off Date and proceeds of the conversion, voluntary or involuntary, of the foregoing; (ii) any Subsequent Mortgage Loans; (iii) the Sales Agreement, except that the Depositor does not assign to the Trustee any of its rights under Sections 9 and 12 of the Sales Agreement; (iv) any Pre-Funding 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 as specified herein (items (i) through (v) above collectively, the “Trust Fund”).  

With respect to any Mortgage Loan that does not have a first payment date on or before the last day of the Due Period immediately preceding the first Distribution Date, the Depositor shall deposit into the Distribution Account on or before the Distribution Account Deposit Date relating to the first Distribution Date, an amount equal to one month’s interest at the related Net Rate on the Cut Off Date Principal Balance of such Mortgage Loan.

(b)

In connection with the transfer set forth in clause (a) above, the Depositor has delivered or caused to be delivered to the Trustee or the Custodian on its behalf for the benefit of the Certificateholders the following documents or instruments (collectively, the “Mortgage Loan Documents”) with respect to each Mortgage Loan so transferred:

(i)

(A) the original Mortgage Note endorsed by manual or facsimile signature to the Trustee or the Custodian or in blank, without recourse, with all intervening endorsements showing a complete chain of endorsement from the originator to the Person endorsing the Mortgage Note (the “Last Endorsee”) (each such endorsement being sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note); or

(B) with respect to any Lost Mortgage Note, a lost note affidavit from the Depositor stating that the original Mortgage Note was lost or destroyed, together with a copy of such Mortgage Note;

(ii)

except with respect to any Cooperative Loan, the original recorded Mortgage or a copy of such Mortgage certified by the Depositor, the originating lender, settlement agent, or escrow company as being a true and complete copy of the Mortgage;

(iii)

except with respect to any Mortgage Loan for which the related Mortgage names the Custodian as nominee for the originating lender (or similar designation satisfactory to the Custodian), as beneficiary or mortgagee, either (A) a duly executed assignment of the Mortgage in blank, or (B) an original recorded assignment of the Mortgage from the Last Endorsee to the Custodian or a copy of such assignment of Mortgage certified by the Depositor, the originating lender, settlement agent, or escrow company as being a true and complete copy thereof which in either case may be included in a blanket assignment or assignments; 

(iv)

each interim recorded assignment of such Mortgage, or a copy of each such interim recorded assignment of Mortgage certified by the Depositor, the originating lender, settlement agent, or escrow company as being a true and complete copy thereof; 

(v)

the original or copies of each assumption, modification, written assurance or substitution agreement, if any;

(vi)

except as to any second lien Mortgage Loan in the original principal amount of $50,000.00 or less, either the original or duplicate original title policy (including all riders thereto) with respect to the related Mortgaged Property, if available, provided that the title policy (including all riders thereto) will be delivered as soon as it becomes available, and if the title policy is not available, and to the extent required pursuant to the second paragraph below or otherwise in connection with the rating of the Certificates, a written commitment or interim binder or preliminary report of the title issued by the title insurance or escrow company with respect to the Mortgaged Property; and

(vii)

in the case of a Cooperative Loan, the originals of the following documents or instruments:

(a)

The Coop Shares, together with a stock power in blank;

(b)

The executed Security Agreement;

(c)

The executed Proprietary Lease;

(d)

The executed Recognition Agreement;

(e)

The executed UCC-1 financing statement with evidence of recording thereon which have been filed in all places required to perfect the Depositor’s interest in the Coop Shares and the Proprietary Lease; and

(f)

Executed UCC-3 financing statements or other appropriate UCC financing statements required by state law, evidencing a complete and unbroken line from the mortgagee to the Trustee with evidence of recording thereon (or in a form suitable for recordation).

In the event that in connection with any Mortgage Loan the Depositor cannot deliver (a) the original recorded Mortgage or (b) any recorded assignments or interim assignments satisfying the requirements of clause (iii) or (iv) above, respectively, concurrently with the execution and delivery hereof because such document or documents have not been returned from the applicable public recording office, the Depositor shall deliver such documents to the Trustee or the Custodian on its behalf as promptly as possible upon receipt thereof and, in any event, within 720 days following the Closing Date. The Depositor or Servicer shall forward or cause to be forwarded to the Trustee or the Custodian on its behalf (a) from time to time additional original documents evidencing an assumption or modification of a Mortgage Loan and (b) any other documents required to be delivered by the Depositor or the Servicer to the Trustee.  In the case where a public recording office retains the original recorded Mortgage or in the case where a Mortgage is lost after recordation in a public recording office, the Depositor shall deliver to the Trustee a copy of such Mortgage certified (to the extent such certification is reasonably obtainable) by such public recording office to be a true and complete copy of the original recorded Mortgage.

In addition, in the event that in connection with any Mortgage Loan the Depositor cannot deliver the original or duplicate original lender’s title policy (together with all riders thereto), satisfying the requirements of clause (vi) above, concurrently with the execution and delivery hereof because the related Mortgage or a related assignment has not been returned from the applicable public recording office, the Depositor shall promptly deliver to the Trustee or the Custodian on its behalf such original or duplicate original lender’s title policy (together with all riders thereto) upon receipt thereof from the applicable title insurer, and in any event, within 720 days following the Closing Date.  

Subject to the immediately following sentence, as promptly as practicable subsequent to the transfer set forth in clause (a) of this Section 2.1, and in any event, within thirty (30) days thereafter, the Servicer shall as to any Mortgage Loan with respect to which the Depositor delivers an assignment of the Mortgage in blank pursuant to clause (b)(iii)(A) of this Section 2.1, (i) complete each such assignment of Mortgage to conform to clause (b)(iii)(B) of this Section 2.1, (ii) cause such assignment to be in proper form for recording in the appropriate public office for real property records, and (iii) cause to be delivered for recording in the appropriate public office for real property records each such assignment of the Mortgages, except that, with respect to any assignments of Mortgage as to which the Servicer has not received the information required to prepare such assignments in recordable form, the Servicer’s obligation to do so and to deliver the same for such recording shall be as soon as practicable after receipt of such information and in any event within thirty (30) days after receipt thereof.  Notwithstanding the foregoing, the Servicer need not cause to be recorded any assignment which relates to a Mortgage Loan in any state other than the Required Recordation States.

In the case of Mortgage Loans that have been prepaid in full as of the Closing Date, the Depositor, in lieu of delivering the above documents to the Trustee or the Custodian on its behalf, will deposit in the Collection Account the portion of such payment that is required to be deposited in the Collection Account pursuant to Section 3.8 hereof.

Section 2.2

Acceptance by Trustee of the Mortgage Loans.

The Trustee or the Custodian, on behalf of the Trustee acknowledges receipt of the documents identified in the initial certification in the form annexed hereto as Exhibit C (the “Initial Certification”) and declares that it or the Custodian holds and will hold such documents and the other documents delivered to it constituting the Mortgage Files, and that it or the Custodian holds or will hold such other assets as are included in the Trust Fund, in trust for the exclusive use and benefit of all present and future Certificateholders. 

The Trustee agrees to execute and deliver or to cause the Custodian to execute and deliver on the Closing Date to the Depositor, the Master Servicer and the Servicer an Initial Certification in the form annexed hereto as Exhibit C.  Based on its or the Custodian’s review and examination, and only as to the documents identified in such Initial Certification, the Custodian, on behalf of the Trustee acknowledges that such documents appear regular on their face and relate to such Mortgage Loan. Neither the Trustee nor the Custodian shall be under any duty or obligation to inspect, review or examine said documents, instruments, certificates or other papers to determine that the same are genuine, enforceable or appropriate for the represented purpose or that they have actually been recorded in the real estate records or that they are other than what they purport to be on their face.

Not later than 360 days after the Closing Date, the Trustee shall deliver or shall cause the Custodian to deliver to the Depositor, the Master Servicer and the Servicer a Final Certification in the form annexed hereto as Exhibit D, with any applicable exceptions noted thereon.  Notwithstanding anything to the contrary contained herein, in the event there are exceptions to the Final Certification, the Trustee may transmit such exceptions electronically (via email) to the Depositor, the Master Servicer and the Servicer, subject to the prior approval of the Depositor, the Master Servicer and the Servicer.

If, in the course of such review, the Trustee or the Custodian, on behalf of the Trustee finds any document constituting a part of a Mortgage File which does not meet the requirements of Section 2.1 hereof, the Trustee shall list or shall cause the Custodian to list such as an exception in the Final Certification; provided, however that neither the Trustee nor the Custodian shall make any determination as to whether (i) any endorsement is sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any assignment is in recordable form or is sufficient to effect the assignment of and transfer to the assignee thereof under the mortgage to which the assignment relates.  SMI shall promptly correct or cure such defect within 90 days from the date it was so notified of such defect and, if SMI does not correct or cure such defect within such period, SMI shall either (a) substitute for the related Mortgage Loan a Substitute Mortgage Loan, which substitution shall be accomplished in the manner and subject to the conditions set forth in Section 2.3 hereof, or (b) purchase such Mortgage Loan from the Trustee within 90 days from the date SMI was notified of such defect in writing at the Purchase Price of such Mortgage Loan; provided, however, that in no event shall such substitution or purchase occur more than 540 days from the Closing Date, except that if the substitution or purchase of a Mortgage Loan pursuant to this provision is required by reason of a delay in delivery of any documents by the appropriate recording office, and there is a dispute between either the Servicer or SMI and the Trustee over the location or status of the recorded document, then such substitution or purchase shall occur within 720 days from the Closing Date. Any such substitution pursuant to (a) above shall not be effected prior to the delivery to the Trustee of the Opinion of Counsel required by Section 2.4 hereof, if any, and any substitution pursuant to (a) above shall not be effected prior to the additional delivery to the Trustee of a Request for Release substantially in the form of Exhibit I.  No substitution is permitted to be made in any calendar month after the Determination Date for such month. The Purchase Price for any such Mortgage Loan shall be deposited by SMI in the Collection Account on or prior to the Distribution Account Deposit Date for the Distribution Date in the month following the month of repurchase and, upon receipt of such deposit and certification with respect thereto in the form of Exhibit J hereto, the Trustee shall cause the Custodian to release the related Mortgage File to SMI and shall execute and deliver at SMI’s request such instruments of transfer or assignment prepared by SMI, in each case without recourse, as shall be necessary to vest in SMI, or a designee, the Trustee’s interest in any Mortgage Loan released pursuant hereto.

The Trustee shall retain or shall cause the Custodian to retain possession and custody of each Mortgage File in accordance with and subject to the terms and conditions set forth herein. The Servicer shall promptly deliver to the Trustee or the Custodian on its behalf, upon the execution or receipt thereof, the originals of such other documents or instruments constituting the Mortgage File as come into the possession of the Servicer from time to time.

It is understood and agreed that the obligation of SMI to substitute for or to purchase any Mortgage Loan which does not meet the requirements of Section 2.1 hereof shall constitute the sole remedy respecting such defect available to the Trustee and any Certificateholder against the Depositor or SMI.

In order to facilitate sales and deliveries of Mortgage Loans to the Trust Fund, the Trustee may execute and deliver one or more remittance agency agreements in substantially the form of Exhibit K hereto (each, a "Remittance Agency Agreement"), and in such event the Trustee: (i) shall perform the duties of Remittance Agent (as that term is defined in the related Remittance Agency Agreement); and (ii) may accept as conclusive evidence of the release of the related security interests one or more security release certifications in substantially the form attached as Exhibit L hereto (each, a "Security Release Certification").

Section 2.3

Representations, Warranties and Covenants of the Depositor and Servicer and Master Servicer.

(a)

The Servicer represents and warrants to the Trustee that, as of the Closing Date:

(i)

the Servicer is a corporation licensed as a mortgage servicer duly organized, validly existing and in good standing under the laws of the state of its incorporation and has, and had at all relevant times, full corporate power to service the Mortgage Loans, to own its property, to carry on its business as presently conducted and to enter into and perform its obligations under this Agreement. The Servicer has all necessary licenses and is qualified to transact business in and is in good standing under the laws of each state where any Mortgaged Property is located or is otherwise exempt under applicable law from such qualification or is otherwise not required under applicable law to effect such qualification and no demand for such qualification has been made upon the Servicer by any state having jurisdiction;

(ii)

the execution and delivery of this Agreement by the Servicer and the performance by it of and compliance with the terms of this Agreement will not (A) violate the Servicer's articles of incorporation or by-laws or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the breach or acceleration of, any material contract, agreement or other instrument to which the Servicer is a party or which may be applicable to the Servicer or any of its assets or (B) result in the creation or imposition of any lien, charge or encumbrance upon any of its properties pursuant to the terms of any such contract, agreement or other instrument;

(iii)

the Servicer has the full power and authority to enter into and consummate all transactions contemplated by this Agreement to be consummated by it, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.  This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of the Servicer, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);

(iv)

the Servicer is not in violation of, and the execution and delivery of this Agreement by the Servicer and the performance by it and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the condition (financial or otherwise) or operations of the Servicer or any of its properties or materially and adversely affect the performance of any of its duties hereunder; and

(v)

there are no actions or proceedings against, or investigations of, the Servicer pending or, to the knowledge of the Servicer, threatened, before any court, administrative agency or other tribunal (A) that, if determined adversely, would prohibit its entering into this Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (C) that, if determined adversely, would prohibit or materially and adversely affect the performance by the Servicer of any of its obligations under, or the validity or enforceability of, this Agreement.

(b)

The Master Servicer represents and warrants to the Trustee that, as of the Closing Date:

(i)

the Master Servicer is a corporation licensed as a mortgage banker duly organized, validly existing and in good standing under the laws of the state of its incorporation and has, and had at all relevant times, full corporate power to service the Mortgage Loans, to own its property, to carry on its business as presently conducted and to enter into and perform its obligations under this Agreement. The Master Servicer has all necessary licenses and is qualified to transact business in and is in good standing under the laws of each state where a Mortgaged Property is located or is otherwise exempt under applicable law from such qualification or is otherwise not required under applicable law to effect such qualification and no demand for such qualification has been made upon the Master Servicer by any state having jurisdiction;

(ii)

the execution and delivery of this Agreement by the Master Servicer and the performance by it of and compliance with the terms of this Agreement will not (A) violate the Master Servicer's articles of incorporation or by-laws or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the breach or acceleration of, any material contract, agreement or other instrument to which the Master Servicer is a party or which may be applicable to the Master Servicer or any of its assets or (B) result in the creation or imposition of any lien, charge or encumbrance upon any of its properties pursuant to the terms of any such contract, agreement or other instrument;

(iii)

the Master Servicer has the full power and authority to enter into and consummate all transactions contemplated by this Agreement to be consummated by it, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.  This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of the Master Servicer, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);

(iv)

the Master Servicer is not in violation of, and the execution and delivery of this Agreement by the Master Servicer and the performance by it and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the condition (financial or otherwise) or operations of the Master Servicer or any of its properties or materially and adversely affect the performance of any of its duties hereunder; and

(v)

there are no actions 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 (A) that, if determined adversely, would prohibit its entering into this Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (C) that, if determined adversely, would prohibit or materially and adversely affect the performance by the Master Servicer of any of its obligations under, or the validity or enforceability of, this Agreement.

(c)

The Depositor represents and warrants to the Trustee that, as of the Closing Date:

(i)

the Depositor is a corporation, duly organized, validly existing and in good standing under the laws of the state of its incorporation and has, and had at all relevant times, full corporate power to own its property, to carry on its business as presently conducted and to enter into and perform its obligations under this Agreement;

(ii)

the execution and delivery of this Agreement by the Depositor and the performance by it of and compliance with the terms of this Agreement will not (A) violate the Depositor's articles of incorporation or by-laws or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the breach or acceleration of, any material contract, agreement or other instrument to which the Depositor is a party or which may be applicable to the Depositor or any of its assets or (B) result in the creation or imposition of any lien, charge or encumbrance upon any of its properties pursuant to the terms of any such contract, agreement or other instrument;

(iii)

the Depositor has the full power and authority to enter into and consummate all transactions contemplated by this Agreement to be consummated by it, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.  This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of the Depositor, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);

(iv)

the Depositor is not in violation of, and the execution and delivery of this Agreement by the Depositor and the performance by it and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the condition (financial or otherwise) or operations of the Depositor or any of its properties or materially and adversely affect the performance of any of its duties hereunder; and

(v)

there are no actions or proceedings against, or investigations of, the Depositor pending or, to the knowledge of the Depositor, threatened, before any court, administrative agency or other tribunal (A) that, if determined adversely, would prohibit its entering into this Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (C) that, if determined adversely, would prohibit or materially and adversely affect the performance by the Depositor of any of its obligations under, or the validity or enforceability of, this Agreement.

(d)

Pursuant to Section 2.1(a)(iii) hereof, the Depositor has assigned to the Trustee, for the benefit of Certificateholders, its rights under the Sales Agreement, including each representation and warranty of SMI set forth in such Sales Agreement in respect of the Mortgage Loans.

Upon discovery by any of the parties hereto of a breach of a representation or warranty made by SMI in respect of the Mortgage Loans that materially and adversely affects the interests of the Certificateholders in any such Mortgage Loan, the party discovering such breach shall give prompt notice thereof to the other parties.  SMI hereby covenants that within 90 days of the earlier of its discovery or its receipt of written notice from any party of a breach such of any representation or warranty which materially and adversely affects the interests of the Certificateholders in any Mortgage Loan (it being understood that any such breach shall be deemed to materially and adversely affect the value of such Mortgage Loan or the interest of the Trust Fund therein, if the Trust Fund incurs a loss as the result of such breach), it shall cure such breach in all material respects, and if such breach is not so cured, shall, (i) if such 90-day period expires prior to the second anniversary of the Closing Date, remove such Mortgage Loan (a “Deleted Mortgage Loan”) from the Trust Fund and substitute in its place a Substitute Mortgage Loan, in the manner and subject to the conditions set forth in this Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set forth below; provided, however, that any such substitution pursuant to (i) above shall not be effected prior to the delivery to the Trustee of the Opinion of Counsel required by Section 2.4(a) hereof, if any, and any such substitution pursuant to (i) above shall not be effected prior to the additional delivery to the Trustee or the Custodian on its behalf of a Request for Release substantially in the form of Exhibit J and the Mortgage File for any such Substitute Mortgage Loan.  SMI shall promptly reimburse the Servicer and the Trustee for any expenses reasonably incurred by the Servicer or the Trustee in respect of enforcing the remedies for such breach.  With respect to the representations and warranties described in this Section which are made to the best of SMI’s knowledge, if it is discovered by either the Servicer or the Trustee that the substance of such representation and warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan or the interests of the Certificateholders therein, notwithstanding SMI’s lack of knowledge with respect to the substance of such representation or warranty, such inaccuracy shall be deemed a breach of the applicable representation or warranty.

With respect to any Substitute Mortgage Loan, SMI shall deliver to the Trustee or the Custodian on its behalf for the benefit of the Certificateholders the Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such other documents and agreements as are required by Section 2.1, with the Mortgage Note endorsed and the Mortgage assigned as required by Section 2.1. No substitution is permitted to be made in any calendar month after the Determination Date for such month. Scheduled Payments due with respect to Substitute Mortgage Loans in the month of substitution shall not be part of the Trust Fund and will be retained by SMI on the next succeeding Distribution Date. For the month of substitution, distributions to Certificateholders will include the monthly payment due on any Deleted Mortgage Loan for such month and thereafter SMI shall be entitled to retain all amounts received in respect of such Deleted Mortgage Loan.  The Servicer shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the removal of such Deleted Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans and the Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee.  Upon such substitution, the Substitute Mortgage Loan or Loans shall be subject to the terms of this Agreement in all respects, and SMI shall be deemed to have made with respect to such Substitute Mortgage Loan or Loans, as of the date of substitution, the representations and warranties made by SMI pursuant to the Sales Agreement with respect to such Mortgage Loan. Upon any such substitution and the deposit to the Collection Account of the amount required to be deposited therein in connection with such substitution as described in the following paragraph, the Trustee shall release or shall cause the Custodian to release the Mortgage File held for the benefit of the Certificateholders relating to such Deleted Mortgage Loan to SMI and shall execute and deliver at SMI’s direction such instruments of transfer or assignment prepared by SMI, in each case without recourse, as shall be necessary to vest title in SMI, or its designee, the Trustee’s interest in any Deleted Mortgage Loan substituted for pursuant to this Section 2.3.

For any month in which SMI substitutes one or more Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will determine the amount (if any) by which the aggregate principal balance of all such Substitute Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after application of the scheduled principal portion of the monthly payments due in the month of substitution). The amount of such shortage (the “Substitution Adjustment Amount”) plus an amount equal to the aggregate of any unreimbursed Advances with respect to such Deleted Mortgage Loans shall be deposited in the Collection Account by SMI on or before the Distribution Account Deposit Date for the Distribution Date in the month succeeding the calendar month during which the related Mortgage Loan became required to be purchased or replaced hereunder.

In the event that SMI shall have repurchased a Mortgage Loan, the Purchase Price therefor shall be deposited in the Distribution Account prior to the Distribution Date in the month following the month during which SMI became obligated hereunder to repurchase or replace such Mortgage Loan and upon such deposit of the Purchase Price, the delivery of the Opinion of Counsel required by Section 2.4 hereof and receipt of a Request for Release in the form of Exhibit I hereto, the Trustee shall release or shall cause the Custodian to release the related Mortgage File held for the benefit of the Certificateholders to SMI, and the Trustee shall execute and deliver or shall cause the Custodian to execute and deliver at SMI’s direction such instruments of transfer or assignment prepared by such Person, in each case without recourse, as shall be necessary to transfer title from the Trustee. It is understood and agreed that the obligation under this Agreement of SMI to cure, repurchase or replace any Mortgage Loan as to which a breach has occurred and is continuing shall constitute the sole remedy respecting such breach available to Certificateholders or the Trustee on their behalf.

The representations and warranties made pursuant to this Section 2.3 (and the representations and warranties with respect to the Mortgage Loans made in the Sales Agreement) shall survive delivery of the respective Mortgage Files to the Trustee or the Custodian for the benefit of the Certificateholders.

(e)

Upon discovery by the Depositor, the Servicer, the Master Servicer or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall promptly (and in any event within five (5) Business Days of discovery) give written notice thereof to the other parties. In connection therewith, the Trustee shall require SMI, at SMI’s option, to either (i) substitute, if the conditions in Section 2.3(d) with respect to substitutions are satisfied, a Substitute Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of such discovery in the same manner as it would a Mortgage Loan for a breach of representation or warranty made pursuant to this Section 2.3. The Trustee shall reconvey or shall cause the Custodian to reconvey to SMI the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty contained in this Section 2.3.

Section 2.4

Delivery of Opinion of Counsel in Connection with Substitutions.

(a)

Notwithstanding any contrary provision of this Agreement, no substitution pursuant to Section 2.2 or Section 2.3 shall be made more than 90 days after the Closing Date unless the Depositor or SMI delivers to the Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the expense of either the Trustee or the Trust Fund, addressed to the Trustee, to the effect that such substitution will not (i) result in the imposition of the tax on “prohibited transactions” on the Trust Fund or contributions after the Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any REMIC created hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding.

Section 2.5

Execution and Delivery of Certificates.

The Trustee acknowledges the transfer and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, has executed and delivered to or upon the order of the Depositor, the Certificates in authorized denominations evidencing directly or indirectly the entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights referred to above for the benefit of all present and future Holders of the Certificates and to perform the duties set forth in this Agreement to the best of its ability, to the end that the interests of the Holders of the Certificates may be adequately and effectively protected.

Section 2.6

Purchase of Subsequent Mortgage Loans.

(a)

Subject to the satisfaction of the conditions set forth in paragraph (b) below in consideration of the delivery on a Subsequent Sales Date to or upon the order of the Depositor of all or a portion of the Pre-Funded Amount, as the case may be, the Depositor shall on such Subsequent Sales Date sell, transfer, assign, set over and otherwise convey without recourse, to the Trust Fund, and the Trustee shall purchase on behalf of the Trust Fund, all the Depositor’s right, title and interest in and to the Subsequent Mortgage Loans, together with the related Mortgage Loan Files, covered by the Subsequent Sales Agreement delivered on such date.  

(b)

The obligation of the Trust to acquire Subsequent Mortgage Loans is subject to the satisfaction of each of the following conditions on or prior to the related Subsequent Sales Date:

(i)

the Depositor shall have delivered to the Trustee with a copy to the Master Servicer a duly executed written Subsequent Sales Agreement, which shall include a Schedule of Subsequent Mortgage Loans, and specifying the amount to be withdrawn from the Pre-Funding Account;

(ii)

the remaining term to maturity of each Subsequent Mortgage Loan may not exceed 30 years;

(iii)

no Subsequent Mortgage Loan will have been selected in a manner adverse to the interests of Certificateholders;

(iv)

the addition of the Subsequent Mortgage Loans will not result in the reduction, qualification or withdrawal of the then current ratings of the Certificates;

(v)

no Subsequent Mortgage Loan may have a Loan-to-Value Ratio greater than 100.00%;

(vi)

each Subsequent Mortgage Loan will be underwritten in accordance with the Depositor’s underwriting guidelines;

(vii)

after giving effect to the acquisition of all the Subsequent Mortgage Loans, the Mortgage Loans in the applicable Group shall conform to the applicable Subsequent Delivery Requirements;

(viii)

the Depositor shall have provided the Master Servicer and the Trustee any information reasonably requested by any of them with respect to the Subsequent Mortgage Loans then to be sold to the Trust Fund;

(ix)

the Depositor shall have delivered to the Trustee a letter from an independent accountant stating whether or not the characteristics of the Subsequent Mortgage Loans conform to the characteristics of the Mortgage Loans required in Section 2.6(b);

(x)

as of each Subsequent Sales Date, neither the Depositor nor SMI shall be insolvent, nor will either of them be made insolvent by such transfer;

(xi)

the Funding Period shall not have ended; and

(xii)

the Depositor and SMI each shall have delivered to the Master Servicer and the Trustee an Officer’s Certificate confirming the satisfaction of each condition precedent specified in this paragraph (b) and in the related Subsequent Sales Agreement and opinions of counsel with respect to corporate, bankruptcy and tax matters relating to the transfer of Subsequent Mortgage Loans in the forms substantially similar to those delivered on the Closing Date.

(c)

Pursuant to Section 2.6(b) hereof, the Trustee shall remit on each Subsequent Sales Date to or upon the order of the Depositor from the Pre-Funding Account the amount specified by the Master Servicer only upon the Trustee’s receipt of: 

(i)

a fully executed Subsequent Sales Agreement; 

(ii)

the two Officer’s Certificates required by Section 2.6(b) hereof; 

(iii)

an Opinion or Opinions of Counsel from each of the Depositor and SMI required by Section 2.6(b); 

(iv)

a letter from each Rating Agency on the final Subsequent Sale Date confirming the condition provided in Section 2.6(b); 

(v)

a letter from an independent accountant as required by Section 2.6(b); and 

(vi)

the written instruction from the Master Servicer setting forth the amounts to be paid as required by Section 2.6(b) hereof.  The Trustee may rely and shall be protected in relying on all such Officer’s Certificates as evidencing full compliance with all conditions precedent specified in Section 2.6(b), without any further duty of inquiry with respect thereto.

(d)

On each Subsequent Sales Date and on the Determination Date immediately following the end of the Funding Period, the Master Servicer shall determine:  

(i)

the amount and correct disposition of the Pre-Funded Amount, and 

(ii)

any other necessary matters in connection with the administration of the Pre-Funding Account.  If any amounts are released as a result of an error in calculation to the Holders or the Depositor from the Pre-Funding Account, the Depositor shall immediately repay such amounts to the Master Servicer.

(e)

The Depositor shall deliver (or cause to be delivered) to the Master Servicer for deposit in the Master Servicer Custodial Account on the related Servicer Deposit Date all principal and interest due in respect of such Subsequent Mortgage Loans after the related Subsequent Cut Off Date.

Section 2.7

Pre-Funding Account.

(a)

The Trustee shall establish and maintain the Pre-Funding Account to be held in trust for the benefit of the Certificateholders.  The Pre-Funding Account shall be an Eligible Account.  On the Closing Date, the Depositor will cause to be deposited in the Pre-Funding Account the Original Pre-Funded Amount.

(b)

On any Subsequent Sales Date, the Master Servicer shall instruct the Trustee, with a copy to the Depositor, 

(i)

to withdraw from the Pre-Funded Amount in the Pre-Funding Account an amount equal to 100% of the aggregate Stated Principal Balances of the Subsequent Mortgage Loans as of the applicable Subsequent Cut Off Date sold to the Trust on such Subsequent Sales Date, and 

(ii)

to pay such amounts to or upon the order of the Depositor upon satisfaction of the conditions set forth in Section 2.6(c) hereof with respect thereto.  In no event shall the Trustee withdraw from the Pre-Funding Account an amount in excess of the Original Pre-Funded Amount.

(c)

On the Business Day immediately following the end of the Funding Period, the Master Servicer shall instruct the Trustee to transfer the Pre-Funded Amount to the Distribution Account for distribution to the Holders of the Certificates in accordance with Article 4.  The Pre-Funded Amount shall not be invested during the time such Pre-Funded Amount is held in the Distribution Account.

(d)

The Pre-Funding Account shall not be an asset of any REMIC created pursuant to this Agreement.

ARTICLE 3

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 3.1

Servicer to Service Mortgage Loans.

For and on behalf of the Certificateholders, the Servicer shall service and administer the Mortgage Loans in accordance with the terms of this Agreement and customary and usual standards of practice of prudent mortgage loan servicers. In connection with such servicing and administration, the Servicer shall have full power and authority, acting alone and/or through Subservicers as provided in Section 3.2 hereof, to do or cause to be done any and all things that it may deem necessary or desirable in connection with such servicing and administration, including but not limited to, the power and authority, subject to the terms hereof (i) to execute and deliver, on behalf of the Certificateholders and the Trustee, customary consents or waivers and other instruments and documents, (ii) to consent to transfers of any Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages (but only in the manner provided in this Agreement), (iii) to collect any Insurance Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing any Mortgage Loan; provided that the Servicer shall not take any action that is inconsistent with or prejudices the interests of the Trust Fund or the Certificateholders in any Mortgage Loan or the rights and interests of the Depositor, the Trustee and the Certificateholders under this Agreement. The Servicer shall represent and protect the interests of the Trust Fund in the same manner as it protects its own interests in mortgage loans in its own portfolio in any claim, proceeding or litigation regarding a Mortgage Loan, provided, however, that unless (x) the Mortgagor is in default with respect to the Mortgage Loan, or such default is, in the judgment of the Servicer, imminent or (y) in the absence of default or imminent default, any such waiver, modification, postponement or indulgence would not cause any REMIC created hereunder to be disqualified or result in the imposition of any tax under Section 860F(a) or Section 860G(d) of the Code, the Servicer may not permit any modification with respect to any Mortgage Loan.  Without limiting the generality of the foregoing, the Servicer, in its own name or in the name of the Depositor and the Trustee, is hereby authorized and empowered by the Depositor and the Trustee, when the Servicer believes it appropriate in its reasonable judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Mortgage Loans, and with respect to the Mortgaged Properties held for the benefit of the Certificateholders. The Servicer shall prepare and deliver to the Depositor and/or the Trustee such documents requiring execution and delivery by either or both of them as are necessary or appropriate to enable the Servicer to service and administer the Mortgage Loans to the extent that the Servicer is not permitted to execute and deliver such documents pursuant to the preceding sentence. Upon receipt of such documents, the Depositor and/or the Trustee shall promptly execute such documents and deliver them to the Servicer.

In accordance with the standards of the preceding paragraph, the Servicer shall make Servicing Advances as necessary for the purpose of effecting the payment of taxes and assessments on the Mortgaged Properties, which advances shall be reimbursable in the first instance from related collections from the Mortgagors pursuant to Section 3.6 hereof, and further as provided in Section 3.8 hereof. The costs incurred by the Servicer, if any, in effecting the timely payments of taxes and assessments on the Mortgaged Properties and related insurance premiums shall not, for the purpose of calculating monthly distributions to the Certificateholders, be added to the Stated Principal Balances of the related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.

Upon request of the Servicer, the Trustee and the Custodian shall furnish the Servicer with any powers of attorney necessary or appropriate to enable Servicer to execute in the name of the Trustee or the Custodian, as applicable, all documents reasonably required to perform the servicing functions described in this Article 3.

Section 3.2

Subservicing; Enforcement of the Obligations of Servicers.

(a)

The Servicer may arrange for the subservicing of any Mortgage Loan by a Subservicer pursuant to a subservicing agreement; provided, however, that such subservicing arrangement and the terms of the related subservicing agreement must provide for the servicing of such Mortgage Loans in a manner consistent with the servicing arrangements contemplated hereunder. Unless the context otherwise requires, references in this Agreement to actions taken or to be taken by the Servicer in servicing the Mortgage Loans include actions taken or to be taken by a Subservicer on behalf of the Servicer. Notwithstanding the provisions of any subservicing agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Servicer and a Subservicer or reference to actions taken through a Subservicer or otherwise, the Servicer shall remain obligated and liable to the Depositor, the Trustee and the Certificateholders for the servicing and administration of the Mortgage Loans in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue of such subservicing agreements or arrangements or by virtue of indemnification from the Subservicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Mortgage Loans. All actions of each Subservicer performed pursuant to the related subservicing agreement shall be performed as an agent of the Servicer with the same force and effect as if performed directly by the Servicer.

(b)

For purposes of this Agreement, the Servicer shall be deemed to have received any collections, recoveries or payments with respect to the Mortgage Loans that are received by a Subservicer regardless of whether such payments are remitted by the Subservicer to the Servicer.

Section 3.3

Rights of the Depositor and the Trustee in Respect of the Servicer.

The Depositor may, but is not obligated to, enforce the obligations of the Servicer hereunder and may, but is not obligated to, perform, or cause a designee to perform, any defaulted obligation of the Servicer hereunder and in connection with any such defaulted obligation to exercise the related rights of the Servicer hereunder; provided that the Servicer shall not be relieved of any of its obligations hereunder by virtue of such performance by the Depositor or its designee. Neither the Trustee nor the Depositor shall have any responsibility or liability for any action or failure to act by the Servicer nor shall the Trustee or the Depositor be obligated to supervise the performance of the Servicer hereunder or otherwise.

Section 3.4

Master Servicer to Act as Servicer.

In the event that the Servicer shall for any reason no longer be the Servicer hereunder (including by reason of an Event of Default), the Master Servicer or its successor shall thereupon assume all of the rights and obligations of the Servicer hereunder arising thereafter (except that the Master Servicer shall not be (i) liable for losses of the Servicer pursuant to Section 3.9 hereof or any acts or omissions of the predecessor Servicer hereunder, (ii) obligated to make Advances if it is prohibited from doing so by applicable law, (iii) obligated to effectuate repurchases or substitutions of Mortgage Loans hereunder including, but not limited to, repurchases or substitutions of Mortgage Loans pursuant to Section 2.2 or 2.3 hereof, (iv) responsible for expenses of the Servicer pursuant to Section 2.3 hereof or (v) deemed to have made any representations and warranties of the Servicer hereunder).  If the Servicer shall for any reason no longer be the Servicer (including by reason of any Event of Default), the Master Servicer or its successor shall succeed to any rights and obligations of the Servicer under each subservicing agreement.

The Servicer shall, upon request of the Master Servicer, but at the expense of the Servicer, deliver to the assuming party all documents and records relating to each subservicing agreement or substitute subservicing agreement and the Mortgage Loans then being serviced thereunder and an accounting of amounts collected or held by it and otherwise use its best efforts to effect the orderly and efficient transfer of the substitute subservicing agreement to the assuming party.

Section 3.5

Collection of Mortgage Loan Payments; Collection Account; Distribution Account.

(a)

The Servicer shall make reasonable efforts in accordance with the customary and usual standards of practice of prudent mortgage servicers to collect all payments called for under the terms and provisions of the Mortgage Loans to the extent such procedures shall be consistent with this Agreement.  Consistent with the foregoing, and subject to the provisions of Section 3.1 hereof, the Servicer may in its discretion (i) waive any late payment charge or penalty interest and (ii) extend the due dates for payments due on a Mortgage Note for a period not greater than 180 days; provided, however, that the Servicer cannot extend the maturity of any such Mortgage Loan past the date on which the final payment is due on the latest maturing Mortgage Loan as of the Cut Off Date. In the event of any such arrangement, any P&I Advance required to be made by the Servicer on the related Mortgage Loan in accordance with the provisions hereof (i) with respect to the Prepayment Period in which such arrangement became effective shall be made in accordance with the amortization schedule of such Mortgage Loan without giving effect to the modification thereof by reason of such arrangements and (ii) with respect to any Prepayment Period thereafter shall be made in accordance with the amortization schedule of such Mortgage Loan as so modified.  The Servicer shall not be required to institute or join in litigation with respect to collection of any payment (whether under a Mortgage, Mortgage Note or otherwise or against any public or governmental authority with respect to a taking or condemnation) if it reasonably believes that enforcing the provision of the Mortgage or other instrument pursuant to which such payment is required is prohibited by applicable law.

The Servicer shall comply with the provisions of Section 3.21 hereof with respect to each Prepayment Penalty related to the Mortgage Loans.

(b)

The Servicer shall establish and maintain a Collection Account into which the Servicer shall deposit or cause to be deposited as soon as practicable following receipt but in no event no later than two Business Days after receipt, except as otherwise specifically provided herein, the following payments and collections remitted by Subservicers or received by it in respect of Mortgage Loans subsequent to the Cut Off Date (other than in respect of principal and interest due on the Mortgage Loans on or before the Cut Off Date) and the following amounts required to be deposited hereunder:

(i)

all payments on account of principal on the Mortgage Loans, including Principal Prepayments;

(ii)

all payments on account of interest on the Mortgage Loans, net of the related Servicing Fee and any Prepayment Interest Excess;

(iii)

any Prepayment Penalty required to be deposited by the Servicer hereunder;

(iv)

all Insurance Proceeds and Liquidation Proceeds, other than proceeds to be applied to the restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with the Servicer’s normal servicing procedures;

(v)

any amount required to be deposited by the Servicer pursuant to Section 3.5(e) in connection with any losses on Permitted Investments;

(vi)

any amounts required to be deposited by the Servicer pursuant to Section 3.9(b) and (d) hereof, and in respect of net monthly rental income from REO Property pursuant to Section 3.11 hereof;

(vii)

all Substitution Adjustment Amounts; and

(viii)

all P&I Advances made by the Servicer pursuant to Section 3.19 hereof.

In addition, with respect to any Mortgage Loan that is subject to a buydown agreement, on each Due Date for such Mortgage Loan, in addition to the monthly payment remitted by the Mortgagor, the Servicer shall cause funds to be deposited into the Collection Account in an amount required to cause an amount of interest to be paid with respect to such Mortgage Loan equal to the amount of interest that has accrued on such Mortgage Loan from the preceding Due Date at the related Mortgage Rate (net of the Servicing Fee Rate) on such date.

The foregoing requirements for remittance by the Servicer shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of late payment charges, assumption fees or amounts attributable to reimbursements of Advances, if collected, need not be remitted by the Servicer. In the event that the Servicer shall remit any amount not required to be remitted, it may at any time withdraw or direct the institution maintaining the Collection Account to withdraw such amount from the Collection Account, any provision herein to the contrary notwithstanding. Such withdrawal or direction may be accomplished by delivering written notice thereof to the Trustee or such other institution maintaining the Collection Account which describes the amounts deposited in error in the Collection Account. The Servicer shall maintain adequate records with respect to all withdrawals made pursuant to this Section. All funds deposited in the Collection Account shall be held in trust for the Certificateholders until withdrawn in accordance with Section 3.8.

(c)

The Master Servicer shall establish and maintain, for the benefit of Certificateholders, a Master Servicer Custodial Account.  On each Servicer Deposit Date, the Servicer shall remit to the Master Servicer for deposit in the Master Servicer Custodial Account, the Available Funds for such date.  In addition, the Master Servicer shall deposit any amounts pursuant to Section 3.5(e) in connection with losses on Permitted Investments in the Master Servicer Custodial Account.

(d)

The Trustee shall establish and maintain, on behalf of Certificateholders, the Distribution Account.  On each Distribution Account Deposit Date, the Master Servicer shall remit to the Trustee for deposit in the Distribution Account the Available Funds for such date.  In addition, the Trustee shall deposit any amounts received from the Master Servicer pursuant to Section 3.5(e) in connection with losses on permitted Investments in the Distribution Account.

In the event that the Servicer or Master Servicer shall remit any amount not required to be remitted, it may at any time direct the Trustee to withdraw such amount from the Distribution Account, any provision herein to the contrary notwithstanding. Such direction may be accomplished by delivering an Officer’s Certificate to the Trustee which describes the amounts deposited in error in the Distribution Account. All funds deposited in the Distribution Account shall be held by the Trustee in trust for the Certificateholders until disbursed in accordance with this Agreement or withdrawn in accordance with Section 3.8. In no event shall the Trustee incur liability for withdrawals from the Distribution Account at the direction of the Servicer.

(e)

The institutions at which the Collection Account, Master Servicer Custodial Account and Distribution Account are maintained shall invest funds as directed by the Master Servicer in Permitted Investments which in each case shall mature not later than (i) in the case of the Collection Account, the second Business Day next preceding the related Servicer Deposit Date (except that if such Permitted Investment is an obligation of the institution that maintains such account, then such Permitted Investment shall mature not later than the Business Day next preceding such Servicer Deposit Date), (ii) in the case of the Master Servicer Custodial Account, the second Business Day next preceding the related Distribution Account Deposit Date (except that if such Permitted Investment is an obligation of the institution that maintains such account, then such Permitted Investment shall mature not later than the Business Day next preceding such Distribution Account Deposit Date), and (iii) in the case of the Distribution Account, the Business Day next preceding the related Distribution Date (except that if such Permitted Investment is an obligation of the institution that maintains such fund or account, then such Permitted Investment shall mature not later than such Distribution Date) and, in each case, shall not be sold or disposed of prior to its maturity. All such Permitted Investments shall be made in the name of the Trustee, for the benefit of the Certificateholders.  All income and gain net of any losses realized from any such investment of funds on deposit in the Collection Account shall be for the benefit of the Servicer as servicing compensation and all income and gain net of any losses realized from any such investment of funds on deposit in the Master Servicer Custodial Account and the Distribution Account shall be for the benefit of the Master Servicer. The amount of any realized losses in the Collection Account in respect of any such investments shall promptly be deposited by the Servicer in the Collection Account and the amount of any realized losses in the Master Servicer Custodial Account and the Distribution Account in respect of any such investments shall promptly be deposited therein by the Master Servicer.  The Trustee in its fiduciary capacity shall not be liable for the amount of any loss incurred in respect of any investment or lack of investment of funds held in the Collection Account or the Master Servicer Custodial Account and made in accordance with this Section 3.5.

Section 3.6

Collection of Taxes, Assessments and Similar Items; Escrow Accounts.

(a)

To the extent required by the related Mortgage Note and not violative of current law, the Servicer shall establish and maintain one or more accounts (each, an “Escrow Account”) and deposit and retain therein all collections from the Mortgagors (or advances by the Servicer) for the payment of taxes, assessments, hazard insurance premiums or comparable items for the account of the Mortgagors. Nothing herein shall require the Servicer to compel a Mortgagor to establish an Escrow Account in violation of applicable law.

(b)

Withdrawals of amounts so collected from the Escrow Accounts may be made only to effect timely payment of taxes, assessments, hazard insurance premiums, condominium or PUD association dues, or comparable items, to reimburse the Servicer out of related collections for any payments made pursuant to Sections 3.1 hereof (with respect to taxes and assessments and insurance premiums) and 3.9 hereof (with respect to hazard insurance), to refund to any Mortgagors any sums determined to be overages, to pay interest, if required by law or the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear and terminate the Escrow Account at the termination of this Agreement in accordance with Section 9.1 hereof. The Escrow Accounts shall not be a part of the Trust Fund.

(c)

The Servicer shall advance, as Servicing Advances, any payments referred to in Section 3.6(a) that are not timely paid by the Mortgagors on the date when the tax, premium or other cost for which such payment is intended is due, provided, however that the Servicer shall not be required to make any such advance if such advance, in the good faith judgment of the Servicer, would constitute a Nonrecoverable Advance.

Section 3.7

Access to Certain Documentation and Information Regarding the Mortgage Loans.

The Servicer shall afford the Depositor and the Trustee reasonable access to all records and documentation regarding the Mortgage Loans and all accounts, insurance information and other matters relating to this Agreement, such access being afforded without charge, but only upon reasonable request and during normal business hours at the office designated by the Servicer.

Upon reasonable advance notice in writing, the Servicer will provide to each Certificateholder which is a savings and loan association, bank or insurance company certain reports and reasonable access to information and documentation regarding the Mortgage Loans sufficient to permit such Certificateholder to comply with applicable regulations of the OTS or other regulatory authorities with respect to investment in the Certificates; provided that the Servicer shall be entitled to be reimbursed by each such Certificateholder for actual expenses incurred by the Servicer in providing such reports and access.

Section 3.8

Permitted Withdrawals from the Collection Account, Master Servicer Custodial Account and Distribution Account.

(a)

The Servicer may from time to time make withdrawals from the Collection Account for the following purposes:

(i)

to the extent not previously retained by the Servicer, to pay to the Servicer the servicing compensation to which it is entitled pursuant to Section 3.14, and earnings on or investment income with respect to funds in or credited to the Collection Account as additional servicing compensation;

(ii)

to the extent not previously retained by the Servicer, to reimburse the Servicer for unreimbursed Advances made by it, such right of reimbursement pursuant to this subclause (ii) being limited to amounts received on the Mortgage Loan(s) in respect of which any such Advance was made;

(iii)

to reimburse the Servicer for any Nonrecoverable Advance previously made;

(iv)

to reimburse the Servicer for Insured Expenses from the related Insurance Proceeds;

(v)

to reimburse the Servicer for unpaid Servicing Fees as provided in Section 3.11 hereof;

(vi)

to pay to the purchaser, with respect to each Mortgage Loan or property acquired in respect thereof that has been purchased pursuant to Section 2.2, 2.3 or 3.11, all amounts received thereon after the date of such purchase;

(vii)

to reimburse the Master Servicer, the Servicer or the Depositor for expenses incurred by any of them and reimbursable pursuant to Section 6.3 hereof;

(viii)

to pay to the Master Servicer any accrued compensation to which it is entitled hereunder (and any amount to which it is entitled to reimbursement herewith);

(ix)

to withdraw any amount deposited in the Collection Account and not required to be deposited therein;

(x)

on or prior to each Servicer Deposit Date, to withdraw an amount equal to the related Available Funds and remit such amount to the Master Servicer for deposit in the Master Servicer Custodial Account; and

(xi)

to clear and terminate the Collection Account upon termination of this Agreement pursuant to Section 9.1 hereof.

The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from the Collection Account pursuant to such subclauses (i), (ii), (iv), (v) and (vi). Prior to making any withdrawal from the Collection Account pursuant to subclause (iii), the Servicer shall deliver to the Master Servicer an Officer’s Certificate of a Servicing Officer indicating the amount of any previous Advance determined by the Servicer to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s), and their respective portions of such Nonrecoverable Advance.

(b)

The Master Servicer may from time to time make withdrawals from the Master Servicer Custodial Account for the following purposes:

(i)

to pay itself any compensation due it hereunder;

(ii)

to the extent not previously retained by the Servicer, to pay to the Servicer the servicing compensation to which it is entitled pursuant to Section 3.14;

(iii)

to pay to itself earnings or investment income with respect to funds in the Master Servicer Custodial Account;

(iv)

on each Distribution Account Deposit Date, to withdraw the Available Funds for such date and remit such amount to the Trustee for deposit in the Distribution Account; and

(v)

to clear and terminate the Master Servicer Custodial Account upon termination of the Agreement pursuant to Section 9.1 hereof.

(c)

The Trustee shall withdraw funds from the Distribution Account for distributions to Certificateholders in the manner specified in this Agreement.  In addition, the Trustee may prior to making the distribution pursuant to Section 4.1 from time to time make withdrawals from the Distribution Account for the following purposes:

(i)

to pay to itself the Trustee Fee for the related Distribution Date (allocated pro rata by Group, if applicable);

(ii)

to the extent not previously retained by the Servicer, to pay to the Servicer the servicing compensation to which it is entitled pursuant to Section 3.14;

(iii)

to pay to the Master Servicer earnings on or investment income with respect to funds in the Distribution Account;

(iv)

to withdraw and return to the Servicer or Master Servicer any amount deposited in the Distribution Account and not required to be deposited therein; and

(v)

to clear and terminate the Distribution Account upon termination of the Agreement pursuant to Section 9.1 hereof.

Section 3.9

Maintenance of Hazard Insurance; Maintenance of Primary Insurance Policies.

(a)

The Servicer shall cause to be maintained, for each Mortgage Loan, hazard insurance with extended coverage in an amount that is at least equal to the lesser of (i) the maximum insurable value of the improvements securing such Mortgage Loan; (ii) the outstanding principal balance of the Mortgage Loan, and (iii) the maximum amount available in the locality of the related Mortgaged Property from insurers generally acceptable to institutional residential mortgage lenders without payment of extraordinary premium.  Each such policy of standard hazard insurance shall contain, or have an accompanying endorsement that contains, a standard mortgagee clause. Any amounts collected by the Servicer under any such policies (other than the amounts to be applied to the restoration or repair of the related Mortgaged Property or amounts released to the Mortgagor in accordance with the Servicer’s normal servicing procedures) shall be deposited in the Collection Account. Any cost incurred by the Servicer in maintaining any such insurance shall not, for the purpose of calculating monthly distributions to the Certificateholders or remittances to the Trustee for their benefit, be added to the principal balance of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall be recoverable by the Servicer as Servicing Advances or, if applicable, as Nonrecoverable Advances.  It is understood and agreed that no earthquake or other additional insurance is to be required of any Mortgagor or maintained on property acquired in respect of a Mortgage other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance. If the Mortgaged Property is located at the time of origination of the Mortgage Loan in a federally designated special flood hazard area and such area is participating in the national flood insurance program, the Servicer shall cause flood insurance to be maintained with respect to such Mortgage Loan. Such flood insurance shall be in an amount equal to the least of (i) the original principal balance of the related Mortgage Loan, (ii) the replacement value of the improvements which are part of such Mortgaged Property, and (iii) the maximum amount of such insurance available for the related Mortgaged Property under the national flood insurance program.

(b)

In the event that the Servicer shall obtain and maintain a blanket policy insuring against hazard losses on any or all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its obligations as set forth in the first sentence of this Section with respect to all of the Mortgage Loans so covered, it being understood and agreed that such policy may contain a deductible clause on terms substantially equivalent to those commercially available and maintained by comparable servicers. If such policy contains a deductible clause, the Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property a policy complying with the first sentence of this Section, and there shall have been a loss that would have been covered by such policy, deposit in the Collection Account the amount not otherwise payable under the blanket policy because of such deductible clause. In connection with its activities as Servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the Depositor, and the Trustee for the benefit of the Certificateholders, claims under any such blanket policy.

(c)

The Servicer shall not take any action which would result in non-coverage under any applicable Primary Insurance Policy of any loss which, but for the actions of the Servicer, would have been covered thereunder. The Servicer shall not cancel or refuse to renew any such Primary Insurance Policy that is in effect at the date of the initial issuance of the Certificates and is required to be kept in force hereunder unless the replacement Primary Insurance Policy for such canceled or non-renewed policy is maintained with a Qualified Insurer.

The Servicer shall not be required to maintain any Primary Insurance Policy (i) with respect to any Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80% (or such lower Loan-to-Value Ratio as may be provided by applicable law) as of any date of determination or, based on a new appraisal, the principal balance of such Mortgage Loan represents 80% or less of the new appraised value (or other method of determination as may be provided by applicable law) or (ii) if maintaining such Primary Insurance Policy is otherwise prohibited by applicable law.

The Servicer agrees to effect the timely payment of the premiums on each Primary Insurance Policy, and such costs not otherwise recoverable shall be recoverable by the Servicer as Servicing Advances or, if applicable, as Nonrecoverable Advances.

(d)

In connection with its activities as Servicer of the Mortgage Loans, the Servicer agrees to present on behalf of itself, the Trustee and Certificateholders, claims to the insurer under any Primary Insurance Policies and, in this regard, to take such reasonable action as shall be necessary to permit recovery under any Primary Insurance Policies respecting defaulted Mortgage Loans. Any amounts collected by the Servicer under any Primary Insurance Policies shall be deposited in the Collection Account.

Section 3.10

Enforcement of Due-on-Sale Clauses; Assumption Agreements.

(a)

Except as otherwise provided in this Section, when any property subject to a Mortgage has been conveyed by the Mortgagor, the Servicer shall to the extent that it has knowledge of such conveyance enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent, in the Servicer’s reasonable judgment, enforcement is permitted under applicable law and governmental regulations.  Notwithstanding the foregoing, the Servicer is not required to exercise such rights with respect to a Mortgage Loan if the Person to whom the related Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the terms and conditions contained in the Mortgage Note and Mortgage related thereto and the consent of the mortgagee under such Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a condition to such transfer. In the event that the Servicer is prohibited by law from enforcing any such due-on-sale clause, or if nonenforcement is otherwise permitted hereunder, the Servicer is authorized, subject to Section 3.10(b), to take or enter into an assumption and modification agreement from or with the person to whom such property has been or is about to be conveyed, pursuant to which such person becomes liable under the Mortgage Note and, unless prohibited by applicable state law, the Mortgagor remains liable thereon, provided that the Mortgage Loan shall continue to be covered (if so covered before the Servicer enters such agreement) by the applicable Required Insurance Policies. The Servicer, subject to Section 3.10(b), is also authorized with the prior approval of the insurers under any Required Insurance Policies to enter into a substitution of liability agreement with such Person, pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not be deemed to be in default under this Section by reason of any transfer or assumption which the Servicer reasonably believes it is restricted by law from preventing, for any reason whatsoever.

(b)

Subject to the Servicer’s duty to enforce any due-on-sale clause to the extent set forth in Section 3.10(a) hereof, in any case in which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person is to enter into an assumption agreement or modification agreement or supplement to the Mortgage Note or Mortgage that requires the signature of the Trustee, or if an instrument of release signed by the Trustee is required releasing the Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and deliver or cause to be prepared and delivered to the Trustee for signature and shall direct, in writing, the Trustee to execute the assumption agreement with the Person to whom the Mortgaged Property is to be conveyed and such modification agreement or supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to such Person. In connection with any such assumption, no material term of the Mortgage Note may be changed. In addition, the substitute Mortgagor and the Mortgaged Property must be acceptable to the Servicer in accordance with its underwriting standards as then in effect. Together with each such substitution, assumption or other agreement or instrument delivered to the Trustee for execution by it, the Servicer shall deliver an Officer’s Certificate signed by a Servicing Officer stating that the requirements of this subsection have been met in connection therewith. The Servicer shall notify the Trustee that any such substitution or assumption agreement has been completed by forwarding to the Trustee the original of such substitution or assumption agreement, which in the case of the original shall be added to the related Mortgage File and shall, for all purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof. Any fee collected by the Servicer for entering into an assumption or substitution of liability agreement will be retained by the Servicer as additional servicing compensation.

Section 3.11

Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans.

(a)

Subject to the limitations set forth in Sections 3.5(a), 3.11(b), 3.11(f), and 3.11(i), the Servicer shall use reasonable efforts to foreclose upon or otherwise comparably convert the ownership of properties securing such of the Mortgage Loans as come into and continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments. In connection with such foreclosure or other conversion, the Servicer shall follow such practices and procedures as it shall deem necessary or advisable and as shall be normal and usual in its general mortgage servicing activities; provided, however, that the Servicer shall not be required to expend its own funds in connection with any foreclosure or towards the restoration of any property unless it shall determine (i) that such restoration and/or foreclosure will increase the proceeds of liquidation of the Mortgage Loan after reimbursement to itself of such expenses and (ii) that such expenses will be recoverable to it through Liquidation Proceeds (respecting which it shall have priority for purposes of withdrawals from the Collection Account). The Servicer shall be responsible for all other costs and expenses incurred by it in any such proceedings; provided, however, that it shall be entitled to reimbursement thereof from the Liquidation Proceeds with respect to the related Mortgaged Property, as Servicing Advances or, if applicable, as Nonrecoverable Advances.

(b)

If the Servicer has actual knowledge that a Mortgaged Property which the Servicer is contemplating acquiring in foreclosure or by deed in lieu of foreclosure is located within a one mile radius of any site with material environmental or hazardous waste risks known to the Servicer, the Servicer will, prior to acquiring the Mortgaged Property, consider such risks and shall proceed with such in foreclosure or by deed in lieu of foreclosure only if the Servicer reasonably determines that doing so shall more like than not be in the best interests of the Trust Fund, considering all relevant factors including such environmental matters.  For the purpose of this Section, actual knowledge of the Servicer means actual knowledge of a Servicing Officer involved in the servicing of the relevant Mortgage Loan at the time such knowledge was acquired.  Actual knowledge of the Servicer does not include knowledge imputable by virtue of the availability of or accessibility to information relating to environmental or hazardous waste sites or the locations thereof.

(c)

With respect to any REO Property, the deed or certificate of sale shall be taken in the name of the Trustee for the benefit of the Certificateholders, or its nominee, on behalf of the Certificateholders, provided that the Servicers may cause title to be placed in the name of the Custodian or the Servicer if the Servicer reasonably determines that such manner of holding title is required or advisable in order to facilitate the foreclosure process as to any one or more particular Mortgage Loans.  The Trustee’s name shall be placed on the title to such REO Property solely as the Trustee hereunder and not in its individual capacity. The Servicer shall ensure that the title to such REO Property references this Agreement and the Trustee’s capacity thereunder. Pursuant to its efforts to sell such REO Property, the Servicer shall either itself or through an agent selected by the Servicer protect and conserve such REO Property in the same manner and to such extent as is customary in the locality where such REO Property is located and may, incident to its conservation and protection of the interests of the Certificateholders, in its sole discretion, rent or decline to rent the same, or any part thereof, as the Servicer deems to be in the best interest of the Certificateholders for the period prior to the sale of such REO Property. The Servicer shall prepare for and deliver to the Trustee a statement with respect to any REO Property that has been rented showing the aggregate rental income received and all expenses incurred in connection with the management and maintenance of such REO Property at such times as is necessary to enable the Trustee to comply with the reporting requirements of the REMIC Provisions. The net monthly rental income, if any, from such REO Property shall be deposited in the Collection Account no later than the close of business on each Determination Date. The Servicer shall perform the tax reporting and withholding required by Sections 1445 and 6050J of the Code with respect to foreclosures and abandonments, the tax reporting required by Section 6050H of the Code with respect to the receipt of mortgage interest from individuals and any tax reporting required by Section 6050P of the Code with respect to the cancellation of indebtedness by certain financial entities, by preparing such tax and information returns as may be required, in the form required, and delivering the same to the Trustee for filing.

(d)

In the event that the Trust Fund acquires any Mortgaged Property as aforesaid or otherwise in connection with a default or imminent default on a Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to the close of the third taxable year after its acquisition by the Trust Fund unless the Trustee shall have been supplied with an Opinion of Counsel to the effect that the holding by the Trust Fund of such Mortgaged Property subsequent to such three-year period will not result in the imposition of taxes on “prohibited transactions” of any REMIC created hereunder as defined in section 860F of the Code or cause any REMIC created hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding, in which case the Trust Fund may continue to hold such Mortgaged Property (subject to any conditions contained in such Opinion of Counsel).  Notwithstanding any other provision of this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to continue to be rented) or otherwise used for the production of income by or on behalf of the Trust Fund in such a manner or pursuant to any terms that would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or (ii) subject any REMIC created hereunder to the imposition of any federal, state or local income taxes on the income earned from such Mortgaged Property, unless the Servicer has agreed to indemnify and hold harmless the Trust Fund with respect to the imposition of any such taxes.

(e)

In the event of a default on a Mortgage Loan one or more of whose obligor is not a “United States person,” as that term is defined in Section 7701(a)(30) of the Code, in connection with any foreclosure or acquisition of a deed in lieu of foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the Servicer will cause compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that no withholding tax obligation arises with respect to the proceeds of such foreclosure except to the extent, if any, that proceeds of such foreclosure are required to be remitted to the obligor on such Mortgage Loan.

(f)

The decision of the Servicer to foreclose, or to continue the foreclosure process, on a defaulted Mortgage Loan shall be subject to a determination by the Servicer that the proceeds of such foreclosure would more likely than not exceed the costs and expenses of bringing such a proceeding and liquidating the REO expected to be obtained through such foreclosure.  Promptly upon making any determination in accordance with the preceding sentence not to foreclose, or to discontinue the foreclosure process, as to any Mortgage Loan, the Servicer shall deliver to the Master Servicer an Officer’s Certificate signed by a Servicing Officer identifying the Mortgage Loans as to which such determination has been made (each such Mortgage Loan, upon acceptance of such Officer’s Certificate by the Master Servicer, a “Nonrecoverable Mortgage Loan”) setting forth the basis for such determination in a form acceptable to the Master Servicer.

(g)

The income earned from the management of any REO Properties, net of reimbursement to the Servicer for expenses incurred (including any property or other taxes) in connection with such management and net of unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall be applied to the payment of principal of and interest on the related defaulted Mortgage Loans (with interest accruing as though such Mortgage Loans were still current) and all such income shall be deemed, for all purposes in this Agreement, to be payments on account of principal and interest on the related Mortgage Notes and shall be deposited into the Collection Account. To the extent the net income received during any calendar month is in excess of the amount attributable to amortizing principal and accrued interest at the related Mortgage Rate on the related Mortgage Loan for such calendar month, such excess shall be considered to be a partial prepayment of principal of the related Mortgage Loan.

(h)

The proceeds from any liquidation of a Mortgage Loan, as well as any income from an REO Property, will be applied in the following order of priority: first, to reimburse the Servicer for any related unreimbursed Servicing Advances and Servicing Fees; second, to reimburse the Servicer for any unreimbursed Advances; third, to reimburse the Collection Account for any Nonrecoverable Advances (or portions thereof) that were previously withdrawn by the Servicer pursuant to Section 3.8(a)(iii) that related to such Mortgage Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been made for such amount or any such Advance has been reimbursed) on the Mortgage Loan or related REO Property, at the Mortgage Rate (net of the Servicing Fee Rate) to the Due Date occurring in the month in which such amounts are required to be distributed; and fifth, as a recovery of principal of the Mortgage Loan. Excess Proceeds, if any, from the liquidation of a Liquidated Mortgage Loan will be retained by the Servicer as additional servicing compensation pursuant to Section 3.14.

(i)

Notwithstanding any provision hereof, in connection with the foreclosure or other conversion of defaulted assets, the Servicer shall follow such practices and procedures as it shall deem necessary or advisable in its sole discretion, and as shall be normal and usual in its general mortgage servicing activities.  In connection therewith, the Master Servicer shall have the sole discretion to determine whenever an immediate sale of any REO or Nonrecoverable Mortgage Loan, or continued management of such REO or Nonrecoverable Mortgage Loan, is in the best interest of certificateholders to maximize recoveries.  Any such disposition (including by means of a “whole loan sale”) shall be conducted by the Servicer on terms and conditions approved by the Master Servicer in its sole discretion.  The foregoing notwithstanding, the Master Servicer shall not approve any such disposition that would (i) result in the imposition of the tax on “prohibited transactions” on the Trust Fund, as defined in Sections 860F(a)(2) of the Code, or (ii) cause any REMIC created hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding.

(j)

The Master Servicer, in its sole discretion, shall have the right to purchase for its own account from the Trust Fund any Mortgage Loan which is 91 days or more Delinquent at a price equal to the Purchase Price; provided however, that for any such Mortgage Loan that is a Nonrecoverable Mortgage Loan, such purchase shall be at a price equal to the Nonrecoverable Mortgage Loan Purchase Price, and provided further that any REO Property may be disposed of pursuant to the preceding Section 3.11(i).  The total price calculated pursuant to the preceding sentence for any Mortgage Loan purchased hereunder shall be deposited in the Collection Account and the Trustee, upon receipt of the Request for Release from the Servicer in the form of Exhibit J hereto, shall release or cause to be released to the purchaser of such Mortgage Loan the related Mortgage File and shall execute and deliver such instruments of transfer or assignment prepared by the purchaser of such Mortgage Loan, in each case without recourse, as shall be necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of such Mortgage Loan shall succeed to all the Trustee’s right, title and interest in and to such Mortgage Loan and all security and documents related thereto. Such assignment shall be an assignment outright and not for security. The purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all security and documents, free of any further obligation to the Trustee or the Certificateholders with respect thereto.

Section 3.12

Trustee to Cooperate; Release of Mortgage Files.

Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Servicer will immediately notify the Trustee by delivering, or causing to be delivered a Request for Release substantially in the form of Exhibit J.  Upon receipt of such request, the Trustee shall or shall cause the Custodian to promptly release the related Mortgage File to the Servicer, and the Trustee shall at the Servicer’s direction execute and deliver to the Servicer the request for reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument releasing the lien of the Mortgage, in each case as provided by the Servicer, together with the Mortgage Note with written evidence of cancellation thereon.  In lieu of the document execution process described in the preceding two sentences, the Servicer shall be authorized to execute each such Request for Release, request for reconveyance, deed of reconveyance, and release, satisfaction of mortgage, or such instrument releasing the lien of the Mortgage as attorney in fact for the Trustee (or the Custodian, if applicable) pursuant to the powers of attorney described in Section 3.1.  Expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be chargeable to the related Mortgagor. From time to time and as shall be appropriate for the servicing or foreclosure of any Mortgage Loan, including for such purpose, collection under any policy of flood insurance, any fidelity bond or errors or omissions policy, or for the purposes of effecting a partial release of any Mortgaged Property from the lien of the Mortgage or the making of any corrections to the Mortgage Note or the Mortgage or any of the other documents included in the Mortgage File, the Trustee shall, upon delivery to the Trustee of a Request for Release in the form of Exhibit K signed by a Servicing Officer, release the Mortgage File to the Servicer. Subject to the further limitations set forth below, the Servicer shall cause the Mortgage File or documents so released to be returned to the Trustee or its Custodian when the need therefor by the Servicer no longer exists, unless the Mortgage Loan is liquidated and the proceeds thereof are deposited in the Collection Account, in which case the Servicer shall deliver to the Trustee a Request for Release in the form of Exhibit L, signed by a Servicing Officer.

If the Servicer at any time seeks to initiate a foreclosure proceeding in respect of any Mortgaged Property as authorized by this Agreement, the Servicer shall deliver or cause to be delivered to the Trustee, for signature, as appropriate, any court pleadings, requests for trustee’s sale or other documents necessary to effectuate such foreclosure or any legal action brought to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce any other remedies or rights provided by the Mortgage Note or the Mortgage or otherwise available at law or in equity.

Section 3.13

Documents Records and Funds in Possession of Servicer to be Held for the Trustee.

Notwithstanding any other provisions of this Agreement, the Servicer shall transmit to the Trustee, or the Custodian on its behalf, all documents and instruments described in Section 2.1(b), and shall hold as Servicer and agent of the Trustee all other documents, in respect of a Mortgage Loan coming into the possession of the Servicer from time to time and shall account fully to the Trustee for any funds received by the Servicer or which otherwise are collected by the Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan. All Mortgage Files and funds collected or held by, or under the control of, the Servicer in respect of any Mortgage Loans, whether from the collection of principal and interest payments or from Liquidation Proceeds, including but not limited to, any funds on deposit in the Collection Account, shall be held by the Servicer for and on behalf of the Trustee and shall be and remain the sole and exclusive property of the Trustee, subject to the applicable provisions of this Agreement. The Servicer also agrees that it shall not create, incur or subject any Mortgage File or any funds that are deposited in the Collection Account, Distribution Account or any Escrow Account, or any funds that otherwise are or may become due or payable to the Trustee for the benefit of the Certificateholders, to any claim, lien, security interest, judgment, levy, writ of attachment or other encumbrance, or assert by legal action or otherwise any claim or right of setoff against any Mortgage File or any funds collected on, or in connection with, a Mortgage Loan, except, however, that the Servicer shall be entitled to set off against and deduct from any such funds any amounts that are properly due and payable to the Servicer under this Agreement.

Section 3.14

Servicing Compensation.

As compensation for its activities hereunder, the Servicer shall be entitled to retain or withdraw from the Collection Account an amount equal to the Servicing Fee for each Mortgage Loan, provided that the aggregate Servicing Fee with respect to any Distribution Date shall be reduced (i) by the amount of any Compensating Interest paid by the Servicer with respect to such Distribution Date, and (ii) with respect to the first Distribution Date, an amount equal to any amount to be deposited into the Distribution Account by the Depositor pursuant to Section 2.1(a) and not so deposited.

Additional servicing compensation in the form of (i) Prepayment Interest Excess and all income and gain net of any losses realized from Permitted Investments and (ii) assumption fees, late payment charges, and other receipts not required to be deposited to the Collection Account pursuant to Section 3.5 hereof, including any Excess Proceeds, shall be retained by the Servicer as additional servicing compensation.  The Servicer and Master Servicer shall be required to pay all expenses incurred by them respectively in connection with their respective activities hereunder to the extent such expenses do not constitute Advances or Nonrecoverable Advances as defined in this Agreement and shall not be entitled to reimbursement therefor except as specifically provided in this Agreement.

Section 3.15

Access to Certain Documentation.

The Servicer shall provide to the OTS and the FDIC and to comparable regulatory authorities supervising Holders of Subordinate Certificates and the examiners and supervisory agents of the OTS, the FDIC and such other authorities, access to the documentation regarding the Mortgage Loans required by applicable regulations of the OTS and the FDIC. Such access shall be afforded without charge, but only upon reasonable and prior written request and during normal business hours at the offices designated by the Servicer. Nothing in this Section shall limit the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors and the failure of the Servicer to provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section.

Section 3.16

Annual Statement as to Compliance.

The Servicer shall deliver to the Depositor and the Trustee on or before 120 days after the end of the Servicer’s fiscal year, commencing with its 2002 fiscal year, an Officer’s Certificate stating, as to the signer thereof, that (i) a review of the activities of the Servicer during the preceding fiscal year and of the performance of the Servicer under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all of its material obligations under this Agreement throughout such year, or, if there has been a material default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. The Trustee shall forward a copy of each such statement to each Rating Agency.

Section 3.17

Annual Independent Public Accountants’ Servicing Statement; Financial Statements.

On or before 120 days after the end of the Servicer’s fiscal year, commencing with its 2002 fiscal year, the Servicer at its expense shall cause a nationally or regionally recognized firm of independent public accountants (who may also render other services to the Servicer, the Depositor or any affiliate thereof) which is a member of the American Institute of Certified Public Accountants to furnish a statement to the Trustee and the Depositor to the effect that such firm has examined certain documents and records relating to the servicing of the Mortgage Loans under this Agreement or of mortgage loans under pooling and servicing agreements substantially similar to this Agreement (such statement to have attached thereto a schedule setting forth the pooling and servicing agreements covered thereby) substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers or alternatively, if the Master Servicer has so elected, the Audit Program for Mortgages serviced for FNMA and FHLMC, and setting forth such firm’s conclusions relating thereto in accordance with the applicable attestation program  or audit program.  In rendering such statement, such firm may rely, as to matters relating to direct servicing of mortgage loans by Subservicers, upon comparable statements for examinations conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC (rendered within one year of such statement) of independent public accountants with respect to the related Subservicer. Copies of such statement shall be provided by the Trustee to any Certificateholder upon request at the Servicer’s expense, provided such statement is delivered by the Servicer to the Trustee.

Section 3.18

Errors and Omissions Insurance; Fidelity Bonds.

The Servicer shall for so long as it acts as Servicer under this Agreement, obtain and maintain in force (a) a policy or policies of insurance covering errors and omissions in the performance of its obligations as Servicer hereunder and (b) a fidelity bond in respect of its officers, employees and agents. Each such policy or policies and bond shall, together, comply with the requirements from time to time of FNMA or FHLMC for persons performing servicing for mortgage loans purchased by FNMA or FHLMC. In the event that any such policy or bond ceases to be in effect, the Servicer shall obtain a comparable replacement policy or bond from an insurer or issuer, meeting the requirements set forth above as of the date of such replacement.

Section 3.19

Advances.

The Servicer shall determine on or before each Determination Date whether it is required to make a P&I Advance pursuant to the definition thereof.  If the Servicer determines it is required to make a P&I Advance, it shall, before the Distribution Account Deposit Date, deposit into the Master Servicer Custodial Account an amount equal to the P&I Advance. The Servicer shall be entitled to be reimbursed for all P&I Advances of its own funds made pursuant to this Section as provided in Section 3.8 hereof. The obligation to make P&I Advances with respect to any Mortgage Loan shall continue if such Mortgage Loan has been foreclosed or otherwise terminated and the related Mortgaged Property has not been liquidated, provided that in no event shall the Servicer be required to make any proposed Advance that, if made, would in the good faith judgment of the Servicer to be a Nonrecoverable Advance.

The Servicer shall deliver to the Master Servicer on the related Servicer Deposit Date an Officer’s Certificate of a Servicing Officer indicating the amount of any proposed Advance that, if made, would in the good faith judgment of the Servicer be a Nonrecoverable Advance.

Section 3.20

Advance Facility.

(a)

The Servicer is hereby authorized to enter into any facility with any Person (any such Person, an “Advance Facility Counterparty”) which provides that the Servicer may pledge or sell its rights to receive reimbursement of Advances pursuant to this Agreement (“Advance Reimbursement Rights”) pursuant to credit facilities, repurchase facilities, or similar facilities providing liquidity for the funding of Advances, including facilities providing that such Advance Facility Counterparty may make all or a portion of the Advances (any such facility, an “Advance Facility”), although no Advance Facility shall reduce or otherwise affect the Servicer’s obligations to fund such Advances.  If so required pursuant to the terms of an Advance Facility, to the extent that an Advance Facility Counterparty makes all or a portion of any Advance and the Advance Facility Counterparty and the Servicer provide the Trustee with notice acknowledged by the Servicer that such Advance Facility Counterparty is entitled to reimbursement, such Advance Facility Counterparty shall be entitled to receive reimbursement pursuant to this Agreement for such amount to the extent provided.  Such notice from the Advance Facility Counterparty and the Servicer must specify the amount of the reimbursement and must specify which Section of this Agreement permits the Advance to be reimbursed.  The Trustee shall be entitled to rely without independent investigation on the Advance Facility Counterparty’s statement with respect to the amount of any reimbursement pursuant to this Section 3.20 and with respect to the Advance Facility Counterparty’s statement with respect to the Section of this Agreement permits the Advance to be reimbursed.  An Advance Facility Counterparty whose obligations are limited to the making of Advances will not be deemed to be a Subservicer under this Agreement.

(b)

If so required pursuant to the terms of an Advance Facility, the Servicer may direct, and if so directed the Trustee is hereby authorized to and shall pay to the Advance Facility Counterparty (i) reimbursements for Advances; and (ii) all or such portion of the Servicing Fee as may be so specified in the Advance Facility, that would otherwise be payable to the Servicer pursuant to this Agreement or the Servicing Agreement.  

(c)

Upon request of the Servicer, the Trustee agrees to execute such acknowledgments, certificates, and other documents recognizing the interests of any Advance Facility Counterparty in such Advance Reimbursement Rights and Servicing Fees as the Servicer may cause to be made subject to Advance Facilities pursuant to this Section 3.20, and such other documents in connection with such Advance Facilities as may be reasonably requested from time to time by any Advance Facility Counterparty.  The implementation of the arrangement described in this Section shall not require the consent of Certificateholders or the Trustee.

Section 3.21

Prepayment Penalties.

The Servicer will not waive any Prepayment Penalty or part of a Prepayment Penalty unless (i) such waiver would, in the reasonable judgment of the Servicer, maximize recovery of total net proceeds taking into account the value of such Prepayment Penalty and related Mortgage Loan and, if such waiver is made in connection with a refinancing of the related Mortgage Loan, such refinancing is related to a default or a reasonably foreseeable default; (ii) the related Mortgage Loan indebtedness has been accelerated; or (iii) the Servicer obtains an Opinion of Counsel, which may be in-house counsel for the Servicer, opining that the Prepayment Penalty is not legally enforceable in the circumstances under which the related prepayment occurs. In no event will the Servicer waive a Prepayment Penalty in connection with a refinancing of a Mortgage Loan that is not related to a default or a reasonably foreseen default.

ARTICLE 4

DISTRIBUTIONS

Section 4.1

Priorities of Distribution.

(a)

On each Distribution Date, the Trustee shall make the following distributions from the Distribution Account, net of the Trustee Fee and the Trustee’s expenses, of an amount equal to the Interest Funds for each Group in the following order of priority:

(i)

from the Interest Funds for each Group, to the related Senior Certificates and the related Component of the Class A-IO Certificates, the Current Interest and any Interest Carry Forward Amount for the such Certificates; provided, however, that any shortfall in available amounts in respect of each Group shall be applied, pro rata, among the Senior Certificates and Components of the Class A-IO Certificates of such Group; and

(ii)

any remaining amounts from the Interest Funds for Group I and Group II shall be combined and distributed pursuant to Section 4.1(b) hereof.

(b)

On each Distribution Date, the Trustee shall apply all amounts remaining pursuant to Section 4.1(a)(ii) in the following order of priority:

(i)

to the Class M-1 Certificates, the Current Interest thereon;

(ii)

to the Class M-2 Certificates, Current Interest thereon;

(iii)

to the Class B Certificates, Current Interest thereon; and

(iv)

any remaining amounts pursuant to Section 4.1(g) hereof.

(c)

On each Distribution Date, the Trustee shall make the following distributions from the Distribution Account of an amount equal to the Principal Distribution Amount for each Group as follows:

(i)

From the Principal Distribution Amount for Group I, in an amount up to the Senior Principal Distribution Amount for such Group as follows:  (x) the Priority Principal Distribution Amount to the Class AF-6 Certificates until the Class Certificate Balance thereof has been reduced to zero, and (y) the balance of the Senior Principal Distribution Amount for Group I sequentially to the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6 Certificates, in that order, so that no such distribution pursuant to this clause (y) will be made to any such Class until the Certificate Principal Balances of all Group I Class A Certificates with a lower numeral designation shall have been reduced to zero; provided, however, that, on any Distribution Date on or after the Credit Support Depletion Date, the Senior Principal Distribution Amount for Group I will be distributed pro rata and not sequentially to the Group I Class A Certificates;

(ii)

From the Principal Distribution Amount for Group II, an amount up to the Senior Principal Distribution Amount for such Group shall be distributed to the Class AV Certificates until the Class Certificate Balance thereof has been reduced to zero; and

(iii)

In the event the Certificate Principal Balance of the (A) Group I Class A Certificates or (B) the Group II Class A Certificates has been reduced to zero, on such Distribution Date and each Distribution Date thereafter principal distributions otherwise distributable to such retired Certificates will be applied to the remaining Senior Certificates related to the other Mortgage Loan Group (after giving effect to the distributions described in this Section 4.1(c)).  Any such distributions in respect of the Group I Class A Certificates will be distributed to such Classes in the manner provided in the first subparagraph of this subsection.

(d)

On each Distribution Date, the Trustee shall distribute the Principal Distribution Amount for all Groups remaining after distributions pursuant to Section 4.1(c) in the following order of priority:  

(i)

to the Class M-1 Certificates, the Class M-1 Principal Distribution Amount, until the Class Certificate Balance thereof has been reduced to zero;

(ii)

to the Class M-2 Certificates, the Class M-2 Principal Distribution Amount, until the Class Certificate Balance thereof has been reduced to zero; and

(iii)

to the Class B Certificates, the Class B Principal Distribution Amount, until the Class Certificate Balance thereof has been reduced to zero.

(e)

Notwithstanding Section 4.1(c) and (d) hereof, before the Stepdown Date or if a Trigger Event is in effect on any Distribution Date each Principal Distribution Amount shall be distributed in the following order of priority:  

(i)

to the related Class A Certificates (in the case of Group I, in the manner described in Section 4.1(c)) until the Certificate Principal Balance of such Class A Certificates has been reduced to zero; 

(ii)

after the Certificate Principal Balance of the Class A Certificates has been reduced to zero, the remaining combined Principal Distribution Amounts shall be distributed to the Class M-1 Certificates until the Class Certificate Balance of the Class M-1 Certificates has been reduced to zero; 

(iii)

after the Class Certificate Balance of the Class M-1 Certificates has been reduced to zero, the remaining combined Principal Distribution Amounts shall be distributed to the Class M-2 Certificates until the Class Certificate Balance of the Class M-2 Certificates has been reduced to zero, and

(iv)

after the Class Certificate Balance of the Class M-2 Certificates has been reduced to zero, the remaining combined Principal Distribution Amounts shall be distributed to the Class B Certificates until the Class Certificate Balance of the Class B Certificates has been reduced to zero.

(f)

On each Distribution Date, the Trustee shall distribute Pledged Prepayment Penalties for such Distribution Date in accordance with the priorities set forth in clauses (xiv) through (xvii) of Section 4.1(g) hereof (without regard to references to the Basis Risk Reserve Fund).

(g)

On each Distribution Date, the Trustee shall make the following distributions from the Distribution Account of any remaining amounts pursuant to Sections 4.1(b)(iv) hereof, together with any Net Pledged Prepayment Penalties for such Distribution Date, in the following order of priority:

(i)

on each of the first four Distribution Dates only, to the Basis Risk Reserve Fund, any Basis Risk Payment for such date;

(ii)

on each of the first four Distribution Dates only, from and to the extent of amounts held in the Basis Risk Reserve Fund, to the Class A Certificates, on a pro rata basis any applicable Cap Carryover Amount;

(iii)

on each of the first four Distribution Dates only, from and to the extent of amounts held in the Basis Risk Reserve Fund, to the Class M-1 Certificates, any applicable Cap Carryover Amount;

(iv)

on each of the first four Distribution Dates only, from and to the extent of amounts held in the Basis Risk Reserve Fund, to the Class M-2 Certificates, any applicable Cap Carryover Amount;

(v)

on each of the first four Distribution Dates only, from and to the extent of amounts held in the Basis Risk Reserve Fund, to the Class B Certificates, any applicable Cap Carryover Amount;

(vi)

the related Principal Percentage of the Extra Principal Distribution Amount will be added to the Principal Distribution Amount for Group I and the related Principal Percentage for Group II of the Extra Principal Distribution Amount will be added to the Principal Distribution Amount for Group II;

(vii)

to the Class M-1 Certificates, any related Interest Carry Forward Amount;

(viii)

to the Class M-1 Certificates, any related Unpaid Realized Loss Amount;

(ix)

to the Class M-2 Certificates, any related Interest Carry Forward Amount;

(x)

to the Class M-2 Certificates, any related Unpaid Realized Loss Amount;

(xi)

to the Class B Certificates, any related Interest Carry Forward Amount;

(xii)

to the Class B Certificates, any related Unpaid Realized Loss Amount;

(xiii)

to the Basis Risk Reserve Fund, any Basis Risk Payment for such date;

(xiv)

on any Distribution Date on or before the Distribution Date on which the Class Certificate Balance thereof has been reduced to zero, from and to the extent of amounts remaining in the Basis Risk Reserve Fund for such Distribution Date, to the Class A Certificates, on a pro rata basis any applicable Cap Carryover Amount;

(xv)

on any Distribution Date on or before the Distribution Date on which the Class Certificate Balance of the Class M-1 Certificates has been reduced to zero, from and to the extent of amounts remaining in the Basis Risk Reserve Fund for such Distribution Date, to the Class M-1 Certificates, any applicable Cap Carryover Amount;

(xvi)

on any Distribution Date on or before the Distribution Date on which the Class Certificate Balance of the Class M-2 Certificates has been reduced to zero, from and to the extent of amounts remaining in the Basis Risk Reserve Fund for such Distribution Date, to the Class M-2 Certificates, any applicable Cap Carryover Amount;

(xvii)

on any Distribution Date on or before the Distribution Date on which the Class Certificate Balance of the Class B Certificates has been reduced to zero, from and to the extent of amounts remaining in the Basis Risk Reserve Fund for such Distribution Date, to the Class B Certificates, any applicable Cap Carryover Amount;

(xviii)

to the other Certificates to the extent of any Unpaid Realized Loss Amount; and

(xix)

the remainder pursuant to Section 4.1(i) hereof.

(h)

On each Distribution Date, the Trustee shall distribute an amount equal to the Class P Prepayment Amount for such Distribution Date to the Class P Certificates.

(i)

On each Distribution Date, the Trustee shall distribute to the Class C Certificates any remaining amounts pursuant to Section 4.1(g)(xix) hereof, to the extent of the sum of the interest accrued thereon at the rate described in Schedule III and that has not been distributed thereon on prior Distribution Dates (amounts deposited in the Basis Risk Reserve Fund under Section 4.1(g)(xiii) are treated as distributed for this purpose), amounts representing earnings on the Basis Risk Reserve Fund, and any amounts released from the Basis Risk Reserve Fund.

(j)

On each Distribution Date, to the extent the Servicer or Master Servicer shall have collected any Subsequent Recoveries during the related Prepayment Period, the Trustee shall apply such amounts as follows:

first, sequentially, in order of priority, to each Class of Subordinate Certificates then outstanding, in reduction of any amounts previously applied to such Class to reduce the Class Certificate Balance thereof pursuant to Section 4.3 hereof (provided, however, that any such amounts distributed pursuant to this clause first to a Class of Subordinate Certificates shall not reduce the Class Certificate Balance thereof); and

second, as part of the related Interest Funds for such Distribution Date for application pursuant to Section 4.1(a).

(k)

On each Distribution Date the Trustee shall distribute to the Class R Certificates any remaining amounts in the Distribution Account.

Section 4.2

Method of Distribution.

(a)

All distributions with respect to each Class of Certificates on each Distribution Date shall be made pro rata among the outstanding Certificates of such Class, based on the Percentage Interest in such Class represented by each Certificate.  Payments to the Certificateholders on each Distribution Date shall be made by the Trustee to the Certificateholders of record on the related Record Date by check or money order mailed to a Certificateholder at the address appearing in the Certificate Register, or upon written request by such Certificateholder to the Trustee made not later than the applicable Record Date, by wire transfer to a U.S. depository institution acceptable to the Trustee, or by such other means of payment as such Certificateholder and the Trustee shall agree.

(b)

Each distribution with respect to a Book-Entry Certificate shall be paid to the Depository, which shall credit the amount of such distribution to the accounts of its Depository Participants in accordance with its normal procedures.  Each Depository Participant shall be responsible for disbursing such distribution to the Certificate Owners that it represents and to each financial intermediary for which it acts as agent.  Each such financial intermediary shall be responsible for disbursing funds to the Certificate Owners that it represents.  All such credits and disbursements with respect to a Book-Entry Certificate are to be made by the Depository and the Depository Participants in accordance with the provisions of the applicable Certificates.  Neither the Trustee nor the Master Servicer shall have any responsibility therefor except as otherwise provided by applicable law.

(c)

The Trustee shall withhold or cause to be withheld such amounts as it reasonably determines are required by the Code (giving full effect to any exemptions from withholding and related certifications required to be furnished by Certificateholders or Certificate Owners and any reductions to withholding by virtue of any bilateral tax treaties and any applicable certification required to be furnished by Certificateholders or Certificate Owners with respect thereto) from distributions to be made to a “Foreign Person” as defined in Section 1445(f)(3) of the Code.  

Section 4.3

Allocation of Losses.

On each Distribution Date, the Trustee (after giving effect to all distributions made on such Distribution Date) shall allocate any excess of the aggregate Certificate Principal Balance of the Certificates over the Assumed Principal Balance to reduce the Class Certificate Balances of the Subordinate Certificates in the following order of priority:

(i)

to the Class B Certificates until the Class Certificate Balance thereof is reduced to zero;

(ii)

to the Class M-2 Certificates until the Class Certificate Balance thereof is reduced to zero; and

(iii)

to the Class M-1 Certificates until the Class Certificate Balance thereof is reduced to zero.

Section 4.4

Reports to the Depositor and the Trustee.

On or before the Business Day preceding each Distribution Date, based on information provided by the Servicer at such times and in form and content, as acceptable to the Master Servicer in its reasonable discretion, the Master Servicer shall notify, or cause to be notified, the Depositor and the Trustee of the following information with respect to the next Distribution Date (which notification may be given by facsimile, electronic transmission or by telephone promptly confirmed in writing):

(a)

the aggregate amount then on deposit in the Distribution Account and the source thereof (identified as interest, scheduled principal or unscheduled principal);

(b)

the amount of any Realized Losses, Applied Realized Loss Amounts and Unpaid Realized Loss Amounts;

(c)

the application of the amounts distributed on such Distribution Date pursuant to Section 4.1 hereof (including the distribution of any Subsequent Recoveries); 

(d)

whether a Trigger Event has occurred; and

(e)

For each Distribution Date during the Funding Period, 

(i)

the Pre-Funded Amount for each Group previously used to acquire Subsequent Mortgage Loans; 

(ii)

the Pre-Funding Account Earnings for each Group transferred to the Distribution Account; and

(iii)

the Pre-Funded Amount and for the Distribution Date following the end of the Funding Period, the Pre-Funded Amount distributed to Certificateholders.

Section 4.5

Reports by or on Behalf of the Master Servicer.

(a)

On or as soon as practicable following each Distribution Date, based on information provided by the Servicer at such times and in form and content, as acceptable to the Master Servicer in its reasonable discretion, the Master Servicer shall report or cause to be published on the Trustee’s website located at http://www-apps.gis.deutsche-bank.com/invr, or such other website designated by the Master Servicer as may be set forth in a notice provided to the Holder of each of the Certificates and each Rating Agency, the following information: 

(i)

with respect to each Class of Certificates (other than Class C and Class R) (based on a Certificate in the original principal amount or Notional Principal Balance of $1,000):

(A)

the amount of the aggregate distributions on such Distribution Date;

(B)

the amount of such distribution allocable to interest;

(C)

the amount of such distributions allocable to principal, separately identifying the aggregate amount of any prepayments, Substitution Adjustment Amounts, repurchase amounts pursuant to Article 2 or other recoveries of principal included therein, any Extra Principal Distribution Amount and any Class M-1, Class M-2, Class B, Applied Realized Loss Amount with respect to, and any Class M-1, Class M-2, and Class B, Unpaid Realized Loss Amount at, such Distribution Date;

(D)

the Class Certificate Balance after giving effect to any distribution allocable to principal and the Notional Principal Balance of each Component of the Class A-IO Certificates for the related Distribution Date; and

(E)

any Interest Carry Forward Amount and any Cap Carryover Amount;

(ii)

the Net WAC Cap and the Maximum Cap Rate for such Group;

(iii)

any Subsequent Recoveries and Realized Losses for Group I and Group II for the period and since the Cut Off Date;

(iv)

the largest Mortgage Loan balance outstanding in each Group;

(v)

the Prepayment Penalties owed by borrowers and (if different) collected by the Servicer or the Master Servicer;

(vi)

the Servicing Fees and Master Servicing Fees allocable to each Group;

(vii)

One-Month LIBOR on the most recent Interest Determination Date; 

(viii)

the Pass-Through Rates for the Certificates for the current Accrual Period and whether such rates have been capped; 

(ix)

for each Distribution Date during the Funding Period, the Pre-Funded Amount allocable to each Group; 

(x)

the number and aggregate principal balances of Mortgage Loans in each Group (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent, as of the close of business as of the end of the related prepayment period;

(xi)

the percentage that each of the Stated Principal Balances set forth pursuant to clauses (a), (b) and (c) of paragraph (i) above represent with respect to all Mortgage Loans in each Group;

(xii)

the number and Stated Principal Balance of all Mortgage Loans in each Group in foreclosure proceedings as of the close of business as of the end of the related Prepayment Period and in the immediately preceding Prepayment Period;

(xiii)

the number of Mortgagors and the Stated Principal Balances of Mortgage Loans in each Group involved in bankruptcy proceedings as of the close of business as of the end of the related Prepayment Period;

(xiv)

the aggregate number and aggregate book value of any REO Property in each Group as of the close of business as of the end of the related Prepayment Period; and

(xv)

the number and amount by principal balance of 60+ Day Delinquent Loans in each Group, in each case by Servicer and as of the end of the related Prepayment Period.

(b)

All allocations made by the Trustee shall be based on information the Trustee receives from the Master Servicer which the Trustee shall be protected in relying on.

Section 4.6

Basis Risk Reserve Fund.

(a)

On the Closing Date, the Trustee shall establish and maintain in its name, in trust for the benefit of the holders of the Certificates, other than the Class A-IO, Class P, and Class R Certificates, the Basis Risk Reserve Fund, into which the Depositor shall deposit $1,000.  The Basis Risk Reserve Fund shall be an Eligible Account, and funds on deposit therein shall be held separate and apart from, and shall not be commingled with, any other moneys, including, without limitation, other moneys of the Trustee held pursuant to this Agreement.  

(b)

The Trustee shall make withdrawals from the Basis Risk Reserve Fund to make distributions pursuant to Section 4.1(g) hereof.

(c)

Funds in the Basis Risk Reserve Fund shall be invested in Eligible Investments.  Any earnings on such amounts shall be distributed to the Class C Certificateholder pursuant to Section 4.1(i).  The Class C Certificate shall evidence ownership of the Basis Risk Reserve Fund for federal income tax purposes and the Holder thereof shall direct the Trustee, in writing, as to investment of amounts on deposit therein.  The Class C Certificateholder shall be liable for any losses incurred on such investments.  In the absence of written instructions from the Class C Certificateholder as to investment of funds on deposit in the Basis Risk Reserve Fund, such funds shall be invested in the Wells Fargo Prime Investment Money Market Fund or comparable investment vehicle.  Any amounts on deposit in the Basis Risk Reserve Fund in excess of the Required Reserve Fund Deposit on any Distribution Date shall be distributed to the Class C Certificateholder on the following Distribution Date.  For all Federal income tax purposes, amounts transferred by REMIC 5 to the Basis Risk Reserve Fund shall be treated as amounts distributed by REMIC 5 to the Class C Certificateholder.

(d)

Upon termination of the Trust Fund, any amounts remaining in the Basis Risk Reserve Fund shall be distributed to the Class C Certificateholder pursuant to Section 4.1(i).

Section 4.7

The Instrument.

At any time on or after the Closing Date, the Depositor shall have the right to deposit into the Trust Fund, solely for the benefit of the Holder of the Class C Certificates, a derivative contract or comparable instrument.  Any such instrument shall constitute a fully prepaid agreement.  All collections, proceeds and other amounts in respect of such an instrument shall be distributed to the Class C Certificates on the Distribution Date following receipt thereof by the Trustee.  In no event shall such an instrument constitute a part of any REMIC created hereunder.  In addition, in the event any such instrument is deposited, the Trust Fund shall be deemed to be divided into two separate and discrete sub-Trusts.  The assets of one such sub-Trust shall consist of all the assets of the Trust other than the instrument and the assets of the other sub-Trust shall consist solely of such instrument.

Section 4.8

The Calculation Agent.

(a)

The Calculation Agent, as agent for the Master Servicer, shall timely and accurately (i) perform and provide to the Trustee calculations of all amounts of principal and interest required to be distributed on each Distribution Date pursuant to this Article 4; (ii) in connection with such calculations, determine the appropriate One Month LIBOR with respect to each Interest Determination Date in accordance with the definition of “One Month LIBOR” set forth in Section 1.1, and (iii) with respect to each Distribution Date, determine the Pre-Funding Account Earnings in accordance with the definition of “Pre-Funding Account Earnings” set forth in Section 1.1. The Calculation Agent shall not resign from its capacity as the Calculation Agent on fewer than sixty (60) prior written days notice to the Master Servicer.

(b)

The compensation of the Calculation Agent shall be the responsibility of the Master Servicer, payable from the Master Servicing Fee.

(c)

The Master Servicer may terminate the Calculation Agent, in its capacity as the Calculation Agent, at any time, with or without cause, upon thirty (30) days notice in writing to the Calculation Agent.  No fee shall be payable to the Calculation Agent in connection with any such termination.

ARTICLE 5

THE CERTIFICATES

Section 5.1

The Certificates.

The Certificates shall be substantially in the forms attached as exhibits hereto.  The Certificates shall be issuable in registered form, in the minimum denominations, integral multiples in excess thereof (except that one Certificate in each Class may be issued in a different amount which must be in excess of the applicable minimum denomination) and aggregate denominations per Class set forth in the Preliminary Statement.

Subject to Section 9.2 hereof respecting the final distribution on the Certificates, on each Distribution Date the Trustee shall make distributions to each Certificateholder of record on the preceding Record Date either (x) by wire transfer in immediately available funds to the account of such Holder at a bank or other entity having appropriate facilities therefor, if (i) such Holder has so notified the Trustee at least five Business Days prior to the related Record Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance of any Class of Certificates or (B) Certificates of any Class with aggregate principal Denominations of not less than $1,000,000 or (y) by check mailed by first class mail to such Certificateholder at the address of such Holder appearing in the Certificate Register.

The Certificates shall be executed 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 the time when such signatures were affixed, authorized to sign on behalf of the Trustee shall bind the Trustee, notwithstanding that such individuals or any of them have ceased to be so authorized prior to the countersignature and delivery of such Certificates or did not hold such offices at the date of such Certificate. No Certificate shall be entitled to any benefit under this Agreement, or be valid for any purpose, unless countersigned by the Trustee by manual signature, and such countersignature upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly executed and delivered hereunder. All Certificates shall be dated the date of their countersignature. On the Closing Date, the Trustee shall countersign the Certificates to be issued at the direction of the Depositor, or any affiliate thereof.

The Depositor shall provide, or cause to be provided, to the Trustee on a continuous basis, an adequate inventory of Certificates to facilitate transfers.

Section 5.2

Certificate Register; Registration of Transfer and Exchange of Certificates.

(a)

The Trustee shall maintain, or cause to be maintained in accordance with the provisions of Section 5.6 hereof, a Certificate Register for the Trust Fund in which, subject to the provisions of subsections (b) and (c) below and to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. Upon surrender for registration of transfer of any Certificate, the Trustee shall execute and deliver, in the name of the designated transferee or transferees, one or more new Certificates of the same Class and aggregate Percentage Interest.

At the option of a Certificateholder, Certificates may be exchanged for other Certificates of the same Class in authorized denominations and evidencing the same aggregate Percentage Interest upon surrender of the Certificates to be exchanged at the office or agency of the Trustee. Whenever any Certificates are so surrendered for exchange, the Trustee shall execute, authenticate, and deliver the Certificates which the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing.

No service charge to the Certificateholders shall be made for any registration of transfer or exchange of Certificates, but 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 may be required.

All Certificates surrendered for registration of transfer or exchange shall be cancelled and subsequently destroyed by the Trustee in accordance with the Trustee’s customary procedures.

(b)

No Person shall transfer a Private Certificate unless such transfer (i) is made pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or (ii) is exempt from the registration requirements under said Act and such state securities laws. In the event that a transfer is to be made in reliance upon an exemption from the Securities Act and such laws, in order to assure compliance with the Securities Act and such laws, the Certificateholder desiring to effect such transfer and such Certificateholder’s prospective transferee shall each certify to the Trustee in writing the facts surrounding the transfer in substantially the forms set forth in Exhibit F (the “Transferor Certificate”) and (i) deliver a letter in substantially the form of either Exhibit G (the “Investment Letter”) or Exhibit H (the “Rule 144A Letter”) or (ii) there shall be delivered to the Trustee at the expense of the transferor an Opinion of Counsel that such transfer may be made pursuant to an exemption from the Securities Act. The Depositor shall provide to any Holder of a Private Certificate and any prospective transferee designated by any 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. The Trustee and the Master Servicer shall cooperate with the Depositor in providing the Rule 144A information referenced in the preceding sentence, including providing to the Depositor such information regarding the Certificates, the Mortgage Loans and other matters regarding the Trust Fund as the Depositor shall reasonably request to meet its obligation under the preceding sentence. Each Holder of a Private Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee and the Depositor, the Depositor and the Master Servicer against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.

No transfer of an ERISA-Restricted Certificate shall be made unless the Trustee shall have received either (i) a representation from the transferee of such Certificate acceptable to and in form and substance satisfactory to the Trustee (in the event such Certificate is a Private Certificate, such requirement is satisfied only by the Trustee’s receipt of a representation letter from the transferee substantially in the form of Exhibit G-1), to the effect that such transferee is not an employee benefit plan or arrangement subject to Section 406 of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor a person acting on behalf of any such plan or arrangement, nor using the assets of any such plan or arrangement to effect such transfer, (ii) if the purchaser is an insurance company, a representation in the form of Exhibit G-2 that (a) the purchaser is an insurance company which is purchasing such Certificates with funds contained in an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and (b) all of the requirements of PTCE 95-60 are met, including the requirement that an ERISA Qualifying Underwriting applies, to exempt the acquisition and holding of such Certificates and the transactions in connection with the servicing, management and operation of the trust from the prohibited transaction rules of ERISA and the Code; or (iii) in the case of any such ERISA-Restricted Certificate presented for registration in the name of an employee benefit plan subject to ERISA, or a plan or arrangement subject to Section 4975 of the Code (or comparable provisions of any subsequent enactments), or a trustee of any such plan or any other person acting on behalf of any such plan or arrangement, or using such plan’s or arrangement’s assets, an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an expense of either the Trustee or the Trust Fund, addressed to the Trustee to the effect that the purchase or holding of such ERISA-Restricted Certificate will not result in the assets of the Trust Fund being deemed to be “plan assets” and subject to the prohibited transaction provisions of ERISA and the Code and will not subject the Trustee to any obligation in addition to those expressly undertaken in this Agreement or to any liability.  Notwithstanding anything else to the contrary herein, any purported transfer of an ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject to ERISA or to the Code without the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee as described above shall be void and of no effect.

To the extent permitted under applicable law (including, but not limited to, ERISA), the Trustee shall be under no liability to any Person for any registration of transfer of any ERISA-Restricted Certificate that is in fact not permitted by this Section 5.2(b) or for making any payments due on such Certificate to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Agreement so long as the transfer was registered by the Trustee in accordance with the foregoing requirements.

(c)

Each Person who has or who acquires any Ownership Interest in a Residual Certificate shall be deemed by the acceptance or acquisition of such Ownership Interest to have agreed to be bound by the following provisions, and the rights of each Person acquiring any Ownership Interest in a Residual Certificate are expressly subject to the following provisions:

(i)

Each Person holding or acquiring any Ownership Interest in a Residual Certificate shall be a Permitted Transferee.

(ii)

No Ownership Interest in a Residual Certificate may be registered on the Closing Date or thereafter transferred, and the Trustee shall not register the Transfer of any Residual Certificate unless, in addition to the certificates required to be delivered to the Trustee under subparagraph (b) above, the Trustee shall have been furnished with an affidavit (a “Transfer Affidavit”) of the initial owner or the proposed transferee in the form attached hereto as Exhibit E.

(iii)

Each Person holding or acquiring any Ownership Interest in a Residual Certificate shall agree (A) to obtain a Transfer Affidavit from any other Person to whom such Person attempts to Transfer its Ownership Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from any Person for whom such Person is acting as nominee, trustee or agent in connection with any Transfer of a Residual Certificate and (C) not to Transfer its Ownership Interest in a Residual Certificate or to cause the Transfer of an Ownership Interest in a Residual Certificate to any other Person if it has actual knowledge that such Person is not a Permitted Transferee.

(iv)

Any attempted or purported Transfer of any Ownership Interest in a Residual Certificate in violation of the provisions of this Section 5.2(c) shall be absolutely null and void and shall vest no rights in the purported Transferee. If any purported transferee shall become a Holder of a Residual Certificate in violation of the provisions of this Section 5.2(c), then the last preceding Permitted Transferee shall be restored to all rights as Holder thereof retroactive to the date of registration of Transfer of such Residual Certificate. The Trustee shall be under no liability to any Person for any registration of Transfer of a Residual Certificate that is in fact not permitted by Section 5.2(b) and this Section 5.2(c) or for making any payments due on such Certificate to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Agreement so long as the Transfer was registered after receipt of the related Transfer Affidavit, Transferor Certificate and either the Rule 144A Letter or the Investment Letter. The Trustee shall be entitled but not obligated to recover from any Holder of a Residual Certificate that was in fact not a Permitted Transferee at the time it became a Holder or, at such subsequent time as it became other than a Permitted Transferee, all payments made on such Residual Certificate at and after either such time. Any such payments so recovered by the Trustee shall be paid and delivered by the Trustee to the last preceding Permitted Transferee of such Certificate.

(v)

The Depositor shall use its best efforts to make available, upon receipt of written request from the Trustee, all information necessary to compute any tax imposed under Section 860E(e) of the Code as a result of a Transfer of an Ownership Interest in a Residual Certificate to any Holder who is not a Permitted Transferee.

The restrictions on Transfers of a Residual Certificate set forth in this Section 5.2(c) shall cease to apply (and the applicable portions of the legend on a Residual Certificate may be deleted) with respect to Transfers occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee, the Depositor or the Master Servicer, to the effect that the elimination of such restrictions will not cause any REMIC created hereunder to fail to qualify as a REMIC at any time that the Certificates are outstanding or result in the imposition of any tax on the Trust Fund.  Each Person holding or acquiring any Ownership Interest in a Residual Certificate hereby consents to any amendment of this Agreement which, based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that the record ownership of, or any beneficial interest in, a Residual Certificate is not transferred, directly or indirectly, to a Person that is not a Permitted Transferee and (b) to provide for a means to compel the Transfer of a Residual Certificate which is held by a Person that is not a Permitted Transferee to a Holder that is a Permitted Transferee.

(d)

The preparation and delivery of all certificates and opinions referred to above in this Section 5.2 in connection with transfer shall be at the expense of the parties to such transfers.

(e)

Except as provided below, the Book-Entry Certificates shall at all times remain registered in the name of the Depository or its nominee and at all times: (i) registration of the Certificates may not be transferred by the Trustee except to another Depository; (ii) the Depository shall maintain book-entry records with respect to the Certificate Owners and with respect to ownership and transfers of such Book-Entry Certificates; (iii) ownership and transfers of registration of the Book-Entry Certificates on the books of the Depository shall be governed by applicable rules established by the Depository; (iv) the Depository may collect its usual and customary fees, charges and expenses from its Depository Participants; (v) the Trustee shall deal with the Depository, Depository Participants and indirect participating firms as representatives of the Certificate Owners of the Book-Entry Certificates for purposes of exercising the rights of holders under this Agreement, and requests and directions for and votes of such representatives shall not be deemed to be inconsistent if they are made with respect to different Certificate Owners; and (vi) the Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its Depository Participants and furnished by the Depository Participants with respect to indirect participating firms and persons shown on the books of such indirect participating firms as direct or indirect Certificate Owners.

All transfers by Certificate Owners of Book-Entry Certificates shall be made in accordance with the procedures established by the Depository Participant or brokerage firm representing such Certificate Owner. Each Depository Participant shall only transfer Book-Entry Certificates of Certificate Owners it represents or of brokerage firms for which it acts as agent in accordance with the Depository’s normal procedures.

If (x) (i) the Depository or the Depositor advises the Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities as Depository, and (ii) the Trustee or the Depositor is unable to locate a qualified successor, (y) the Depositor at its option advises the Trustee in writing that it elects to terminate the book-entry system through the Depository, or (z) after the occurrence of an Event of Default, Certificate Owners representing at least 51% of the Class Certificate Balance of the Book-Entry Certificates together advise the Trustee and the Depository through the Depository Participants in writing that the continuation of a book-entry system through the Depository is no longer in the best interests of the Certificate Owners, the Trustee shall notify all Certificate Owners, through the Depository, of the occurrence of any such event and of the availability of definitive, fully-registered Certificates (the “Definitive Certificates”) to Certificate Owners requesting the same. Upon surrender to the Trustee of the related Class of Certificates by the Depository, accompanied by the instructions from the Depository for registration, the Trustee shall issue the Definitive Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall be liable for any delay in delivery of such instruction and each may conclusively rely on, and shall be protected in relying on, such instructions. The Master Servicer shall provide the Trustee with an adequate inventory of certificates to facilitate the issuance and transfer of Definitive Certificates. Upon the issuance of Definitive Certificates all references herein to obligations imposed upon or to be performed by the Depository shall be deemed to be imposed upon and performed by the Trustee, to the extent applicable with respect to such Definitive Certificates and the Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder; provided that the Trustee shall not by virtue of its assumption of such obligations become liable to any party for any act or failure to act of the Depository.

Section 5.3

Mutilated, Destroyed, Lost or Stolen Certificates.

If (a) any mutilated Certificate is surrendered to the Trustee, or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there is delivered to the Master Servicer and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, countersign and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor and Percentage Interest. In connection with the issuance of any new Certificate under this Section 5.3, the Trustee 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 Trustee) connected therewith. Any replacement Certificate issued pursuant to this Section 5.3 shall constitute complete and indefeasible evidence of ownership, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

Section 5.4

Persons Deemed Owners.

The Trustee and any agent of the Trustee may treat the Person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions as provided in this Agreement and for all other purposes whatsoever, and neither the Trustee nor any agent of the Trustee shall be affected by any notice to the contrary.

Section 5.5

Access to List of Certificateholders’ Names and Addresses.

If three or more Certificateholders (a) request such information in writing from the Trustee, (b) state that such Certificateholders desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates, and (c) provide a copy of the communication which such Certificateholders propose to transmit, or if the Depositor or Master Servicer shall request such information in writing from the Trustee, then the Trustee shall, within ten Business Days after the receipt of such request, provide the Depositor, the Master Servicer or such Certificateholders at such recipients’ expense the most recent list of the Certificateholders of such Trust Fund held by the Trustee, if any. The Depositor and every Certificateholder, by receiving and holding a Certificate, agree that the Trustee shall not be held accountable by reason of the disclosure of any such information as to the list of the Certificateholders hereunder, regardless of the source from which such information was derived.

Section 5.6

Maintenance of Office or Agency.

The Trustee will maintain or cause to be maintained at its expense an office or offices or agency or agencies in New York City where Certificates may be surrendered for registration of transfer or exchange. The Trustee initially designates the office of the Trustee’s agent, located at DTC Transfer Agent Services, 55 Water Street, Jeanette Park Entrance, New York, New York 10041, Attention: Vinny Brown, for such purposes. The Trustee will give prompt written notice to the Certificateholders of any change in such location of any such office or agency.

ARTICLE 6

THE DEPOSITOR, THE SERVICER AND MASTER SERVICER

Section 6.1

Respective Liabilities of the Depositor, Servicer and Master Servicer.

The Depositor, Servicer and Master Servicer shall each be liable in accordance herewith only to the extent of the obligations specifically and respectively imposed upon and undertaken by them herein.

Section 6.2

Merger or Consolidation of the Depositor, Servicer and Master Servicer.

The Depositor, Servicer and Master Servicer will each keep in full effect its existence, rights and franchises as a corporation under the laws of the United States or under the laws of one of the states thereof and will each obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, or any of the Mortgage Loans and to perform its respective duties under this Agreement.

Any Person into which the Depositor, Servicer or the Master Servicer may be merged or consolidated, or any Person resulting from any merger or consolidation to which the Depositor, Servicer or the Master Servicer shall be a party, or any person succeeding to the business of the Depositor, Servicer or the Master Servicer, shall be the successor of the Depositor, Servicer 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 hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or surviving Person to the Servicer shall be qualified to sell mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.

Section 6.3

Limitation on Liability of the Depositor, the Servicer, the Master Servicer and Others.

None of the Depositor, the Servicer, the Master Servicer or any of the directors, officers, employees or agents of the Depositor, the Servicer or the Master Servicer shall be under any liability to the Certificateholders for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Depositor, the Servicer, the Master Servicer or any such Person against any breach of representations or warranties made by it herein or protect the Depositor, the Servicer, the Master Servicer or any such Person from any liability which would otherwise be imposed by reasons of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. The Depositor, the Servicer, the Master Servicer and any director, officer, employee or agent of the Depositor, the Servicer or the Master Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Depositor, the Servicer, the Master Servicer and any director, officer, employee or agent of the Depositor, the Servicer or the Master Servicer shall be indemnified by the Trust Fund and held harmless against any loss, liability or expense incurred in connection with any audit, controversy or judicial proceeding relating to a governmental taxing authority or any legal action relating to this Agreement or the performance thereof, or the Certificates, other than any loss, liability or expense related to any specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense shall be otherwise reimbursable pursuant to this Agreement) and any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties hereunder.  None of the Depositor, the Servicer or the Master Servicer shall be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its respective duties hereunder and which in its opinion may involve it in any expense or liability; provided, however, that any of the Depositor, the Servicer or the Master Servicer may in its discretion undertake any such action that it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties hereto and interests of the Trustee and the Certificateholders hereunder. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Trust Fund, and the Depositor, the Servicer and the Master Servicer shall be entitled to be reimbursed therefor out of the Collection Account.

Section 6.4

Limitation on Resignation of Servicer.

The Servicer shall not resign from the obligations and duties hereby imposed on it except (a) upon appointment of a successor servicer and receipt by the Trustee of a letter from each Rating Agency that such a resignation and appointment will not result in a downgrading of the rating of any of the Certificates, or (b) upon determination that its duties hereunder are no longer permissible under applicable law. Any such determination under clause (b) permitting the resignation of the 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 assumed the Servicer’s responsibilities, duties, liabilities and obligations hereunder.

ARTICLE 7

SERVICER DEFAULT

Section 7.1

Events of Default.

“Event of Default,” wherever used herein, means any one of the following events:

(i)

any failure by the Servicer to deposit in the Collection Account or remit to the Trustee any payment required to be made under the terms of this Agreement, which failure shall continue unremedied for five days after the date upon which written notice of such failure shall have been given to the Servicer by the Trustee or the Depositor or to the Master Servicer and the Trustee by the Holders of Certificates having not less than 51% of the Voting Rights evidenced by the Certificates; or

(ii)

any failure by the Servicer to observe or perform in any material respect any other of the covenants or agreements on the part of the Servicer contained in this Agreement, which failure materially affects the rights of Certificateholders, which failure continues unremedied for a period of 60 days after the date on which written notice of such failure shall have been given to the Servicer by the Trustee, the Master Servicer, or the Depositor, or to the Servicer and the Trustee by the Holders of Certificates evidencing not less than 51% of the Voting Rights evidenced by the Certificates; provided, however, that the 60-day cure period shall not apply to the initial delivery of the Mortgage File for Delay Delivery Mortgage Loans nor the failure to substitute or repurchase in lieu thereof; or

(iii)

a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of 60 consecutive days; or

(iv)

the Servicer shall consent to the appointment of a receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Servicer or all or substantially all of the property of the Servicer; or

(v)

the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of, or commence a voluntary case under, any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations.

Upon its obtaining actual knowledge of the occurrence of an Event of Default, the Master Servicer shall promptly deliver to the Trustee, an Officer’s Certificate that an event has occurred that may justify termination of the Servicer hereunder and describing the circumstances surrounding such event.  Upon determination by the Master Servicer that an Event of Default has occurred, the Master Servicer shall promptly deliver to the Trustee an Officer’s Certificate to that effect, and the Master Servicer (a) may terminate the Servicer hereunder, if in its judgment such termination is in the best interests of the Trust Fund; or (b) shall terminate the Servicer hereunder, if instructed to do so by the Trustee.  The Trustee shall so instruct the Master Servicer if directed to do so by the Holders of Certificates evidencing not less than 51% of the Voting Rights evidenced by the Certificates exercised in writing following delivery to such Holders by the Trustee of notice of the occurrence of such Event of Default pursuant to Section 7.2(b).

Upon any such termination, the Master Servicer shall enter into a substitute servicing arrangement with another mortgage loan servicing company acceptable to the Master Servicer and Rating Agency under which such mortgage loan servicing company shall assume, satisfy, perform and carry out all liabilities, duties, responsibilities and obligations that are to be, or otherwise were to have been, satisfied, performed and carried out by the terminated Servicer hereunder.  Until such time as the Master Servicer enters into a substitute servicing agreement with respect to the Mortgage Loans, the Master Servicer shall assume, satisfy, perform and carry out all obligations which otherwise were to have been satisfied, performed and carried out by the terminated Servicer.  As compensation to the Master Servicer for any servicing obligations fulfilled or assumed by the Master Servicer, the Master Servicer shall be entitled to any servicing compensation to which the terminated Servicer would have been entitled if such Servicer had not been terminated.

Notwithstanding anything to the contrary herein, upon the occurrence of a Servicing Trigger Event, the Trustee will, upon the direction of, and at the expense of, a Majority of the Certificateholders, remove the Servicer and shall appoint a successor Servicer in accordance with the direction of a Majority of Certificateholders.   

Notwithstanding any termination of the activities of the Servicer hereunder, the Servicer shall be entitled to receive, out of any late collection of a Scheduled Payment on a Mortgage Loan which was due prior to the notice terminating such Servicer’s rights and obligations as Servicer hereunder and received after such notice, that portion thereof to which such Servicer would have been entitled pursuant to Sections 3.8(a)(i) through (viii), and any other amounts payable to such Master Servicer hereunder the entitlement to which arose prior to the termination of its activities hereunder.

In no event shall the termination of the Servicer under this Agreement result in any diminution of the Servicer’s right to reimbursement for any outstanding Advances due such Servicer at the time of termination.  The successor Servicer shall be obligated to promptly reimburse the terminated Servicer for outstanding Advances provided, however, that if the Trustee becomes the successor Servicer, such reimbursement obligation shall be limited to the funds available in the Collection Account for such purposes pursuant to Sections 3.8(a)(ii) and 3.8(iii) of the Pooling and Servicing Agreement.  In addition, any such reimbursement for outstanding Advances shall be made on a first in, first out ("FIFO") basis no later than the 18th day of each month provided that the successor Servicer has received prior written notice from the appropriate party, under the Pooling and Servicing Agreement, of such reimbursement amount.

Section 7.2

Notification to Certificateholders.

(a)

Upon any termination of or appointment of a successor to the Servicer or Master Servicer, the Trustee shall give prompt written notice thereof to Certificateholders and to each Rating Agency.

(b)

Within 60 days after the occurrence of any Event of Default, the Trustee shall transmit by mail to all Certificateholders notice of each such Event of Default hereunder known to the Trustee, unless such Event of Default shall have been cured or waived.

ARTICLE 8

CONCERNING THE TRUSTEE

Section 8.1

Duties of Trustee.

The Trustee, prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge and after the curing of all Events of Default that may have occurred, shall undertake to perform such duties and only such duties as are specifically set forth in this Agreement. In case an Event of Default of which a Responsible Officer of the Trustee has actual knowledge has occurred and remains uncured, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee that are specifically required to be furnished pursuant to any provision of this Agreement shall examine them to determine whether they are in the form required by this Agreement; provided, however, that the Trustee shall not be responsible for the accuracy or content of any such resolution, certificate, statement, opinion, report, document, order or other instrument.  If any such instrument is found not to conform in any material respect to the requirements of this Agreement, the Trustee shall notify the Certificateholders of such instrument in the event that the Trustee, after so requesting, does not receive a satisfactorily corrected instrument.

No provision of this 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:

(i)

unless an Event of Default of which a Responsible Officer of the Trustee has actual knowledge shall have occurred and be continuing, the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Trustee and 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 and conforming to the requirements of this Agreement which it believed in good faith to be genuine and to have been duly executed by the proper authorities respecting any matters arising hereunder;

(ii)

the Trustee shall not be liable for an error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be finally proven that the Trustee was negligent in ascertaining the pertinent facts;

(iii)

the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of Holders of Certificates evidencing not less than 25% of the Voting Rights of Certificates 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 this Agreement;

(iv)

the Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or the exercise of any of its rights or powers if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not assured to it, and none of the provisions contained in this Agreement shall in any event require the Trustee to perform, or be responsible for the manner of performance of, any of the obligations of the Master Servicer under this Agreement except during such time, if any, as the Trustee shall be the successor to, and be vested with the rights, duties, powers and privileges of, the Master Servicer; and

(v)

without limiting the generality of this Section 8.1, the Trustee shall have no duty (A) to see to any recording, filing, or depositing of this Agreement or any agreement referred to herein or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or deposit or to any rerecording, refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Fund other than from funds available in the Distribution Account (D) to confirm or verify the contents of any reports or certificates of the Servicer delivered to the Trustee pursuant to this Agreement believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties.

Section 8.2

Certain Matters Affecting the Trustee.

Except as otherwise provided in Section 8.1:

(i)

the Trustee may request and rely upon and shall be protected in acting or refraining from acting upon any resolution, Officers’ Certificate, certificate of auditors or any 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 and the Trustee shall have no responsibility to ascertain or confirm the genuineness of any signature of any such party or parties;

(ii)

the Trustee may consult with counsel, financial advisers or accountants and the advice of any such counsel, financial advisers or accountants and 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 Opinion of Counsel;

(iii)

the Trustee shall not be 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 this Agreement;

(iv)

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 so to do by Holders of Certificates evidencing not less than 25% of the Voting Rights allocated to each Class of Certificates; 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 this Agreement, the Trustee may require indemnity satisfactory to the Trustee against such cost, expense or liability as a condition to taking any such action.  

(v)

the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, accountants or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of such agent, accountant or attorney appointed by the Trustee with due care;

(vi)

the Trustee shall not be required to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it;

(vii)

the Trustee shall not be liable for any loss on any investment of funds pursuant to this Agreement (other than as issuer of the investment security);

(viii)

the Trustee shall not be deemed to have knowledge of an Event of Default until a Responsible Officer of the Trustee shall have received written notice thereof and in the absence of such notice, the Trustee may conclusively assume that there is no Event of Default;

(ix)

the Trustee shall be under no obligation to exercise any of the trusts, rights or powers vested in it by this Agreement or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders, pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or thereby;

(x)

the right of the Trustee to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful misconduct in the performance of such act; and

(xi)

the Trustee shall not be required to give any bond or surety in respect of the execution of the Trust Fund created hereby or the powers granted hereunder.

Section 8.3

Trustee Not Liable for Certificates or Mortgage Loans.

The recitals contained herein and in the Certificates shall be taken as the statements of the Depositor, the Depositor or Master Servicer, as the case may be, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or related document other than with respect to the Trustee’s execution and counter-signature of the Certificates. The Trustee shall not be accountable for the use or application by the Depositor or the Master Servicer of any funds paid to the Depositor or the Master Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the Collection Account by the Depositor or the Master Servicer.

Section 8.4

Trustee May Own Certificates.

The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates with the same rights as it would have if it were not the Trustee.

Section 8.5

Trustee’s Fees and Expenses.

The Trustee, as compensation for its activities prior to making the distributions pursuant to Section 4.1 hereunder, shall be entitled to deduct from the Master Servicing Fee on each Distribution Date an amount equal to the Trustee Fee and reasonable expenses for such Distribution Date.  Saxon shall indemnify and hold harmless the Trustee, the Paying Agent or the Custodian and any director, officer, employee or agent thereof against any loss, liability or expense, including reasonable attorney’s fees, incurred in connection with or arising out of or in connection with this Agreement, any custodial agreement or the Certificates, including, but not limited to, any such loss, liability or expense incurred in connection with any legal action against the Trust or the Trustee, the Paying Agent or the Custodian or any director, officer, employee or agent thereof, or the performance of any of the duties of the Trustee or the Paying Agent under this Agreement or the duties of the Custodian under any custodial agreement (including, but not limited to, the execution and delivery of documents in connection with a foreclosure sale, trustee’s sale, or deed in lieu of foreclosure of a Mortgage Loan, including, but not, limited to, any deed of reconveyance, any substitution of trustee documents or any other documents to release, satisfy, cancel or discharge any Mortgage Loan) other than any loss, liability or expense incurred by reason of the willful misfeasance, bad faith or negligence in the performance of the duties under this Agreement or by reason of the willful misfeasance, bad faith or gross negligence of the Custodian under any custodial agreement (including specifically any loss, liability or expense incurred by the Custodian by reason of simple negligence under any custodial agreement).  The provisions of this Section 8.5 shall survive the resignation or removal of the Trustee or the Paying Agent and the termination of this Agreement and the resignation or removal of the Custodian under any custodial agreement.  The Trustee may receive an additional indemnity from a party acceptable to the Trustee.

Section 8.6

Eligibility Requirements for Trustee.

The Trustee hereunder shall at all times be a corporation or association organized and doing business under the laws of a state or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to super-vision or examination by federal or state authority and with a credit rating which would not cause either of the Rating Agencies to reduce their respective then current ratings of the Certificates (or having provided such security from time to time as is sufficient to avoid such reduction). If such corporation or association publishes reports of 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 8.6 the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 8.6, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.7 hereof. The entity serving as Trustee may have normal banking and trust relationships with the Depositor and its affiliates or the Master Servicer and its affiliates; provided, however, that such entity cannot be an affiliate of the Master Servicer other than the Trustee in its role as successor to the Master Servicer.

Section 8.7

Resignation and Removal of Trustee.

The Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice of resignation to the Depositor and the Master Servicer and each Rating Agency not less than 60 days before the date specified in such notice when, subject to Section 8.8, such resignation is to take effect, and acceptance by a successor trustee in accordance with Section 8.8 meeting the qualifications set forth in Section 8.6. If no successor trustee meeting such qualifications shall have been so appointed and have accepted appointment within 30 days after the giving of such notice or 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 8.6 hereof and shall fail to resign after written request thereto by the Depositor, or if at any time the Trustee shall become incapable of acting, or shall be adjudged as 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, or a tax is imposed with respect to the Trust Fund by any state in which the Trustee or the Trust Fund is located and the imposition of such tax would be avoided by the appointment of a different trustee, then the Depositor or the Master Servicer may remove the Trustee and appoint a successor trustee by written instrument, in triplicate, one copy of which instrument shall be delivered to the Trustee, one copy of which shall be delivered to the Master Servicer and one copy to the successor trustee.

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 by the successor Trustee to the Master Servicer, one complete set to the Trustee so removed and one complete set to the successor so appointed. Notice of any removal of the Trustee shall be given to each Rating Agency by the Successor Trustee.

Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 8.7 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 8.8 hereof.

Section 8.8

Successor Trustee.

Any successor trustee appointed as provided in Section 8.7 hereof shall execute, acknowledge and deliver to the Depositor and to its predecessor trustee and the Master Servicer an instrument accepting such appointment hereunder 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 hereunder, with the like effect as if originally named as trustee herein. The Depositor, 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 8.8 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.6 hereof and its appointment shall not adversely affect the then current rating of the Certificates.

Upon acceptance of appointment by a successor trustee as provided in this Section 8.8, the Depositor shall mail notice of the succession of such trustee hereunder to all Holders of Certificates. If the Depositor 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 the Depositor.

Section 8.9

Merger or Consolidation of Trustee.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be eligible under the provisions of Section 8.6 hereof without the execution or filing of any paper or further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

Section 8.10

Appointment of Co-Trustee or Separate Trustee.

Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing any Mortgage Note may at the time be located, 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 separate trustees, of all or any part of the Trust Fund, and to vest in such Person or Persons, in such capacity and for the benefit of the Certificateholders, such title to the Trust Fund or any part thereof, whichever is applicable, and, subject to the other provisions of this Section 8.10, such powers, duties, obligations, rights and trusts as the Master Servicer and the Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request to do so, or in the case an Event of Default shall have occurred and be continuing, the Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 8.6 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required under Section 8.8.

Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(i)

To the extent necessary to effectuate the purposes of 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 (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), 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 hereunder or as successor to the Master Servicer hereunder), 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 applicable Trust Fund or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee;

(ii)

No trustee hereunder shall be held personally liable by reason of any act or omission of any other trustee hereunder and such appointment shall not, and shall not be deemed to, constitute any such separate trustee or co-trustee as agent of the Trustee;

(iii)

The Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee; and

(iv)

The Master Servicer, and not the Trustee, shall be liable for the payment of reasonable compensation, reimbursement and indemnification to any such separate trustee or co-trustee.

Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the separate trustees and co-trustees, when and as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this 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 this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee and a copy thereof given to the Master Servicer and the Depositor.

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 this 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.

Section 8.11

Tax Matters.

It is intended that the assets with respect to which the REMIC elections are to be made, as set forth in Schedule III, shall constitute, and that the conduct of matters relating to such assets shall be such as to qualify such assets as REMICs as defined in and in accordance with the REMIC Provisions.  In furtherance of such intention, the Master Servicer covenants and agrees that it shall act as agent (and the Master Servicer is hereby appointed to act as agent) on behalf of each such REMIC and that in such capacity it shall: (a) prepare and file, or cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by the Internal Revenue Service) and prepare and file or cause to be prepared and filed with the Internal Revenue Service and applicable state or local tax authorities income tax or information returns for each taxable year with respect to each such REMIC, containing such information and at the times and in the manner as may be required by the Code or state or local tax laws, regulations, or rules, and furnish or cause to be furnished to Certificateholders the schedules, statements or information at such times and in such manner as may be required thereby; (b) within thirty days of the Closing Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms 8811 or as otherwise may be required by the Code, the name, title, address, and telephone number of the person that the Holders of the Certificates may contact for tax information relating thereto, together with such additional information as may be required by such Form, and update such information at the time or times in the manner required by the Code; (c) make or cause to be made REMIC elections as directed in Schedule III on the federal tax returns for each such REMIC’s first taxable year (and, if necessary, under applicable state law); (d) prepare and forward, or cause to be prepared and forwarded, to the Certificateholders and to the Internal Revenue Service and, if necessary, state tax authorities, all information returns and reports as and when required to be provided to them in accordance with the REMIC Provisions, including without limitation, the calculation of any original issue discount using the prepayment assumption; (e) provide information necessary for the computation of tax imposed on the transfer of a Residual Certificate to a Person that is not a Permitted Transferee, or an agent (including a broker, nominee or other middleman) of a Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted Transferee is the record holder of an interest (the reasonable cost of computing and furnishing such information may be charged to the Person liable for such tax); (f) to the extent that they are under its control conduct matters relating to such assets at all times that any Certificates are outstanding so as to maintain the status of each REMIC created hereunder under the REMIC Provisions; (g) not knowingly or intentionally take any action or omit to take any action that would cause the termination of REMIC status or result in the imposition of tax on any REMIC; (h) pay the amount of any federal or state tax, including prohibited transaction taxes as described below, imposed on any such REMIC prior to its termination when and as the same shall be due and payable (but such obligation shall not prevent the Master Servicer or any other appropriate Person from contesting any such tax in appropriate proceedings and shall not prevent the Master Servicer from withholding payment of such tax, if permitted by law, pending the outcome of such proceedings); (i) ensure that federal, state or local income tax or information returns shall be signed by the Trustee or such other person as may be required to sign such returns by the Code or state or local laws, regulations or rules; (j) maintain records relating to any such REMIC, including but not limited to the income, expenses, assets and liabilities thereof and the fair market value and adjusted basis of the assets determined at such intervals as may be required by the Code, as may be necessary to prepare the foregoing returns, schedules, statements or information; and (k) as and when necessary and appropriate, represent any such REMIC in any administrative or judicial proceedings relating to an examination or audit by any governmental taxing authority, request an administrative adjustment as to any taxable year of any such REMIC, enter into settlement agreements with any governmental taxing agency, extend any statute of limitations relating to any tax item of any such REMIC, and otherwise act on behalf of any such REMIC in relation to any tax matter or controversy involving it.

To enable the Master Servicer to perform its duties as set forth herein, the Depositor shall provide, or cause to be provided, to the Master Servicer within ten (10) days after the Closing Date all information or data that the Master Servicer requests in writing and determines to be relevant for tax purposes to the valuations and offering prices of the Certificates, including, without limitation, the price, yield, prepayment assumption and projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide to the Master Servicer promptly upon written request therefor, any such additional information or data that the Master Servicer may, from time to time, reasonably request in order to enable the Master Servicer to perform its duties as set forth herein. The Depositor hereby indemnifies the Master Servicer for any losses, liabilities, damages, claims or expenses of the Master Servicer arising from any errors or miscalculations of the Master Servicer that result from any failure of the Depositor to provide, or to cause to be provided, accurate information or data to the Master Servicer on a timely basis.

Section 8.12

Periodic Filings.

The Trustee shall prepare, execute and file all periodic reports required under the Securities Exchange Act of 1934 in conformity with the terms of the “no-action” relief granted by the SEC to issuers of asset-backed securities such as the Certificates.  In connection with the preparation and filing of such periodic reports, the Depositor and the Master Servicer shall timely provide to the Trustee all material information available to them which is required to be included in such reports and not known to them to be in the possession of the Trustee and such other information as the Trustee reasonably may request from either of them and otherwise reasonably shall cooperate with the Trustee. The Trustee shall have no liability with respect to any failure to properly prepare or file such periodic reports resulting from or relating to the Trustee’s inability or failure to obtain any information not resulting from its own negligence or willful misconduct.

ARTICLE 9

TERMINATION

Section 9.1

Termination upon Liquidation or Purchase of all Mortgage Loans.

(a)

Subject to Section 9.3, the obligations and responsibilities of the Depositor, the Master Servicer and the Trustee created hereby with respect to the Trust Fund shall terminate upon the earlier of: 

(i)

the purchase by the Master Servicer or its designee of all Mortgage Loans (including REO Properties not otherwise disposed of pursuant to Section 3.11(i)) remaining in the Trust Fund at a price equal to the sum of (A) 100% of the Stated Principal Balance of each Mortgage Loan that is not a Nonrecoverable Mortgage Loan; (B) the Projected Net Liquidation Value of each Nonrecoverable Mortgage Loan (not including any REO), and (C) the lesser of (x) the appraised value of any REO Property as determined by a real estate broker meeting the qualifications, and applying broker’s price opinion methodology, generally acceptable to residential mortgage servicers, or other property valuation opinion methodology customarily used by residential mortgage servicers with respect to defaulted loans and (y) the Stated Principal Balance of each Mortgage Loan related to any REO Property.  In addition, such purchase price shall include with respect to the Mortgage Loans (including REO Properties) accrued and unpaid interest thereon at the applicable Net Rate, except to the extent the Servicer was not or would not be required to make a P&I Advance hereunder; and 

(ii)

the later of (A) the maturity or other liquidation (or any Advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the disposition of all REO Property and (B) the distribution to Certificateholders of all amounts required to be distributed to them pursuant to this Agreement. In no event shall the trusts created hereby continue beyond the earlier of (i) the expiration of 21 years from the death of the 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, and (ii) the Latest Possible Maturity Date.  

The right to purchase all Mortgage Loans and REO Properties pursuant to clause (i) above shall be conditioned upon the Pool Principal Balance, at the time of any such repurchase, aggregating less than ten percent of the Assumed Principal Balance of the Mortgage Loans as of the Cut-Off Date.

(b)

With respect to any purchase pursuant to subsection (a), upon deposit of the price determined pursuant to subsection (a)(i) in the Distribution Account, the Trustee shall release or cause to be released to the purchaser of each such Mortgage Loan the related Mortgage File and shall execute and deliver such instruments of transfer or assignment prepared by the purchaser of such Mortgage Loan (including appropriate instruments with respect to any REO Property), in each case without recourse, as shall be necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan sold pursuant hereto, and the purchaser of such Mortgage Loan shall succeed to all the Trustee’s right, title and interest in and to such Mortgage Loan and all security and documents related thereto. Such assignment shall be an assignment outright and not for security. The purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all security and documents, free of any further obligation to the Trustee or the Certificateholders with respect thereto.

Section 9.2

Final Distribution on the Certificates.

If on any Determination Date, the Master Servicer determines that there are no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other than the funds in the Collection Account, the Master Servicer shall direct the Trustee promptly to send a final distribution notice to each Certificateholder. If the Master Servicer elects to terminate the Trust Fund pursuant to clause (a) of Section 9.1, at least 20 days prior to the date notice is to be mailed to the affected Certificateholders, the Master Servicer shall notify the Depositor and the Trustee of the date the Master Servicer intends to terminate the Trust Fund and of the applicable repurchase price of the Mortgage Loans and REO Properties.

Notice of any termination of the Trust Fund, specifying the Distribution Date on which Certificateholders may surrender their Certificates for payment of the final distribution and cancellation, shall be given promptly by the Trustee by letter to Certificateholders mailed not earlier than the 10th day and no later than the 15th day of the month next preceding the month of such final distribution. Any such notice shall specify (a) the Distribution Date upon which final distribution on the Certificates will be made upon presentation and surrender of Certificates at the office therein designated, (b) the amount of such final distribution, (c) the location of the office or agency at which such presentation and surrender must be made, and (d) that the Record Date otherwise applicable to such Distribution Date is not applicable, distributions being made only upon presentation and surrender of the Certificates at the office therein specified. The Master Servicer will give such notice to each Rating Agency at the time such notice is given to Certificateholders.

In the event such notice is given, the Master Servicer shall cause all funds in the Collection Account to be remitted to the Trustee for deposit in the Distribution Account on the Business Day prior to the applicable Distribution Date in an amount equal to the final distribution in respect of the Certificates. Upon such final deposit with respect to the Trust Fund and the receipt by the Trustee of a Request for Release therefor, the Trustee shall promptly release to the Master Servicer the Mortgage Files for the Mortgage Loans.

Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to the Certificateholders of each Class, in the order set forth in Section 4.2 hereof, on the final Distribution Date, in the case of the Certificateholders, in proportion to their respective Percentage Interests, with respect to Certificateholders of the same Class, an amount equal to (i) as to each Class of Regular Certificates, the Class Certificate Balance thereof plus accrued interest thereon (or on their Notional Principal Balance, if applicable) in the case of an interest bearing Certificate, and (ii) as to the Residual Certificates, the amount, if any, which remains on deposit in the Distribution Account (other than the amounts retained to meet claims) after application pursuant to clause (i) above.

In the event that any affected Certificateholders shall not surrender Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within six months after the second notice all the applicable Certificates shall not have been surrendered for cancellation, the Trustee 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 funds and other assets which remain a part of the Trust Fund. If within one year after the second notice all Certificates shall not have been surrendered for cancellation, the holder of each of the Class R Certificates shall be entitled to all unclaimed funds and other assets of the REMICs held for distribution to such Certificateholders, which remain subject hereto.

Section 9.3

Additional Termination Requirements.

(a)

In the event the Master Servicer exercises its purchase option as provided in Section 9.1, the Trust Fund shall be terminated in accordance with the following additional requirements, unless the Trustee has been supplied with an Opinion of Counsel, at the expense of the Master Servicer, to the effect that the failure to comply with the requirements of this Section 9.3 will not (i) result in the imposition of taxes on “prohibited transactions” on any REMIC as defined in section 860F of the Code, or (ii) cause any REMIC to fail to qualify as a REMIC at any time that any Certificates are outstanding:

(i)

The Trustee shall sell all of the assets that constitute the Trust Fund for cash as provided in Section 9.01(a)(i), and, within 90 days of such sale, shall distribute to (or credit to the account of) the Holders of the Certificates the proceeds of such sale together with other cash on hand (less amounts retained to meet claims) in complete liquidation of the Trust Fund and each REMIC created hereunder; and

(ii)

The Trustee shall attach a statement to the final federal income tax return for each REMIC created hereunder stating that pursuant to Treasury Regulation § 1.860F-1, the first day of the 90-day liquidation period for each such REMIC was the date on which the Trustee sold the assets of the Trust Fund pursuant to Section 9.01(a)(i).

(b)

By their acceptance of the Certificates, the Holders thereof hereby authorize the Trustee to undertake the above-described actions.

ARTICLE 10

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

BY THE MASTER SERVICER

Section 10.1

Duties of the Master Servicer.

(a)

The Certificateholders, by their purchase and acceptance of the Certificates, appoint Saxon Mortgage, Inc. as Master Servicer.  For and on behalf of the Depositor, the Trustee and the Certificateholders, the Master Servicer shall master service the Mortgage Loans in accordance with the provisions of this Agreement.

(b)

The Master Servicer shall supervise and provide oversight of the Servicer’s performance of its obligations hereunder.  The Master Servicer shall, for the benefit of Certificateholders, use its reasonable best efforts to enforce the obligation of the Servicer hereunder, and, upon its obtaining actual knowledge of an Event of Default, shall take such action as is required by Section 7.1.

(c)

To the extent the Servicer defaults in its obligation to timely make an P&I Advance required hereunder, upon notice of such failure, the Master Servicer shall be required to make such P&I Advance by the related Distribution Date.  All rights of reimbursement otherwise available to the Servicer hereunder in respect of any Advance shall be fully available to the Master Servicer.

(d)

The Master Servicer shall, in the manner and at such times specified, prepare and furnish the reports described in Sections 4.4 and 4.5 hereof.

Section 10.2

Compensation to the Master Servicer.

The Master Servicer shall be entitled to the Master Servicing Fee on each Distribution Date from amounts on deposit in the Master Servicer Custodial Account.  If, on any Distribution Date such fee is not distributed as provided herein, the Master Servicer shall be entitled to direct the Trustee to pay the Master Servicing Fee to the Master Servicer by withdrawal from the Distribution Account.  The Master Servicer shall be entitled to deposit account earnings as provided in Section 3.5 as additional master servicing compensation.

Section 10.3

Termination of Master Servicer; Trustee to Act.

Each of the following shall constitute an event of default by the Master Servicer (a "Master Servicer Event of Default") of its obligations hereunder:

(a)

any failure of the Master Servicer to remit to the Trustee any payment required to be made to the Trustee for the benefit of Certificateholders under the terms of this Agreement within five days of the due date therefor;

(b)

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) contained herein 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 51% of the Voting Rights; or

(c)

a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and 1iabilities 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

(d)

the Master Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceeding of or relating to the Master Servicer or relating to all or substantially all its property; or

(e)

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. 

The rights and obligations of the Master Servicer under this Agreement may be terminated only upon the occurrence of a Master Servicer Event of Default.  If a Master Servicer Event of Default described in clauses (a) through (d) of this Section 10.3 shall occur, then, and in each and every such case, so long as such Master Servicer Event of Default shall not have been remedied, the Trustee may, and at the direction of the Holders of Certificates entitled to at least 51% of the Voting Rights, the Trustee shall, by notice in writing to the Master Servicer, terminate all the rights and obligations of the Master Servicer hereunder, other than its rights as a Certificateholder.  If a Master Servicer Event of Default described in clause (e) of this Section 10.3 shall occur, the Trustee may terminate, by notice in writing to the Master Servicer, all the rights and obligations of the Master Servicer hereunder, 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 hereunder, 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 10.3 (provided, however, that the Master Servicer shall continue to be entitled to receive all amounts accrued or owing to it hereunder 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 hereunder, 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.

As successor Master Servicer, the Trustee shall be entitled to the fees to which the Master Servicer would have been entitled if the Master Servicer had continued to act as such.  The Trustee shall also, as successor Master Servicer, be entitled to all the protections and indemnification afforded to the Master Servicer hereunder.

Notwithstanding the above, upon the occurrence of a Master Servicer Event of Default, if the Trustee shall be unwilling so to act, or shall, if it is unable so to act or, if the Holders of Certificates entitled to at least 51% of the Voting Rights so request in writing to the Trustee, promptly appoint, or petition a court of competent jurisdiction to appoint, any established mortgage loan servicing institution acceptable to each Rating Agency and having a net worth of not less than $15,000,000 as the successor to the Master Servicer. No appointment of a successor to the Master Servicer shall be effective until the assumption by such successor of all future responsibilities, duties and liabilities of the Master Servicer hereunder.  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 Fund as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted the Master Servicer hereunder.  The Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.

Section 10.4

Notification to Certificateholders.

Upon any termination pursuant to Section 10.3 hereof, or any appointment of a successor to the Master Servicer, the Trustee shall give prompt written notice thereof to the Certificateholders at their respective addresses appearing in the Certificate Register.

ARTICLE 11

MISCELLANEOUS PROVISIONS

Section 11.1

Amendment.

This Agreement may be amended from time to time by the Depositor, Servicer, the Master Servicer and the Trustee without the consent of any of the Certificateholders (i) to cure any ambiguity or mistake, (ii) to cause the provisions herein to conform to or be consistent with or in furtherance of the statements made with respect to the Certificates, the Trust Fund or this Agreement in any disclosure document pursuant to which any Certificates were offered; to correct any defective provision herein or to supplement any provision herein which may be inconsistent with any other provision herein, (iii) to add to the duties of the Depositor, the Servicer or the Master Servicer, (iv) to add any other provisions with respect to matters or questions arising hereunder or (v) to modify, alter, amend, add to or rescind any of the terms or provisions contained in this Agreement; provided that any action pursuant to clauses (iv) or (v) above shall not, as evidenced by an Opinion of Counsel delivered to the Trustee (which Opinion of Counsel shall not be an expense of the Trustee or the Trust Fund), adversely affect in any material respect the interests of any Certificateholder; provided, however, that the amendment shall not be deemed to adversely affect in any material respect the interests of the Certificateholders if the Person requesting the amendment obtains a letter from each Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificates; it being understood and agreed that any such letter in and of itself will not represent a determination as to the materiality of any such amendment and will represent a determination only as to the credit issues affecting any such rating.  The Trustee, Servicer, the Depositor and the Master Servicer also may at any time and from time to time amend this Agreement without the consent of the Certificateholders to modify, eliminate or add to any of its provisions to such extent as shall be necessary or helpful to (i) maintain the qualification of each REMIC created hereunder as a REMIC under the Code, (ii) avoid or minimize the risk of the imposition of any tax on any such REMIC pursuant to the Code that would be a claim at any time prior to the final redemption of the Certificates or (iii) comply with any other requirements of the Code, provided that the Trustee have been provided an Opinion of Counsel, which opinion shall be an expense of the party requesting such opinion but in any case shall not be an expense of the Trustee or the Trust Fund, to the effect that such action is necessary or helpful to, as applicable, (i) maintain such qualification, (ii) avoid or minimize the risk of the imposition of such a tax or (iii) comply with any such requirements of the Code.

This Agreement may also be amended from time to time by the Depositor, Servicer, the Master Servicer and the Trustee with the consent of the Holders of a Majority in Interest of each Class of Certificates affected thereby for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders of Certificates; provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, payments 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, as to such Class, Percentage Interests aggregating 66%, or (iii) reduce the aforesaid percentages 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.

Notwithstanding any contrary provision of this Agreement, the Trustee shall not consent to any amendment to this Agreement unless it shall have first received an Opinion of Counsel, which opinion shall not be an expense of the Trustee or the Trust Fund, to the effect that such amendment will not cause the imposition of any tax on any REMIC created hereunder or the Certificateholders or cause any REMIC created hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding.

Promptly after the execution of any amendment to this Agreement requiring the consent of Certificateholders, the Trustee shall furnish written notification of the substance or a copy of such amendment to each Certificateholder and each Rating Agency.

It shall not be necessary for the consent of Certificateholders under this Section 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.

Nothing in this Agreement shall require the Trustee to enter into an amendment without receiving an Opinion of Counsel (which Opinion shall not be an expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i) such amendment is permitted and is not prohibited by this Agreement and that all requirements for amending this Agreement have been complied with; and (ii) either (A) the amendment does not adversely affect in any material respect the interests of any Certificateholder or (B) the conclusion set forth in the immediately preceding clause (A) is not required to be reached pursuant to this Section 11.1.

Section 11.2

Recordation of Agreement; Counterparts.

This 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 Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Master Servicer at its expense, but only upon direction a majority of the Certificateholders to the effect that such recordation materially and beneficially affects the interests of the Certificateholders.  However, the foregoing sentence notwithstanding, the Servicer may provide copies hereof to counsel, judicial officers, and government agencies, or may cause this Agreement to be recorded, in any jurisdiction in which, in the Servicer’s judgment, such disclosure or recording may facilitate foreclosure or other recovery with respect to any one or more of the Mortgage Loans.  

For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed (by facsimile or otherwise) 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 11.3

Governing Law.

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section 11.4

Intention of Parties.

It is the express intent of the parties hereto that the conveyance of the Trust Fund by the Depositor to the Trustee be, and be construed as, absolute sales thereof to the Trustee. It is, further, not the intention of the parties that such conveyances be deemed a pledge thereof by the Depositor to the Trustee.  However, in the event that, notwithstanding the intent of the parties, such assets are held to be the property of the Depositor, or if for any other reason this Agreement is held or deemed to create a security interest in such assets, then (i) this Agreement shall be deemed to be a security agreement within the meaning of the Uniform Commercial Code of the State of New York and (ii) the conveyance provided for in this Agreement shall be deemed to be an assignment and a grant by the Depositor to the Trustee, for the benefit of the Certificateholders, of a security interest in all of the assets that constitute the Trust Fund, whether now owned or hereafter acquired.

The Depositor, for the benefit of the Certificateholders, shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Trust Fund, 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 Agreement. The Depositor shall arrange for filing any Uniform Commercial Code continuation statements in connection with any security interest granted or assigned to the Trustee for the benefit of the Certificateholders.

Section 11.5

Notices.

(a)

The Trustee shall use its best efforts to promptly provide notice to each Rating Agency with respect to each of the following of which it has actual knowledge:

1.

any material change or amendment to this Agreement;

2.

the occurrence of any Event of Default that has not been cured;

3.

the resignation or termination of the Servicer, the Master Servicer or the Trustee and the appointment of any successor;

4.

the repurchase or substitution of Mortgage Loans pursuant to Section 2.3 hereof;

5.

the final payment to Certificateholders; and

6.

any rating action involving the long-term credit rating of the Master Servicer, which notice shall be made by first-class mail within two Business Days after the Trustee gains actual knowledge thereof.

In addition, the Trustee shall promptly furnish to each Rating Agency copies of the following:

1.

Each report to Certificateholders described in Section 4.5 hereof;

2.

Each annual statement as to compliance described in Section 3.16 hereof;

3. 

Each annual independent public accountants’ servicing report described in Section 3.17 hereof; and

4.

Any notice of a purchase of a Mortgage Loan pursuant to Section 2.2, 2.3 or 3.11 hereof.

(b)

All directions, demands, authorizations, consents, waivers, communications and notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by first class mail, facsimile or courier to the applicable Notice Address, or in the case of the Rating Agencies, the address specified therefor in the definition corresponding to the name of such Rating Agency. Notices to Certificateholders shall be deemed given when mailed, first class postage prepaid, to their respective addresses appearing in the Certificate Register.

Section 11.6

Severability of Provisions.

If any one or more of the covenants, agreements, provisions or terms of this 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 this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof.

Section 11.7

Assignment.

Notwithstanding anything to the contrary contained herein, except as provided in Section 6.02, this Agreement may not be assigned by the Master Servicer without the prior written consent of the Trustee and Depositor.

Section 11.8

Limitation on Rights of Certificateholders.

The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the trust created hereby, nor entitle such Certificateholder’s legal representative or heirs to claim an accounting or to take any action or commence any proceeding in any court for a petition or winding up of the trust created hereby, or 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 provided herein) or in any manner otherwise control the operation and management of the Trust Fund, or the obligations of the parties hereto, nor shall anything herein set forth or contained in the terms of the Certificates be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third party by reason of any action taken by the parties to this Agreement pursuant to any provision hereof.

No Certificateholder shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of an Event of Default and of the continuance thereof, as herein provided, and unless the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates shall also have made written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder 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 60 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 being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Agreement, except in the manner herein provided and for the common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 11.8, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Section 11.9

Inspection and Audit Rights.

The Servicer agrees that, on reasonable prior notice, it will permit and will cause each Subservicer to permit any representative of the Depositor or the Trustee during the Servicer’s normal business hours, to examine all the books of account, records, reports and other papers of the Servicer relating to the Mortgage Loans, to make copies and extracts therefrom, to cause such books to be audited by independent certified public accountants selected by the Depositor or the Trustee and to discuss its affairs, finances and accounts relating to the Mortgage Loans with its officers, employees and independent public accountants (and by this provision the Master Servicer hereby authorizes said accountants to discuss with such representative such affairs, finances and accounts), all at such reasonable times and as often as may be reasonably requested. Any out-of-pocket expense incident to the exercise by the Depositor or the Trustee of any right under this Section 11.9 shall be borne by the party requesting such inspection; all other such expenses shall be borne by the Servicer or the related Subservicer.

Section 11.10

Certificates Nonassessable and Fully Paid.

It is the intention of the Depositor that Certificateholders shall not be personally liable for obligations of the Trust Fund, that the interests in the Trust Fund represented by the Certificates shall be nonassessable for any reason whatsoever, and that the Certificates, upon due authentication thereof by the Trustee pursuant to this Agreement, are and shall be deemed fully paid.

Section 11.11

Limitations on Actions; No Proceedings.

(a)

Other than pursuant to this Agreement, or in connection with or incidental to the provisions or purposes of this Agreement, the trust created hereunder shall not (i) issue debt or otherwise borrow money, (ii) merge or consolidate with any other entity reorganize, liquidate or transfer all or substantially all of its assets to any other entity, or (iii) otherwise engage in any activity or exercise any power not provided for in this Agreement.

(b)

Notwithstanding any prior termination of this Agreement, the Trustee, the Servicer, the Master Servicer and the Depositor shall not, prior to the date which is one year and one day after the termination of this Agreement, acquiesce, petition or otherwise invoke or cause any Person to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Depositor or the Trust Fund under any federal or state bankruptcy, insolvency or other similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Depositor or the Trust Fund or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of the Depositor or the Trust Fund.

*          *          *

IN WITNESS WHEREOF, the Depositor, Master Servicer, Servicer and the Trustee, have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

SAXON ASSET SECURITIES COMPANY

By:      /s/ Bradley D. Adams                          

Bradley D. Adams

Senior Vice President

SAXON MORTGAGE, INC.

By:      /s/ Bradley D. Adams                             

            Bradley D. Adams

            Senior Vice President

SAXON MORTGAGE SERVICES, INC.

By:     /s/ Dennis Stowe                                    

           Dennis Stowe

DEUTSCHE BANK TRUST COMPANY AMERICAS

By:     /s/ Barbara Campbell                            

          Barbara Campbell

          Assistant Secretary

By:     /s/ Barbara Rowe                                  

           Barbara Rowe

           Associate

Schedule I

MORTGAGE LOAN SCHEDULE (BY GROUP)

[Maintained in a separate binder at McKee Nelson LLP, Washington, D.C.]

Schedule II

PASS-THROUGH RATE SCHEDULE

Set forth below are the Pass-Through Rates for each interest bearing Class of Certificates:

Class AF-1 Pass-Through Rate: With respect to any Distribution Date, the least of:

(x)

One Month LIBOR, plus 0.12% per annum; 

(y)

the Group I Net WAC Cap for such Distribution Date; and

(z)

the Maximum Cap Rate for such Distribution Date.

Class AF-2 Pass-Through Rate: With respect to each Distribution Date, the lesser of: 

(x)

4.02% per annum; and

(y)

the Group I Net WAC Cap for such Distribution Date.

Class AF-3 Pass-Through Rate: With respect to each Distribution Date, the lesser of:

(x)

4.61% per annum; and

(y)

the Group I Net WAC Cap for such Distribution Date.

Class AF-4 Pass-Through Rate: With respect to each Distribution Date, the lesser of:

(x)

5.38% per annum; and

(y)

the Group I Net WAC Cap for such Distribution Date.

Class AF-5 Pass-Through Rate: With respect to each Distribution Date, the lesser of:

(x)

5.99% per annum plus, after the Initial Optional Termination Date, 

0.50%; and

(y)

the Group I Net WAC Cap for such Distribution Date.

Class AF-6 Pass-Through Rate: With respect to each Distribution Date, the lesser of:

(x)

5.62% per annum plus, after the Initial Optional Termination Date, 

0.50%; and

(y)

the Group I Net WAC Cap for such Distribution Date.

Class A-IO Pass-Through Rate: With respect to each Distribution Date, 5.25% per annum.

Class AV Pass-Through Rate: With respect to each Distribution Date, the least of:

(x)

One Month LIBOR plus, in the case of any Distribution Date on or prior to the Initial Optional Termination Date, 0.26% per annum, or in the case of any Distribution Date that occurs after the Initial Optional Termination Date, plus 0.52% per annum; 

(y)

the Group II Net WAC Cap for such Distribution Date; and

(z)

the Maximum Cap Rate for such Distribution Date.

Class B Pass-Through Rate: With respect to each Distribution Date, the least of:

(x)

One Month LIBOR plus, in the case of any Distribution Date on or prior to the Initial Optional Termination Date, 1.80% per annum, or in the case of any Distribution Date that occurs after the Initial Optional Termination Date, plus 2.70% per annum;

(y)

the Subordinate Net WAC Cap for such Distribution Date; and

(z)

the Maximum Cap Rate for such Distribution Date.

Class M-1 Pass-Through Rate:  With respect to each Distribution Date, the least of:

(x)

One Month LIBOR plus, in the case of any Distribution Date on or prior to the Initial Optional Termination Date, 0.60% per annum, or in the case of any Distribution Date that occurs after the Initial Optional Termination Date, plus 0.90% per annum; 

(y)

the Subordinate Net WAC Cap for such Distribution Date; and

(z)

the Maximum Cap Rate for such Distribution Date.

Class M-2 Pass-Through Rate:  With respect to each Distribution Date, the least of:

(x)

One Month LIBOR plus, in the case of any Distribution Date on or prior to the Initial Optional Termination Date, 1.15% per annum, or in the case of any Distribution Date that occurs after the Initial Optional Termination Date, plus 1.725% per annum;

(y)

the Subordinate Net WAC Cap for such Distribution Date; and

(z)

the Maximum Rate Cap for such Distribution Date.

Schedule III

REMIC STRUCTURE

The Trustee shall make elections to treat each of the segregated pools of assets described below as a real estate mortgage investment conduit (each a “REMIC” or, in the alternative, “REMIC 1,” “REMIC 2,” “REMIC 3,” “REMIC 4,” and “REMIC 5,” REMIC 5 also being referred to as the “Upper-Tier REMIC”).  The Certificates, other than the Class R Certificate and the Class P Certificate, represent ownership of the regular interests in the Upper-Tier REMIC for purposes of the REMIC Provisions.  The Class P Certificate represents an interest in the Trust Fund but does not represent an interest in any REMIC created hereunder.  The Class P Certificate shall be entitled to distributions of prepayment penalties received by the Trustee with respect to the Mortgage Loans to the extent such prepayment penalties do not represent Pledged Prepayment Penalties. In addition, the Offered Certificates, other than the Class A-IO Certificates, represent the right to receive payments from the Basis Risk Reserve Fund.  The Class R Certificates represents ownership of the sole class of residual interest in each of REMIC 1, REMIC 2, REMIC 3, REMIC 4 and the Upper-Tier REMIC for purposes of the REMIC Provisions.

The Upper-Tier REMIC shall hold as its assets the several classes of uncertificated Lower Tier Interests in REMIC 4, other than the Class LT4-R Interest, and each such Lower Tier Interest is hereby designated as a regular interest in REMIC 4 for purposes of the REMIC provisions.  REMIC 4 shall hold as its assets the several classes of uncertificated Lower Tier Interests in REMIC 3, other than the Class LT3-R Interest, and each such Lower Tier Interest is hereby designated as a regular interest in REMIC 3 for purposes of the REMIC Provisions.  REMIC 3 shall hold as its assets the several classes of uncertificated Lower Tier Interests in REMIC 2, other than the Class LT2-R Interest, and each such Lower Tier Interest is hereby designated as a regular interest in REMIC 2.  REMIC 2 shall hold as its assets the several classes of uncertificated Lower Tier Interests in REMIC 1, other than the Class LT1-R Interest, and each such Lower Tier Interest is hereby designated as a regular interest in REMIC 1.  REMIC 1 shall hold as its assets the property of the Trust Fund other than the (i) Lower Tier Interests in REMIC 1, REMIC 2, REMIC 3 and REMIC 4, (ii) the Pre-Funding Account, (iii) the Basis Risk Reserve Fund and (iv) the prepayment penalties received on the mortgage loans other than the Pledged Prepayment Penalties.

The startup day for each REMIC created hereby for purposes of the REMIC Provisions is the Closing Date.  In addition, for purposes of the REMIC Provisions, the latest possible maturity date for each regular interest in each REMIC created hereby is the Latest Possible Maturity Date.

Definitions 

Capitalized terms used in this Schedule III but not otherwise defined herein or in the Agreement shall have the meaning set forth below:

Adjusted Net Rate:  For any Distribution Date (and the related Accrual Period), the product of (i) 2 and (ii) the weighted average of the interest rates on each of the Corresponding REMIC 4 P&I Interests and the Class LT4-D Interest, computed for this purpose by subjecting the interest rate payable on the Class LT4-D Interest to a cap equal to a per annum rate of 0% and the rate payable on each of the Corresponding REMIC 4 P&I Interests to a cap that corresponds to the per annum rate payable for such Distribution Date on its Corresponding Class of Certificates.

Corresponding Class:  With respect to any Class of REMIC 4 Lower Tier Interest, the Class of Certificates having the same alphanumeric designation as described in the table set out in this Schedule III for REMIC 4.

Corresponding REMIC 3-AIO-I:  With respect to any REMIC 3 AIO-I Interest, the Class of REMIC 2 AIO-I Interest having the same numeric designation.

Corresponding REMIC 3-AIO-II:  With respect to any REMIC 3 AIO-II Interest, the Class of REMIC 2 AIO-II Interest having the same numeric designation.

Corresponding REMIC 4 P&I Interests:  With respect to any Class of Certificates other than the Class A-IO, Class C, Class R, and Class P Certificates the class of REMIC 4 Lower Tier Interests having the same alphanumeric designation.

REMIC 2 AIO-I Interest:  Each of the REMIC 2 Lower Tier Interests having “AIO-I” in their class designation.

REMIC 2 AIO-II Interest:  Each of the REMIC 2 Lower Tier Interests having “AIO-II” in their class designation.

REMIC 3 AIO-I Interest:  Each of the REMIC 3 Lower Tier Interests having an “AIO-I” in their class designation.

REMIC 3 AIO-II Interest:  Each of the REMIC 3 Lower Tier Interests having an “AIO-II” in their class designation.

REMIC 1 

The following table sets forth (or describes) the class designation, interest rate, and initial principal amount for each class of interests in REMIC 1, each such Class a “REMIC 1 Lower Tier Interest.”

	REMIC 1 Lower

Tier Class

Designation

	REMIC 1

Lower Tier

Interest Rate

	Initial Class

Principal Amount

	Class LT1-Initial-Grp I

	(1)

	$149,032,093.00

	Class LT1-Subsequent-Grp I

	(2)

	$  50,000,000.00

	Class LT1-Initial-Grp II

	(3)

	$305,967,907.00

	Class LT1-Subsequent-Grp II

	(4)

	$100,000,000.00

	Class LT1-CIO-Grp I

	(5)

	(5)

	Class LT1-CIO-Grp II

	(6)

	(6)

	Class LT1-R

	(7)

	(7)

(1)

The interest rate for Class LT1-Initial-Grp I for each Distribution Date (and the related Accrual Period) is a per annum rate equal to the weighted average of the Net Rates for the related Due Period for the Mortgage Loans in Group I that are not Subsequent Mortgage Loans.  

(2)

The interest rate for Class LT1-Subsequent-Grp I for each of the first four Distribution Dates (and the related Accrual Periods) is a per annum rate of 0%, and for each Distribution Date (and the related Accrual Period) thereafter, is per annum rate equal to the weighted average of the Net Rates for the related Due Period for the Mortgage Loans in Group I that are Subsequent Mortgage Loans.  

(3)

The interest rate for Class LT1-Initial-Grp II for each Distribution Date (and the related Accrual Period) is a per annum rate equal to the weighted average of the Net Rates for the related Due Period for the Mortgage Loans in Group II that are not Subsequent Mortgage Loans.

(4)

The interest rate for Class LT1-Subsequent-Grp II for each of the first four Distribution Dates (and the related Accrual Periods) is a per annum rate of 0%, and for each Distribution Date (and the related Accrual Period) thereafter, is per annum rate equal to the weighted average of the Net Rates for the related Due Period for the Mortgage Loans in Group II that are Subsequent Mortgage Loans.

(5)

The Class LT1-CIO-Grp I Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each of the first four Distribution Dates, the Class LT1-CIO Interest shall be entitled to 100% of the interest payable on each Subsequent Mortgage Loan in Group I for the related Due Period, and for each Distribution Date thereafter, shall not be entitled to any distributions. 

(6)

The Class LT1-CIO-Grp II Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each of the first four Distribution Dates, the Class LT1-CIO-Grp II Interest shall be entitled to the interest payable on each Subsequent Mortgage Loan in Group II and for each Distribution Date thereafter, shall not be entitled to any distributions.     

(7)

The Class LT1-R Interest is the sole class of residual interest in REMIC 1.  It does not have an interest rate or a principal balance.  

On each Distribution Date, the Interest Funds for Group I and Group II in each case determined without regard to Pledged Prepayment Penalties, shall be distributed with respect to the REMIC 1 Lower Tier Interests at the rates described above.  

On each Distribution Date, the Principal Funds for Group I shall be distributed first to Class LT1-Initial-Grp I until its principal balance equals the aggregate of the Stated Principal Balances as of the related Determination Date of the Mortgage Loans that are not Subsequent Mortgage Loans, and then to the Class LT1-Subsequent-Grp I until the principal balances of such interests are reduced to zero.  All Realized Losses and all Pledged Prepayment Penalties shall be allocated between the Class LT1-Initial-Grp I and Class LT1-Subsequent-Grp I Interests in that same manner.  Similarly, on each Distribution Date, the Principal Funds for Group II shall be distributed first to Class LT1-Initial-Grp II until its principal balance equals the aggregate of the Stated Principal Balances as of the related Determination Date of the Mortgage Loans that are not Subsequent Mortgage Loans, and then to the Class LT1-Subsequent-Grp II until the principal balances of such interests are reduced to zero.  All Realized Losses and all Pledged Prepayment Penalties shall be allocated between the LT1-Initial-Grp II and Class LT1-Subsequent-Grp II Interests in that same manner.

REMIC 2

The following table sets forth (or describes) the class designation, interest rate, and initial principal amount for each class of interest in REMIC 2, each such class a “REMIC 2 Lower Tier Interest.”  

	REMIC 2 Lower Tier

Class Designation

	REMIC 2

Lower Tier

Interest Rate

	Initial Class

Principal Amount

	Class LT2-I

	(1)

	$212,472,093.00

	Class LT2-AIO-I-1

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-3

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-4

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-5

	(1)

	$   1,142,000.00

	Class LT2-AIO-I-6

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-7

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-8

	(1)

	$   2,286,000.00

	Class LT2-AIO-I-9

	(1)

	$   4,571,000.00

	Class LT2-AIO-I-10

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-11

	(1)

	$   2,286,000.00

	Class LT2-AIO-I-12

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-13

	(1)

	$   2,285,000.00

	Class LT2-AIO-I-14

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-15

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-16

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-17

	(1)

	$   1,143,000.00

	Class LT2-AIO-I-18

	(1)

	$   2,287,000.00

	Class LT2-AIO-I-19

	(1)

	$   3,427,000.00

	Class LT2-AIO-I-20

	(1)

	$   1,983,000.00

	Class LT2-AIO-I-21

	(1)

	$   3,520,000.00

	Class LT2-AIO-I-22

	(1)

	$   3,280,000.00

	Class LT2-AIO-I-23

	(1)

	$   3,080,000.00

	Class LT2-AIO-I-24

	(1)

	$   2,870,000.00

	Class LT2-AIO-I-25

	(1)

	$   2,690,000.00

	Class LT2-AIO-I-26

	(1)

	$   2,500,000.00

	Class LT2-AIO-I-27

	(1)

	$   2,350,000.00

	Class LT2-AIO-I-28

	(1)

	$   2,190,000.00

	Class LT2-AIO-I-29

	(1)

	$   2,050,000.00

	Class LT2-AIO-I-30

	(1)

	$   1,910,000.00

	Class LT2-AIO-I-31

	(1)

	$   1,790,000.00

	Class LT2-AIO-I-32

	(1)

	$   1,680,000.00

	Class LT2-AIO-I-33

	(1)

	$   1,560,000.00

	Class LT2-AIO-I-34

	(1)

	$ 22,250,000.00

	 	 	

	Class LT2-II

	(2)

	$232,496,907.00

	Class LT2-AIO-II-1

	(2)

	$   1,142,000.00

	Class LT2-AIO-II-2

	(2)

	$   4,496,000.00

	Class LT2-AIO-II-3

	(2)

	$   3,863,000.00

	Class LT2-AIO-II-4

	(2)

	$   4,963,000.00

	Class LT2-AIO-II-5

	(2)

	$   3,136,000.00

	Class LT2-AIO-II-6

	(2)

	$   3,625,000.00

	Class LT2-AIO-II-7

	(2)

	$   3,546,000.00

	Class LT2-AIO-II-8

	(2)

	$   3,496,000.00

	Class LT2-AIO-II-9

	(2)

	$   3,455,000.00

	Class LT2-AIO-II-10

	(2)

	$ 41,749,000.00

	 	 	

	Class LT2-CIO

	(3)

	(3)

	Class LT2-R

	(4)

	(4)

(1)

The interest rate for this Class for any Distribution Date (and the related Accrual Period) is a per annum rate equal to the weighted average of the rates at which interest accrues on the Class LT1-Initial-Grp I and Class LT1-Subsequent-Grp I Interests for the related Accrual Period.

(2)

The interest rate for this Class for any Distribution Date (and the related Accrual Period) is a per annum rate equal to the weighted average of the rates at which interest accrues on the Class LT1-Initial-Grp II and Class LT1-Subsequent-Grp II Interests for the related Accrual Period.

(3)

The Class LT2-CIO Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each Distribution Date, the Class LT2-CIO shall be entitled to all amounts distributed with respect to the Class LT1-CIO-Grp I and Class LT1-CIO-Grp II Interests.

(4)

The Class LT2-R Interest is the sole class of residual interest in REMIC 2.  It does not have an interest rate or a principal balance.  

On each Distribution Date, interest distributed with respect to the REMIC 1 Lower Tier Interests shall be distributed on the REMIC 2 Lower Tier Interests at the rates described above. 

On each Distribution Date, the principal distributed with respect to the REMIC 1 Lower Tier Interests that is allocable to Group I shall be distributed sequentially, first to Class LT2-I until its principal balance is reduced to zero, then to each of the REMIC 2 AIO-I Interests in ascending order of their numerical designations, and the principal distributed with respect to the REMIC 1 Lower Tier Interests that is allocable to Group II shall be distributed sequentially, first to Class LT2-II until its principal balance is reduced to zero, then to each of the REMIC 2 AIO-II Interests in ascending order of their numerical designations.  All Realized Losses attributable to those REMIC 1 Lower Tier Interests shall be allocated among the REMIC 2 Lower Tier Interests in the same manner in which principal is distributed among the REMIC 2 Lower Tier Interests.

On each Distribution Date, Pledged Prepayment Penalties distributed with respect to Group I shall be allocated to the Class LT2-I Interest, and Pledged Prepayment Penalties distributed with respect to Group II shall be allocated to the Class LT2-II Interest.

REMIC 3

	REMIC 3 Lower Tier

Class Designation

	 	REMIC 3

Lower Tier

Interest Rate

	 	Initial Class

Principal 

Amount

	Class LT3-Senior IA

	 	(1)

	 	$    1,654,700.00

	Class LT3-Senior IB

	 	(1)

	 	$ 163,815,300.00

	Class LT3-Senior IIA

	 	(2)

	 	$    3,397,100.00

	Class LT3-Senior IB

	 	(2)

	 	$336,312,900.00

	Class LT3-Sub IA

	 	(3)

	 	$       998,200.00

	Class LT3-Sub IB

	 	(3)

	 	$  98,821,800.00

	Class LT3-AIO-I-1

	 	(4)

	 	(4)

	Class LT3-AIO-I-3

	 	(5)

	 	(5)

	Class LT3-AIO-I-4

	 	(6)

	 	(6)

	Class LT3-AIO-I-5

	 	(7)

	 	(7)

	Class LT3-AIO-I-6

	 	(8)

	 	(8)

	Class LT3-AIO-I-7

	 	(9)

	 	(9)

	Class LT3-AIO-I-8

	 	(10)

	 	(10)

	Class LT3-AIO-I-9

	 	(11)

	 	(11)

	Class LT3-AIO-I-10

	 	(12)

	 	(12)

	Class LT3-AIO-I-11

	 	(13)

	 	(13)

	Class LT3-AIO-I-12

	 	(14)

	 	(14)

	Class LT3-AIO-I-13

	 	(15)

	 	(15)

	Class LT3-AIO-I-14

	 	(16)

	 	(16)

	Class LT3-AIO-I-15

	 	(17)

	 	(17)

	Class LT3-AIO-I-16

	 	(18)

	 	(18)

	Class LT3-AIO-I-17

	 	(19)

	 	(19)

	Class LT3-AIO-I-18

	 	(20)

	 	(20)

	Class LT3-AIO-I-19

	 	(21)

	 	(21)

	Class LT3-AIO-I-20

	 	(22)

	 	(22)

	Class LT3-AIO-I-21

	 	(23)

	 	(23)

	Class LT3-AIO-I-22

	 	(24)

	 	(24)

	Class LT3-AIO-I-23

	 	(25)

	 	(25)

	Class LT3-AIO-I-24

	 	(26)

	 	(26)

	Class LT3-AIO-I-25

	 	(27)

	 	(27)

	Class LT3-AIO-I-26

	 	(28)

	 	(28)

	Class LT3-AIO-I-27

	 	(29)

	 	(29)

	Class LT3-AIO-I-28

	 	(30)

	 	(30)

	Class LT3-AIO-I-29

	 	(31)

	 	(31)

	Class LT3-AIO-I-30

	 	(32)

	 	(32)

	Class LT3-AIO-I-31

	 	(33)

	 	(33)

	Class LT3-AIO-I-32

	 	(34)

	 	(34)

	Class LT3-AIO-I-33

	 	(35)

	 	(35)

	Class LT3-AIO-I-34

	 	(36)

	 	(36)

	 	 	 	 	 
	Class LT3-AIO-II-1

	 	(37)

	 	(37)

	Class LT3-AIO-II-2

	 	(38)

	 	(38)

	Class LT3-AIO-II-3

	 	(39)

	 	(39)

	Class LT3-AIO-II-4

	 	(40)

	 	(40)

	Class LT3-AIO-II-5

	 	(41)

	 	(41)

	Class LT3-AIO-II-6

	 	(42)

	 	(42)

	Class LT3-AIO-II-7

	 	(43)

	 	(43)

	Class LT3-AIO-II-8

	 	(44)

	 	(44)

	Class LT3-AIO-II-9

	 	(45)

	 	(45)

	Class LT3-AIO-II-10

	 	(46)

	 	(46)

	Class LT3-CIO

	 	(47)

	 	(47)

	Class LT3-R

	 	(48)

	 	(48)

(1)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Group I Net WAC Cap.

(2)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Group II Net WAC Cap.

(3)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Subordinate Net WAC Cap.

(4)

The Class LT3-AIO-I-1 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first Distribution Date, the Class LT3-AIO-I-1 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-1 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(5)

The Class LT3-AIO-I-3 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first three Distribution Dates, the Class LT3-AIO-I-3 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-3 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(6)

The Class LT3-AIO-I-4 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first four Distribution Dates, the Class LT3-AIO-I-4 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-4 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(7)

The Class LT3-AIO-I-5 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first five Distribution Dates, the Class LT3-AIO-I-5 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-5 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(8)

The Class LT3-AIO-I-6 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first six Distribution Dates, the Class LT3-AIO-I-6 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-6 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(9)

The Class LT3-AIO-I-7 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first seven Distribution Dates, the Class LT3-AIO-I-7 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-7 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(10)

The Class LT3-AIO-I-8 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first eight Distribution Dates, the Class LT3-AIO-I-8 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-8 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(11)

The Class LT3-AIO-I-9 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first nine Distribution Dates, the Class LT3-AIO-I-9 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-9 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(12)

The Class LT3-AIO-I-10 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 10 Distribution Dates, the Class LT3-AIO-I-10 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-10 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(13)

The Class LT3-AIO-I-11 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 11 Distribution Dates, the Class LT3-AIO-I-11 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-11 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(14)

The Class LT3-AIO-I-12 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 12 Distribution Dates, the Class LT3-AIO-I-12 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-12 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(15)

The Class LT3-AIO-I-13 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 13 Distribution Dates, the Class LT3-AIO-I-13 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-13 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(16)

The Class LT3-AIO-I-14 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 14 Distribution Dates, the Class LT3-AIO-I-14 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-14 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(17)

The Class LT3-AIO-I-15 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 15 Distribution Dates, the Class LT3-AIO-I-15 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-15 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(18)

The Class LT3-AIO-I-16 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 16 Distribution Dates, the Class LT3-AIO-I-16 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-16 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(19)

The Class LT3-AIO-I-17 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 17 Distribution Dates, the Class LT3-AIO-I-17 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-17 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(20)

The Class LT3-AIO-I-18 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 18 Distribution Dates, the Class LT3-AIO-I-18 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-18 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(21)

The Class LT3-AIO-I-19 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 19 Distribution Dates, the Class LT3-AIO-I-19 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-19 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(22)

The Class LT3-AIO-I-20 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 20 Distribution Dates, the Class LT3-AIO-I-20 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-20 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(23)

The Class LT3-AIO-I-21 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 21 Distribution Dates, the Class LT3-AIO-I-21 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-21 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(24)

The Class LT3-AIO-I-22 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 22 Distribution Dates, the Class LT3-AIO-I-22 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-22 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(25)

The Class LT3-AIO-I-23 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 23 Distribution Dates, the Class LT3-AIO-I-23 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-23 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(26)

The Class LT3-AIO-I-24 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 24 Distribution Dates, the Class LT3-AIO-I-24 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-24 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(27)

The Class LT3-AIO-I-25 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 25 Distribution Dates, the Class LT3-AIO-I-25 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-25 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(28)

The Class LT3-AIO-I-26 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 26 Distribution Dates, the Class LT3-AIO-I-26 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-26 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(29)

The Class LT3-AIO-I-27 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 27 Distribution Dates, the Class LT3-AIO-I-27 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-27 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(30)

The Class LT3-AIO-I-28 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 28 Distribution Dates, the Class LT3-AIO-I-28 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-28 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(31)

The Class LT3-AIO-I-29 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 29 Distribution Dates, the Class LT3-AIO-I-29 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-29 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(32)

The Class LT3-AIO-I-30 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 30 Distribution Dates, the Class LT3-AIO-I-30 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-30 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(33)

The Class LT3-AIO-I-31 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 31 Distribution Dates, the Class LT3-AIO-I-31 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-31 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(34)

The Class LT3-AIO-I-32 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 32 Distribution Dates, the Class LT3-AIO-I-32 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-32 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(35)

The Class LT3-AIO-I-33 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 33 Distribution Dates, the Class LT3-AIO-I-33 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-33 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(36)

The Class LT3-AIO-I-34 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 34 Distribution Dates, the Class LT3-AIO-I-34 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-I-34 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.  

(37)

The Class LT3-AIO-II-1 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 25 Distribution Dates, the Class LT3-AIO-II-1 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-1 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(38)

The Class LT3-AIO-II-2 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 26 Distribution Dates, the Class LT3-AIO-II-2 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-2 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(39)

The Class LT3-AIO-II-3 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 27 Distribution Dates, the Class LT3-AIO-II-3 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-3 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(40)

The Class LT3-AIO-II-4 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 28 Distribution Dates, the Class LT3-AIO-II-4 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-4 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(41)

The Class LT3-AIO-II-5 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 29 Distribution Dates, the Class LT3-AIO-II-5 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-5 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(42)

The Class LT3-AIO-II-6 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 30 Distribution Dates, the Class LT3-AIO-II-6 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-6 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(43)

The Class LT3-AIO-II-7 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 31 Distribution Dates, the Class LT3-AIO-II-7 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-7 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(44)

The Class LT3-AIO-II-8 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 32 Distribution Dates, the Class LT3-AIO-II-8 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-8 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(45)

The Class LT3-AIO-II-9 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 33 Distribution Dates, the Class LT3-AIO-II-9 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-9 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(46)

The Class LT3-AIO-II-10 Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For the first 34 Distribution Dates, the Class LT3-AIO-II-10 Interest shall be entitled to receive distributions of interest accrued on the Class LT2-AIO-II-10 Interest for the related Accrual Period at a per annum rate equal to 5.25% and shall not be entitled thereafter to any distributions.

(47)

The Class LT3-CIO Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each Distribution Date, the Class LT3-CIO shall be entitled to all amounts distributed with respect to the Class LT2-CIO Interest.

(48)

The Class LT3-R Interest is the sole class of residual interest in REMIC 3.  It does not have an interest rate or a principal balance.

On each Distribution Date, interest distributed with respect to the REMIC 2 Lower Tier Interests shall be distributed on the REMIC 3 Lower Tier Interests at the rates described above, provided however, that a portion of the interest that accrues at the rate described above on the Class LT3-Sub IA and Class LT3-Sub IB Interests shall be deferred and added to the principal balance of such Classes.  For any Distribution Date, the portion so deferred shall equal the increase occurring on such Distribution Date in the Overcollateralization Amount.  Interest so deferred shall be applied to make principal payments on the other Lower Tier Interests in REMIC 3.  

On each Distribution Date principal distributed with respect to the REMIC 2 Lower Tier Interests, and any interest deferred on the Class LT3-Sub IA and Class LT3-Sub IB Interests, shall be distributed, and any Realized Losses shall be allocated, among the REMIC 3 Lower Tier Interests in a manner such that immediately following such Distribution Date:

(a)

the principal balance of the Class LT3-Senior IA Interest equals 1% of the sum of Certificate Principal Balances of Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6;

(b)

the principal balance of the Class LT3-Senior IB Interest equals 99% of the sum of Certificate Principal Balances of Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6;

(c)

the principal balance of the Class LT3-Senior IIA Interest equals 1% of the Class AV Certificate Principal Balance;

(d)

the principal balance of the Class LT3-Senior IIB Interest equals 99% of the Class AV Certificate Principal Balance;

(e)

the principal balance of the Class LT3-Sub IA Interest equals 1% of the sum of (x) the Overcollateralization Amount and (y) the Certificate Principal Balances of the Subordinate Certificates; and 

(f)

the principal balance of the Class LT3-Sub IB Interest equals 99% of the sum of (x) the Overcollateralization Amount and (y) the Certificate Principal Balances of the Subordinate Certificates.

On each Distribution Date, Pledged Prepayment Penalties distributed on the REMIC 2 Lower Tier Interests shall be allocated proportionally among the REMIC 3 Lower Tier Interests in accordance with their relative principal balances immediately before such Distribution Date.

REMIC 4

The following table sets forth (or describes) the class designation, interest rate, and principal amount for each class interest in REMIC 4, each such class a “REMIC 4 Lower Tier Interest.”  

	REMIC 4 Lower

Tier Class

Designation

	REMIC 4

Lower Tier

Interest Rate

	Initial Class

Principal

Amount

	Corresponding

Class

of Certificates

	Class LT4-D

	(1)

	$302,500,000.00

	N/A

	Class LT4-AF-1

	(2)

	$  31,770,000.00

	AF-1

	Class LT4-AF-2

	(2)

	$    7,235,000.00

	AF-2

	Class LT4-AF-3

	(2)

	$  18,245,000.00

	AF-3

	Class LT4-AF-4

	(2)

	$    5,885,000.00

	AF-4

	Class LT4-AF-5

	(2)

	$  11,325,000.00

	AF-5

	Class LT4-AF-6

	(2)

	$    8,275,000.00

	AF-6

	Class LT4-AV

	(3)

	$169,855,000.00

	AV-1

	Class LT4-M-1

	(4)

	$  19,665,000.00

	M-1

	Class LT4-M-2

	(4)

	$  15,880,000.00

	M-2

	Class LT4-B

	(4)

	$  14,365,000.00

	B

	Class LT4-A-IO

	(5)

	(5)

	A-IO

	Class LT4-CIO

	(6)

	(6)

	C

	Class LT4-R

	(7)

	(7)

	N/A

(1)

The interest rate for this Class for any Distribution Date (and the related Accrual Period) is a per annum rate equal to the weighted average of the rates at which interest accrues on the Class LT3-Senior IA, Class LT3-Senior IIA and Class LT3-Sub IA Interests.

(2)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Group I Net WAC Cap.

(3)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Group II Net WAC Cap.

(4)

For any Distribution Date (and the related Accrual Period), this Class shall bear interest at a per annum rate equal to the Subordinate Net WAC Cap.

(5)

The Class LT4-A-IO Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each Distribution Date, the Class LT4-A-IO Interest shall be entitled to all interest distributed with respect to the REMIC 3 AIO-I Interests and the REMIC 3 AIO-II Interests.

(6)

The Class LT4-CIO Interest is an interest only Lower Tier Interest, and it does not have a principal balance.  For each Distribution Date, the Class LT4-CIO shall be entitled to all amounts distributed with respect to the Class LT3-CIO Interest.

(7)

The Class LT4-R Interest is the sole class of residual interest in REMIC 4.  It does not have an interest rate or a principal balance.  

On each Distribution Date, interest distributed with respect to the REMIC 3 Lower Tier Interests shall be distributed on the REMIC 4 Lower Tier Interests at the rates described above, provided however, that a portion of the interest that accrues at the rate described above on the Class LT4-D Interest shall be deferred and added to the principal balance of the Class LT4-D Interest.  For any Distribution Date, the portion so deferred shall equal 50% of the increase occurring on such Distribution Date in the Overcollateralization Amount.  Interest so deferred shall be applied to make principal payments on the other Lower Tier Interests in REMIC 4.

On each Distribution Date principal distributed with respect to the REMIC 3 Lower Tier Interests, and any interest deferred on the Class LT4-D Interest, shall be distributed, and any Realized Losses shall be allocated, among the REMIC 4 Lower Tier Interests in a manner such that immediately following such Distribution Date:

(g)

the principal balance of the Class LT4-AF-1 Interest equals 50% of the Class AF-1 Certificate Principal Balance;

(h)

the principal balance of the Class LT4-AF-2 Interest equals 50% of the Class AF-2 Certificate Principal Balance;

(i)

the principal balance of the Class LT4-AF-3 Interest equals 50% of the Class AF-3 Certificate Principal Balance;

(j)

the principal balance of the Class LT4-AF-4 Interest equals 50% of the Class AF-4 Certificate Principal Balance;

(k)

the principal balance of the Class LT4-AF-5 Interest equals 50% of the Class AF-5 Certificate Principal Balance;

(l)

the principal balance of the Class LT4-AF-6 Interest equals 50% of the Class AF-6 Certificate Principal Balance;

(m)

the principal balance of the Class LT4-AV Interest equals 50% of the Class AV-1 Certificate Principal Balance;

(n)

the principal balance of the Class LT4-M-1 Interest equals 50% of the Class M-1 Certificate Principal Balance;

(o)

the principal balance of the Class LT4-M-2 Interest equals 50% of the Class M-2 Certificate Principal Balance;

(p)

the principal balance of the Class LT4-B Interest equals 50% of the sum of the Class B Certificate Principal Balance; and

(q)

the principal balance of the Class LT4-D Interest equals the excess of the Assumed Principal Balance over the sum of the balances of the Class LT4-AF-1, Class LT4-AF-2, Class LT4-AF-3, Class LT4-AF-4, Class LT4-AF-5, Class LT4-AF-6, Class LT4-AV, Class LT4-M-1, Class LT4-M-2 and Class LT4-B Interests.

On each Distribution Date, Pledged Prepayment Penalties distributed on the REMIC 3 Lower Tier Interests shall be allocated proportionally among the REMIC 4 Lower Tier Interests in accordance with their relative principal balances immediately before such Distribution Date.

REMIC 5

The following table sets forth (or describes) the class designation, interest rate, and principal amount for each class of the REMIC 5 Interests.  

	REMIC 5 Certificate

Class Designation

	REMIC 5

Certificate

Interest Rate

	Initial Class

Principal Amount

	Class AF-1

	(1)

	$  63,540,000.00

	Class AF-2

	(2)

	$  14,470,000.00

	Class AF-3

	(3)

	$  36,490,000.00

	Class AF-4

	(4)

	$  11,770,000.00

	Class AF-5

	(5)

	$  22,650,000.00

	Class AF-6

	(6)

	$  16,550,000.00

	Class AV

	(7)

	$339,710,000.00

	Class M-1

	(8)

	$  39,330,000.00

	Class M-2

	(9)

	$  31,760,000.00

	Class B

	(10)

	$  28,730,000.00

	Class A-IO

	(11)

	(11)

	Class C

	(12)

	(12)

	Class R

	(13)

	(13)

(1)

The Class AF-1 Pass-Through Rate.

(2)

The Class AF-2 Pass-Through Rate.

(3)

The Class AF-3 Pass-Through Rate.

(4)

The Class AF-4 Pass-Through Rate.

(5)

The Class AF-5 Pass-Through Rate.

(6)

The Class AF-6 Pass-Through Rate.

(7)

The Class AV Pass-Through Rate.

(8)

The Class M-1 Pass-Through Rate.

(9)

The Class M-2 Pass-Through Rate.

(10)

The Class B Pass-Through Rate.

(11)

The Class A-IO Certificates are interest only certificates and do not have a principal balance.  For each Distribution Date, the Class A-IO Certificate shall be entitled to all interest distributed with respect to the REMIC 4 Class LT4-A-IO Interest.

(a)

The Class C Certificate is an interest only certificate and does not have a principal balance.  For each Distribution Date the Class C Certificate shall be entitled to (i) all amounts distributed with respect to the Class LT4-CIO Interest, and (ii) a specified portion of the interest accrued during the related Accrual Period on each Corresponding REMIC 4 P&I Interest and the Class LT4-D Interest at a per annum rate equal to the positive difference, if any, between (I) the weighted average of the interest rates on the Corresponding REMIC 4 P&I Interests, and (II) the Adjusted Net Rate.

For each Distribution Date, interest accrued on the Class C Certificate during the related Accrual Period shall be deferred to the extent of the increase in the Overcollateralization Amount for such Distribution Date.  Any interest so deferred shall not itself bear interest.  

(12)

The Class R Certificate evidences ownership of the Class LT1-R, Class LT2-R, Class LT3-R and Class LT4-R Interests and also represents the sole class of residual interest in REMIC 5.  It does not have an interest rate or a principal balance.

For any Distribution Date, distributions shall be made and realized losses shall be allocated among the Certificates in the manner provided in the Agreement.

EXHIBIT A

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 TRUST 2002-2

MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 2002-2

CLASS A__-1 CERTIFICATE

THE PRINCIPAL OF THIS 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 CERTIFICATE REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX PURPOSES.

	DENOMINATION: $            

	INITIAL PRINCIPAL BALANCE: $            

	 	 
	PASS-THROUGH RATE:  

	REGISTERED HOLDER: CEDE & CO.

	Certificate No. A  -1-1

	CUSIP No: 805564      

	 	 

This Certificate evidences 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.

The Registered Holder named above is the owner of the Percentage Interest calculated as set forth below in the above mentioned Class of Certificates issued by the Trust (the “Trust”) created pursuant to a Pooling and Servicing Agreement, dated as of July 1, 2002 (the “Pooling and Servicing Agreement”), among Saxon Asset Securities Company (herein called the “Depositor,” which term includes any successor entity under the Pooling and Servicing Agreement), Saxon Mortgage, Inc., as Master Servicer, Saxon Mortgage Services, Inc., as Servicer, and Deutsche Bank Trust Company Americas, as Trustee, a summary of certain of the pertinent provisions of which is set forth herein.  To the extent not defined herein, capitalized terms used herein have the meanings assigned in the Pooling and Servicing Agreement.  This Certificate is issued under and is subject to the terms, provisions and conditions of the Pooling and Servicing Agreement to which Pooling and Servicing 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 2002-2 (herein called the “Certificates”) and represents a Percentage Interest in the above mentioned Class of Certificates equal to the quotient, expressed as a percentage, obtained by dividing the Denomination of this Certificate specified above by the Initial Principal Balance specified above of the above mentioned Class of Certificates.  The Certificates are issued in multiple Classes designated as specifically set forth in the Pooling and Servicing 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 Pooling and Servicing Agreement, 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”) is entitled to receive an amount equal to the product of such Person’s Percentage Interest and the Distribution Amount (as defined in the Pooling and Servicing Agreement) with respect to the above mentioned Class of Certificates 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 in August 2002.  All amounts distributable with respect to 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.

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 Pooling and Servicing Agreement.  As provided in the Pooling and Servicing Agreement, withdrawals from the Distribution 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 Fund.

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 Pooling and Servicing 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 Pooling and Servicing Agreement.

The Trustee will duly and punctually make distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing 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 Pooling and Servicing Agreement.

The Pooling and Servicing Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor and the Trustee and the rights of the Holders of the Certificates under the Pooling and Servicing Agreement at any time by the Depositor, 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 Pooling and Servicing 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 Pooling and Servicing 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 Pooling and Servicing 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 Trustee or such other offices or agencies appointed by the Trustee for that purpose and such other locations provided in the Pooling and Servicing Agreement, duly endorsed by or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Trustee 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 Pooling and Servicing 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 through the book-entry facilities of such Clearing agency or its nominee in minimum denominations of $25,000 and integral multiples of $1,000 in excess thereof.

As provided in the Pooling and Servicing 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 Trustee 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.

The Depositor, the Master Servicer, the Trustee and the Paying Agent and any agent of the Depositor, the Master Servicer, the Trustee and the Paying Agent may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or any such agent shall be affected by notice to the contrary.

The Pooling and Servicing Agreement provides that the obligations created thereby will terminate upon the payment to the Holders of all Certificates of all amounts held by the Trustee and required to be paid to such Holders pursuant to the Pooling and Servicing Agreement or the last to occur of (a) the final payment or other liquidation (or any advance made with respect thereto) of the last Mortgage Loan in the Trust Fund, (b) the disposition of all property acquired in respect of any Mortgage Loan remaining in the Trust Fund and (c) at any time when a qualified liquidation of the Trust Fund is effected as described in the Pooling and Servicing Agreement.

The Pooling and Servicing Agreement also provides that (i) on and after the Initial Optional Termination Date, the Master Servicer may purchase the Mortgage Loans then remaining in the Trust Fund and apply the proceeds of such sale to effect early retirement of the Certificates and (ii) under certain circumstances relating to the qualification of any 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 Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Pooling and Servicing Agreement or be valid for any purpose.

THIS CERTIFICATE AND THE POOLING AND SERVICING 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 Pooling and Servicing Agreement, and the Trustee shall be liable hereunder only in respect of the assets of the Trust.

IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed under its official seal.

Dated: July ___, 2002

DEUTSCHE BANK TRUST COMPANY AMERICAS

AS TRUSTEE

BY:                                                           

Authorized Officer

[SEAL]

ATTEST:

CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE CLASS A__-1 CERTIFICATES REFERRED TO IN THE WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.

Dated: July ___, 2002

DEUTSCHE BANK TRUST COMPANY AMERICAS

AS TRUSTEE

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         UNIF GIFT MIN ACT       Custodian...........

(Cus)(Minors)

TEN ENT.     as tenants by the entireties              Under Uniform Gifts to Minors Act

JT TEN.     as joint tenants with rights of               ..............................

              survivorship and not as                                              [State]

              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.

EXHIBIT B

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 TRUST 2002-2

MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 2002-2

CLASS B CERTIFICATE

THE PRINCIPAL OF THIS 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 CERTIFICATE REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX PURPOSES.

THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

	

DENOMINATION: $             

	

INITIAL PRINCIPAL BALANCE: $            

	 	 
	PASS-THROUGH RATE:   

	REGISTERED HOLDER: CEDE & CO.

	Certificate No. B-1

	CUSIP No: 805564      

	 	 

This Certificate evidences 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.

The Registered Holder named above is the owner of the Percentage Interest calculated as set forth below in the above mentioned Class of Certificates issued by the Trust (the “Trust”) created pursuant to a Pooling and Servicing Agreement, dated as of July 1, 2002 (the “Pooling and Servicing Agreement”), among Saxon Asset Securities Company (herein called the “Depositor,” which term includes any successor entity under the Pooling and Servicing Agreement), Saxon Mortgage, Inc., as Master Servicer, Saxon Mortgage Services, Inc., as Servicer, and Deutsche Bank Trust Company Americas, as Trustee, a summary of certain of the pertinent provisions of which is set forth herein.  To the extent not defined herein, capitalized terms used herein have the meanings assigned in the Pooling and Servicing Agreement.  This Certificate is issued under and is subject to the terms, provisions and conditions of the Pooling and Servicing Agreement to which Pooling and Servicing 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 2002-2 (herein called the “Certificates”) and represents a Percentage Interest in the above mentioned Class of Certificates equal to the quotient, expressed as a percentage, obtained by dividing the Denomination of this Certificate specified above by the Initial Principal Balance specified above of the above mentioned Class of Certificates.  The Certificates are issued in multiple Classes designated as specifically set forth in the Pooling and Servicing 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 Pooling and Servicing Agreement, 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”) is entitled to receive an amount equal to the product of such Person’s Percentage Interest and the Distribution Amount (as defined in the Pooling and Servicing Agreement) with respect to the above mentioned Class of Certificates 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 in August 2002.  All amounts distributable with respect to 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.

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 Pooling and Servicing Agreement.  As provided in the Pooling and Servicing Agreement, withdrawals from the Distribution 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 Fund.

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 Pooling and Servicing 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 Pooling and Servicing Agreement.

The Trustee will duly and punctually make distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing 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 Pooling and Servicing Agreement.

The Pooling and Servicing Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor and the Trustee and the rights of the Holders of the Certificates under the Pooling and Servicing Agreement at any time by the Depositor, 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 Pooling and Servicing 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 Pooling and Servicing 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 Pooling and Servicing 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 Trustee or such other offices or agencies appointed by the Trustee for that purpose and such other locations provided in the Pooling and Servicing Agreement, duly endorsed by or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Trustee 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 Pooling and Servicing 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 through the book-entry facilities of such Clearing agency or its nominee in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof.

As provided in the Pooling and Servicing 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 Trustee 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.

The Depositor, the Master Servicer, the Trustee and the Paying Agent and any agent of the Depositor, the Master Servicer, the Trustee and the Paying Agent may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or any such agent shall be affected by notice to the contrary.

The Pooling and Servicing Agreement provides that the obligations created thereby will terminate upon the payment to the Holders of all Certificates of all amounts held by the Trustee and required to be paid to such Holders pursuant to the Pooling and Servicing Agreement or the last to occur of (a) the final payment or other liquidation (or any advance made with respect thereto) of the last Mortgage Loan in the Trust Fund, (b) the disposition of all property acquired in respect of any Mortgage Loan remaining in the Trust Fund and (c) at any time when a qualified liquidation of the Trust Fund is effected as described in the Pooling and Servicing Agreement.

The Pooling and Servicing Agreement also provides that (i) on and after the Initial Optional Termination Date, the Master Servicer may purchase the Mortgage Loans then remaining in the Trust Fund and apply the proceeds of such sale to effect early retirement of the Certificates and (ii) under certain circumstances relating to the qualification of any 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 Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Pooling and Servicing Agreement or be valid for any purpose.

THIS CERTIFICATE AND THE POOLING AND SERVICING 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 Pooling and Servicing Agreement, and the Trustee shall be liable hereunder only in respect of the assets of the Trust.

IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed under its official seal.

Dated: July ___, 2002

DEUTSCHE BANK TRUST COMPANY AMERICAS

AS TRUSTEE

BY:                                                                      

           Authorized Officer

[SEAL]

ATTEST:

CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE CLASS B CERTIFICATES REFERRED TO IN THE WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.

Dated: July ___, 2002

DEUTSCHE BANK TRUST COMPANY AMERICAS

AS TRUSTEE

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          UNIF GIFT MIN ACT     Custodian............

(Cus)(Minors)

TEN ENT.     as tenants by the entireties           Under Uniform Gifts to Minors Act

JT TEN.     as joint tenants with rights of            .....................................

                 survivorship and not as                                            [State]

                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.  

EXHIBIT C

FORM OF INITIAL CERTIFICATION OF TRUSTEE

July __, 2002

Deutsche Bank Trust Company Americas, as Trustee

1761 East St. Andrew Place

Santa Ana, California 92705

Saxon Asset Securities Company

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  President

Saxon Mortgage, Inc., as Master Servicer

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  President

SAXON ASSET SECURITIES COMPANY

MORTGAGE LOAN ASSET BACKED

SECURITIES, SERIES 2002-2

Ladies and Gentlemen:

In accordance with Section 2.3(a) of the Standard Terms of Custody Agreement (June 2000 Edition) (the “Standard Terms”) incorporated into the Custody Agreement, dated as of July __, 2002 (together with the Standard Terms, the “Custody Agreement”), between Deutsche Bank Trust Company Americas, as trustee (the “Trustee”), and Deutsche Bank Trust Company Americas, as custodian (the “Custodian”), the Custodian hereby certifies that it has received and is holding a Mortgage File with respect to each Mortgage Loan (other than any Mortgage Loan listed on the schedule of exceptions attached hereto) listed on Schedule I (a copy of which is attached hereto) to the Custody Agreement.

In connection therewith, the Custodian has examined each Mortgage File to confirm that:

(i)

no Note, on the face or the reverse side(s) thereof, contains evidence, except for the endorsement to the Custodian, of any unsatisfied claims, liens, security interests, encumbrances or restrictions on transfer;

(ii)

the Note bears an endorsement that appears to be an original either in blank or to the Custodian, as set forth substantially as follows “Without Recourse, pay to the order of Deutsche Bank Trust Company Americas, as Custodian or Trustee”;

(iii)

all documents required to be contained in the Mortgage File are in its possession;

(iv)

such documents have been reviewed by it and appear to relate to such Mortgage Loan and are not torn or mutilated; and

(v)

based on its examination and only as to the foregoing documents, the mortgage information set forth on the Mortgage Loan Schedule accurately reflects information set forth in the Mortgage File and each balance listed as the “Original Balance” on Schedule I to the Custody Agreement is identical to the original principal amount of the corresponding Note (or, if applicable, the amount set forth in a lost note affidavit).

The Custodian further certifies that the Custodian’s review of each Mortgage File included each of the procedures set forth in Section 2.3(a) of the Standard Terms.

The Custodian has not (1) inspected, reviewed or examined 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, any such documents, instruments, securities or other papers have actually been recorded or that any document that appears to be an original is in fact an original, or (2) determined whether any Mortgage File should include any surety or guaranty, 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 Custody Agreement.

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Custodian

By:                                                              

Name:                                                         

Title:                                                           

EXHIBIT D

FORM OF FINAL CERTIFICATION OF TRUSTEE

July __, 2002

Deutsche Bank Trust Company Americas, as Trustee

1761 East St. Andrew Place

Santa Ana, California 92705

Saxon Asset Securities Company

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  President

Saxon Mortgage, Inc., as Master Servicer

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  President

Saxon Mortgage Services, Inc.

4708 Mercantile Drive

Fort Worth, Texas 76137 

Attention:  President

SAXON ASSET SECURITIES COMPANY

MORTGAGE LOAN ASSET BACKED

SECURITIES, SERIES 2002-2

Ladies and Gentlemen:

In accordance with (i) Section 2.02 of the Pooling and Servicing Agreement among Saxon Asset Securities Company, as depositor, Saxon Mortgage, Inc., as master servicer, Saxon Mortgage Services, Inc., as servicer and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”) and (ii) Section 2.3(a) of the Standard Terms of Custody Agreement (June 2000 Edition) (the “Standard Terms”) incorporated into the Custody Agreement, dated as of July 1, 2002 (together with the Standard Terms, the “Custody Agreement”), between the Trustee, and Deutsche Bank Trust Company Americas, as custodian (the “Custodian”), the Custodian hereby certifies that it has received and is holding a Mortgage File with respect to each Mortgage Loan (other than any Mortgage Loan listed on the schedule of exceptions attached hereto) listed on Schedule I (a copy of which is attached hereto) to the Custody Agreement.

In connection therewith, the Custodian has examined each Mortgage File to confirm that:

(vi)

no Note, on the face or the reverse side(s) thereof, contains evidence, except for the endorsement to the Custodian, of any unsatisfied claims, liens, security interests, encumbrances or restrictions on transfer;

(vii)

the Note bears an endorsement that appears to be an original either in blank or to the Custodian, as set forth substantially as follows “Without Recourse, pay to the order of Deutsche Bank Trust Company Americas, as Custodian or Trustee”;

(viii)

all documents required to be contained in the Mortgage File are in its possession;

(ix)

such documents have been reviewed by it and appear to relate to such Mortgage Loan and are not torn or mutilated; and

(x)

based on its examination and only as to the foregoing documents, the mortgage information set forth on the Mortgage Loan Schedule accurately reflects information set forth in the Mortgage File and each balance listed as the “Original Balance” on Schedule I to the Custody Agreement is identical to the original principal amount of the corresponding Note (or, if applicable, the amount set forth in a lost note affidavit).

The Custodian further certifies that the Custodian’s review of each Mortgage File included each of the procedures set forth in Section 2.3(a) of the Standard Terms.

The Custodian has not (1) inspected, reviewed or examined 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, any such documents, instruments, securities or other papers have actually been recorded or that any document that appears to be an original is in fact an original, or (2) determined whether any Mortgage File should include any surety or guaranty, 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 Custody Agreement.

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Custodian

By:                                                            

Name:                                                       

Title:                                                         

EXHIBIT E

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 2002-2 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 [                          ], a [                           ] (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 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 its activities are subject to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a majority of its board of directors is not selected by such governmental unit.

5.

The Transferee agrees to consent to any amendment of the Trust Agreement that shall be deemed necessary by Saxon (upon the advice of counsel to Saxon) to constitute a reasonable arrangement to ensure that no interest in a Residual Certificate will be owned directly or indirectly by a Disqualified Organization. 

6.

The Transferee acknowledges that Section 860E(e) of the Code would impose a substantial tax on the transferor or, in certain circumstances, on an agent for the Transferee, with respect to any transfer of any interest in any Residual Certificate to a Disqualified Organization. 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Pooling and Servicing Agreement, dated as of July 1, 2002, by and among Saxon Asset Securities Company, the Master Servicer and the Trustee. 

IN WI1NESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized representative as of the [__] day of [           ] 200[ ]. 

[NAME OF TRANSFEROR/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 [          ] 200[ ]. 

Notary Public

My commission expires the [         ] day of [                     ] 200[    ].

EXHIBIT F

FORM OF TRANSFEROR CERTIFICATE

[date]

Saxon Asset Securities Company

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Deutsche Bank Trust Company Americas

1761 East St. Andrews Place

Santa Ana, California 92705

Re:      Saxon Asset Securities Trust 2002-2, 

Mortgage Loan Pass-Through Certificates, Series 2002-2  

Ladies and Gentlemen:

In connection with our disposition of the above Certificates we certify that (a) we have not offered or sold any Certificates to, or solicited offers to buy any Certificates from, any person, or otherwise approached or negotiated with any person with respect thereto, in a manner that would be deemed, or taken any other action which would result in, a violation of Section 5 of the Act, (b) to the extent we are disposing of a Class       Certificate, we have no knowledge the Transferee is not a Permitted Transferee and (c) no purpose of the proposed disposition of a Class       Certificate is to impede the assessment or collection of tax.

Very truly yours,

[NAME OF TRANSFEROR]

By:                                                         

EXHIBIT G-1

FORM OF INVESTMENT LETTER [NON-RULE 144A]

[date]

Saxon Asset Securities Company

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Deutsche Bank Trust Company Americas

1761 East St. Andrew Place

Santa Ana, California 92705

Re:      Saxon Asset Securities Trust 2002-2, 

Mortgage Loan Pass-Through Certificates, Series 2002-2  

Ladies and Gentlemen:

In connection with our acquisition of the above-captioned Certificates, we certify that (a) we understand that the Certificates are not being registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws and are being transferred to us in a transaction that is exempt from the registration requirements of the Act and any such laws, (b) we are an “accredited investor”, as defined in Regulation D under the Act, and have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of investments in the Certificates, (c) we have had the opportunity to ask questions of and receive answers from the Depositor concerning the purchase of the Certificates and all matters relating thereto or any additional information deemed necessary to our decision to purchase the Certificates, (d) we are not an employee benefit plan that is subject to the Employee Retirement Income Security Act of 1974, as amended, or a plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any such plan, (e) we are acquiring the Certificates for investment for our own account and not with a view to any distribution of such Certificates (but without prejudice to our right at all times to sell or otherwise dispose of the Certificates in accordance with clause (g) below), (f) we have not offered or sold any Certificates to, or solicited offers to buy any Certificates from, any person, or otherwise approached or negotiated with any person with respect thereto, or taken any other action which would result in a violation of Section 5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any Certificates unless (1) such sale, transfer or other disposition is made pursuant to an effective registration statement under the Act or is exempt from such registration requirements, and if requested, we will at our expense provide an opinion of counsel satisfactory to the addressees of this Certificate that such sale, transfer or other disposition may be made pursuant to an exemption from the Act, (2) the purchaser or transferee of such Certificate has executed and delivered to you a certificate to substantially the same effect as this certificate, and (3) the purchaser or transferee has otherwise complied with any conditions for transfer set forth in the Pooling and Servicing Agreement.

Very truly yours,

[NAME OF TRANSFEREE]

By:                                                      

     Authorized Officer

EXHIBIT G-2

BENEFIT PLAN AFFIDAVIT

Re:

[Trust Information]

Private Certificates 

STATE OF [_________]          )

)ss:

COUNTY/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.

(c)

1.

That I am a duly authorized officer of [Organization], a [State] corporation (the “Purchaser”), whose taxpayer identification number is [                     ], and on behalf of which I have the authority to make this affidavit.

(d)

2.

That the Purchaser is acquiring any of the Private Certificates, each representing an interest in the Trust Fund, for 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”).

(e)

3.

The Purchaser either: 

(i)

is not an employee benefit plan or arrangement subject to Section 406 of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor a person acting on behalf of any such plan or arrangement, nor using the assets of any such plan or arrangement to effect such transfer; 

(ii)

is an insurance company and (A) the Purchaser is acquiring the ERISA Restricted Certificates with funds held in an “insurance company general account” (as defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”), as published in 60 Fed. Reg. 35925 (July 12, 1995)) and (B) and all of the requirements of PTCE 95-60 are met, including the requirement that an ERISA Qualifying Underwriting applies, to exempt the acquisition and holding of the Private Certificates and the transactions in connection with the servicing, management and operation of the Trust Fund from the prohibited transaction rules of ERISA and the Code; or 

(iii)

has provided an Opinion of Counsel obtained at the Transferee’s expense, satisfactory to [                          ].  An Opinion of Counsel with respect to this Benefit Plan Affidavit is an opinion of counsel to the effect that the proposed transfer will not (a) cause the assets of the Trust Fund to be regarded as Plan Assets, (b) give rise to a fiduciary duty under ERISA, on the part of [                ], the Servicer, or the Trustee, or (c) be treated as, or result in, a prohibited transaction under Section 406 or 407 of ERISA or Section 4975 of the Code. 

Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Pooling and Servicing Agreement, dated as of [             ], among [                     ].

[NAME OF PURCHASER]

By:                                                                

                        [TITLE]

EXHIBIT H

FORM OF RULE 144A AGREEMENT-QIB CERTIFICATION 

SAXON ASSET SECURITIES COMPANY

MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 2002-2, CLASS _

[date]

Deutsche Bank Trust Company Americas, as Trustee

1761 East St. Andrew Place

Santa Ana, California 92705

Attention:  Barbara Campbell

Deutsche Bank Trust Company Americas, as Certificate Registrar

1761 East St. Andrew Place

Santa Ana, California 92705

Attention:  Barbara Campbell 

Saxon Mortgage, Inc., as Master Servicer

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  Ernie Bretana

Saxon Asset Securities Company, as Depositor

4951 Lake Brook Drive

Glen Allen, Virginia 23060

Attention:  Ernie Bretana

Ladies and Gentlemen:

In connection with the purchase on the date hereof of the captioned Certificates (the “Purchased Certificates”), the undersigned (the “Transferee”) hereby certifies and covenants to the transferor, Saxon, the Master Servicer, the Certificate Registrar, 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 A. The Transferee is aware that the sale to it is being made in reliance on Rule 144A.

2.

The Transferee understands that the Purchased Certificates have not been registered under the Securities Act or registered or qualified under any state securities laws and that no transfer may be made unless the Purchased Certificates are registered under the Securities Act and under applicable state law or unless an exemption from such registration is available. The Transferee further understands that neither Saxon, the Master Servicer, the Certificate Registrar, the Paying Agent, the Calculation Agent, the Trustee nor the Trust is under any obligation to register the Purchased Certificates or make an exemption from such registration available.

3.

The Transferee is acquiring the Purchased Certificates for its own account or for the account of a “qualified institutional buyer,” and understands that such Purchased Certificates may be resold, pledged or transferred only (a) to a person reasonably believed to be such a qualified institutional buyer that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, or (b) pursuant to another exemption from registration under the Securities Act and under applicable state securities laws. In addition, such transfer may be subject to additional restrictions, as set forth in Section 5.2 of the Pooling and Servicing Agreement.

4.

The Transferee has been furnished with all information that it requested regarding (a) the Purchased Certificates and distributions thereon and (b) the Pooling and Servicing 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 Pooling and Servicing Agreement, dated as of July 1, 2002, by and among Saxon Asset Securities Company, the Master Servicer, the Certificate Registrar 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 [          ] 200[   ].

[NAME OF TRANSFEREE]

By:                                                             

Title:                                                          

EXHIBIT I

REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

                                 

Date

[Addressed to Trustee

or, if applicable, custodian]

In connection with the administration of the mortgages held by you as Trustee under a certain Pooling and Servicing Agreement, dated as of July 1, 2002, among Saxon Asset Securities Company, as Depositor, Saxon Mortgage, Inc., as Master Servicer, Saxon Mortgage Services, Inc., as Servicer, and you, as Trustee (the “Pooling and Servicing Agreement”), the undersigned Master Servicer hereby requests a release of the Mortgage File held by you as Trustee with respect to the following described Mortgage Loan for the reason indicated below.

Mortgagor’s Name:

Address:

Loan No.:

Reason for requesting file:

1.

Mortgage Loan paid in full. (The Master Servicer hereby certifies that all amounts received in connection with the loan have been or will be credited to the Collection Account to the Pooling and Servicing Agreement.)

2.

The Mortgage Loan is being foreclosed.

3.

Mortgage Loan substituted. (The Master Servicer hereby certifies that a Qualifying Substitute Mortgage Loan has been assigned and delivered to you along with the related Mortgage File pursuant to the Pooling and Servicing Agreement.)

4.

Mortgage Loan repurchased. (The Master Servicer hereby certifies that the Purchase Price has been credited to the Collection Account pursuant to the Pooling and Servicing Agreement.)

5.

Other. (Describe)

6.

California Mortgage Loan expected to be paid in full.

The undersigned acknowledges that the above Mortgage File will be held by the undersigned in accordance with the provisions of the Pooling and Servicing Agreement and will be returned to you within ten (10) days of our receipt of the Mortgage File, except if the Mortgage Loan has been paid in full, or repurchased or substituted for a Qualifying Substitute Mortgage Loan (in which case the Mortgage File will be retained by us permanently) and except if the Mortgage Loan is being foreclosed or is a California Mortgage Loan specified in #6 above (in which case the Mortgage File will be returned when no longer required by us for such purpose).

Capitalized terms used herein shall have the meanings ascribed to them in the Pooling and Servicing Agreement.

                                                                 

[Name of Master Servicer]

By:                                                          

     Name:

     Title: Servicing Officer

EXHIBIT J

REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

                               

                 Date

[Addressed to Trustee

or, if applicable, custodian]

In connection with the administration of the mortgages held by you as Trustee under a certain Pooling and Servicing Agreement, dated as of July 1, 2002, among Saxon Asset Securities Company, as Depositor, Saxon Mortgage, Inc., as Master Servicer, Saxon Mortgage Services, Inc., as Servicer, and you, as Trustee (the “Pooling and Servicing Agreement”), the undersigned Master Servicer hereby requests a release of the Mortgage File held by you as Trustee with respect to the following described Mortgage Loan for the reason indicated below.

Mortgagor’s Name:

Address:

Loan No.:

Reason for requesting file:

7.

Mortgage Loan paid in full. (The Master Servicer hereby certifies that all amounts received in connection with the loan have been or will be credited to the Collection Account to the Pooling and Servicing Agreement.)

8.

The Mortgage Loan is being foreclosed.

9.

Mortgage Loan substituted. (The Master Servicer hereby certifies that a Qualifying Substitute Mortgage Loan has been assigned and delivered to you along with the related Mortgage File pursuant to the Pooling and Servicing Agreement.)

10.

Mortgage Loan repurchased. (The Master Servicer hereby certifies that the Purchase Price has been credited to the Collection Account pursuant to the Pooling and Servicing Agreement.)

11.

Other. (Describe)

12.

California Mortgage Loan expected to be paid in full.

The undersigned acknowledges that the above Mortgage File will be held by the undersigned in accordance with the provisions of the Pooling and Servicing Agreement and will be returned to you within 10 days of our receipt of the Mortgage File, except if the Mortgage Loan has been paid in full, or repurchased or substituted for a Qualifying Substitute Mortgage Loan (in which case the Mortgage File will be retained by us permanently) and except if the Mortgage Loan is being foreclosed or is a California Mortgage Loan specified in #6 above (in which case the Mortgage File will be returned when no longer required by us for such purpose).

Capitalized terms used herein shall have the meanings ascribed to them in the Pooling and Servicing Agreement.

                                                                       

[Name of Master Servicer]

By:

                                                                       

Name:

     Title: Servicing Officer

EXHIBIT K

FORM OF REMITTANCE AGENCY AGREEMENT

This Remittance Agency Agreement, dated as of July __, 2002, is made by and among, Saxon Asset Securities Company, as buyer (the “Counterparty”), Saxon Asset Securities Company (“SASCO”) and Deutsche Bank Trust Company Americas (the “Remittance Agent”).

The Counterparty hereby appoints the Remittance Agent, and the Remittance Agent hereby accepts its appointment as agent of the Counterparty in connection with the receipt of $[                    ] (the “Remitted Amount”) in connection with the sale of mortgage-backed securities by Saxon Asset Securities Trust, Series 2002-2 in immediately available funds on the date hereof.  The Counterparty delivers herewith to the Remittance Agent, in escrow pending wire transfer of the Remitted Amount as provided herein, a security release certification (the “Security Release Certification”) referencing the above-mentioned Saxon Asset Securities Trust, Series 2002-2.  Upon receipt by the Remittance Agent of the Remitted Amount on the Counterparty’s behalf, the Counterparty hereby authorizes the Remittance Agent to release the Counterparty’s right, title, interest or claim of any kind with respect to the Mortgage Loans and the related collateral and assets identified in the Security Release Certification by delivering the Security Release Certification to SASCO and such other parties as SASCO may designate.

The Remittance Agent shall wire the Remitted Amount s promptly as reasonably possible pursuant to the Counterparty’s wiring instructions set forth below:

[                                ]

Bank:  [                    ]

ABA:  [                    ]

Acct:   [                    ]

Re:  Saxon Mortgage, Inc.

Attn:   [                    ]

In no event shall the Remitted Amount be remitted to SASCO, Saxon Mortgage, Inc. or any party other than the Counterparty.

The parties agree that if for reasons not arising from the Remittance Agent’s negligence or willful misconduct, the Remittance Agent is unable to wire the Remitted Amount, then the Remittance Agent shall incur no liability for any reasonable delay; provided that the Remittance Agent shall make commercially reasonable efforts to invest such funds on the Counterparty’s behalf, and shall remit the Remitted Amount together with any investment earnings thereof as soon as possible thereafter, and in any event, within 1 Business Day.

In consideration of the execution and delivery of this Remittance Agency Agreement by the Counterparty, SASCO hereby represents and warrants to the Counterparty that the Remitted Amount includes the total amount to which the Counterparty is entitled to receive pursuant to the terms of any and all existing agreements between the Counterparty and SASCO prior to delivering the release set forth in the Security Release Certification (such total amount, the “Required Amount”).  In the event that upon final audit by the Counterparty the Remitted Amount is determined to be less than the Required Amount, SASCO shall pay the difference between the Remitted Amount and the Required Amount to the Counterparty in immediately available funds within two Business Days following notice thereof.

IN WITNESS WHEREOF, the Remittance Agent, the Counterparty and SASCO have caused this Remittance Agency Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Remittance Agent

By                                                                

Name:                                                          

Title:                                                            

Telephone:                                                  

[                                                                         ]

            as Counterparty

By                                                                

Name:                                                          

Title:                                                            

Telephone:                                                  

SAXON ASSET SECURITIES COMPANY

By                                                                

Name:                                                          

Title:                                                            

Telephone:                                                  

EXHIBIT L

FORM OF SECURITY RELEASE CERTIFICATION

Definitions.  As used in this Security Release Certification, the term “Remittance Agency Agreement” shall mean the Remittance Agency Agreement, dated as of July [  ], 2002, among the undersigned financial institution (the “Counterparty”), Saxon Asset Securities Company (“SASCO”), and Deutsche Bank Trust Company Americas (the “Remittance Agent”) relating to Saxon Asset Securities Trust 2002-2.  The term “Pooling and Servicing Agreement” shall mean the Pooling and Servicing Agreement among Saxon Asset Securities Company (“Saxon”), Saxon Mortgage, Inc. (“SMI”) as Master Servicer, Saxon Mortgage Services, Inc. (“SMS”), as Servicer, and the Trustee named therein relating to the said Saxon Asset Securities Trust.

Release.  Simultaneously with receipt by wire transfer of the Remitted Amount as defined in the Remittance Agency Agreement, the Counterparty hereby, without further act, releases any and all right, title, interest, or security interest in the Mortgage Loans identified in the Pooling and Servicing Agreement, together with all of the Counterparty’s rights and interests in and to the related loan files, rights, assets of any kind, and proceeds thereof, related to the Mortgage Loans.  Until payment for such Mortgage Loans is received by the Remittance Agent, the Counterparty’s aforesaid ownership interest therein will remain in full force and effect.

The Counterparty agrees that upon receipt by the Remittance Agent of the Remitted Amount it shall execute and deliver to SMI and such other parties as SMI may designate such further release documents, and file with the appropriate filing officials, as required, any and all documents appropriate to further evidence such release and to reflect such release in appropriate public records.  

IN WITNESS WHEREOF, the Counterparty has caused this Security Release Certification to be executed and delivered by its duly authorized officer as of the date first set forth above.

[                                                                   ]

By                                                                

Name:                                                          

Title:                                                            

Telephone:EXHIBIT 4.1

                                                           CCR&W Draft - 7/23/02

                          COMCERTZ ABS TRUST CERTIFICATES

                               STANDARD TERMS FOR

                                TRUST AGREEMENTS

                          [Name of Trustee], as Trustee

                      Comcertz ABS Corporation, as Depositor

      These Standard Terms for Trust Agreements, dated [o] ("Standard Terms"),
may be incorporated by reference in one or more Trust Agreements, each of which
together with such incorporated Standard Terms shall constitute a Trust
Agreement (each a "Trust Agreement") relating to a particular series of Comcertz
ABS Trust Certificates described in the Prospectus dated [o] and the applicable
Prospectus Supplement. Any such Trust Agreement may be in the form of Exhibit A
hereto or such other form as Comcertz ABS Corporation (the "Depositor") and the
Trustee may approve, such approval to be evidenced by their execution thereof.
All terms defined herein shall have meanings solely with respect to the
particular Trust Agreement in which these Standard Terms are incorporated.
Incorporation of these Standard Terms into a Trust Agreement is for convenience
only to avoid the necessity of physically including the Standard Terms in such
Trust Agreement, and each trust created by a Trust Agreement shall be a legally
separate and distinct trust from any other trust created by any other Trust
Agreement into which these Standard Terms may also be incorporated. These
Standard Terms shall by themselves be of no force and effect, and shall only
have effect as and to the extent incorporated by reference in a Trust Agreement.
Execution hereof by the Trustee and the Depositor is for purposes of
identification only and the absence of such execution shall not affect the
validity of any Trust Agreement or these Standard Terms to the extent
incorporated therein. The Trust Agreement into which these Standard Terms are
incorporated by reference, including the Terms Schedule attached thereto and
made a part thereof and these Standard Terms so incorporated by reference
therein, as amended, modified or supplemented from time to time, shall together
constitute a single Trust Agreement and are referred to herein as the "Trust
Agreement." In the event of a conflict between any Trust Agreement, including
the Terms Schedule attached thereto, and these Standard Terms, the Trust
Agreement shall control.

                                    ARTICLE I

                            DEFINITIONS; CONSTRUCTION

      Section 1.01. Definitions. Except as otherwise specified herein or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of these Standard Terms:

      "Account": As defined in Section 3.06.

      "Trust Administrator": As defined in Section 3.09.

      "Trust Administrator Termination Events": Unless otherwise specified in
the Terms Schedule, the occurrence of any of the following:

      (i) any failure by a trust administrator to remit to the trustee any funds
in respect of collections on the Underlying Securities and Credit Support, if
any, as required under the Trust Agreement, that continues unremedied for five
days after the giving of written notice of such failure to the Trust
Administrator by the Trustee or the Depositor, or to the Trust Administrator,
the Depositor and the Trustee by the Holders of such Certificates evidencing not
less than 25% of the Voting Rights;

      (ii) any failure by a Trust Administrator duly to observe or perform in
any material respect any of its other covenants or obligations under the Trust
Agreement which continues unremedied for thirty days after the
<PAGE>

giving of written notice of such failure to the Trust Administrator by the
Trustee or the Depositor, or to the Trust Administrator, the Depositor and the
Trustee by the Holders evidencing not less than 25% of the Voting Rights; and

      (iii) events of insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings and certain actions by or on behalf of a
Trust Administrator indicating its insolvency or inability to pay its
obligations.

      "Affected Underlying Securities": With respect to any Liquidation Event,
the Underlying Securities affected by an Underlying Security Default,
Disqualified Underlying Securities, or Underlying Securities related to a
Disqualified Transaction.

      "Affected Transaction": As defined in the Swap Agreement.

      "Affiliate": With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

      "Alternative Non-Plan ERISA Restrictions": The restrictions on transfer of
Certificates set forth in Section 5.11(d)(1).

      "Authenticating Agent": As defined in Section 5.10.

      "Available Funds": With respect to any Distribution Date, (i) all amounts
received by the Trustee on or with respect to the Underlying Securities or other
Trust Property plus (ii) all investment income from Permitted Investments plus
(iii) all Swap Amounts, if any, paid to the Trustee by the Swap Counterparty
pursuant to the Swap Agreement, or by the Swap Guarantor pursuant to the Swap
Guarantee, minus (iv) all amounts paid or payable to the Swap Counterparty by
the Trustee pursuant to the Swap Agreement, minus (v) any amounts reimbursable
to the Trustee under Section 10.02(ix), in each case on deposit in the
Certificate Account, and available for distribution, on such Distribution Date.

      "Base Rate": LIBOR, Commercial Paper Rate, Treasury Rate, Federal Funds
Rate, CD Rate or such other Base Rate specified in the Terms Schedule.

      "Benefit Plan": The meaning specified in Section 5.11(d).

      "Book-Entry Certificate": A Certificate represented by a Global Security.

      "Business Day": As specified in the Terms Schedule.

      "Calculation Agent": As specified in the Terms Schedule, if any.

      "Call Date": As defined in Section 5.13.

      "Call Option": As specified in the Terms Schedule.

      "Call Price": As defined in Section 5.13.

      "Callable Series": A Series so designated in the Terms Schedule which
grants one or more specified persons the right to purchase all or a portion of
the Certificates of any given Series.

      "CD Rate": For each Interest Reset Period, the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the Terms Schedule as published in H.15(519) under
the heading "CDs (Secondary Market)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the CD Rate Calculation
Date pertaining to such CD Rate Determination Date, then the "CD Rate" for such
Interest Reset Period will be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the Terms
Schedule as published in Composite Quotations under the heading "Certificates of
Deposit." If by 3:00 p.m., New York City time, on such CD Rate Calculation Date
such rate is not yet published in either H.15(519) or Composite Quotations, then
the "CD Rate" for such Interest Reset Period will be calculated by
<PAGE>

the Calculation Agent for such CD Rate Certificate and will be the arithmetic
mean of the secondary market offered rates as of 10:00 a.m., New York City time,
on such CD Rate Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The City of New York selected
by the Calculation Agent for such CD Rate Certificate for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the Terms
Schedule in a denomination of $5,000,000; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates as
mentioned in this sentence, the "CD Rate" for such Interest Reset Period will be
the same as the CD Rate for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the Initial Pass-Through Rate).

      "CD Rate Calculation Date": With respect to any CD Rate Determination
Date, the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (b) the second Business Day preceding the date any distribution
of interest is required to be made following the applicable Interest Reset Date.

      "CD Rate Certificates": Floating Rate Certificates with a Base Rate equal
to CD Rate.

      "CEDEL": Cedelbank, S.A.

      "Certificate": A certificate in the form attached as Exhibit B, evidencing
a Registered Certificate.

      "Certificate Account": As defined in Section 3.05.

      "Certificate Event of Default": Any "Event of Default" applicable to the
Certificates as specified in the Terms Schedule.

      "Certificate Principal Balance": With respect to a Certificate that is
Outstanding, as determined at any time, the maximum amount that the Holder
thereof is entitled to receive as distributions allocable to principal payments
on the Underlying Securities.

      "Certificate Register" and "Certificate Registrar": As respectively
defined in Section 5.03.

      "Certificates": The securities authorized by, and authenticated and
delivered under, the Trust Agreement and evidenced by a certificate in the form
or forms attached hereto as Exhibit B.

      "Composite Quotations": The daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Securities" published by the Federal
Reserve Bank of New York.

      "Class": A separately denominated class of the Certificates of any Series,
entitled to specified distributions of the Trust Property.

      "Code": The Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.

      "Commercial Paper Rate": For each Interest Reset Period, a rate determined
by the Calculation Agent for such Commercial Paper Rate Certificate as of the
second Business Day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and equal to the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper having the Index Maturity specified in the Terms Schedule, as
such rate shall be published in H.15(519) under the heading "Commercial Paper."
In the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Commercial Paper Rate Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 p.m., New York City
time, on such Commercial Paper Rate Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Commercial
Paper Rate" for such Interest Reset Period shall be the Money Market Yield of
the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time,
on such Commercial Paper Rate Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
such Commercial Paper Rate Certificate for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bonds are rated "AA" or the
equivalent by a nationally recognized rating
<PAGE>

agency; provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as mentioned in this sentence,
the "Commercial Paper Rate" for such Interest Reset Period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Pass-Through Rate).

      "Commercial Paper Rate Calculation Date": With respect to any Commercial
Paper Rate Determination Date, the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (b) the second Business Day
preceding the date any distribution of interest is required to be made following
the applicable Interest Reset Date.

      "Commercial Paper Rate Certificates": Floating Rate Certificates with a
Base Rate equal to Commercial Paper Rate.

      "Commission": The Securities and Exchange Commission, or any successor
agency.

      "Concentrated Underlying Security": Any Underlying Security that on the
Original Issue Date constitutes 10% or more of the total Underlying Securities
held by the Trust with respect to a Series of Certificates.

      "Corporate Trust Office": The Trustee's offices at [o], or such other
addresses as the Trustee may designate from time to time by notice to the
Holders, the Depositor, the Swap Counterparty and the Swap Guarantor.

      "Credit Support": With respect to any Series (or any Class within such
Series), any combination of insurance policies, letters of credit, financial
guaranty, surety bond, credit swap, reserve accounts and other types of rights
or assets designed to support or ensure the servicing and distribution of
amounts due in respect of the Trust Property, which in each case is specified as
such in the applicable Terms Schedule.

      "Credit Support Provider": With respect to any Series (or any Class within
such Series), the bank, financial guarantor, surety company or other financial
institution issuing a letter of credit, financial guaranty, surety bond, credit
swap or other instrument that serves as Credit Support with respect to such
Series or Class, which in each case is specified as such in the applicable Terms
Schedule.

      "Currency": Dollars or Foreign Currency.

      "D&P": Duff & Phelps Credit Rating Co.

      "Definitive Registered Certificate": A Registered Certificate in
definitive, certificated form without coupons attached.

      "Deposited Assets": Collectively, the Underlying Securities, the Swap
Agreement, if any, the Credit Support, if any, and any other assets deposited
with the Trust.

      "Deposited Asset Provider": The relevant person who sold the applicable
Deposited Assets to the Depositor.

      "Depositary": DTC or, if so provided in the Terms Schedule, Euroclear or
CEDEL; or another depositary specified in the Terms Schedule.

      "Depositor": Comcertz ABS Corporation, a Delaware corporation, and any of
its successors or assigns.

      "Depositor Order" or "Depositor Requests": A written order or request,
respectively, signed in the name of the Depositor by any of its Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer, President, a Vice
President, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.

      "Determination Date": A date which is specified in the Terms Schedule and
on which the amount of distributions allocable to the Certificates shall be
determined.

      "Disqualified Credit Support": Any Credit Support with respect to which
(i) the related Credit Support Provider ceases to be an Eligible Issuer and no
means of replacing such Credit Support Provider or otherwise satisfying the
Depositor's reporting obligations under the Exchange Act regarding the related
Credit Support is described in the Terms Schedule; (ii) whether or not the
Credit Support Provider was initially an Eligible Issuer, it
<PAGE>

becomes impossible or impractical for the Depositor to satisfy its reporting
obligations under the Exchange Act regarding the related Credit Support. For
purposes of the foregoing, a Credit Support Provider which is fully guaranteed
by a guarantor who is an Eligible Issuer will be considered an Eligible Issuer.

      "Disqualified Transaction": Any Transaction under a Swap Agreement with
respect to which (i) the Swap Counterparty ceases to be an Eligible Issuer and
no means of replacing such Swap Counterparty or otherwise satisfying the
Depositor's reporting obligations under the Exchange Act regarding such
Transaction is described in the Terms Schedule; (ii) whether or not the related
Swap Counterparty was initially an Eligible Issuer, it becomes impossible or
impractical for the Depositor to satisfy its reporting obligations under the
Exchange Act regarding such Transaction; or (iii) that is a credit swap
transaction with respect to which the Deliverable Obligation is a Disqualified
Underlying Security. For purposes of the foregoing, a Swap Counterparty which is
fully guaranteed by a guarantor who is an Eligible Issuer will be considered an
Eligible Issuer.

      "Disqualified Underlying Security": Any (i) Concentrated Underlying
Security, the issuer of which ceases to be an Eligible Issuer or (ii) any
Underlying Security other than a Concentrated Underlying Security, the issuer of
which ceases to be an Eligible Issuer or a Reporting Issuer, in each case where
no additional means of providing current information regarding such Underlying
Security Issuer is described in the Terms Schedule. For purposes of the
foregoing, an Underlying Security Issuer which is fully guaranteed by a
guarantor who is an Eligible Issuer will be considered an Eligible Issuer.

      "Distribution Date": As specified in the Terms Schedule.

      "Dollar" or "$" or "USD": Such currency of the United States as at the
time of payment is legal tender for the payment of public and private debts.

      "DTC": The Depository Trust Company, a limited purpose trust company
organized under the laws of the State of New York, its successors and assigns.

      "Early Termination Date": As defined in the Swap Agreement.

      "Eligible Account": A non-interest bearing account, held in either the
United States or the United Kingdom, in the name of the Trustee for the benefit
of the Trust that is either (i) a segregated account or segregated accounts
maintained with a Federal or State chartered depositary institution or trust
company the short-term and long-term unsecured debt obligations of which (or, in
the case of a depositary institution or trust company that is the principal
subsidiary of a holding company, the short-term and long-term unsecured debt
obligations of such holding company) are rated P-i and Aaa by Moody's, A-1+ and
AAA by S&P, and, if rated by D&P, D-1+ and AAA by D&P at the time any amounts
are held on deposit therein including when such amounts are initially deposited
and all times subsequent or (ii) a segregated trust account or segregated
accounts maintained as a segregated account or as segregated accounts and held
by the Trustee in its Corporate Trust Office in trust for the benefit of the
Holders.

      "Eligible Issuer": (i) the United States government, (ii) any corporation,
limited partnership, trust, limited liability company or other organization,
banking organization or insurance company, in each case which meets the market
capitalization and other requirements for a primary issuance of common stock on
Form S-3 under the Securities Act and is subject to the informational
requirements of the Exchange Act, and which, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (or
another applicable agency pursuant to Section 12(i) of the Exchange Act), (iii)
the Federal National Mortgage Association, Federal Home Loan Mortgage
Corporation or other government sponsored enterprise that has a comparable
market capitalization and which makes information publicly available comparable
to that of Exchange Act reporting companies or (iv) a Multilateral Bank Issuer.

      "ERISA": The Employee Retirement Income Underlying Security Act of 1974,
as amended, including any successor or amendatory statutes.

      "ERISA Benefit Plan": As specified in Section 5.11(d).

      "Euro": As defined in Section 5.08.

      "Euroclear": Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear System.
<PAGE>

      ["Excess Expense Event"]: As defined in Section 9.05(a).

      "Exchange Act": The Securities Exchange Act of 1934, as amended.

      "Exchangeable Series": A series of Certificates that permit the Holders
thereof to exchange the Certificates pursuant to an Optional Exchange.

      "Exchange Rate Agent": Unless otherwise specified in the Terms Schedule,
[o] or an Affiliate or agent of [o] designated by [o].

      "Executive Officer": With respect to any corporation, the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of such corporation; with respect to any partnership, any
general partner thereof.

      "Extraordinary Trust Expense": As defined in Section 10.05(b).

      "Federal Funds Rate": For each Interest Reset Period, the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Federal Funds Rate
Calculation Date (as defined below) pertaining to such Federal Funds Rate
Determination Date, the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If by
3:00 p.m., New York City time, on such Federal Funds Rate Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date made publicly available by the Federal
Reserve Bank of New York which is equivalent to the rate which appears in
H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that
if such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Federal Funds Rate Calculation
Date, the "Federal Funds Rate" for such Interest Reset Period will be the same
as the Federal Funds Rate in effect for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial Pass-Through
Rate). Unless otherwise specified in the Terms Schedule, in the case of a
Federal Funds Rate Certificate that resets daily, the Pass-Through Rate on such
Certificate for the period from and including a Monday to but excluding the
succeeding Monday will be reset by the Calculation Agent for such certificate on
such second Monday (or, if not a Business Day, on the next succeeding Business
Day) to a rate equal to the average of the Federal Funds Rate in effect with
respect to each such day in such week.

      "Federal Funds Rate Calculation Date": With respect to any Federal Funds
Rate Determination Date, the next succeeding Business Day.

      "Federal Funds Rate Certificates": Floating Rate Certificates with a Base
Rate equal to Federal Funds Rate.

      "Fixed Pass-Through Rate": A fixed Pass-Through Rate specified in the
Terms Schedule.

      "Fixed Rate Certificates": Certificates with a Fixed Pass-Through Rate.

      "Floating Rate Certificates": Certificates with a Variable Pass-Through
Rate.

      "Foreign Currency": A currency issued by the government of any country
other than the United States or a composite currency the value of which is
determined by reference to the values of the currencies of any group of
countries.

      "Global Security": A Certificate in global form issued to the Depositary
and (in the case of a Registered Certificate) registered in the name of the
Depositary or its nominee.

      "H.15(519)": The publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publications, published by the Board
of Governors of the Federal Reserve System.

      "Holder": The Person in whose name a Certificate is registered in the
Certificate Register on the applicable Record Date.
<PAGE>

      "Independent": When used with respect to any specified Person means that
the Person (1) is in fact independent of the Depositor, the Swap Counterparty
and the Swap Guarantor and of any Affiliate of any of the foregoing Persons, (2)
does not have any direct or indirect financial interest in the Depositor, the
Swap Counterparty or the Swap Guarantor, or in any Affiliate of any of the
foregoing Persons which is material with respect to such Person and (3) is not
connected with the Depositor, the Swap Counterparty or the Swap Guarantor, as an
officer, employee, promoter, partner, director or person performing similar
functions.

      "Index Maturity": The period of maturity of the instrument or obligation
from which the Base Rate is calculated specified in the Terms Schedule.

      "Initial Pass-Through Rate": Rate applicable to the Certificates from its
Original Issue Date to the first Interest Reset Date as set forth on the face
thereof, the Terms Schedule.

      "Initial Swap Rate Accrual Period": The period from and including the
Original Issue Date to but excluding the next Swap Payment Date.

      "Initial Underlying Security Accrual Period": The period from and
including the Original Issue Date to but excluding the next Underlying Security
Payment Date.

      "Insolvency Law": As defined in Section 10.14.

      "Investment Company Act": The United States Investment Company Act of
1940, as amended, and applicable rules thereunder.

      "LIBOR": Unless otherwise specified in the Terms Schedule, a rate
determined for each Interest Reset Period by the Calculation Agent for any LIBOR
Certificate as follows:

      (i) On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a "LIBOR Determination Date"), the Calculation Agent
for such LIBOR Certificate will determine the arithmetic mean of the offered
rates for deposits in U.S. dollars for the period of the Index Maturity
specified in the Terms Schedule, commencing on such Interest Reset Date, which
appear on the Reuters Screen LIBOR Page at approximately 11:00 a.m., London
time, on such LIBOR Determination Date. "Reuters Screen LIBOR Page" means the
display designated as page "LIBOR" on the Reuters Monitor Money Rates Service
(or such other page may replace the LIBOR page on that service for the purpose
of displaying London interbank offered rates of major banks). If at least two
such offered rates appear on the Reuters Screen LIBOR Page, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Certificate.

      (ii) If fewer than two offered rates appear on the Reuters Screen LIBOR
Page on such LIBOR Determination Date, the Calculation Agent for such LIBOR
Certificate will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with its offered quotations for deposits in U.S.
dollars for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time. If at least
two such quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such quotations. If fewer than two such quotations are
provided, "LIBOR" for such Interest Reset Period will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by the
Calculation Agent for such LIBOR Certificate at approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date for loans in U.S. dollars to
leading European banks, for the period of the specified Index Maturity,
commencing on such Interest Reset Date, and in a principal amount equal to an
amount of not less than $1,000,000 that is representative of a single
transaction in such market at such time; provided, however, that if fewer than
three banks selected as aforesaid by such Calculation Agent are quoting rates as
specified in this sentence, "LIBOR" for such Interest Reset Period will be the
same as LIBOR for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Pass-Through Rate). If LIBOR with
respect to any LIBOR Certificate is indexed to the offered rates for deposits in
a currency other than U.S. dollars, the Terms Schedule will set forth the method
for determining such rate.

      "LIBOR Certificates": Floating Rate Certificates with a Base Rate equal to
LIBOR.
<PAGE>

      "Liquidation Event": Any of the events described in Section 9.02.

      "Maximum Reimbursable Amount": As specified in the Terms Schedule (or any
other amount specified by the party agreeing to indemnify the Trustee).

      "Money Market Yield": A yield calculated in accordance with the following
formula:

                           D x 360 x 100
      Money Markey Yield = -------------
                           360 - (D x M)

      where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and "M" refers to
the actual number of days in the specified Index Maturity.

      "Moody's": Moody's Investors Service, Inc.

      "Multilateral Bank Issuer": The International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the International Finance Corporation, and the
European Bank for Reconstruction and Development, or another multilateral
development bank that has a volume of outstanding securities and files with the
Commission publicly available information comparable to that of Eligible Issuers
described in clause (ii) or (iii) of the definition thereof, and the securities
of which are exempted from registration under the Securities Act.

      "Notional Amount": A notional amount specified in the Terms Schedule with
respect to any Class of Certificates with respect to which distributions of
interest or other distributions are determined but which does not represent a
Certificate Principal Balance.

      "Officers' Certificate": A certificate signed by any one (or, if specified
in the Trust Agreement, more than one) Executive Officer of the applicable
Person, and delivered to the Trustee.

      "Opinion of Counsel": A written opinion of counsel, who may, except as
otherwise expressly provided in the Trust Agreement, be counsel for the
Depositor, acceptable to the Trustee.

      "Optional Exchange": An exchange of Certificates for the Underlying
Securities in accordance with Section 5.12.

      "Optional Exchange Date": As defined in Section 5.12.

      "Original Issue Date": As specified in the Terms Schedule.

      "Outstanding": As of any date of determination, all Certificates
theretofore authenticated and delivered under the Trust Agreement, except:

            (i) Certificates theretofore canceled by the Certificate Registrar
      or delivered to the Trustee for cancellation; and

            (ii) Certificates in exchange for or in lieu of which other
      Certificates have been authenticated and delivered pursuant to the Trust
      Agreement, unless proof satisfactory to the Trustee is presented that any
      such Certificates are held by a bona fide purchaser in whose hands such
      Certificates represent interests in the Trust.

"Pass-Through Rate": The Fixed Pass-Through Rate or Variable Pass-Through Rate
applicable to the Certificates as specified in the Terms Schedule.

      "Paying Agent": As defined in Section 5.09.

      "Permitted Investments": All investments made by the Trustee pursuant to
Section 3.06 in any one or more of the following; provided, however, that the
total return specified by the terms of each such obligation or security is at
least equal to the purchase price thereof; and provided, further, that each such
obligation or security shall be held in the name of the Trustee on behalf of the
Trust:
<PAGE>

            (i) direct obligations of, and obligations fully guaranteed by, the
      United States, the Federal Home Loan Mortgage Corporation, the Federal
      National Mortgage Association, the Federal Farm Credit System or any
      agency or instrumentality of the United States the obligations of which
      are explicitly backed by the full faith and credit of the United States of
      America; provided that obligations of, or guaranteed by, the Federal Home
      Loan Mortgage Corporation, the Federal National Mortgage Association or
      the Federal Farm Credit System shall be Permitted Investments only if, at
      the time, and during the course, of investment, it has at least the credit
      rating of P-1 or Aaa by Moody's, A-1+ or AAA by S&P, and, if rated by D&P,
      D-1+ or AAA by D&P;

            (ii) demand and time deposits in, certificates of deposit of, or
      banker's acceptances issued by any depositary institution or trust company
      (including the Trustee or any agent of the Trustee acting in their
      respective commercial capacities) incorporated under the laws of the
      United States or any State and subject to supervision and examination by
      Federal and/or State banking authorities so long as the commercial paper
      and/or the short-term debt obligations of such depositary institution or
      trust company at the time of, and during the course of, such investment or
      contractual commitment providing for such investment have at least the
      credit rating of P-1 or Aaa by Moody's, A-l+ or AAA by S&P, and, if rated
      by D&P, D-1+ or AAA by D&P (or, in the case of a depositary institution
      which is the principal subsidiary of a holding company, the commercial
      paper or other short-term debt obligations of such holding company have a
      credit rating of P-i or Aaa by Moody's, A-1+ or AAA by S&P, and, if rated
      by D&P, D-l+ or AAA by D&P;

            (iii) commercial paper having a maturity of not more than 180 days
      and having at the time, and during the course, of such investment at least
      the credit rating of P-1 by Moody's, A-1+ by S&P, and, if rated by D&P,
      D-l+ by D&P; and (iv) repurchase agreements with respect to (a) any
      security described in clause (i) above or (b) any other security issued or
      guaranteed by an agency or instrumentality of the United States with an
      entity having the credit rating of P-1 or Aaa by Moody's, A-1+ or AAA by
      S&P, and, if rated by D&P, D-1+ or AAA by D&P. Copies of any repurchase
      agreement entered into will be delivered to the Rating Agencies, if any.

      In no event shall a Permitted Investment at any time constitute (a) a swap
agreement as defined in the United States Bankruptcy Code, 11 U.S.C. ss. 101 et
seq., (b) an interest-only or principal-only security or (c) a liability of the
Trust in excess of the principal amount invested by the Trustee. Permitted
Investments shall include, without limitation, those investments for which the
Trustee or an Affiliate of the Trustee provides services.

      "Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.

      "Predecessor Certificate": With respect to any particular Certificate,
every previous Certificate evidencing all or a portion of the same interest as
that evidenced by such particular Certificate; and, for the purpose of this
definition, any Certificate authenticated and delivered under Section 5.04 in
lieu of a lost, destroyed or stolen Certificate shall be deemed to evidence the
same interest as the lost, destroyed or stolen Certificate.

      "Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.

      "Rating Agencies": As specified in the Terms Schedule.

      "Rating Agency Condition": With respect to any specified action or
determination, receipt by the Trustee of a confirmation from each Rating Agency
then rating the Certificates that such specified action or determination will
not result in the reduction or withdrawal of their then-current ratings on the
Certificates.

      "Realized Losses": Losses attributable to principal, premium (if any) and
interest realized on an Underlying Security.

      "Record Date": As specified in the Terms Schedule.

      "Redenomination Date": As defined in Section 5.08.

      "Registered Certificate": Any Certificate in registered form ownership of
which is evidenced by the Certificate Register.
<PAGE>

      "Reporting Issuer": The issuer of each Underlying Security that represents
on the date of formation of the Trust less than 10% by principal amount of the
Underlying Securities held by such Trust will either be an Eligible Issuer or a
domestic corporation, limited partnership, trust, limited liability company or
other domestic organization, domestic banking organization or domestic insurance
company which is subject to the information requirements of the Exchange Act and
which, in accordance therewith, files reports and other information with the
Securities and Exchange Commission (or another applicable agency pursuant to
Section 12(1) of the Exchange Act).

      "Required Percentage": With respect to any matter requiring a vote of
Holders of Certificates, the specified percentage (computed on the basis of
Outstanding Certificate Principal Balance or Notional Amount, as applicable) of
certificates of a designated class or group of classes within such series
(either voting as separate classes or as a single class) applicable to such
matter, all as specified in the Terms Schedule.

      "Responsible Officer": With respect to the Trustee, any officer within the
Corporate Trust Office of the Trustee, including any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.

      "Retained Interest": If applicable, with respect to any Underlying
Security or other Trust Property, an ownership interest therein and a right to a
portion of the payments thereon by the obligor thereof, as specified in the
Terms Schedule, held by the Person so specified in such Terms Schedule.

      "S&P": Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc.

      "Scheduled Final Distribution Date": As specified in the Terms Schedule.

      "Securities Act": The Securities Act of 1933, as amended.

      "Selling Agent": Unless otherwise specified in the Terms Schedule,
Commerzbank Capital Markets Corp. or any Affiliate of the foregoing designated
by it.

      "Series": All of the Certificates issued by a particular Trust.

      "Special Depositor Wind-up Event": As defined in Section 9.06.

      "Specified Currency": Unless otherwise specified in the Terms Schedule,
United States Dollars.

      "State": Any one of the 50 states of the United States or the District of
Columbia.

      "Strip Certificates": Certificates entitled to (1) principal
distributions, with disproportionate, nominal or no interest distributions, or
(2) interest distributions, with disproportionate, nominal or no principal
distributions.

      "Swap Agreement": The ISDA Master Agreement (including the Schedule
thereto and Confirmation or Confirmations thereunder and any ISDA Credit Support
Annex forming a part thereof), if any, to which the Trust is a party identified
in the Terms Schedule. In the event that the Trust shall enter into more than
one ISDA Master Agreement, "Swap Agreement" shall mean each such ISDA Master
Agreement specified in the Terms Schedule.

      "Swap Amount": With respect to each Swap Payment Date, an amount, payable
by, or on behalf of, the Swap Counterparty, equal to the accrued interest or
other payment obligation calculated with reference to the Swap Notional Amount
for the immediately preceding Swap Rate Accrual Period at the Swap Rate.

      "Swap Calculation Agent": The "Calculation Agent" as defined in the Swap
Agreement.

      "Swap Counterparty": [Commerzbank AG], unless another Person is identified
in the Terms Schedule as the counterparty of the Trust under the Swap Agreement;
unless a successor Person shall have become the Swap Counterparty pursuant to
the applicable terms of the Swap Agreement, whether by assignment or otherwise,
and thereafter "Swap Counterparty" shall mean such Person. In the event that the
Trust shall enter into more than one Swap Agreement, "Swap Counterparty" shall
mean each counterparty of the Trust specified in the Terms Schedule.

      "Swap Default": The occurrence of an "Event of Default" (as defined in the
Swap Agreement) under the Swap Agreement.
<PAGE>

      "Swap Guarantee": The guarantee (if any) identified in the Terms Schedule
of the obligations of the Swap Counterparty under the Swap Agreement. If the
Terms Schedule does not specify a swap guarantee, references to the Swap
Guarantee and the Swap Guarantor herein shall be deemed deleted.

      "Swap Guarantor": The guarantor who issues and is identified in the Swap
Guarantee (if a Swap Guarantee is identified in the Terms Schedule), and, if a
successor Person shall have become the Swap Guarantor pursuant to the Swap
Guarantee, "Swap Guarantor" shall mean such successor Person.

      "Swap Notional Amount": As specified in the Terms Schedule.

      "Swap Payment Date": As specified in the Terms Schedule.

      "Swap Rate": As specified in the Terms Schedule.

      "Swap Rate Accrual Period": The Initial Swap Rate Accrual Period and each
period from and including a Swap Payment Date to but excluding the next
succeeding Swap Payment Date.

      "Termination Event": As defined in the Swap Agreement.

      "Termination Payment": Any amounts payable under the Swap Agreement in
accordance with its terms, whether to or by the Trust, as the case may be, in
consequence of an early termination of one or more Transactions under the Swap
Agreement.

      "Terms Schedule": The schedule or schedules (which may be in the form of
Schedules I, II and III attached to Exhibit A hereto) which contains information
with respect to the particular terms of the Certificates, as well as the Swap
Agreement, the Underlying Securities and any other Trust Property.

      "TIA": The Trust Indenture Act of 1939, as amended.

      "Transaction": As defined in the Swap Agreement.

      "Transfer": To sell, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of setoff against, deposit, set over,
contribute and confirm to the Trustee pursuant to the Trust Agreement; and the
terms "Transferred" and "Transferring" have the meanings correlative to the
foregoing. A Transfer of any Underlying Securities or of any other instrument
shall include all rights, powers and options (but none of the obligations) of
the Transferring party thereunder, including the first priority and continuing
right to claim for, collect, receive and give receipt for principal, premium, if
any, and interest payments in respect of such Underlying Securities and all
other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the Transferring party or
otherwise, and generally to do and receive anything that the Transferring party
is or may be entitled to do or receive thereunder or with respect thereto.

      "Treasury Rate": For each Interest Reset Period, the rate for the auction
held on the Treasury Rate Determination Date for such Interest Reset Period of
direct obligations of the United States ("Treasury bills") having the Index
Maturity specified in the Terms Schedule, as such rate shall be published in
H.15(519) under the heading "U.S. Government Certificates-Treasury bills-auction
average (investment)" or, in the event that such rate is not published prior to
3:00 p.m., New York City time, on the Treasury Rate Calculation Date (as defined
below) pertaining to such Treasury Rate Determination Date, the auction average
rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury bills having the specified
Index Maturity are not published or reported as provided above by 3:00 p.m., New
York City time, on such Treasury Rate Calculation Date, or if no such auction is
held on such Treasury Rate Determination Date, then the "Treasury Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent for such
Treasury Rate Certificate and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government securities
dealers selected by such Calculation Agent for the issue of Treasury bills with
a remaining maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for
such Interest Reset Period will be the same as the Treasury
<PAGE>

Rate for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Pass-Through Rate).

      "Treasury Rate Calculation Date": With respect to any Treasury Rate
Determination Date, the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a Business Day, the
next succeeding Business Day or (b) the second Business Day preceding the date
any distribution of interest is required to be made following the applicable
Interest Reset Date.

      "Treasury Rate Certificates": Floating Rate Certificates with a Base Rate
equal to Treasury Rate.

      "Treasury Rate Determination Date": With respect to any Interest Reset
Period, the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. Unless otherwise
specified in the Terms Schedule, if an auction date shall fall on any day that
would otherwise be an Interest Reset Date for a Treasury Rate Certificate, then
such Interest Reset Date shall instead be the Business Day immediately following
such auction date.

      "Treaty": As defined in Section 5.08.

      "Trigger Amount": As specified in the Terms Schedule.

      "Trust": The trust created by the Trust Agreement.

      "Trust Agreement": As defined in the preamble hereto.

      "Trust Property": As defined in Section 3.01.

      "Trust Wind-up Event": As defined in Section 9.01.

      "Trustee": [Name of Trustee], or any co-trustee appointed pursuant to
Section 10.10, until a successor Person shall have become the Trustee pursuant
to the applicable terms of the Trust Agreement, and thereafter "Trustee" shall
mean such successor Person.

      "Trustee Fee Letter": A letter agreement between the Trustee and the
Depositor dated on or before the Original Issue Date setting forth the fees and
expenses of the Trust and the Trustee which are subject to reimbursement by the
Depositor.

      "Trustee Fees": The amount or amounts set forth in the Trustee Fee Letter.

      "UCC": The Uniform Commercial Code as in effect in the relevant
jurisdiction or, with respect to the State of Louisiana, the equivalent body of
statutory and common law.

      "Underlying Securities": As specified in the Terms Schedule.

      "Underlying Security Accrual Period": The Initial Underlying Security
Accrual Period and each period from and including an Underlying Security Payment
Date to but excluding the next succeeding Underlying Security Payment Date.

      "Underlying Security Amount": With respect to each Underlying Security
Payment Date, an amount equal to the accrued interest and/or other payment
obligation calculated with reference to the applicable Underlying Security for
the immediately preceding applicable Underlying Security Accrual Period at the
applicable Underlying Security Rate.

      "Underlying Security Default": Unless otherwise specified in the Terms
Schedule, (i) the acceleration of the maturity of the Underlying Securities
under the Underlying Securities and/or the Underlying Security Indenture, as
applicable, whether by declaration of the Holders thereof, the Underlying
Security Trustee or otherwise, (ii) the failure to pay an installment of
principal of, or any amount of interest due on, the Underlying Securities after
the due date, and after the expiration of any applicable grace period or cure
period, (iii) the occurrence of any event of
<PAGE>

default relating to bankruptcy or insolvency of the Underlying Security Issuer
under the Underlying Securities and/or the Underlying Security Indenture, as
applicable or (iv) the occurrence of a waiver, deferral, restructuring,
rescheduling, exchange or other adjustment with respect to the Underlying
Security such that the Swap Counterparty reasonably determines that the economic
terms of the Underlying Security are materially different or the Underlying
Security represents materially greater credit or other risks. An Underlying
Security Default will be deemed to have occurred for all purposes of the Trust
Agreement notwithstanding any rescission or annulment of any such acceleration
or any subsequent payment (after the default and after any applicable grace
period) of such overdue principal or interest.

      "Underlying Security Indenture": The indenture, fiscal agency agreement,
or other agreement with respect to an Underlying Security which sets forth the
covenants and agreements of the Underlying Security Issuer in connection with
issuance of the Underlying Security.

      "Underlying Security Issuer": As specified in the Terms Schedule.

      "Underlying Security Payment Date": As specified in the Terms Schedule.

      "Underlying Security Rate": As specified in the Terms Schedule.

      "Underlying Security Trustee": As specified in the Terms Schedule, if
applicable.

      "Underwriter": Each Person acting as underwriter, dealer, placement agent
or any similar capacity in connection with the initial distribution of the
Certificates.

      "Underwriting Agreement": The agreement between each Underwriter and the
Trust relating to the distribution of the Certificates.

      "United States": The United States of America (including the States and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

      "U.S. Person": A citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate the income of
which is subject to United States federal income taxation regardless of its
source or a trust if (i) a U.S. court is able to exercise primary supervision
over the trust's administration and (ii) one or more U.S. persons have the
authority to control all of the trust's substantial decisions.

      "Variable Pass-Through Rate": A variable Pass-Through Rate calculated by
reference to a Base Rate specified in the Terms Schedule.

      "Voting Rights": With respect to any Certificate, the portion of the
voting rights of all the Certificates allocated in the manner described in the
Terms Schedule.

      Certain additional defined terms have the meanings assigned thereto in
other terms hereof.

      Section 1.02. Rules of Construction. Unless the context otherwise
requires:

            (i) a term has the meaning assigned to it;

            (ii) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with generally accepted accounting principles
      as in effect in the United States from time to time;

            (iii) "or" is not exclusive;

            (iv) the words "herein," "hereof," "hereunder" and other words of
      similar import refer to the Trust Agreement as a whole and not to any
      particular Article, section or other subdivision;

            (v) "including" means including without limitations; and (vi) words
      in the singular include the plural and words in the plural include the
      singular.
<PAGE>

      Section 1.03. Article and Section References. All article and section
references used in the Trust Agreement, unless otherwise provided, are to
articles and sections in the Trust Agreement. Any reference to "this Section"
appearing within a particular paragraph of a section is a reference to such
section as a whole.

                                   ARTICLE II

    DECLARATION OF TRUST; ENTRY INTO SWAP AGREEMENT; ISSUANCE OF CERTIFICATES

      Section 2.01. Creation and Declaration of Trust; Assignment of Underlying
Securities.

            (a) The Depositor, concurrently with the execution and delivery of
the Trust Agreement, Transfers to the Trustee, on behalf and for the benefit of
the Holders and without recourse, all the right, title and interest of the
Depositor, including any security interest therein, in, to and under (i) the
Underlying Securities, (ii) the Certificate Account, including all income from
the investment of funds in the Certificate Account, (iii) all payments on or
under and all proceeds of any of the foregoing (including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, causes of action, rights to payment of any and every kind
and other forms of obligations, receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) and (iv) all other assets included or to be included in
the Trust Property; in each case except for any specified Retained Interest.

            (b) In connection with the Transfer referred to in the preceding
paragraph, the Depositor shall, not later than the Original Issue Date, (i)
deposit the Underlying Securities with the Trustee by physical delivery of such
Underlying Securities, duly endorsed, to the Trustee or cause the Underlying
Securities to be registered by book-entry in the name of the Trustee provided
that the book-entry depositary will be an agency of the United States, DTC or
another book-entry institution acceptable to the Depositor and (ii) with respect
to each such Underlying Security, deliver or cause to be delivered to the
Trustee all documents necessary to transfer such Underlying Security to the
Trustee.

            (c) The Guarantor shall deliver the Swap Guarantee to the Trustee
for the benefit of the Holders.

            (d) The Transfer of the Underlying Securities by the Depositor
accomplished by the Trust Agreement is absolute (other than with respect to any
Retained Interest) and is intended by the parties thereto as a sale as further
provided in Section 3.04.

      Section 2.02. Entry into Swap Agreement and Underwriting Agreement. If so
specified in the Terms Schedule, concurrently with the execution of the Trust
Agreement, the Trust shall (i) execute and deliver the Swap Agreement and each
Transaction thereunder, if any, (ii) accept the Swap Guarantee, if any, and
(iii) enter into any Underwriting Agreement with each Underwriter. It shall be a
condition to the effectiveness of the Trust Agreement that the Swap Agreement be
effective as of the date of the Trust Agreement. The Trustee shall, on behalf of
the Trust, perform the obligations of the Trust under the Swap Agreement in
accordance with its terms and shall make demands under the Swap Guarantee
immediately upon obtaining notice of a payment default under the Swap Agreement
by the Swap Counterparty. The Trustee and the Depositor agree, and each Holder
by acquiring its Certificates shall be deemed to agree, that the Swap Agreement
does not represent an ownership interest in the Trust or its assets and that
none of them shall treat the Swap Agreement as an ownership interest for the
Trust for any purpose. Except as expressly set forth in this Trust Agreement and
in the Swap Agreement, the receipt by the Trustee of the Underlying Securities
and the execution by the Trustee of the Swap Agreement shall not constitute and
is not intended to result in an assumption by the Trustee or any Holder of any
obligation of the issuer of the Underlying Securities or the Swap Counterparty
or any other Person in connection with the Underlying Securities or the Swap
Agreement or under any agreements or instruments relating to any of them.

      Section 2.03. Acceptance by Trustee. The Trustee will acknowledge receipt
by it of (i) the Underlying Securities and the related documents referred to in
Section 2.01, now existing or hereafter acquired, (ii) the Swap Agreement, (ii)
the Swap Guarantee and (iv) the documents specified in the Swap Agreement (in
Part 3 of the Schedule to the Master Agreement), and declares that it will hold
such assets and all other assets comprising the Trust Property in trust, for the
exclusive use and benefit of all present and future Holders and for the purposes
and
<PAGE>

subject to the terms and conditions set forth in the Trust Agreement, including
the Trustee's obligations, as and when they may arise, (I) to pay any amount due
from the Trust under the Swap Agreement, which obligations shall be and hereby
are designated to be secured, under the terms of the Swap Agreement, by a pledge
of all of the Trust Property, (II) to pay Extraordinary Trust Expenses and (III)
to make distributions to the Holders in accordance with Section 4.01.

      Section 2.04. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trustee that as of the Original Issue
Date or as of such other date otherwise specifically provided in the Trust
Agreement:

            (i) the Depositor is a corporation duly organized, validly existing
      and in good standing under the laws of the State of Delaware;

            (ii) to the Depositor's knowledge after the inquiry, there are not
      any liens or encumbrances on the Underlying Securities immediately prior
      to the time of Transfer except those created by the Trust Agreement;

            (iii) the execution and delivery of the Trust Agreement by the
      Depositor and its performance of and compliance with the terms thereof
      will not violate the Depositor's articles of incorporation or By-laws or
      constitute a default (or an event which, with notice or lapse of time, or
      both, would constitute a default) under, or result in the breach or
      acceleration of, any material contract, agreement or other instrument to
      which the Depositor is a party or by which the Depositor or any of its
      assets is bound;

            (iv) to the Depositor's knowledge after due inquiry, the Depositor
      has the full power and authority to enter into and consummate all
      transactions contemplated by the Trust Agreement, has duly authorized the
      execution, delivery and performance of the Trust Agreement and has duly
      executed and delivered the Trust Agreement. The Trust Agreement, upon its
      execution and delivery by the Depositor and assuming due authorization,
      execution and delivery by the Trustee, will constitute a valid, legal and
      binding obligation of the Depositor, enforceable against it in accordance
      with the terms thereof, except as such enforcement may be limited by
      bankruptcy, insolvency, reorganization, receivership, moratorium or other
      laws relating to or affecting the rights of creditors generally, and by
      general equity principles (regardless of whether such enforcement is
      considered in a proceeding in equity or at law); and

            (v) to the Depositor's knowledge after due inquiry, the Depositor is
      not in violation, and the execution and delivery of the Trust Agreement by
      the Depositor and its performance and compliance with the terms of the
      Trust Agreement will not constitute a violation, of any order decree of
      any court or any order or regulation of any Federal, State, municipal or
      governmental agency having jurisdiction over the Depositor or its
      properties, which violation would reasonably be expected to have a
      material and adverse effect on the duties and obligations of the Depositor
      under the Trust Agreement.

      It is understood and agreed that the representations and warranties of the
Depositor set forth in this Section shall survive delivery of the respective
documents to the Trustee and shall inure to the benefit of the Trustee on behalf
of the Holders notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Swap Guarantor, or the
Trustee of a breach of any of the foregoing representations and warranties which
materially and adversely affects the interests of the Holders, the party
discovering such breach shall give prompt written notice thereof to the other
parties.

      Section 2.05. Breach of Representation or Warranty. Upon the earlier of
discovery by the Depositor or receipt of notice by the Depositor of a breach of
any representation or warranty of the Depositor set forth in Section 2.04 that
materially and adversely affects the rights of the Holders to receive
distributions under the Trust Agreement when due and payable, the Depositor
shall notify the Rating Agencies of such breach. The Depositor shall cure such
breach in all material respects within ten Business Days of the earlier of
discovery by the Depositor or receipt of notice by the Depositor of such breach.

      Section 2.06. Agreement to Authenticate and Deliver Certificates. The
Trustee agrees and acknowledges that it will, concurrently with the Transfer to
and receipt by it of the Underlying Securities and the Swap Guarantee and
delivery to it by the Depositor of the executed Trust Agreement and by the Swap
Counterparty of the executed Swap Agreement, cause to be executed, authenticated
and delivered to or upon the order of the
<PAGE>

Depositor, in exchange for the Underlying Securities and such other assets
constituting the Trust Property, Certificates duly executed and authenticated by
or on behalf of the Trustee in authorized denominations evidencing ownership of
the entire Trust Property, all in accordance with the terms and subject to the
conditions of Section 5.02.

                                   ARTICLE III

               TRUST POWERS; ADMINISTRATION OF THE TRUST PROPERTY

      Section 3.01. Trust Property. (a) The "Trust Property" with respect to a
Trust will consist of: (i) the related Underlying Securities and all payments on
or collections in respect of such Underlying Securities due after a specified
"Cut-off Date" set forth in the Terms Schedule; (ii) all the Trustee's right,
title and interest under any Swap Agreement and any related Swap Guarantee;
(iii) all the Trustee's right, title and interest in any related Credit Support,
if any; (iv) all Permitted Investments and all funds from time to time deposited
in certain segregated accounts held by the Trustee in trust and for the benefit
of the Holders representing interests in such Trust; and (v) any other asset
described in the Terms Schedule as constituting a portion of such Trust
Property, in each case exclusive of any Retained Interest.

      (b) The Trust Property for a given Series of Certificates and the related
Trust will not constitute Trust Property for any other Series of Certificates
and the related Trust and the Certificates of each Class of a given Series
possess an equal and ratable undivided ownership interest in such Trust
Property. The Terms Schedule may, however, specify that certain assets
constituting a part of the Trust Property relating to any given Series may be
beneficially owned solely by or deposited solely for the benefit of one Class or
a group of Classes within such Series. In such event, the other Classes of such
Series will not possess any beneficial ownership interest in those specified
assets constituting a part of the Trust Property.

      Section 3.02. Administration of the Trust. (a) The Trustee shall
administer the Trust Property for the benefit of the Holders. In engaging in
such activities, the Trustee shall follow or cause to be followed collection
procedures in accordance with the terms of the Trust Agreement, the Underlying
Securities, the Swap Agreement, the indemnification offered by the Depositor
pursuant to Section 10.05(b) and the Swap Guarantee. The duties of the Trustee
shall be performed in accordance with applicable local, State and Federal law.

      (b) Subject to Article X, the Trustee is hereby authorized to perform, and
from time to time hereafter, shall perform only those acts which are described
in the Trust Agreement as obligations of the Trustee. Notwithstanding the
generality of the foregoing, the Trustee is hereby specifically authorized to do
the following on behalf of the Trust: to issue the certificates evidencing
Certificates; to execute and deliver and perform its obligations and exercise
its rights under the Swap Agreement; to establish and maintain the Certificate
Account hereunder; to accept delivery of the Underlying Securities and the Swap
Agreement; to pledge the assets of the Trust (including the Underlying
Securities) to secure the obligations of the Trust including obligations under
the Swap Agreement; to sell the Underlying Securities through the Selling Agent
in accordance with Section 9.03; to make Permitted Investments pursuant to
Section 3.06; to liquidate the Trust pursuant to Article IX and to make
distributions pursuant to Article IV.

      (c) Notwithstanding anything to the contrary herein, the Trust shall not
engage in any business or activities other than receiving the Underlying
Securities and any Credit Support or other Trust Property and entering into the
Swap Agreement as provided herein, holding the Underlying Securities, the Swap
Agreement and any Credit Support (or other Trust Property), issuing certificates
evidencing Certificates, making Permitted Investments in accordance with Section
3.06 and performing its obligations hereunder and under the Swap Agreement;
provided, however, that during its existence the Trust shall not engage in any
business or activity which will cause it to be or become an open-end investment
company, certificate investment trust or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act,
or to be or become a closed-end investment company required to be registered,
but not registered, under the Investment Company Act.

      (d) The Trustee shall not sell, assign, pledge or otherwise transfer the
Underlying Securities, the Swap Agreement, any Credit Support or other Trust
Property, or any interest of the Trust therein, to any Person or Persons, except
to a successor trustee as provided in Section 10.07, through the Selling Agent
in accordance with Section
<PAGE>

9.03, in accordance with Section 10.02(a)(x), as required under any Swap
Agreement or as otherwise expressly permitted hereunder. This section shall not
be construed to prohibit transfers of the Certificates.

      (e) The Trustee shall have the legal power to exercise all of the rights,
powers and privileges of holders of the Underlying Securities in which the
Certificates evidence an interest; provided, however, that the exercise of such
powers shall be subject to the provisions of this Section 3.02, Article X and
the other provisions hereof. However, neither the Trustee (except as
specifically provided herein or in the TIA) nor the Depositor shall be under any
obligation whatsoever to appear in, prosecute or defend any action, suit or
other proceeding in respect of Underlying Securities or Certificates.

      (f) Except for actions expressly authorized by the Trust Agreement, the
Trustee shall not take actions reasonably likely to (nor fail to take actions,
if such failure would be reasonably likely to) (i) impair the interests of the
Trust in any Underlying Security, any Credit Support, the Swap Agreement or the
Swap Guarantee (or any other Trust Property); (ii) impair the value of any
Underlying Security, any Credit Support, the Swap Agreement or the Swap
Guarantee (or any other Trust Property); or (iii) alter the classification of a
Trust for U.S. federal income tax purposes.

      (g) Except as expressly provided in the Trust Agreement, the Trustee shall
have no power to vary the corpus of the Trust Property including by (i)
accepting any substitute obligation or asset for an Underlying Security or any
Credit Support, (ii) entering into any amendment or modification of the Swap
Agreement or the Underlying Securities, (iii) accepting any substitute guarantee
for the Swap Guarantee, (iv) adding any other investment, obligation or security
to the Trust Property, (v) withdrawing from the Trust Property any Underlying
Securities or Credit Support, (vi) terminating the Swap Agreement except in
accordance with its terms or (vii) rejecting or otherwise failing to accept the
continuing benefits of the Swap Guarantee.

      Section 3.03. Collection of Certain Underlying Security Payments. The
Trustee shall make reasonable efforts to collect all payments required to be
made pursuant to the terms of the Underlying Securities in a manner consistent
with the terms of the Trust Agreement and such Underlying Securities.

      Section 3.04. Sale. The parties hereto agree and intend that the Transfer
of Underlying Securities, the Swap Agreement and all proceeds of any of the
foregoing shall be treated as a sale and purchase by the Trust and not a loan or
a pledge to secure a loan. If for any reason such Transfer is deemed to be a
loan or a pledge to secure a loan, the parties intend that the Trust Agreement
shall be a security agreement pursuant to which there shall be deemed to have
been granted to the Trustee a security interest in all right, title and interest
in the Underlying Securities, the Swap Agreement and all proceeds of any of the
Trust Property granted in favor of the Swap Counterparty pursuant to the Swap
Agreement and to the obligation of the Trust to pay Extraordinary Trust
Expenses. If the Trust terminates prior to the satisfaction of the claims of any
Holder under any Certificate, the security interest created hereby shall
continue in full force and effect and the Trustee shall be deemed to be the
collateral agent for the benefit of such Holder, subject to the prior security
interest of the Swap Counterparty under the Swap Agreement and to the terms of
the Trust Agreement.

      Section 3.05. Certificate Account. (a) The Trustee shall establish and
maintain one or more Eligible Accounts (collectively, the "Certificate
Account"), held in trust for the benefit of the Holders, subject to the security
interest in all of the Trust Property granted in favor of the Swap Counterparty
pursuant to the Swap Agreement and the obligation of the Trust to pay
Extraordinary Trust Expenses. The Trustee, on behalf of the Holders, shall
possess all right, title and interest in all funds on deposit from time to time
in the Certificate Account and in all proceeds thereof, subject to the security
interest in all of the Trust Property granted in favor of the Swap Counterparty
pursuant to the Swap Agreement and the obligation of the Trust to pay
Extraordinary Trust Expenses. The Certificate Account shall be under the sole
dominion and control of the Trustee. The Trustee shall deposit or cause to be
deposited in the Certificate Account all amounts collected with respect to the
Underlying Securities, Swap Agreement and the Swap Guarantee including:

            (i) all payments received by the Trustee on account of principal of
      the Underlying Securities;

            (ii) all payments received by the Trustee on account of interest (if
      any) on the Underlying Securities;
<PAGE>

            (iii) all payments received by the Trustee on account of premium (if
      any) on the Underlying Securities;

            (iv) all Swap Amounts and all other payments, if any, received by
      the Trustee on account of the Swap Agreement;

            (v) all payments under the Credit Support;

            (vi) any payments under any other assets deposited with the Trust;

            (vii) the Certificate Principal Balance, if applicable;

            (viii) all payments received by the Trustee on account of the Swap
      Guarantee; and (vii) it is understood and agreed that payments in the
      nature of prepayment or redemption penalties, late payment charges or
      assumption fees which may be received by the Trustee shall be deposited by
      the Trustee in the Certificate Account and shall not be retained by the
      Trustee for its own account.

      If, at any time, a formerly Eligible Account no longer fulfills the
definition of Eligible Account, the Trustee shall within five Business Days or
by the next Distribution Date, whichever comes earlier, establish a new
Certificate Account meeting the conditions specified above and transfer any cash
and any investments on deposit in the Certificate Account to such new
Certificate Account, and from the date such new Certificate Account is
established, it shall be the Certificate Account.

            (b) The Trustee shall give notice to the Depositor and the Rating
Agencies of the location of each Eligible Account constituting the Certificate
Account prior to any change thereof.

      Section 3.06. Investment of Funds in the Accounts. The Depositor, on
behalf of the Trust, may direct in writing the Trustee or any depositary
institution maintaining the Certificate Account, if any, and any other
segregated account the contents of which are held for the benefit of the Trust
(each, an "Account") to invest the funds therein in one or more Permitted
Investments bearing interest or sold at a discount, which shall be held to
maturity unless payable on demand. If the Depositor does not provide any
investment directions to the Trustee, then the Trustee shall invest funds held
in any Account in the Permitted Investments specified in clause (i) of the
definition thereof upon receipt of such funds. Such funds shall be invested in
Permitted Investments that will mature at least one calendar day prior to the
next Distribution Date.

      Section 3.07. Retained Interest. The Retained Interest, if any, in any
Underlying Security or other Trust Property shall initially be held by the
Person so specified in the Terms Schedule and to the extent specified therein.
The Retained Interest will be established on an asset-by-asset basis. With
respect to each Underlying Security, unless otherwise specified in the Terms
Schedule, the Retained Interest shall be deducted by the Trustee from applicable
collections in respect of such Underlying Security or other Trust Property.
Unless otherwise provided in the Terms Schedule, collections in respect of
Retained Interest shall not be deposited in the Certificate Account and shall
not constitute a part of the Trust, but shall instead be distributed to the
holder of such Retained Interest; provided, however, that the Terms Schedule
with respect to which there is a Retained Interest may provide that commingled
amounts received in respect of Underlying Securities and the related Retained
Interest may initially be deposited in separate and discrete accounts
established by the Trustee. Unless otherwise provided in the applicable
prospectus supplement and in the Terms Schedule, any partial recovery of
interest on a Deposited Asset, after deduction of all applicable administration
fees, will be allocated between the Retained Interest (if any) and interest
distributions to Holders on a pari passu basis.

      Section 3.08. Access to Certain Documentation. The Trustee shall provide
to any Federal, State or local regulatory authority that may exercise authority
over the Depositor, the Swap Counterparty, the Swap Guarantor or any Holder
access to the documentation regarding the Underlying Securities, the Swap
Agreement and the Swap Guarantee required by applicable laws and regulations.
Such access shall be afforded without charge, but only upon reasonable request
and during normal business hours at the offices of the Trustee designated by it.
In addition, access to the documentation regarding the Underlying Securities,
the Swap Agreement and the Swap Guarantee will be provided to the Depositor, the
Swap Counterparty, the Swap Guarantor or any Holder upon reasonable request
during normal business hours at the offices of the Trustee designated by it at
the expense of the Person requesting such access.
<PAGE>

      Section 3.09. Trust Administrator.

            (a) If specified in the Terms Schedule, the Trustee shall appoint a
Trust Administrator for the Trust (the "Trust Administrator"). The entity
serving as the Trust Administrator may be the Trustee, the Depositor,
[Commerzbank Capital Markets Corp.], an affiliate of any of them, the Deposited
Asset Provider or any third party and may have other normal business
relationships with the trustee, Comcertz ABS Corporation, their affiliates or
the Deposited Asset Provider. The Trust Administrator shall perform such duties,
shall have such obligations and shall be entitled to such compensation each as
is specified in the Terms Schedule and/or such other trust administrator
agreement by and between the Trustee and the Trust Administrator.

            (b) If any document in respect of any of the Deposited Assets is
found to be missing or defective in any material respect, the trustee (or such
custodian) will immediately notify the Trust Administrator, if any, and
Depositor, and the Trust Administrator, if any, and the trustee will immediately
notify the relevant person who sold the applicable Deposited Asset to Depositor
(a "Deposited Asset Provider"). If and to the extent specified in the applicable
prospectus supplement and the Terms Schedule attached hereto, the Deposited
Asset Provider cannot cure such omission or defect within 60 days after receipt
of notice, the Deposited Asset Provider will be obligated, within 90 days of
receipt of notice, to repurchase the related Deposited Asset from the trustee at
the Purchase Price (as defined below) or provide a substitute for the Deposited
Asset. The Trust Administrator, if any, or otherwise the trustee is obligated to
use its best efforts to enforce such obligation, provided, however, that,
neither such Trust Administrator nor Depositor will be obligated to repurchase
or substitute for such Deposited Asset if the Deposited Asset Provider defaults
on its obligation. Unless otherwise specified in the applicable Prospectus
Supplement and the Terms Schedule attached hereto, when applicable, this
repurchase or substitution obligation constitutes the sole remedy available to
the certificateholders or the trustee for omission of, or a material defect in,
or failure to provide, a constituent document.

            (c) The Trustee is not accountable for the use or application by or
on behalf of any Trust Administrator of any funds paid to the Trust
Administrator or its designee in respect of such Certificates or the Deposited
Assets, or deposited into or withdrawn from the related Certificate Account or
any other account by or on behalf of the Trust Administrator.

            (d) The Trust Administrator may resign from its obligations and
duties under the Trust Agreement with respect to any series of Certificates only
if such resignation, and the appointment of a successor, will not result in a
withdrawal or downgrading of the rating of any class of Certificates of such
series, or upon a determination that its duties under the Trust Agreement with
respect to such series are no longer permissible under applicable law. No
resignation will become effective until the trustee or a successor has assumed
the Trust Administrator's obligations and duties under the Trust Agreement with
respect to such series.

            (e) Neither a Trust Administrator, the Depositor nor any director,
officer, employee, or agent of the Trust Administrator or the Depositor will
incur any liability to the related Trust or Holders for any action taken, or for
refraining from taking any action, in good faith pursuant to the trust agreement
or for errors in judgment; provided, however, that none of the Trust
Administrator, the Depositor nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties thereunder or by reason
of reckless disregard of obligations and duties thereunder. The trust agreement
will further provide that, unless otherwise provided in the Terms Schedule, a
Trust Administrator, the Depositor and any director, officer, employee or agent
of the Trust Administrator or the Depositor will be entitled to indemnification
by the Trust and will be held harmless against any loss, liability or expense
incurred in connection with any legal action relating to the trust agreement or
the certificates, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties thereunder or by reason of reckless disregard of obligations and duties
thereunder. In addition, the Trust Agreement will provide that neither a Trust
Administrator nor the Depositor will be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to their respective
responsibilities under the trust agreement or which in its opinion may cause it
to incur any expense or liability. Each of the Trust Administrator or the
Depositor may, however, in its discretion undertake any action which it may deem
necessary or desirable with respect to the Trust Agreement and the rights and
duties of the parties thereto and the interests of the Holders thereunder.

            (f) Any person into which a Trust Administrator may be merged or
consolidated, or any person resulting from any merger or consolidation to which
a Trust Administrator is a part, or any person succeeding
<PAGE>

to the business of a Trust Administrator, will be the successor of the Trust
Administrator under the trust agreement with respect to the certificates of any
given series.

      Section 3.10. Trust Administrator and Trustee Advances.

            (a) Either the Trust Administrator or Trustee may, to the extent of
and pursuant to the Terms Schedule, and pursuant to this Section, but shall have
no obligation to make advances with respect to collections on the Deposited
Assets or in favor of the Holders.

            (b) Unless otherwise provided in the applicable Prospectus
Supplement and the Terms Schedule, advances of a Trust Administrator's or
Trustee's funds will be reimbursable only out of related recoveries on the
Deposited Assets (and amounts received under any form of credit support) for
such series with respect to which such advances were made (as to any Deposited
Assets, "Related Proceeds"); provided, however, that any advance will be
reimbursable from any amounts in the Certificate Account for the series to the
extent that the Trust Administrator or Trustee shall determine, in its sole
judgment, that the advance (a "Nonrecoverable Advance") is not ultimately
recoverable from Related Proceeds. If advances have been made by the Trust
Administrator or Trustee from excess funds in the Certificate Account for any
series, the Trust Administrator or Trustee will replace the funds in such
Certificate Account on any future Distribution Date to the extent that funds in
the Certificate Account on the Distribution Date are less than payments required
to be made to certificateholders on such date. If so specified in the applicable
Prospectus Supplement and the Terms Schedule, the obligations, if any, of a
Trust Administrator or Trustee to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the applicable Prospectus Supplement and the Terms
Schedule.

      Section 3.11. Trust Administrator Termination Event Remedies. Unless
otherwise specified in the applicable prospectus supplement and the Terms
Schedule, so long as a Trust Administrator Termination Event under the trust
agreement with respect to a given series of Certificates remains unremedied, the
Depositor or the Trustee may, and at the direction of Holders of such
Certificates evidencing not less than the Required Percentage of the Voting
Rights, the Trustee will, terminate all the rights and obligations of the Trust
Administrator under the trust agreement relating to the applicable trust and in
and to the related Deposited Assets (other than any Retained Interest of such
Trust Administrator). The Trustee will then succeed to all the responsibilities,
duties and liabilities of the Trust Administrator under the trust agreement with
respect to such series (except that if the Trustee is prohibited by law from
obligating itself to make advances regarding delinquent Deposited Assets, then
the Trustee will not be so obligated) and will be entitled to similar
compensation arrangements. In the event that the Trustee is unwilling or unable
to act, it may or, at the written request of the Holders of such Certificates
evidencing not less than the Required Percentage of the Voting Rights, it will
appoint, or petition a court of competent jurisdiction for the appointment of,
an administration agent acceptable to the rating agency with a net worth at the
time of such appointment of at least $15,000,000 to act as successor to such
Trust Administrator under the trust agreement with respect to such series.
Pending such appointment, the Trustee is obligated to act in such capacity
(except that if the Trustee is prohibited by law from obligating itself to make
advances regarding delinquent Deposited Assets, then the Trustee will not be so
obligated). The Trustee and any such successor may agree upon the compensation
be paid to such successor, which in no event may be greater than the
compensation payable to such Trust Administrator under the trust agreement with
respect to such series.

                                   ARTICLE IV

                 DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS

      Section 4.01. Distributions. On each Distribution Date for the
Certificates (including the Scheduled Final Distribution Date), the Trustee
shall distribute the pro rata portion of the Available Funds in the Certificate
Account allocable to each Holder, as further set forth in the Trust Agreement.
Distributions allocable to principal, premium (if any) and interest on the
Certificates will be made in the Specified Currency for such Certificates by or
on behalf of the trustee on each Distribution Date as specified in the Terms
Schedule and the amount of each distribution will be determined as of the close
of business on the Determination Date.

      Section 4.02. Reports to Holders. (a) On each Distribution Date, the
Trustee shall forward or cause to be forwarded to the Depositor, the Rating
Agency, if any, and each Holder a statement setting forth:
<PAGE>

            (i) the amount of such distribution to Holders of such class
      allocable to principal of or interest or premium, if any, on the
      Certificates of such class; and the amount of aggregate unpaid interest as
      of such Distribution Date;

            (ii) in the case of Certificates with a Variable Pass-Through Rate,
      the Pass-Through Rate applicable to such Distribution Date, as calculated
      in accordance with the method specified in the Terms Schedule;

            (iii) the amount of compensation received by the Trust
      Administrator, if any, and the Trustee for the period relating to such
      Distribution Date, and such other customary information as the Trust
      Administrator, if any, or otherwise the Trustee deems necessary or
      desirable to enable Holders to prepare their tax returns;

            (iv) if the Terms Schedule provides for advances, the aggregate
      amount of advances included in such distribution, and the aggregate amount
      of unreimbursed advances at the close of business on such Distribution
      Date;

            (v) the aggregate stated principal amount or, if applicable,
      notional principal amount of the Underlying Securities and the current
      interest rate thereon at the close of business on such Distribution Date;

            (vi) the aggregate Certificate Principal Balance or aggregate
      Notional Amount, if applicable, of each class of Certificates (including
      any class of Certificates not offered hereby) at the close of business on
      such Distribution Date, separately identifying any reduction in such
      aggregate Certificate Principal Balance or aggregate Notional Amount due
      to the allocation of any Realized Losses or otherwise;

            (vii) as to any series (or class within such series) for which
      Credit Support has been obtained, the amount of coverage of each element
      of Credit Support included therein as of the close of business on such
      Distribution Date; and

            (viii) any additional information relevant to the Holders as
      specified in the Terms Schedule.

            (b) In the case of information furnished with respect to the amounts
of distributions or the amounts of compensation of the Trust Administrator and
the Trustee, the amounts shall be expressed as a U.S. dollar amount (or
equivalent thereof in any other Specified Currency) per minimum denomination of
Certificates or for such other specified portion thereof. Within a reasonable
period of time after the end of each calendar year, the Trust Administrator or
the Trustee, as provided in the applicable Prospectus Supplement, shall furnish
to each person who at any time during the calendar year was a Holder a statement
containing the information set forth above with respect to the amounts of
distributions or the amounts of compensation of the Trust Administrator and the
Trustee, aggregated for such calendar year or the applicable portion thereof
during which such person was a Holder. Such obligation of the Trust
Administrator or the Trustee, as applicable, shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trust Administrator or the Trustee, as applicable, pursuant to
any requirements of the Code as are from time to time in effect.

            (c) At any time when the Trust is not subject to Section 13 or 15(d)
of the Exchange Act, upon request to the Trustee by a Holder or a prospective
purchaser from a Holder of the information required by Rule 144A(d)(4)(i) of the
Securities Act, the Trustee shall promptly notify the Depositor of such request,
and the Depositor shall promptly thereafter provide such information to the
Trustee, and the Trustee shall furnish such information to such Holder or
prospective purchaser, provided, that for purposes of this Section 4.02(c), the
information required by Rule 144A(d)(4)(i) shall be as interpreted in Release
No. 33-6862, Part D, i.e., basic, material information concerning the structure
of the Trust, the Certificates and distributions in respect thereof, and the
nature and performance of the Underlying Securities, the Swap Agreement and any
other assets of the Trust.

            (d) The Trustee will deliver to Holders copies of all notices and
communications it receives from each Underlying Security Issuer, including
notice of any call of the Underlying Securities by the Underlying Security
Issuer. The Trustee will also notify the Holders of any call of the Underlying
Securities by a Swap Counterparty under the terms of a Swap Agreement.
<PAGE>

            (e) If so specified in the Terms Schedule commencing on a certain
date and on or before a specified date in each year thereafter, a firm of
independent public accountants will furnish a statement to the Trustee to the
effect that such firm has examined certain documents and records relating to the
administration of the Trust Property during the related 12-month period (or, in
the case of the first such report, the period ending on or before the date
specified in the Terms Schedule, which date shall not be more than one year
after the related original issue date with respect to such Certificates) and
that, on the basis of certain agreed upon procedures considered appropriate
under the circumstances, such firm is of the opinion that such administration
was conducted in compliance with the terms of the Trust Agreement, except for
such exceptions as such firm shall believe to be immaterial and such other
exceptions and qualifications as shall be set forth in such report.

            (f) The Terms Schedule may also provide for delivery to the
Depositor and the Trustee on behalf of the Holders, on or before a specified
date in each year, of an annual statement signed by two officers of the Trustee
to the effect that the Trustee has fulfilled its obligations under the Trust
Agreement throughout the preceding year with respect to any Series of
Certificates. Copies of the annual accountants' statement, if any, and the
statement of officers of the Trustee may be obtained by Holders without charge
upon written request to the Trustee.

            (g) If the Terms Schedule provides the Certificates are subject to
the right of one or more specified Persons to purchase all or a portion of the
Certificates of a given Series (a "Call Option") and designates such Series a
"Callable Series," then after receiving notice of the exercise of such a call
right, the Trustee will provide notice thereof as provided in the Terms
Schedule. The Trustee and the Depositor agree, and each Holder by acquiring its
Certificates shall be deemed to agree, that the Call Option does not represent
an ownership interest in the Trust or its assets and that none of them shall
treat the Call Option as an ownership interest in the Trust for any purpose.

            (h) If required by TIA Section 313(a), within 60 days after December
31 of each year, the Trustee shall mail to (i) each Holder as required by TIA
Section 313(c) and (ii) the Depositor, a brief report dated as of such date that
complies with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b). A copy of any report delivered pursuant to this Section 4.02(h) shall,
at the time of its mailing to Holders and the Depositor, be filed by the Trustee
with the Commission and each stock exchange, if any, on which the Certificates
are listed. The Depositor shall notify the Trustee if and when the Certificates
are listed on any stock exchange.

      Section 4.03. Calculation of Pass-Through Rates.

            (a) Unless otherwise specified in the Terms Schedule, the
Pass-Through Rate applicable to the Certificates will be the equivalent rate
applicable to payments received by the Trust under the Underlying Securities or
any related Swap Agreement (as determined by the Swap Calculation Agent).

            (b) Unless otherwise specified in the Terms Schedule, interest on
Fixed Rate Certificates will be computed on the basis of a 360-day year of
twelve 30-day months. With respect to a Floating Rate Certificate, accrued
interest shall be calculated by multiplying the Certificate Principal Balance of
such certificate (or, in the case of a Strip Certificate with no or a nominal
Certificate Principal Balance, the Notional Amount specified in the Terms
Schedule) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. Unless otherwise specified in
the Terms Schedule, the interest factor (expressed as a decimal calculated to
seven decimal places without rounding) for each such day is computed by dividing
the Pass-Through Rate in effect on such day by 360, in the case of LIBOR
Certificates, Commercial Paper Rate Certificates, Federal Funds Rate
Certificates and CD Rate Certificates or by the actual number of days in the
year, in the case of Treasury Rate Certificates.

            (c) If the Terms Schedule specifies a Calculation Agent, the
Calculation Agent shall calculate the Pass-Through Rate applicable to the
Certificates from time to time as specified in the Terms Schedule. All
determinations of interest by the Calculation Agent hereunder shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
holders of Certificates. Each of the protections, releases, indemnities and
other terms applicable to the Trustee under Section 10.01, 10.02, 10.03 and
10.05 shall apply to the Calculation Agent in connection with its actions as
Calculation Agent for the Trust.

      Section 4.04. Compliance with Tax Reporting and Withholding Requirements.
Unless otherwise specified in the Terms Schedule, the Trustee shall file or
cause to be filed, within the time limits established by law, federal and state
income tax returns and information statements as a grantor trust for each of
Trust's taxable years.
<PAGE>

The Trust's taxable year shall be the calendar year. Notwithstanding any other
provision of the Trust Agreement to the contrary, the Trustee shall comply with
all Federal withholding requirements respecting distributions to, or receipts of
amounts on behalf of, Holders and pursuant to the Swap Agreement that the
Trustee reasonably believes are applicable under the Code. The consent of
Holders shall not be required for such withholding. In the event the Trustee
does withhold any amount from interest or original issue discount distributions
thereof to any Holder pursuant to Federal withholding requirements, the Trustee
shall indicate in the statement required pursuant to Section 4.02 the amount so
withheld.

      Section 4.05. Preservation of Information, Communications to Holders.

            (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee and the names and addresses of Holders
received by the Trustee in its capacity as Certificate Registrar. The Trustee
may destroy any list furnished to it as provided upon receipt of a new list.

            (b) Holders shall have the right to communicate pursuant to TIA
Section 312(b) with other Holders with respect to their rights under this
Agreement or under the Certificates.

            (c) Irrespective of whether the TIA shall apply to this Agreement,
the Depositor, the Trustee, the Paying Agent and the Certificate Registrar shall
have the protections provided pursuant to TIA Section 312(c).

                                    ARTICLE V

                                THE CERTIFICATES

      Section 5.01. The Certificates. (a) The Certificates may be issued in the
form of and be represented by definitive certificates substantially in the form
of Exhibit B hereto (a "Certificate") or by one or more Global Securities.
Certificates will be issued in denominations specified in the applicable Terms
Schedule, but in no event will Certificates denominated in U.S. dollars be
issued in denominations less than $[______] and in integral multiples of $1 in
excess thereof. The authorized denomination of Certificates having a Specified
Currency other than U.S. dollars will be set forth in the applicable Terms
Schedule. All Certificates of the same Class shall be identical in all respects
except for the denominations thereof. All Certificates issued under the Trust
Agreement shall be in all respects equally and ratably entitled to the benefits
thereof without preference, priority or distinction on account of the actual
time or times of authentication and delivery, all in accordance with the Terms
Schedule. No additional interests in the Trust other than the Certificates shall
be issued hereunder, except in accordance with Section 5.04. The Certificates in
the aggregate may be subject, to the extent provided in the Terms Schedule, to a
Call Option.

            (b) The Certificates issued under a Trust Agreement may be limited
to a single class, or, if so specified in the Terms Schedule, a Series of
Certificates may include two or more Classes differing as to entitlement to
distributions of principal, interest or premium and one or more Classes may be
subordinated in certain respects to other Classes of such Series with respect to
allocation of losses arising from any defaults with respect to the Trust
Property.

      Each Series and Class of Certificates may be issued as Registered
Certificates, in definitive form or as one or more Global Securities. Unless
otherwise specified in the Terms Schedule, all Certificates of a given Series
(or, if more than one Class exists, any given Class within that Series) will,
upon issuance, be represented by one or more Global Securities that will be
deposited with, or on behalf of, DTC (only for Registered Certificates
denominated and payable in U.S. dollars), Euroclear, CEDEL, or another
Depositary. Global Securities may be issued in registered form and in either
temporary or permanent form. Global Securities representing Registered
Certificates will be registered in the name of a nominee of the Depositary, and
will clear and settle in book-entry form only through the facilities of one or
more Depositaries. Unless and until it is exchanged in whole or in part for the
individual Certificates represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor.

      Section 5.02. Execution, Authentication and Delivery. (a) The Certificates
shall be executed on behalf of the Trust by the Trustee by its President, its
Treasurer, or one of its Vice Presidents, Assistant Vice Presidents or
<PAGE>

Trust Officers. The signature of any of these officers may be manual or
facsimile. Certificates bearing the manual or facsimile signature of individuals
who were at any time the proper officers of the Trustee shall be binding,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.

            (b) The Trustee shall not be required to authenticate any
Certificates if the issuance of such Certificates pursuant to the Trust
Agreement will adversely affect the Trustee's own rights, duties or immunities
under the Trust Agreement.

            (c) Each Certificate shall be dated as of the date of its
authentication.

            (d) Subject to Section 5.10(c), no Certificate shall be entitled to
any benefit under the Trust Agreement or be valid or obligatory for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form as contained in the form of Certificate attached to
the Trust Agreement as Exhibit B executed by the Trustee by the manual signature
of one of its authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered under the Trust Agreement and is entitled
to the benefits of the Trust Agreement. Any Certificate duly authenticated and
delivered to the Depositor under the Trust Agreement shall be fully paid and
non-assessable for all purposes.

      Section 5.03. Registration; Registration of Transfer and Exchange.

            (a) The Trustee shall cause to be kept a register for Registered
Certificates (the registers maintained in such office and in any other office or
agency of the Trustee from which distributions are made being herein sometimes
collectively referred to as the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, a transfer agent and registrar
(which may be the Trustee) (the "Certificate Registrar") shall provide for the
registration of Registered Certificates and the registration of transfers and
exchanges of Registered Certificates. The Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering Registered Certificates and
transfers and exchanges of Registered Certificates as herein provided and the
Trustee shall remain Certificate Registrar for such purposes until the earlier
to occur of (i) the appointment by the Depositor of a different Certificate
Registrar, (ii) the resignation or termination of the Trustee and appointment of
a successor trustee in accordance with Section 10.07, in which case such
successor trustee shall assume the duties of Certificate Registrar and (iii) the
termination of the Trust and discharge of the Trustee's obligations under the
Trust Agreement in accordance with the applicable terms of Articles IX and XI;
provided, however, that the Trustee may appoint one or more Co-Certificate
Registrars. Upon any resignation of any Certificate Registrar appointed by the
Depositor pursuant to clause (i) above, the Trustee shall promptly appoint a
successor or, in the absence of such appointment, assume the duties of
Certificate Registrar.

      Upon (i) the appointment by the Depositor of a Person other than the
Trustee as Certificate Registrar, (ii) the appointment of any Co-Certificate
Registrar or (iii) any change in the identity of the Certificate Registrar or
any Co-Certificate Registrar, the Depositor will in each case give each of the
Trustee and each Rating Agency, if any, written notice within three Business
Days of any such appointment or change and of the location, and any change in
the location, of the Certificate Register, and the Trustee shall have the right
to rely upon a certificate executed on behalf of the Certificate Registrar by an
Executive Officer thereof as to the names and addresses of the Holders of the
Registered Certificates and the principal amounts and numbers of such Registered
Certificates.

      Upon surrender for registration of transfer of any Registered Certificate
at the office or agency of the Trustee, if the requirements of Section 8-401(1)
of the Uniform Commercial Code are met to the Trustee's satisfaction, and
subject to the transfer restrictions set forth in Section 5.11 hereof, the
Trustee shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Registered Certificates of any
authorized denominations, of a like aggregate Certificate Principal Balance. All
transfers of Registered Certificates are subject to the approval of the Trustee
and the Trustee shall not register any transfer of Registered Certificates if
such transfer would violate any provision of the Trust Agreement.

            (b) At the option of the Holder, Registered Certificates may be
exchanged for other Registered Certificates of any authorized denomination or
denominations of like tenor and aggregate Certificate Principal Balance upon
surrender of the Registered Certificates to be exchanged at the office or agency
of the Trustee maintained for such purpose. Whenever any Registered Certificates
are so surrendered for exchange, the
<PAGE>

Trustee shall execute, authenticate and deliver the Registered Certificates that
the Holder making the exchange is entitled to receive.

      All Registered Certificates issued upon any registration of transfer or
exchange of Certificates shall constitute complete and indefeasible evidence of
ownership in the Trust Property and be entitled to the same benefits under the
Trust Agreement as the Certificates surrendered upon such registration of
transfer or exchange.

            (c) Every Registered Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or the
Certificate Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar, duly executed, by the Holder thereof or his attorney duly authorized
in writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in The City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and such other documents as the Trustee may
require.

      No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee may require payment by the
Holders of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates.

      Section 5.04. Mutilated, Destroyed, Lost and Stolen Certificates. If (i)
any mutilated Certificate is presented to the Depositor and the Trustee or (ii)
the Depositor and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate, and there is delivered to the
Depositor and the Trustee such security or indemnity as they may require to save
each of them and any Paying Agent harmless, and neither the Depositor nor the
Trustee receives notice that such Certificate has been acquired by a bona fide
purchaser, then, in each case, the Trustee, shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, form, terms and principal
amount, bearing a number not contemporaneously Outstanding, so that neither gain
nor loss in interest shall result from such exchange or substitution.

      Upon the issuance of any new Certificate under this Section, the Trustee
may require the payment by the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

      Every new Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust Property, whether
or not the destroyed, lost or stolen Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of the Trust
Agreement equally and proportionately with any and all other Certificates, if
any, duly issued thereunder.

      The terms of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates.

      Section 5.05. Distributions in Respect of Certificates. (a) Any per
Certificate amount in respect of a Registered Certificate that is payable and is
punctually paid or duly provided for on any Distribution Date or any other date
shall be distributed to the Person in whose name such Registered Certificate (or
one or more Predecessor Certificates) is registered at the close of business on
the related Record Date notwithstanding the cancellation of such Registered
Certificate upon any transfer or exchange subsequent to such related Record
Date. Distributions on Registered Certificates shall be made, in accordance with
arrangements satisfactory to the Trustee, by wire transfer to an account
designated in writing by a Holder, or, in the case of distributions of
Underlying Securities in kind, by delivery of such Underlying Securities to any
DTC or other depositary account designated in writing by a Holder, or, if such
arrangements with respect to any Holder are not so made no later than 15
calendar days prior to the applicable Distribution Date, at the Corporate Trust
Office (with respect to the final distribution and distributions in kind of
Underlying Securities) or by check mailed to the address of the Person entitled
thereto as such address shall appear in the Certificate Register.

            (b) Subject to the foregoing terms of this Section, each Certificate
delivered under the Trust Agreement upon transfer of or in exchange for or in
lieu of any other Certificate shall carry the rights to amounts to be
distributed that are accrued and undistributed, and to accrue, that were carried
by such other Certificate.
<PAGE>

      Section 5.06. Persons Deemed Owners. Subject to Section 5.05 and except
for the final distribution, the Depositor and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name any Registered
Certificate is registered as the owner of such Certificate on the related Record
Date for the purpose of receiving distributions of principal of (and premium, if
any) and (subject to Section 5.05) interest, if any, on such Certificate and for
all other purposes whatsoever, whether or not such Certificate be overdue, and
neither the Depositor, the Trustee, nor any agent of the Depositor or the
Trustee shall be affected by notice to the contrary. All distributions made to
any such Holder, or upon his order, shall be valid, and, to the extent of the
sum or sums paid, effectual to satisfy and discharge the liability for moneys
distributable upon such Certificate.

      Section 5.07. Cancellation. All Certificates surrendered for payment,
redemption, transfer or exchange shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by it.
No Certificates shall be authenticated in lieu of or in exchange for any
Certificates canceled as provided in this Section, except as expressly permitted
by the Trust Agreement.

      Section 5.08. Currency of Distributions in Respect of Certificates;
Redenomination. (a) Except as provided in (b) below, distributions of the
principal of (and premium and interest, if any) on the Certificates will be made
in the Specified Currency.

            (b) Except as set forth below or unless otherwise provided in the
Terms Schedule, if distributions in respect of a Certificate are required to be
made in a Specified Currency other than U.S. dollars and such currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the control of the Depositor or the Trust or their respective Affiliates,
or is no longer used by the government of the country issuing such currency or
for the settlement of transactions by public institutions of or within the
international banking community (other than under the circumstances described in
(c)), then all distributions in respect of such Certificate shall be made at a
time and in a manner determined by the Exchange Rate Agent in its sole
discretion, which may be in the Specified Currency at such time as such currency
is again available or so used or in such other currency and at such rates as the
Exchange Rate Agent shall determine.

      Each of the protections, releases, indemnities and other terms applicable
to the Trustee under Section 10.01, 10.02, 10.03 and 10.05 shall apply to the
Exchange Rate Agent in connection with its actions as Exchange Rate Agent for
the Trust.

      Section 5.09. Appointment of Paying Agent. (a) The Trustee may appoint one
or more paying agents (each, a "Paying Agent") with respect to the Certificates.
Any such Paying Agent shall be authorized to make distributions to Holders
pursuant to the Trust Agreement and shall report the amounts of such
distributions to the Trustee. The Trustee may remove the Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under the Trust Agreement in any material
respect or if the Paying Agent fails to satisfy the eligibility requirements set
forth in paragraph (b) of this Section. The Paying Agent shall initially be the
Trustee and any co-paying agent chosen by the Depositor and acceptable to the
Trustee. Any Paying Agent shall be permitted to resign as Paying Agent upon 30
days written notice to the Trustee. In the event that the Trustee shall no
longer be the Paying Agent, the Trustee shall appoint a successor or additional
Paying Agent and shall provide written notice of such appointment to the Rating
Agencies, if any. The Trustee shall cause each such Paying Agent to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that it will hold all sums, if any, held by it for distribution to
the Holders in an Eligible Account in trust for the benefit of the Holders
entitled thereto until such sums shall be distributed to such Holders. The
Paying Agent shall return all. unclaimed funds to the Trustee within two years
from the time such funds were first eligible to be claimed and promptly upon
removal shall also return all funds in its possession to the Trustee.

            (b) The Paying Agent shall at all times be a corporation or an
association, the combined capital and surplus of which is at least $50,000,000
and the long-term debt obligations of which are rated in one of the four highest
categories assigned long-term debt obligations by each of the Rating Agencies,
and is subject to supervision of examination by Federal or State authority. If
such corporation or association publishes reports of conditions at least
annually, pursuant to combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In the event that at any
time the Paying Agent shall cease to be eligible in accordance with the terms of
this paragraph, the Paying Agent shall release all Trust Property to the Trustee
and then resign immediately. Upon such resignation, the Trustee shall act as
Paying Agent until the appointment of a successor Paying Agent in accordance
with paragraph (c) of this Section.
<PAGE>

            (c) The terms of Sections 10.01, 10.02, 10.03, 10.05 and 10.06 shall
apply to the Trustee also in its role as Paying Agent, for so long as the
Trustee shall act as Paying Agent.

            (d) Any reference in the Trust Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.

      Section 5.10. Authenticating Agent. (a) The Trustee may appoint any one or
more Authenticating Agents (each, an "Authenticating Agent") with respect to the
Certificates which shall be authorized to act on behalf of the Trustee in
authenticating the Certificates in connection with the issuance, delivery and
registration or transfer or exchange of the Certificates. Whenever reference is
made in the Trust Agreement to the authentication of Certificates by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Depositor.

            (b) Any institution succeeding to the corporate agency business of
any Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filling of any power or any further act on the part of the
Trustee or such Authenticating Agent. An Authenticating Agent may at any time
resign by giving notice of resignation to the Trustee, the Depositor and the
Rating Agencies. The Trustee may at any time terminate the agency of an
Authenticating Agent by signing notice of termination to such Authenticating
Agent and to the Depositor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time an Authenticating Agent shall cease
to be acceptable to the Trustee or the Depositor, the Trustee may appoint a
successor Authenticating Agent. Subsequent to any such removal or resignation of
the Authenticating Agent, the Trustee shall act as Authenticating Agent until a
successor Authenticating Agent, if any, is appointed. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless acceptable to the Depositor. The
Trustee agrees to pay to each Authenticating Agent from time to time reasonable
compensating for its services under this Section. The provision of Sections
10.01, 10.02 and 10.03 shall be applicable to any Authenticating Agent.

            (c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:

      This is one of the Certificates described in the Trust Agreement.

      By:    ______________________________
             as Authenticating Agent for the Trustee,

      By:    ______________________________
             Authorized Signatory

      Section 5.11. Issuance and Transfer Restrictions. (a) The Certificates
shall be issued on the Original Issue Date upon (i) deposit of the Underlying
Securities into the Trust by the Depositor in exchange for all the Certificates,
(ii) satisfaction of the conditions set forth in Section 2.06 and (iii) the due
authentication by the Trustee of the Certificates in the form set forth in
Exhibit B attached hereto.

            (b) In the event that the Terms Schedule provides that the
Certificates will be Book-Entry Certificates, the following terms shall apply:

            (i) The Certificates will be represented by one or more Global
      Securities registered (in the case of Registered Certificates) in the name
      of a Depositary or its nominee.

            (ii) Unless otherwise provided in the Certificates or the Terms
      Schedule, any Global Security representing Registered Certificates shall
      be exchangeable for Certificates registered in the name of Persons other
      than the Depositary or its nominee only if (i) the Depositary is no longer
      willing or able to act as a depositary and the Trustee is unable to locate
      a qualified successor within 30 days, or (ii) there shall have occurred
      and be continuing an event specified in Section 9.01. Upon such issuance,
      the Trustee shall register such Certificates in the name of, and cause the
      same to be delivered to, such Person or Persons (or the nominee thereof)
      consistent with Section 5.03.
<PAGE>

            (iii) Any Global Security representing Registered Certificates may
      bear a legend in substantially the following form:

            "This Certificate is a Global Security within the meaning of the
            Trust Agreement hereinafter referred to and is registered in the
            name of a Depositary or a nominee of a Depositary. This Certificate
            is exchangeable for Certificates registered in the name of a person
            other than the Depositary or its nominee only in the limited
            circumstances described in the Trust Agreement, and may not be
            transferred except as a whole by the Depositary to a nominee of the
            Depositary or by a nominee of the Depositary to the Depositary or
            another nominee of the Depositary."

            (c) (i) If the Terms Schedule provides that the "Alternative
      Non-Plan ERISA Restrictions" apply, Certificates will be issued only as
      definitive Registered Certificates and no transfer of any Certificate
      evidencing a Certificate shall be made to any employee benefit plan,
      domestic or foreign, whether or not subject to ERISA, or described in
      Section 4975(e)(1) of the Code, or comparable terms of any subsequent
      enactments, or a trustee of any such plan, or an entity whose underlying
      assets include the assets of any such plan (each of the foregoing a
      "Benefit Plan"), unless immediately after such transfer, either (x) no
      Certificates are held by a Benefit Plan subject to the fiduciary
      responsibility terms of Part 4, Subtitle B, Title I of ERISA, described in
      Section 4975(e)(1) of the Code or subject to substantially similar legal
      requirements (an "ERISA Benefit Plan") or (y) Certificates representing a
      percentage interest of not more than 24.9% are held by Benefit Plans (for
      this purpose the percentage interest shall be calculated as if any
      Certificates held by the Depositor, the Trustee or any of their affiliates
      (within the meaning of Department of Labor Reg. ss.ss. 2510.3-101(f)(3))
      were not outstanding). If the Terms Schedule provides that the Alternative
      Non-Plan ERISA Restrictions apply, the Underwriting Agreement shall
      require any prospective transferee to certify whether or not it is (or may
      become) a Benefit Plan or an ERISA Benefit Plan. In addition, each ERISA
      Benefit Plan and other Benefit Plan will be required to give assurances
      that the acquisition and holding of Certificates will not result in any
      nonexempt prohibited transaction.

            (ii) If the Terms Schedule provides that the "Alternative ERISA Plan
      Assets Representations" apply, the restrictions described in (c)(i) above
      will not apply. Certificates will be issued in reliance on certain
      exemptions from the prohibited transaction provisions of Section 406 of
      ERISA and Section 4975 of the Code which may be applicable, depending in
      part on the type of Plan fiduciary making the decision to acquire a
      Certificate and the circumstances under which such decision is made.
      Included among these exemptions are Prohibited Transaction Class Exemption
      ("PTCE") 91-38 (relating to investments by bank collective investment
      funds), PTCE 84-14 (relating to transactions effected by a "qualified
      professional asset manager"), PTCE 90-1 (relating to investments by
      insurance company pooled separate accounts) and PTCE 96-23 (relating to
      transactions determined by in-house asset managers). Where "Alternative
      ERISA Plan Assets Representations" apply, BY ITS PURCHASE OF ANY
      CERTIFICATE, THE PURCHASER THEREOF WILL BE REQUIRED TO REPRESENT AND AGREE
      (OR, IF PERMITTED IN THE DISCRETION OF THE DEPOSITOR, DEEMED TO HAVE
      REPRESENTED AND AGREED) EITHER THAT (A) IT IS NOT AND FOR SO LONG AS
      CERTIFICATES ARE HELD WILL NOT BE AN ERISA BENEFIT PLAN, AN ENTITY WHOSE
      UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY ERISA PLAN, OR A GOVERNMENTAL
      PLAN OR OTHER BENEFIT PLAN (OR AN ENTITY WHOSE ASSETS ARE DEEMED FOR
      PURPOSES OF APPLICABLE LAW TO BE ASSETS OF A BENEFIT PLAN) WHICH IS
      SUBJECT TO ANY FEDERAL, STATE, LOCAL OR FOREIGN LAW THAT IS SUBSTANTIALLY
      SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
      CODE OR (B) ITS PURCHASE, HOLDING AND DISPOSITION OF A CERTIFICATE WILL
      NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
      SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL PLAN OR OTHER
      BENEFIT PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE, LOCAL OR FOREIGN
      LAW) FOR WHICH AN EXEMPTION IS NOT AVAILABLE.

            (iii) Unless the Alternative Non-Plan ERISA Restrictions or
      Alternative ERISA Plan Assets Representations apply, no Certificate may be
      transferred to any ERISA Benefit Plan. Notwithstanding the preceding
      sentence, unless the Alternative Non-Plan ERISA Restrictions apply, each
      person who acquires a Certificate, and each fiduciary which causes a
      person to acquire a Certificate, in such
<PAGE>

      fiduciary's individual capacity, hereby agrees to indemnify and hold
      harmless the Depositor, the Swap Counterparty, the Trustee and their
      affiliates from any cost, damage, loss or expense incurred by them as a
      result of such person being or being deemed to be an ERISA Benefit Plan.

            (iv) The Depositor may specify restrictions on investment by ERISA
      Benefit Plan and other Benefit Plans that are different from those
      specified above or in this Section 5.11.

            (d) The Trustee and the Depositor are entitled to request additional
evidence from a proposed transferee of such Certificates to ensure to their sole
satisfaction the accuracy of the representations in the items in the
Underwriting Agreement described above.

            (e) If, at any time, the Trustee learns that any of the
representations or warranties provided by a potential transferee of Certificates
is false or that any agreement made therein has been violated, any transfer of a
Certificate to such potential transferee shall be null and void ab initio. The
Trustee will arrange for the compulsory sale (at a price determined by the
Depositor) for any Certificate sold or otherwise acquired in contravention of
any of the transfer restrictions set forth herein. The Trustee shall also have
such other powers to effect compliance with the terms of this Section 5.11 as it
deems appropriate.

            (f) If the Terms Schedule specifies that the "QIB Restriction" is
applicable, sales of the Certificates will be restricted to "qualified
institutional buyers" as defined in Rule 144A under the Securities Act, and each
purchaser of the Certificates is deemed to represent (or in the case of
definitive Certificates, shall be required to represent) for the benefit of the
Depositor, the Trustee and each Underwriter that such purchaser is a "qualified
institutional buyer."

            (g) Each Certificate shall be required to bear a legend describing
the restrictions on transferability set forth in this Section 5.11 applicable
thereto.

      Section 5.12. Optional Exchange.

            (a) In order for a Certificate of a given Exchangeable Series (or
Class within such Exchangeable Series) to be exchanged by the applicable Holder,
the Trustee must receive, at least 30 (or such shorter period acceptable to the
Trustee) but not more than 45 days prior to an Optional Exchange Date (i) such
Certificate with the form entitled "Option to Elect Exchange" on the reverse
thereof duly completed or (ii) in the case of Registered Certificates, a
telegram, telex, facsimile transmission or letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc., the
Depositary (in accordance with its normal procedures) or a commercial bank or
trust company in the United States setting forth the name of the Holder of such
Registered Certificate, the Certificate Principal Balance or Notional Amount of
such Registered Certificate to be exchanged, the certificate number or a
description of the tenor and terms of such Registration Certificate, a statement
that the option to elect exchange is being exercised thereby and a guarantee
that the Registered Certificate to be exchanged with the form entitled "Option
to Elect Exchange" on the reverse of the Registered Certificate duly completed
will be received by such Trustee not later than five Business Days after the
date of such telegram, telex, facsimile transmission or letter. If the procedure
described in clause (ii) of the preceding sentence is followed, then such
Registered Certificate and form duly completed must be received by such Trustee
by such fifth Business Day. Any tender of a Certificate by the Holder for
exchange shall be irrevocable. The exchange option may be exercised by the
Holder of a Certificate for less than the entire Certificate Principal Balance
of such Certificate provided that the Certificate Principal Balance or Notional
Amount, as applicable, of such Certificate remaining Outstanding after
redemption is an authorized denomination and all other exchange requirements set
forth in the related Terms Schedule are satisfied. Upon such partial exchange,
such Certificate shall be canceled and a new Certificate or Certificates for the
remaining Certificate Principal Balance thereof shall be issued (which, in the
case of any Registered Certificate, shall be in the name of the Holder of such
exchanged Certificate).

            (b) Unless otherwise provided in the Terms Schedule, upon the
satisfaction of the foregoing conditions and any applicable conditions with
respect to the related Trust Property, the applicable Holder will be entitled to
receive a distribution of a pro rata share of the Trust Property related to the
Exchangeable Series (and Class within such Exchangeable Series) of the
Certificate being exchanged, in the manner and to the extent described in the
Terms Schedule. Alternatively, if so specified in the Terms Schedule, the
applicable Holder, upon satisfaction of such conditions, may direct the Trustee
to sell, on behalf of such Holder, such pro rata share of the Trust Property, in
which event the Holder shall be entitled to receive the net proceeds of such
sale, less any costs and
<PAGE>

expenses incurred by such Trustee in facilitating such sale, subject to any
additional adjustments set forth in the Terms Schedule.

      Any right of exchange in respect of Certificates of an Exchangeable Series
shall be exercisable only to the extent that the Depositor determines that such
exchange would not be inconsistent with the Depositor's and such Trust's
continued satisfaction of the applicable requirements for exemption under Rule
3a-7 under the Investment Company Act. The Terms Schedule shall set forth
additional terms pertaining to any right of exchange, including but are not
limited to, the following:

            (i) a requirement that the exchanging Holder tender to the Trustee
      Certificates of each Class within such Exchangeable Series;

            (ii) a minimum Certificate Principal Balance or Notional Amount, as
      applicable, with respect to each Certificate being tendered for exchange;

            (iii) a requirement that the Certificate Principal Balance or
      Notional Amount, as applicable, of each Certificate tendered for exchange
      be an integral multiple of an amount specified in the Terms Schedule;

            (iv) specified dates during which a Holder may effect such an
      exchange (each, an "Optional Exchange Date");

            (v) limitations on the right of an exchanging Holder to receive any
      benefit upon exchange from any Credit Support or other non-Underlying
      Securities deposited in the applicable Trust;

            (vi) adjustments to the value of the proceeds of any exchange based
      upon the Holder's allocable share of expenses incurred but not yet paid
      and the establishment of a reserve for any allocable Extraordinary Trust
      Expenses as set forth in the Terms Schedule; and (vii) a requirement that
      the exchanging holder obtain the consent of any Swap Counterparty to such
      exchange and tender to the Swap Counterparty a termination payment for
      termination of the portion of the Swap Agreement corresponding to the
      portion of the Underlying Securities to be distributed by the Trustee.

      If the Terms Schedule states that "Depositor Optional Exchange" is
applicable to the Certificates of a given Series, any Certificates held by the
Depositor or its affiliates from time to time will be subject to optional
exchange by the Depositor or such affiliates, but not by other Holders, for a
pro rata portion of the Trust Property of the related Trust, subject to one or
more of the conditions set forth in (b) above and as described in the Terms
Schedule, to the above limitations under Rule 3a-7 and to such other conditions
as may be specified in the Terms Schedule.

      Section 5.13. Callable Certificates. If one or more specified Persons has
the right to purchase all or a portion of the Certificates of any given Series,
the Terms Schedule will designate such Series as a "Callable Series," and
specify the terms upon which any such specified Person may exercise its right to
purchase all or a portion of the Certificates. Such terms may relate to, but are
not limited to, the following:

            (i) a minimum Certificate Principal Balance with respect to each
      Certificate being purchased;

            (ii) a requirement that the Certificate Principal Balance of each
      Certificate being purchased be an integral multiple of a specified amount;

            (iii) specified dates during which such a purchase may be effected
      (each, a "Call Date"); and (iv) the price at which such a purchase may be
      effected (the "Call Price").

      After receiving notice of the exercise of such a call right, the Trustee
will provide notice thereof as specified in the Terms Schedule. Upon the
satisfaction of any applicable conditions to the exercise of such right to
purchase of the Certificates described in such Terms Schedule, each Holder will
be entitled to receive a distribution of a pro rata share of the Call Price paid
in connection with such exercise, in the manner and to the extent described in
such Terms Schedule.

      Section 5.14. Delivery of Information. The Trustee shall deliver to the
Holders copies of all notices and communications it receives from the Underlying
Security Issuer, including notice of any exercise of any Call
<PAGE>

Option with respect to the Underlying Securities by the Underlying Security
Issuer. The Trustee shall also notify the Holders of any call of the Underlying
Securities by the Counterparty under the terms of the Swap Agreement.

                                   ARTICLE VI

                                  THE DEPOSITOR

      Section 6.01. Liability of the Depositor. The Depositor shall be liable in
accordance with the Trust Agreement only to the extent of the obligation
specifically imposed thereby.

      Section 6.02. Limitation on Liability of the Depositor. (a) Unless
otherwise expressly specified in the Trust Agreement, the Depositor shall not be
under any obligation to expend or risk its own funds, except to the extent of
its obligation to pay any amount payable under the [Trustee Fee Letter] [draft]
or under Section 10.05(b) hereof, or otherwise incur financial liability in the
performance of its duties thereunder or in the exercise of any of its rights or
powers if reasonable grounds exist for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

            (b) Neither the Depositor nor any of the directors, officers,
employees or agents of the Depositor shall be under any liability to the
Trustee, the Trust Property or the Holders 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 the Depositor or any such person against any breach of
warranties, representations or covenants made in the Trust Agreement, or against
any specific liability imposed on the Depositor pursuant to the Trust Agreement,
or against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties specifically
set forth in the Trust Agreement or by reason of reckless disregard of
obligations and duties specifically set forth in the Trust Agreement.

      The Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action unless such action is related to its duties under the
Trust Agreement and, in its reasonable opinion, does not involve it in any
expense or liability; provided, however, that the Depositor may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to the Trust Agreement and the rights and duties of the parties
thereto and the interests of the Holders.

      Section 6.03. Depositor May Purchase Certificates. The Depositor or its
Affiliates may at any time purchase Certificates in the open market or
otherwise. Certificates so purchased by the Depositor may, at the discretion of
the Depositor, be held or resold.

      Section 6.04. Preparation and Filing of Exchange Act Reports; Obligations
of the Depositor. The Depositor shall:

            (a) on behalf of the Trust, prepare, sign and file with the
Commission, within the time period set forth below, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by rules and
regulations prescribe), if any, which the Depositor on behalf of the Trust may
be required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act (collectively, "Exchange Act Reports") with respect to the Trust.
The names of such Exchange Act Reports and the dates on which they are required
to be filed with the Commission are as follows:

            (i) Form 8-K, within the time requirement prescribed by the Exchange
      Act if the filing of Form 8-K is necessary;

            (ii) Form 10-K, within the time requirement prescribed by the
      Exchange Act; and (iii) such other reports as may be required pursuant to
      Section 13 or 15(d) of the Exchange Act.

            (b) deliver to the Trustee within 15 days after the Depositor is
required to file the same with the Commission, such additional information,
documents and reports with respect to compliance by the Depositor with the
conditions and covenants of this Agreement, if any, as may be required to be
filed with the Commission from time to time by such rules and regulations; and

            (c) deliver to the Trustee, which shall then transmit by mail to all
Holders described in TIA Section 313(c), in the manner and to the extent
provided therein, such summaries of any information, documents and
<PAGE>

reports required to be filed by the Depositor and received pursuant to clauses
(a) and (b) of this Section 6.04, if any, as may be required by rules and
regulations prescribed from time to time by the Commission.

      Section 6.05. Preferential Collection of Claims Against Depositor.
Irrespective of whether the TIA shall apply to this Agreement, the Trustee shall
comply with TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent required by TIA Section 311(a).

                                   ARTICLE VII

                          RIGHTS OF CERTIFICATEHOLDERS

      Section 7.01. Voting Rights with Respect to Underlying Securities. (a)
Within five Business Days after receipt of notice of any meeting of, or other
occasion for the exercise of voting rights or the giving of consents by, owners
of any of the Underlying Securities, the Trustee shall give notice to the
Holders, setting forth (i) such information as is contained in such notice to
owners of Underlying Securities, (ii) a statement that the Holders will be
entitled, subject to any applicable provision of law and any applicable terms of
such Underlying Securities (and to the extent of the voting rights allocated to
the Holders), to instruct the Trustee as to the exercise of voting rights, if
any, pertaining to such Underlying Securities and (iii) a statement as to the
manner in which instructions may be given to the Trustee to give a discretionary
proxy to a person designated in the notice received by the Trustee. Such notice
shall be given by the Trustee to the Holders of record on such record date.

            (b) Unless otherwise specified in the Terms Schedule the voting
rights allocable to the owners of the Underlying Securities pursuant to the
terms thereof will be allocated among the Holders pro rata, in the proportion
that the denomination of each Certificate bears to the aggregate denomination of
all Certificates; and upon the written request of the applicable Holder,
received on or before the date established by the Trustee for such purpose, the
Trustee shall endeavor, insofar as practicable and permitted under any
applicable provision of law and any applicable provision of or governing the
Underlying Securities, to vote in accordance with any nondiscretionary
instruction set forth in such written request, provided, that the Trustee shall
not vote except as specifically authorized and directed in written instructions
from the applicable Holder entitled to give such instructions.

            (c) Notwithstanding Section 7.01(b), the Trustee must reject any
vote to (i) alter (based on an opinion of counsel) the status of the Trust as a
grantor trust for federal income tax purposes or (ii) alter the currency, amount
or timing of payment of, or the method or rate of accruing, any principal or
interest on the Underlying Securities underlying the Certificates held by such
Holder or (iii) consent to any redemption or prepayment of the Underlying
Securities underlying the Certificates held by such Holder or (iv) consent to
the issuance of new obligations in exchange or substitution for any Underlying
Securities pursuant to a plan or refunding of the Underlying Securities or any
other offer for the Underlying Securities; in each case unless the Trustee is
directed by the affirmative vote of all Holders to accept such amendment or
offer as the case may be and unless an event of default under the Underlying
Securities Indenture has occurred; and provided, further, that the Trustee
receives advice of nationally recognized independent tax counsel, designated by
the Depositor, that such exercise of voting rights with respect to any
Underlying Securities would not result in a "sale or other disposition" of such
Underlying Securities within the meaning of Section 1001(a) of the Code. The
Trustee will not grant any consent (other than a unanimous consent) solicited
from the owners of the Underlying Securities underlying the Certificates with
respect to the foregoing matters in (i), (ii) and (iii) above nor will it accept
or take any action in respect of any consent, proxy or instructions received
from any Holder in contravention of such provisions. In addition, if the Trustee
determines (based upon advice furnished by nationally recognized independent tax
counsel, whether at the request of any Holder or otherwise) that the exercise of
voting rights with respect to any Underlying Securities could result in a "sale
or other disposition" of such Underlying Securities within the meaning of
Section 1001(a) of the Code, the Trustee shall exercise such voting rights in a
manner that would not result in any such sale or other disposition. The Trustee
will have no responsibility to undertake on its own initiative to determine that
any exercise of voting rights will result in any such sale or other disposition
and in any event will not undertake to make such determination unless given an
indemnity reasonably satisfactory to it against the costs of such determination.

            (d) The Trustee will not be liable for any failure to act resulting
from certificateholders' late return of, or failure to return, directions
requested by the Trustee from the certificateholders.
<PAGE>

      Section 7.02. Amendments and Waivers Under Swap Agreement and Swap
Guarantee. Without the need for consent of or notice to any Holder, the Trustee
shall enter into any amendment of the Swap Agreement or the Swap Guarantee
requested by the Swap Counterparty or the Swap Guarantor, respectively, to cure
any ambiguity or manifest error in, or to correct or supplement any provision
of, the Swap Agreement or the Swap Guarantee, so long as (i) the Trustee
determines that such amendment will not adversely affect the interests of the
Holders and (ii) the Trustee has received an Opinion of Counsel, at the expense
of the Swap Counterparty or the Swap Guarantor, to the effect that such
amendment will not adversely affect the interests of the Holders and will not
alter the classification of the Trust for Federal income tax purposes. The
Trustee shall not agree to any other request from the Swap Counterparty or the
Swap Guarantor for approval of any consent, waiver or other modification of the
Swap Agreement or the Swap Guarantee without the consent of the Holders of the
Required Percentage of Voting Rights and compliance with clause (ii) of the
preceding sentence.

                                  ARTICLE VIII

           DEFAULT ON UNDERLYING SECURITIES AND PERMITTED INVESTMENTS

      Section 8.01. Realization Upon Default. (a) The Trustee, on behalf of the
Holders, shall assert claims under the Underlying Securities or the Permitted
Investments, and shall take such reasonable steps as are necessary to receive
payment or to permit recovery thereunder with respect to any default, subject in
all cases to the terms of Article X.

            (b) If the Trustee is unable to obtain full recovery in respect of a
defaulted Underlying Security or Permitted Investment, the Trustee shall follow
or cause to be followed such normal practices and procedures as it deems
necessary or advisable to realize upon such defaulted Underlying Security or
Permitted Investment, subject in all cases to the terms of Article X.

            (c) If there is an event of default (as defined in the Underlying
Security Indenture) with respect to any Underlying Security and such default is
known to the Trustee, the Trustee shall promptly give notice to the Holders
thereof as promptly as practicable as provided in Section 12.05 hereof, and in
the manner and to the extent provided in TIA Section 313(c)) within 90 days
after such event of default occurs.

            (d) Except as otherwise expressly provided in the applicable
prospectus supplement and the Terms Schedule attached hereto, if the proceeds of
any liquidation of the defaulted Deposited Assets are less than the sum of (i)
the outstanding principal balance of the defaulted Deposited Asset, (ii)
interest accrued but unpaid thereon at the applicable interest rate and (iii)
the aggregate amount of expenses incurred by the Trust Administrator and the
trustee in connection with such proceedings to the extent reimbursable from the
assets of the trust under the trust agreement, the trust will realize a loss in
the amount of such difference.

            (e) Only if and to the extent provided in the applicable prospectus
supplement and in the Terms Schedule attached hereto, the Trust Administrator or
trustee, as so provided, will be entitled to withdraw or cause to be withdrawn
from the related Certificate Account out of the net proceeds recovered on any
defaulted Deposited Asset, prior to the distribution of such proceeds to
certificateholders, amounts representing its normal administrative compensation
on the Deposited Asset, unreimbursed administrative expenses incurred with
respect to the Deposited Asset and any unreimbursed advances of delinquent
payments made with respect to the Deposited Asset.

                                   ARTICLE IX

                              TRUST WIND-UP EVENTS

      Section 9.01. Trust Wind-Up Events. If any of the following events (each
event, a "Trust Wind-up Event") shall occur:

            (a) any Swap Default arising from any action taken or failure to
act, by the Swap Counterparty, if applicable;

            (b) the occurrence of one or more Underlying Security Defaults which
either (i) results in an Underlying Security Default with respect to all
Underlying Securities held by the Trust or (ii) results in a
<PAGE>

Termination Event under the Swap Agreement with respect to which all
Transactions under the Swap Agreement are Affected Transactions;

            (c) any Termination Event under the Swap Agreement with respect to
which the Swap Counterparty shall be the sole "Affected Party" (as defined in
the Swap Agreement); provided that at the time of such occurrence no Settlement
Amount would be payable by the Trust to the Swap Counterparty upon designation
of an Early Termination Date by the Trust;

            (d) any Transaction under the Swap Agreement has become a
Disqualified Transaction and (i) the Trust is not a party to any other
Transaction under the Swap Agreement which is not a Disqualified Transaction and
the Terms Schedule does not set forth provisions for substituting a replacement
Swap Counterparty, or (ii) the Terms Schedule provides that a Trust Wind-Up
Event shall occur upon such Transaction becoming a Disqualified Transaction;

            (e) the designation of an Early Termination Date by the Swap
Counterparty under a related Swap Agreement (other than with respect to the
termination of fewer than all Transactions entered into under the Swap
Agreement);

            (f) the designation of a Special Depositor Wind-Up Event described
in Section 9.06;

            (g) any Underlying Security held by the Trust becomes a Disqualified
Underlying Security and (i) the Trust holds no other Underlying Security which
is not a Disqualified Underlying Security or (ii) the Terms Schedule provides
that a Trust Wind-Up Event shall occur upon such Underlying Security becoming a
Disqualified Underlying Security;

            (h) any Credit Support held by the Trust becomes Disqualified Credit
Support and the Terms Schedule specifies that a Trust Wind-Up Event shall occur
upon such Credit Support becoming Disqualified Credit Support;

            (i) any Excess Expense Event;

            (j) any Trust Administrator Termination Event;

            (k) any Certificate Event of Default; and

            (l) any other Trust Wind-Up Event set forth in the Terms Schedule;

then the Trustee shall by notice to the Swap Counterparty terminate the Swap
Agreement (including all Transactions thereunder) if such notice is applicable
under the Swap Agreement, and the Trustee shall distribute to each Holder its
pro rata share of the Trust Property in accordance with Section 9.03 and the
Trust shall terminate. The Trustee shall also provide notice of such Trust
Wind-up Event to the Rating Agencies immediately upon discovery or receipt of
notice of such Trust Wind-Up Event.

      Section 9.02. Liquidation Events.

            (a) In the event that (i) an Underlying Security Default shall occur
which under the terms of the Swap Agreement results in the termination of at
least one but fewer than all Transactions under the Swap Agreement or (ii) any
Underlying Security held by the Trust becomes a Disqualified Underlying
Security, but the Trust holds one or more other Underlying Securities which are
not Disqualified Underlying Securities, and a Trust Wind-Up Event has not
otherwise occurred, then the Affected Underlying Securities (and, if necessary,
other Trust Property) shall be sold to the extent necessary to pay any
Termination Payment applicable to the Affected Transaction under the Swap
Agreement, and the remainder distributed to the Holders in accordance with
Section 9.03, but the Trust shall continue thereafter.

            (b) In the event that any Transaction under a Swap Agreement becomes
a Disqualified Transaction but the Trust holds one or more other Underlying
Securities other than the Affected Underlying Securities which are not
Disqualified Underlying Securities and a Trust Wind-Up Event has not otherwise
occurred, then the Affected Underlying Securities (and, if necessary, other
Trust Property) shall be sold to the extent necessary to pay any Termination
Payment applicable to the Disqualified Transaction under the Swap Agreement, and
the remainder distributed to the Holders in accordance with Section 9.03, but
the Trust shall continue thereafter.
<PAGE>

            (c) In the event that any Credit Support becomes Disqualified Credit
Support but a Trust Wind-Up Event has not otherwise occurred, then such Credit
Support shall be terminated and any proceeds of such termination shall be
distributed pro rata to the Holders, but the Trust shall continue thereafter.

      Section 9.03. Trust Property Made Available. (a) Subject to Section 9.04,
as promptly as possible after the occurrence of a Trust Wind-up Event or
Liquidation Event, and in any case within three Business Days following such
occurrence, the Trustee shall provide notice to the Holders and the Rating
Agencies of the occurrence of a Trust Wind-up Event or Liquidation Event, the
termination of the Swap Agreement or the particular Affected Transaction(s)
thereunder, the amount of any related Termination Payment and a notice of the
rights of the Holders under Section 9.03(c). In the case of a Trust Wind-Up
Event, subject to Section 9.01, the Trustee shall also provide notice to the
Holders and the Rating Agencies of the termination of the Trust and that Holders
should surrender their Certificates to the Trustee, or deliver security or
indemnity acceptable to the Trustee, for their respective pro rata distributions
of the Underlying Securities and any other remaining Trust Property, if any.
Such notice to the Holders and the Rating Agencies shall also specify (i) the
cause of the Trust Wind-up Event, (ii) the location and hours of the Corporate
Trust Office at which Certificates should be presented and surrendered and (iii)
that each Holder must supply transfer instructions in writing with respect to
the Underlying Securities and/or other Trust Property to be distributed in cash
or in kind.

            (b) Immediately upon receipt of notice from the Swap Counterparty
that the Trust will be obligated to pay a Termination Payment or upon other
notice from the Trustee that the Trust is required to sell Underlying
Securities, the Selling Agent shall undertake to sell Underlying Securities on
behalf of the Trust, unless and until the Selling Agent receives notice from the
Trustee of an exercise by the Holders of their rights under Section 9.03(c);
provided, however, that the Selling Agent may elect not to act as Selling Agent
with respect to some or all of the Underlying Securities by written notice to
that effect to the Trustee. The timing, price and other terms of any sale
conducted by the Selling Agent shall be determined by the Selling Agent in its
sole discretion, but all such sales shall be completed within 30 days or such
longer period of time as may be reasonable with respect to particular Underlying
Securities. In the case of a Liquidation Event, sales under this provision shall
be limited to the Affected Underlying Securities except where the proceeds from
the Affected Underlying Securities are insufficient to make payment of the
Termination Payment.

            (c) Notwithstanding Section 9.03(b), in connection with any
Termination Payment payable by the Trust, the Holders may, acting unanimously,
deliver to the Trustee the amount of such outstanding Termination Payment
(together with, in the case of a Trust Wind-Up Event, any Extraordinary Trust
Expenses in excess of the Maximum Reimbursable Amount payable to the Trustee)
and a written instruction to discontinue sale of the Underlying Securities. If
the Selling Agent receives notice from the Trustee of the exercise by the
Holders of their rights under this Section 9.03(c), the Selling Agent shall
promptly discontinue sales of the related Underlying Securities (but the Selling
Agent and the Trustee shall complete the settlement of any sale already agreed).
It is expressly understood and agreed that Underlying Securities may be sold in
the time necessary for the Holders to be notified of and act upon their rights
under this Section 9.03(c).

            (d) Subject to the security interest in all of the Trust Property
granted in favor of the Swap Counterparty pursuant to the Swap Agreement and the
obligation of the Trust to pay Extraordinary Trust Expenses, and as provided in
the Terms Schedule, the Underlying Securities or Affected Underlying Securities
shall be made available by the Trustee to the Holders upon the occurrence of a
Trust Wind-up Event or Liquidation Event, respectively, after expiration of any
sale period referred to in Section 9.03(b), and upon surrender, or delivery of
security or indemnity acceptable to the Trustee, by each Holder of its
Certificates at the Corporate Trust Office specified pursuant to paragraph (a)
of this Section 9.03. Upon receipt by the Trustee of (i) appropriate transfer
instructions in writing from a Holder with respect to the Underlying Securities
and (ii) such Holder's Certificates (or acceptable security or indemnity), the
Trustee shall promptly deliver Underlying Securities to such Holder in an
aggregate principal amount equal to the aggregate Certificate Principal Balance
of such Holder's Certificates in accordance with such transfer instructions by
(A) physical delivery or (B) if applicable, causing the book-entry depositary
for such Underlying Securities to credit such Underlying Securities to an
account of such Holder with such depositary or an account of a designated
participant in such depositary, provided that such book-entry depositary will be
an agency of the United States, DTC or another book-entry institution acceptable
to the Depositary. Any Transfer made in accordance with this paragraph shall
satisfy all obligations of the Trust with respect to the Holders.
<PAGE>

            (e) Unless otherwise provided in the Terms Schedule, and
notwithstanding any other provision of this Agreement (and as specified in the
Swap Agreement), in connection with early termination of a Swap Agreement or one
or more Transactions thereunder, other than as a result of Underlying Security
Default, the claim of the Swap Counterparty against the Underlying Securities
(or proceeds thereof arising from sale thereof) and any other Trust Property
will be limited to a claim pro rata with that of the Holders according to the
amount of the Termination Payment otherwise payable to the Swap Counterparty and
the Holders' aggregate Certificate Principal Balance plus accrued interest.

            (f) The only distributions from the Trustee to which the Holders
shall be entitled are, subject to the security interest in all of the Trust
Property granted in favor of the Swap Counterparty pursuant to the Swap
Agreement and the obligation of the Trust to pay Extraordinary Trust Expenses,
payments on the Underlying Securities, amounts, if any, recovered under the Swap
Agreement (including Termination Payments, if any, and amounts collected
pursuant to Section 2(e) and Section 11 of the Swap Agreement) or Swap
Guarantee, received by the Trustee after the occurrence of the Trust Wind-Up
Event, and any other remaining Trust Property, if any, which in each case the
Trustee shall distribute pro rata to the Holders in the manner provided pursuant
to Section 4.01 upon satisfaction of the conditions for transfer of Underlying
Securities referred to in paragraph (b) of this Section.

            (g) Except for reports and other information required to be provided
to Holders under the Trust Agreement, the obligations the Trustee and the
Depositor will terminate upon the distribution to Holders of all amounts
required to be distributed to them and the disposition of all Underlying
Securities held by the Trustee, and such distribution shall constitute full
satisfaction of all of the interests of the Holders under this Trust Agreement.

            (h) In the event that the Selling Agent resigns or declines to sell
specific Underlying Securities, the Trustee shall proceed under Section
10.02(a)(x).

            (i) The Selling Agent is an agent of the Trustee only and shall have
no fiduciary or other duties to the Holders, nor shall the Selling Agent have
any liability to the Trust in the absence of the Selling Agent's bad faith or
willful default. The Selling Agent shall be permitted to sell Underlying
Securities to Affiliates of the Selling Agent. The Selling Agent may (in
addition to declining to sell specific Underlying Securities as provided in
Section 9.03(b)) resign at any time by oral or written notice to the Trustee,
such resignation to take effect immediately upon notice. Except as provided in
the first sentence of this Section 9.03(i), each of the protections, releases,
indemnities and other terms applicable to the Trustee under Section 10.01,
10.02, 10.03 and 10.05 shall apply to the Selling Agent in connection with its
actions as Selling Agent for the Trust.

            (j) Subject to Section 9.03(b) and Section 9.03(e), the Trustee
agrees that upon any failure of the Trust to make any payment when due under the
Swap Agreement, the Swap Counterparty shall have the right to take all action
and to pursue all remedies with respect to such property that a secured party is
permitted to take with respect to collateral under the UCC, including the right
to require the Trustee promptly to sell all or any portion of the Underlying
Securities in the open market or, if the Swap Counterparty elects, to sell the
Underlying Securities to the Swap Counterparty for its fair value as determined
in good faith by the Swap Counterparty. In either case, the proceeds of sale
shall be applied to any amounts owed to the Swap Counterparty. The Trustee
further agrees to take any actions necessary to facilitate the perfection of the
aforementioned security interest of the Swap Counterparty in the property of the
Trust as the Swap Counterparty may reasonably request.

            (k) No Holder shall have any liability as a seller of the Trust
Property in connection with any sale of Trust Property by the Trustee or the
Selling Agent.

      Section 9.04. Limitation on Notice Requirement. The Trustee shall not be
responsible for terminating the Swap Agreement (or any individual Affected
Transaction thereunder) or giving notice of a Trust Wind-up Event unless and
until (i) the Trustee fails to receive funds due on the Underlying Securities or
under the Swap Agreement when due and such funds are not received within any
applicable grace period, (ii) receipt by the Trustee of notice from the Swap
Counterparty of the occurrence of a Swap Default or Termination Event or upon
actual knowledge of a Swap Default or Termination Event by a Responsible Officer
of the Trustee; provided, however, that the Trustee is responsible for making
due inquiry as to whether a Trust Wind-up Event occurred if it has reason to
believe that such a Trust Wind-up Event has occurred or (iii) receipt of notice
from the Underlying Security Issuer of an event constituting an Underlying
Security Default.
<PAGE>

      Section 9.05. Expense Event. (a) In the event that the Trustee incurs
Extraordinary Trust Expense in an aggregate amount exceeding the Trigger Amount
and neither the Swap Counterparty nor the Holders have provided adequate
assurance of indemnity to the Trustee in accordance with the terms of paragraph
(b) or paragraph (c), as applicable, of this Section (such event, an "Excess
Expense Event"), the Trust shall terminate as provided in Section 9.01.

            (b) Promptly upon the incurrence by the Trustee of Extraordinary
Trust Expense in an aggregate amount exceeding the Trigger Amount, and in any
event within one Business Day after such incurrence, the Trustee shall provide
notice to each Holder, to the Swap Counterparty and to the Rating Agencies, if
any. Such notice shall state that an Excess Expense Event shall occur on the
seventh calendar day (or, if such day is not a Business Day, on the next
succeeding day that is a Business Day) following the provision of such notice
unless prior to such day either the Holders unanimously agree, or the Swap
Counterparty agrees, to indemnify the Trustee for Extraordinary Trust Expense in
an aggregate amount exceeding the Maximum Reimbursable Amount (or any other
amount specified by the party agreeing to indemnify the Trustee), and actually
incurred by the Trustee as of the date of such agreement, to the reasonable
satisfaction of the Trustee and its counsel; provided, however, in no event
shall the Trustee be released from its obligations under the Trust Agreement
until such seventh calendar day (or, if such day is not a Business Day, on the
next succeeding day that is a Business Day).

            (c) Following an agreement to indemnify the Trustee for future
Extraordinary Trust Expense, upon the incurrence of Extraordinary Trust Expense
in excess of the Maximum Reimbursable Amount, then an "Excess Expense Event"
will occur unless adequate assurance of indemnity is given to the Trustee in the
manner specified in paragraph 9.05(b).

            (d) Nothing in this Section shall be construed to excuse the
Depositor from its indemnification obligations under Section 10.05.

      Section 9.06. Special Depositor Wind-Up Event. If the Depositor (or, if
applicable, its permitted assignee) owns 100% of the Certificates,

then it shall have the power to designate a distribution of the Trust Property
to the Holders and the termination of the Trust (a "Special Depositor Wind-Up
Event") pursuant to this Article IX.

                                    ARTICLE X

                             CONCERNING THE TRUSTEE

      Section 10.01. Duties of Trustee.

            (a) The Trustee undertakes to perform such duties and only such
duties as are specifically set forth in the Trust Agreement. Any permissive
right of the Trustee enumerated in the Trust Agreement shall not be construed as
a duty.

            (b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of the Trust Agreement, shall examine them to determine whether they
conform to the requirements of the Trust Agreement. If any such instrument is
found not to conform to the requirements of the Trust Agreement, 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
will provide notice thereof to the Depositor, the Holders and the Rating
Agencies, if any.

            (c) Upon a default by the Swap Counterparty in making any other
payment due under the Swap Agreement and upon a default by the Swap Guarantor
after the Trustee makes demand under the Swap Guarantee, the Trustee shall
exercise such of the rights and powers vested in it by the Trust Agreement, and
shall use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.

            (d) 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 misconduct; provided, however, that:
<PAGE>

            (i) the duties and obligations of the Trustee shall be determined
      solely by the express terms 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 (except for a fiduciary duty to the beneficiaries of the
      Trust) shall be read into the Trust Agreement against the Trustee and, in
      the absence of negligence, bad faith or willful misconduct 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;

            (ii) the Trustee shall not be personally liable for an error of
      judgment made in good faith by a Responsible Officer or Responsible
      Officers of the Trustee, unless it shall be proved that the Trustee was
      negligent in ascertaining the pertinent facts;

            (iii) except with respect to actions or duties required to be taken
      or performed, as applicable, by the Trustee under the express terms of the
      Trust Agreement, the Trustee shall not be required to expend or risk its
      own funds or otherwise incur financial liability in the performance of any
      of its duties or in the exercise of any of its rights powers under the
      Trust Agreement if there is reasonable ground for believing that the
      repayment of such funds or adequate indemnity against such risk or
      liability is not reasonably assured to it; provided, however, that the
      Trustee agrees that the indemnification under Section 10.05 will provide
      reasonable assurance against such risk or liability; and

            (iv) in the event that the Paying Agent or the Certificate Registrar
      shall fail to perform any obligation, duty or agreement in the manner or
      on the day required to be performed by the Paying Agent or Certificate
      Registrar, as the case may be, under the Trust Agreement, the Trustee
      shall be obligated promptly upon its knowledge thereof to perform such
      obligation, duty or agreement in the manner so required.

      Section 10.02. Certain Matters Affecting the Trustee. (a) Except as
otherwise provided in Section 10.01:

            (i) the Trustee may request and rely upon and shall be protected in
      acting or refraining from acting upon any resolution, Officers'
      Certificate, certificate of auditors or any other certificate, statement,
      instrument, opinion, report, notice, request, consent, order, appraisal,
      bond or other paper or document reasonably believed by it to be genuine
      and to have been signed by the proper party or parties;

            (ii) the Trustee may consult with counsel and any advice or Opinion
      of Counsel shall be full and complete authorization and protection in
      respect of any action taken or suffered or omitted by it under the Trust
      Agreement in good faith and in accordance with such advice or Opinion of
      Counsel;

            (iii) except for the duties and obligations of the Trustee expressly
      created by the Trust Agreement, 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
      Holders, pursuant to the terms of the Trust Agreement, unless such Holders
      or the Depositor shall have, to the reasonable satisfaction of the Trustee
      and its counsel, offered to the Trustee reasonable security or indemnity
      against the costs, expenses and liabilities which may be incurred therein
      or thereby;

            (iv) 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;

            (v) the Trustee shall not be bound to make any investigation into
      the facts of matters stated in any resolution, certificate, statement,
      instrument, opinion, report, notice, request, consent, order, appraisal,
      approval, bond or other paper or document believed by it to be genuine;

            (vi) the Trustee may execute any of the trusts or powers or perform
      any duties under the Trust Agreement either directly or by or through
      agents or attorneys or a custodian or Trust Administrator;
<PAGE>

            (vii) the Trustee shall not be personally liable for any loss
      resulting from the investment of funds held in any Certificate Account
      pursuant to Section 3.05;

            (viii) if no Trust Administrator Termination Event has occurred and
      is continuing with respect to any given series, the Trustee is required to
      perform only those duties specifically required under the trust agreement
      with respect to such series;

            (ix) the Trustee shall not be deemed to have notice or knowledge of
      any matter unless a Responsible Officer assigned to and working in the
      Corporate Trust Office 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 generally or the Trust
      Agreement;

            (x) the Trustee shall have the power to reimburse itself for any
      unpaid Extraordinary Trust Expense actually incurred in accordance with
      the terms and conditions of this Trust Agreement prior to the distribution
      of funds or Trust Property to Holders;

            (xi) the Trustee may, to the extent of and pursuant to the Terms
      Schedule, and pursuant to Section 3.10 hereof, but shall have no
      obligation to make advances with respect to collections on the Deposited
      Assets or in favor of the Holders; and

            (xii) the Trustee shall have the power to sell the Underlying
      Securities and other Trust Property, in accordance with Article IX and XI,
      through the Selling Agent or, if the Selling Agent shall have resigned or
      declined to sell some or all of the Underlying Securities, any broker
      selected by the Trustee (with the consent of the Depositor) with
      reasonable care, in an amount sufficient to pay any amount due to the Swap
      Counterparty under the Swap Agreement (including Termination Payments) or
      reimbursable to itself in respect of unpaid Extraordinary Trust Expenses
      and to use the proceeds thereof to make such payments prior to the
      distribution of funds or Trust Property to Holders. Any such broker shall
      be instructed by the Trustee to sell such Trust Property in a reasonable
      manner designed to maximize the sale proceeds.

            (b) All rights of action under the Trust Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the 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, subject to the terms of the Trust Agreement.

      Section 10.03. Limitation on Liability of Trustee. The Trustee assumes no
responsibility for the correctness of the recitals contained in the Trust
Agreement, the Certificates, the Swap Agreement and the Swap Guarantee, or in
any document issued in connection with the sale of the Certificates (other than
the signature and authentication on the Certificates). The sole obligor with
respect to the Underlying Securities is the related Underlying Security Issuer,
with respect to the Swap Agreement is the Swap Counterparty and with respect to
the Swap Guarantee, is the Swap Guarantor. Except as set forth in Section 10.12,
the Trustee makes no representations or warranties as to the validity or
sufficiency of the Trust Agreement, the Certificates (other than the signature
and authentication on the Certificates), any Underlying Security, the Swap
Agreement, the Swap Guarantee or of any related document. The Trustee shall not
be accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Swap Counterparty in
respect of the Underlying Securities. The Certificates do not represent
interests in or obligations of the Trustee and the Trustee shall not be
responsible or accountable for any tax, accounting or other treatment proposed
to be applied to the Certificates or any interest therein except as expressly
provided in the Trust Agreement.

      Section 10.04. 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 10.05. Trustee Fees and Expenses; Limited Indemnification.

            (a) As compensation for its regular and customary services and in
payment of its regular and customary expenses under the Trust Agreement
(including the reasonable compensation, expenses and disbursements of its
counsel for regular and customary services hereunder) the Trustee shall be
entitled to the Trustee Fees (which shall not be limited by any provision of law
in regard to compensation or payment of a trustee
<PAGE>

of an express trust). The Depositor agrees to pay such Trustee Fees when due in
accordance with the Trustee Fee Letter; provided, however, that, subject to
paragraph (b) below, the Depositor shall be under no obligation to make any
other payment for any other services and expenses, disbursements and advances of
the Trustee.

            (b) The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Depositor and held harmless against any
loss, liability or expense incurred in connection with any Proceeding relating
to the Trust Agreement, the Swap Agreement or the Certificates or the
performance of any of the Trustee's duties under the Trust Agreement, other than
any loss, liability or expense (i) that constitutes a specific liability of the
Trustee under the Trust Agreement or (ii) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's duties
thereunder or by reason of reckless disregard of the Trustee's obligations and
duties thereunder (such loss, liability or expense, other than as described in
clauses (i) and (ii) of this sentence, "Extraordinary Trust Expense"); provided,
however, that with respect to any such Proceeding, (1) the Trustee shall have
given the Depositor notice thereof promptly after the Trustee shall have
knowledge thereof; (2) while maintaining control over its own defense in any
such legal action, the Trustee shall consult with the Depositor in preparing
such defense; (3) if any Person ever alleges such willful misfeasance, bad faith
or negligence by the Trustee, the indemnification provided for in this paragraph
(b) shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged willful misfeasance,
bad faith or negligence; and (4) the Depositor shall in no event be obligated
under the Trust Agreement to indemnify the Trustee for any Extraordinary Trust
Expense to the extent that such Extraordinary Trust Expense, when aggregated
with all Extraordinary Trust Expense previously indemnified, exceeds the Maximum
Reimbursable Amount. Subject to clause (4) of the proviso to the immediately
preceding sentence, the indemnity for Extraordinary Trust Expense shall survive
the termination or discharge of the Trust Agreement and the resignation or
removal of the Trustee. In the event the Trustee is not indemnified by the
Depositor, whether due to bankruptcy, insolvency or otherwise, pursuant to the
first sentence of this paragraph, the Trustee shall nevertheless remain
obligated to perform its duties under the Trust Agreement.

            (c) The Trustee and the Depositor expressly acknowledge that the
limited obligations of the Depositor to indemnify the Trustee pursuant to
paragraph (b) of this Section do not extend to amounts attributable to
compensation for services or payment of expenses of the Trustee, which amounts
are payable in full in the form of the Trustee Fee.

      Section 10.06. Eligibility Requirements for Trustee. (a) The Trustee shall
at all times satisfy the requirements of TIA Section 310(a) and Section
(a)(4)(i) of Rule 3a-7 under the Investment Company Act. The Trustee hereunder
shall at all times be a corporation which is not an Affiliate of the Depositor
(but may have normal banking relationships with the Depositor, the
Administrative Agent or any obligor with respect to the Underlying Securities
with respect to such Series of Certificates and their respective Affiliates)
organized and doing business under the laws of any State or the United States,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or State authority, and the long-term debt obligations of
which are rated in one of the four highest categories assigned long-term debt
obligations by each of the Rating Agencies. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In the event that at any
time the Trustee shall cease to be eligible in accordance with the terms of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 10.07.

            (b) The Trustee shall comply with Section 310(b) of the TIA;
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1), any Series under which other securities are outstanding
evidencing ownership interest in obligations of the Underlying Security Issuer
if the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

      Section 10.07. Resignation or Removal of the Trustee. (a) Subject to the
last sentence of this paragraph (a), the Trustee may at any time resign and be
discharged from the Trust by giving written notice thereof to the Depositor, the
Swap Counterparty and the Swap Guarantor and to all Holders. Upon receiving such
notice or resignation, the Depositor, with the consent of the Swap Counterparty
and the Swap Guarantor which consents shall not be unreasonably withheld, shall
as promptly as possible (and in any event within 30 days after the date of such
notice of resignation) appoint a successor trustee by written instrument, in
duplicate, which instrument shall be
<PAGE>

delivered to the resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Holders, the Swap Counterparty, the Swap
Guarantor and the Rating Agencies by the Depositor. If no such 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 for
the Certificates. Upon any appointment of a successor trustee pursuant to this
paragraph (a), the resigning Trustee shall be solely liable for (i) the payment
of such successor trustee's fees and expenses and (ii) provision of adequate
indemnities satisfactory to such successor trustee (it being understood that the
indemnification obligations of the Depositor pursuant to Section 10.05(b) shall
inure to the benefit of such successor trustee, but that any Extraordinary Trust
Expense previously indemnified by the Depositor shall reduce the Maximum
Reimbursable Amount with respect to such successor trustee on a
dollar-for-dollar basis). In the event that the Trustee fails to satisfy the
conditions contained in clauses (i) and (ii) above, the Trustee may not resign
pursuant to this paragraph (a).

            (b) If at any time the Trustee shall cease to be eligible in
accordance with the terms of Section 10.06 and shall fail to resign after
written request therefor by the Depositor, 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 the
Depositor may, with the consent of the Swap Counterparty and the Swap Guarantor
which consents shall not be unreasonably withheld, remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the Holders, the Swap
Counterparty, the Swap Guarantor, and the Rating Agencies by the Depositor.

            (c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the terms of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 10.08.

      Section 10.08. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 10.07 shall execute, acknowledge and deliver to the
Depositor, its predecessor trustee and the Rating Agencies 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 under the Trust Agreement, with the like effect as if originally
named as trustee in the Trust Agreement. The predecessor trustee shall deliver
to the successor trustee all documents and statements held by it under the Trust
Agreement, and the Depositor 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 unless at the time of such acceptance
such successor trustee shall be eligible under the terms of Section 10.06.

            (b) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall transmit notice of the succession
of such trustee under the Trust Agreement to all Holders in the manner provided
pursuant to Section 12.05.

      Section 10.09. Merger or Consolidation of Trustee. Any corporation or
association into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to the business of the Trustee, shall be
the successor of the Trustee under the Trust Agreement, provided such
corporation or association shall be eligible under the terms of Section 10.06,
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 in the Trust Agreement to
the contrary notwithstanding.

      Section 10.10. Appointment of Co-Trustee. (a) Notwithstanding any other
terms of the Trust Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any party of the Trust Property may at
the time be located, the Depositor 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, of all or any part of the Trust Property, and to vest in such
Person or Persons, in such capacity, such title to the Trust Property, or any
part thereof, and, subject to the other terms of this Section, such powers,
duties, obligations, rights and trusts as the Depositor and the Trustee may
consider necessary or
<PAGE>

desirable. If the Depositor 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 under the Trust Agreement
shall be required to meet the terms of eligibility as a successor trustee under
Section 10.06 and no notice to Holders of the appointment of a co-trustee or
co-trustees shall be required under Section 10.08.

            (b) In the case of any appointment of a co-trustee pursuant to this
Section, 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 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 by the
Trustee, 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 such Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee at the
direction of the Trustee.

            (c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of then co-trustees, as effectively as if
given to each of them. Every instrument appointment any co-trustee shall refer
to the Trust Agreement and the conditions of this Article X. Each co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, jointly with the Trustee
subject to all the terms of the Trust Agreement, specifically including every
provision of the Trust Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.

            (d) Any 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 co-trustee shall die, become
incapable of acting, resign or be removed, all its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.

      Section 10.11. Appointment of Office or Agency. The Certificates may be
surrendered for registration of transfer or exchange, and presented for the
final distribution with respect thereto, and notices and demands to or upon the
Trustee in respect of the Certificates and the Trust Agreement may be served at
the Corporate Trust Office.

      Section 10.12. Representations and Warranties of Trustee. (a) The Trustee
represents and warrants that:

            (i) the Trustee is duly organized, validly existing and in good
      standing under the laws of its jurisdiction of incorporation or
      association;

            (ii) the Trustee has full power, authority and right to execute,
      deliver and perform its duties and obligations under the Trust Agreement,
      the Certificates and the Swap Agreement and has taken all necessary action
      to authorize the execution, delivery and performance by it (or, with
      respect to the Certificates, by an Authenticating Agent on its behalf, if
      applicable) of the Trust Agreement, the Certificates and the Swap
      Agreement;

            (iii) the execution and delivery of the Trust Agreement, the
      Certificates, the Underwriting Agreement and the Swap Agreement by the
      Trustee and its performance of and compliance with the terms of the Trust
      Agreement, the Certificates and the Swap Agreement will not violate the
      Trustee's articles of incorporation, association or other constitutive
      documents or By-laws or constitute a default under, or result in the
      breach or acceleration of, any material contract, agreement or other
      instrument to which the Trustee is a party or which may be applicable to
      the Trustee or any of its assets;

            (iv) as of the Original Issue Date, each of the Trust Agreement, the
      Certificates and the Swap Agreement has been duly executed and delivered
      by the Trustee (or, with respect to the Certificates, by an Authenticating
      Agent on its behalf, if applicable) and each of the Trust Agreement and
      the Swap Agreement constitutes the legal, valid and binding obligation of
      the Trustee, enforceable in accordance with its terms, except as
      enforcement may be limited by the applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the rights of
      creditors generally and general principles of equity;

            (v) the Trustee is not in violation, and the execution and delivery
      of the Trust Agreement, the Swap Agreement and the Certificates by the
      Trustee and its performance and compliance
<PAGE>

      with respective terms of the Trust Agreement, the Swap Agreement and the
      Certificates will not constitute a violation, of any order or decree of
      any court or any order or regulation of any Federal, State, municipal or
      governmental agency having jurisdiction over the Trustee or its
      properties, which violation would reasonably be expected to have a
      material adverse effect on the condition (financial or otherwise) or
      operations of the Trustee or its properties or on the performance of its
      duties thereunder;

            (vi) there are no actions or proceedings against, or investigations
      of, the Trustee pending, or, to the knowledge of the Trustee, threatened,
      before any court, administrative agency or other tribunal (A) that could
      reasonably be expected to prohibit its entering into the Trust Agreement
      or the Swap Agreement or to render the Certificates invalid, (B) seeking
      to prevent the issuance of the Certificates or the consummation of any of
      the transactions contemplated by the Trust Agreement or the Swap Agreement
      or (C) that could reasonably be expected to prohibit or materially and
      adversely affect the performance by the Trustee of its obligations under,
      or the validity or enforceability of, the Trust Agreement, the Swap
      Agreement or the Certificates; and (vii) no consent, approval,
      authorization or order of any court or governmental agency or body is
      required for the execution, delivery and performance by the Trustee of, or
      compliance by the Trustee with, the Trust Agreement, the Swap Agreement or
      the Certificates, or for the consummation of the transactions contemplated
      by the Trust Agreement or the Swap Agreement, except for such consents,
      approvals, authorizations and orders, if any, that have been obtained
      prior to the Original Issue Date.

            (b) Within 30 days of the earlier of discovery by the Trustee or
receipt of notice by the Trustee of a breach of any representation or warranty
of the Trustee set forth in this Section 10.12 that materially and adversely
affects the interests of the Holders, the Trustee shall promptly cure such
breach in all material respects.

      Section 10.13. Limitation of Powers and Duties. The Trust is constituted
solely for the purposes of acquiring and holding the Underlying Securities,
entering into the Swap Agreement, accepting the Swap Guarantee, entering into
the Underwriting Agreement and issuing the Certificates. The Trust may not incur
any additional debt other than the debt that does not constitute a claim against
the Trust to the extent that excess proceeds are insufficient to pay such debt.
The Trustee is not authorized to acquire any other investments or engage in any
activities not authorized in the Trust Agreement and, in particular, the Trustee
is not authorized (i) to sell, assign, transfer, exchange, pledge, set-off or
otherwise dispose of any of the Underlying Securities or interests therein,
including to Holders (except upon termination of the Trust in accordance with
Article IX and Article XI of the Trust Agreement) or (ii) to do anything that
would cause the Trust to fail or cease to qualify as a "grantor trust" for
Federal income tax purposes.

      Section 10.14. Non-Petition. Prior to the date that is one year and one
day after all distributions in respect of the Certificates have been made,
neither the Trustee nor the Depositor shall take any action or institute any
proceeding against the other under the United States Bankruptcy Code or any
other liquidation, insolvency, bankruptcy, moratorium, reorganization or similar
law ("Insolvency Law") applicable to either of them, now or hereafter in effect,
or which would be reasonably likely to cause the other to be subject to, or seek
the protection of, any such Insolvency Law.

                                   ARTICLE XI

                                   TERMINATION

      Section 11.01. Termination of the Trust. (a) Except as otherwise provided
in Article IX, the respective obligations and responsibilities under the Trust
Agreement of the Depositor and the Trustee (other than the obligations imposed
by Section 10.05(b) and the obligations of the Trustee to provide reports and
other information under the Trust Agreement and to make distributions to Holders
as hereafter set forth) shall terminate upon the distribution to such Holders of
all amounts held in all the Accounts and required to be paid to such Holders
pursuant to the Trust Agreement; 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 Queen Elizabeth II of England, living on the date
of the Trust Agreement.
<PAGE>

            (b) Written notice of any termination shall be provided to each
Holder and the Depositor, the Swap Counterparty, the Swap Guarantor, each
Underwriter and the Rating Agencies pursuant to Section 12.05 within ten
Business Days, unless such termination occurs pursuant to the Scheduled Final
Distribution Date.

            (c) On the Scheduled Final Distribution Date, the Trustee shall
distribute to each Holder presenting and surrendering its Certificates, and to
each Holder delivering such security or indemnity to the Trustee as the Trustee
may require to save the Trustee and hold the Trustee harmless, the amount
distributable on such Distribution Date pursuant to Section 4.01 in respect of
the Certificates so presented and surrendered. Any funds not distributed on such
Distribution Date shall be set aside and held in trust for the benefit of
Holders either (i) not presenting and surrendering their Certificates in the
aforesaid manner or (ii) not delivering such security or indemnity to the
Trustee. as the Trustee may require to save the Trustee and hold the Trustee
harmless, and shall be disposed of in accordance with this Section and Sections
4.01 and 5.09. Immediately following the deposit of such funds in trust
hereunder, the Trust shall terminate.

                                   ARTICLE XII

                               MISCELLANEOUS TERMS

      Section 12.01. Amendment of Trust Agreement.

            (a) The Trust Agreement may be amended from time to time by the
Depositor and the Trustee without the consent of or notice to any of the
Holders, upon delivery by the Depositor of an Opinion of Counsel acceptable to
the Trustee to the effect that such amendment will not adversely affect in any
material respect the interests of any Holder, for any of the following purposes:
(i) to cure any ambiguity to correct or supplement any provision herein which
may be inconsistent with any other provision herein or in the Prospectus
Supplement, (ii) to add or supplement any Credit Support for the benefit of any
Holders (provided that if any such addition affects any series or class of
Holders differently than any other series or class of Holders, then such
addition will not, as evidenced by an Opinion of Counsel, have a material
adverse effect on the interests of any affected series or class of Holders),
(iii) to add to the covenants, restrictions or obligations of the Depositor, the
Trust Administrator, if any, or the trustee for the benefit of the Holders, (iv)
to add, change or eliminate any other provisions with respect to matters or
questions arising under Trust Agreement so long as (x) any such addition, change
or elimination will not, as evidenced by an Opinion of Counsel, affect the tax
status of the Trust or result in a sale or exchange of any Certificate for tax
purposes and (y) the Rating Agency Condition is satisfied or (v) to comply with
any requirements imposed by the Code.

            (b) The Trustee shall not agree to any other waiver, amendment or
modification to the Trust Agreement without the consent of the Holders of the
Required Percentage of Voting Rights, satisfaction of the Rating Agency
Condition and receipt by the Trustee of an Opinion of Counsel that such waiver,
amendment or modification shall not affect the tax status of the Trust or result
in a sale or exchange of any Certificate for tax purposes.

            (c) Notwithstanding the foregoing, except as otherwise set forth in
the Terms Schedule, no waiver, modification or amendment may (i) reduce in any
manner the amount of or alter the timing of, distributions or payments which are
required to be made on any Certificate without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any amendment without the consent of the Holders of
all Certificates covered by the Trust Agreement then Outstanding.

      Section 12.02. Waiver by Holders. Unless otherwise specified in the
applicable prospectus supplement and the Terms Schedule, holders of certificates
evidencing not less than the Required Percentage of the Voting Rights of a given
series may, on behalf of all certificateholders of that series, (i) waive,
insofar as that series is concerned, compliance by the Depositor, the Trustee or
the Trust Administrator, if any, with certain restrictive provisions, if any, of
the trust agreement before the time for such compliance and (ii) waive any past
default under the trust agreement with respect to certificates of that series,
except a default in the failure to distribute amounts received as principal of
(and premium, if any) or any interest on any such certificate and except a
default in respect of a covenant or provision the modification or amendment of
which would require the consent of the Holder of each outstanding certificate
affected thereby.
<PAGE>

      Section 12.03. Counterparts. 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 12.04. Limitation on Rights of Holders. (a) The death or
incapacity of any Holder shall not operate to terminate the Trust Agreement or
the Trust Property, nor entitle such Holder'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 Property, nor otherwise affect the rights,
obligations and liabilities of the parties thereto or any of them.

            (b) Except as otherwise expressly provided herein, no Holder shall
have any right to control the operation and management of any Trust Property, or
the obligations of the parties thereto, nor shall anything in the Trust
Agreement set forth, or contained in the terms of the Certificates, be construed
so as to constitute the Holders from time to time as partners or members of an
association; nor shall any Holder 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.

            (c) No Holder 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, and subject to the
Terms Schedule, the holder previously has given to the Trustee written notice of
breach and unless the holders of certificates evidencing not less than the
Required Percentage of the Voting Rights have made written request upon the
Trustee to institute such proceeding in its own name as Trustee thereunder and
have offered to the Trustee reasonable indemnity, and the Trustee for fifteen
days has neglected or refused to institute any such proceeding.

      Section 12.05. Governing Law. The Trust Agreement and each Certificate
issued thereunder shall be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and to be performed
entirely therein without reference to such State's principles of conflicts of
law to the extent that the application of the laws of another jurisdiction would
be required thereby, and the obligations, rights and remedies of the parties
thereunder shall be determined in accordance with such laws.

      Section 12.06. Notices. All directions, demands and notices under the
Trust Agreement shall be in writing and shall be delivered to the offices of the
Trustee specified in the offering documents dated as of the Original Issue Date.
Unless otherwise provided in the Terms Schedule, any notice required to be given
to a holder of a Registered Certificate will be given by facsimile to such
number as may be provided to the Trustee or be mailed to the last address of
such holder set forth in the applicable Certificate Register. Any notice so
mailed within the time prescribed in the Trust Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the Holder receives
such notice. Notices given by facsimile will be effective upon confirmation
(including electronic confirmation) of effective transmission.

      Section 12.07. Severability of Terms. If any one or more of the covenants,
agreements or terms of the Trust Agreement shall be for any reason whatsoever
held invalid, then such covenants, agreements or terms shall be deemed severable
from the remaining covenants, agreements or terms of the Trust Agreement and
shall in no way affect the validity or enforceability of the other terms of the
Trust Agreement or of the Certificates or the rights of the Holders thereof.

      Section 12.08. Notice to Rating Agencies. The Trustee shall use its best
efforts promptly to provide notice to the Rating Agencies with respect to each
of the following of which it has actual knowledge:

            (i) any material change or amendment to the Trust Agreement;

            (ii) the occurrence of any Swap Default or Termination Event;

            (iii) the resignation or termination of the Trustee;

            (iv) the final payment to Holders of the Certificates;

            (v) any change in the location of the Certificate Account; and (vi)
      any Underlying Security Default.
<PAGE>

      In addition, the Trustee shall promptly furnish to the Rating Agencies
copies of each report to Holders described in Section 4.02. Any such notice
pursuant to this Section 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 the Rating Agencies at the addresses
set forth in the Terms Schedule.

      Section 12.09. Perfection of Swap Counterparty Security Interest. At the
request of the Swap Counterparty, the Trustee will assist the Swap Counterparty
in the perfection of the security interest in the Trust Property described in
Section 3.04 and granted by the Trust to the Counterparty under the Swap
Agreement.

      Section 12.10. No Recourse. Each Holder by accepting a Certificate
acknowledges that such Holder's Certificates represent beneficial interests in
the Trust only and do not represent interests in or obligations of the
Depositor, the Trustee, the Swap Counterparty, the Swap Guarantor or any
Affiliate of the foregoing Persons and no recourse may be had against such
Persons or their respective assets, except as may be expressly set forth in the
Trust Agreement, the Swap Agreement or the Certificates.

      Section 12.11. Conflict With Trust Indenture Act.

            (a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Agreement by
any of the provisions of the TIA, such required provision shall control.

            (b) The provisions of the TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Agreement) are a part of and govern
this Agreement, whether or not physically contained herein.

            (c) Except as expressly provided in this Agreement, all provisions
specifically referencing the TIA shall be inapplicable until such time as this
Agreement is qualified under the TIA.
<PAGE>

      IN WITNESS WHEREOF, the Depositor and the Trustee have caused this
instrument to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.

                                        COMCERTZ ABS CORPORATION

                                        By:  ______________________________
                                             Name:
                                             Title:

                                        [NAME OF TRUSTEE],
                                        as Trustee on behalf of the Trust
                                        identified in Schedule I to the Trust
                                        Agreement dated today's date, and not in
                                        its individual capacity

                                        By:  ______________________________
                                             Name:
                                             Title:
<PAGE>

                                    EXHIBIT A

                                 TRUST AGREEMENT

      TRUST AGREEMENT made as of the date set forth in Schedule I attached
hereto, which Schedule together with Schedules II and III attached hereto, are
made a part hereof and are hereinafter referred to collectively as the "Terms
Schedule." The terms of the Standard Terms for Trust Agreements, dated [__],
200[__] (the "Standard Terms"), executed by [NAME OF TRUSTEE], as trustee (the
"Trustee"), and COMCERTZ ABS CORPORATION (the "Depositor") are, except to the
extent otherwise expressly stated, hereby incorporated by reference herein in
their entirety with the same force and effect as though set forth herein.
Capitalized terms used herein and not defined shall have the meanings defined in
the Standard Terms. References to "herein", "hereunder", "this Trust Agreement"
and the like shall include the Terms Schedule attached hereto and the Standard
Terms so incorporated by reference.

      WHEREAS, the Depositor and the Trustee desire to establish the Trust
identified in Schedule I attached hereto (the "Trust") for the primary purposes
of (i) holding the Underlying Securities, (ii) entering into any Swap Agreement
with the Swap Counterparty and (iii) issuing the Certificates;

      WHEREAS, the Depositor desires that the respective beneficial interests in
the Trust be divided into transferable fractional shares, such shares to be
represented by the Certificates;

      WHEREAS, the Depositor desires to appoint the Trustee as trustee of the
Trust and the Trustee desires to accept such appointment;

      WHEREAS, the Depositor shall transfer, convey and assign to the Trust
without recourse, and the Trust shall acquire, all of the Depositor's right,
title and interest in and under the Underlying Securities and other property
identified in Schedule II to the Trust Agreement (the "Trust Property"); and

      WHEREAS, the Trust agrees to acquire the Trust Property specified herein
in consideration for Certificates having an initial Certificate Principal
Balance identified in Schedule I attached hereto, subject to the terms and
conditions specified in the Trust Agreement;

      NOW THEREFORE, the Depositor hereby appoints the Trustee as trustee
hereunder and hereby requests the Trustee to receive the Underlying Securities
from the Depositor and to issue in accordance with the instructions of the
Depositor Certificates having an initial Certificate Principal Balance
identified in Schedule I attached hereto, and the Trustee accepts such
appointment and, for itself and its successors and assigns, hereby declares that
it shall hold all the estate, right, title and interest in any property
contributed to the trust account established hereunder (except property to be
applied to the payment or reimbursement of or by the Trustee for any fees or
expenses which under the terms hereof is to be so applied) in trust for the
benefit of all present and future Holders of the fractional shares of beneficial
interest issued hereunder, namely, the Holders, and subject to the terms and
provisions hereof and of the Standard Terms.
<PAGE>

      IN WITNESS WHEREOF, each of the undersigned has executed this instrument
as of the date set forth in the Terms Schedule attached hereto.

                                        [NAME OF TRUSTEE]
                                        as Trustee on behalf of the Trust
                                        identified in Schedule I hereto, and not
                                        in its individual capacity

                                        By:  ______________________________
                                             Name:
                                             Title:

                                        COMCERTZ ABS CORPORATION

                                        By:  ______________________________
                                             Name:
                                             Title:
<PAGE>

       Attachments: Terms Schedule (consisting of Schedules I, II and III)

                                   Schedule I

                                        (Terms of Trust and Certificates)

Trust:                                  Comcertz ABS Trust Series 200[__]-[__]

Date of Trust Agreement:

Trustee:

Initial Certificate Principal

Balance:

Issue Price:

Cut-off Date:

Original Issue Date:

Specified Currency:

Business Day:

Initial Pass-Through Rate:

Pass-Through Rate:                      [If Fixed Rate Certificates, specify the
                                        applicable fixed rate]

                                        [If Floating Rate Certificates, specify
                                        the applicable Base Rate,
                                        Spread and Spread Multiplier]

Interest Reset Period:

Rating:

Rating Agencies:

Scheduled Final Distribution Date:

[Swap Agreement:]                       [The ISDA Agreement referred to in
                                        Schedule III]

[Swap Counterparty:]                    [Party A to the Swap Agreement referred
                                        to in Schedule III]

[Swap Guarantee:]                       [Any guarantee of Swap Counterparty's
                                        obligations under the Swap Agreement
                                        specified in Schedule III]

[Swap Guarantor:]                       [The obligor under the Swap Guarantee]

[Swap Notional Amount:]                 [The Notional Amount specified in
                                        Schedule III]

[Swap Payment Date:]                    [Each Payment Date specified in Schedule
                                        III for Party A]

[Swap Rate:]

Distribution Date:
<PAGE>

Record Date:

Form:                                   [Global/Definitive Registered]

Minimum Denomination:

Depositary:

Alternative Non-Plan ERISA              [Apply] [Do Not Apply]
Restrictions:

Alternative ERISA Plan Assets           [Apply] [Do Not Apply]
Representations:

QIB Restriction:                        [Applicable] [Not Applicable]

Additional Trust Wind-Up Event:

Exchangeable Series Terms:

Terms of Retained Interest:

Call Option Terms:

Required Percentage:

[Certificate Events of Default]:        [missed interest/principal on the
                                        Underlying Securities][other]

Other Terms:
<PAGE>

                                   Schedule II

                            (Terms of Trust Property)

Underlying Securities
---------------------

Underlying Securities..........  [A [ o ]%] [floating rate] [publicly traded
                                 debt security due [ o ] [A pool of publicly
                                 issued [debt securities of various issuers]
                                 [preferred securities of trusts organized to
                                 issue trust-originated preferred securities]
                                 [term preferred stock having an investment
                                 grade rating] [United States treasury
                                 securities] debt securities of various United
                                 States government sponsored entities] [debt
                                 securities of various foreign government
                                 issuers], exclusive of the Retained
                                 Interest [in/having] an aggregate principal
                                 amount of [$][ o ].

Underlying Security Issuer.....  [Specify issuer] [Pool of various domestic
                                 corporations, limited liability companies,
                                 banking organizations and insurance companies.]
                                 [Asset-backed securities.] [A [ o ]%]-[floating
                                 rate] [United States treasury securities] [debt
                                 securities of various United States government
                                 sponsored entities] [Pool of various foreign
                                 private issuers.], exclusive of the Retained
                                 Interest] [in/having] an aggregate principal
                                 amount of [$][ o ].

[Foreign Government Guarantor].
                                 [Specify guarantor, if any.]

[GSE Issuer]...................  [Specify issuer] [Pool of various U.S.
                                 government sponsored entity issuers].

[Concentrated Underlying         [[ o ]% of the total Underlying Securities.]
Securities]....................  [Describe material covenants in relation to any
                                 Underlying Securities (including a Foreign
                                 Government Security) that represents ten
                                 percent or more of the total Underlying
                                 Securities with respect to any series of
                                 certificates]

Underlying Securities Original   [ o ].
Issue Date.....................

Underlying Securities Final      [ o ].
Payment Date...................

Amortization...................  [Describe amortization schedule, if any].

Denominations; Underlying
Securities Currency............  The Underlying Securities are denominated and
                                 payable in [U.S. dollars] [ o ] and are
                                 available in minimum denominations of [$][ o ]
                                 and [multiples thereof] [multiples of
                                 [$][ o ]].

Underlying Securities Payment    [ o ], commencing [ o ].
Dates..........................

Underlying Securities Rate.....  [ % per annum.] [A [Weighted Average] rate per
                                 annum equal to [specify interest rate formula
                                 for debt security].]

Underlying Securities Interest
Accrual Periods................  [Monthly] [Quarterly] [Semi-annually].

Priority.......................  [Describe senior or subordinated status or
                                 liquidation preference of any of Underlying
                                 Securities].

Security.......................  [Describe existence of any security for
                                 obligations or state that Underlying Securities
                                 are unsecured].

Redemption/Put/Other Features..  [Describe existence of any redemption, put or
                                 other material features applicable to the
                                 Underlying Securities].

Form of Security...............  Book-entry debt securities with DTC [listed on
                                 the [New York] [American] Stock
<PAGE>

                                 Exchange [specify other listing]].

[Underlying Securities Trustee]  [ o ]. The Underlying Securities have been
                                 issued pursuant to an indenture between
                                 _______________ and the issuer of the
                                 Underlying Securities].

[Fiscal and Paying Agent]......  [ o ] [The Underlying Securities have been
                                 issued pursuant to a fiscal and paying agency
                                 agreement, between _______________ and the
                                 issuer of the Underlying Securities] [specify
                                 other agreement].

Ratings........................  [ o ] by [ o ] [and [ o ] by [ o ]].

Credit Support
--------------

[Credit Support]...............  [Description of any combination of insurance
                                 policies, letters of credit, financial
                                 guaranty, surety bond, credit swap, reserve
                                 accounts and other types of rights or assets
                                 designed to support or ensure the servicing and
                                 distribution of amounts due in respect of
                                 the Trust Property.]

[Credit Support Provider]......  [Description of the bank, financial guarantor,
                                 surety company or other financial institution
                                 issuing a letter of credit, financial guaranty,
                                 surety bond, credit swap or other instrument
                                 that serves as
                                 Credit Support.]
<PAGE>

                                  Schedule III

                                  (Swap Terms)
<PAGE>

                                    EXHIBIT B

                         FORM OF REGISTERED CERTIFICATE

                          COMCERTZ ABS TRUST CERTIFICATES

                                SERIES 200[ ]-[ ]

      THIS CERTIFICATE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY.

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TRUSTEE 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 IS 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.

      THIS CERTIFICATE MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
PROVIDED IN THE TRUST AGREEMENT FOR THE TRUST TO WHICH THIS CERTIFICATE RELATES.

      THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      UNLESS THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES THAT THE
ALTERNATIVE NON-PLAN ERISA RESTRICTIONS OR ALTERNATIVE ERISA PLAN ASSETS
REPRESENTATIONS APPLY, EACH PURCHASER OR TRANSFEREE OF THIS CERTIFICATE OR ANY
INTEREST HEREIN REPRESENTS, WARRANTS AND AGREES THAT IT IS NOT A PERSON WHO IS
OR WHILE CERTIFICATES ARE HELD WILL BE AN EMPLOYEE BENEFIT PLAN, DOMESTIC OR
FOREIGN, WHETHER OR NOT SUBJECT TO ERISA, OR PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE CODE, OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS,
OR A TRUSTEE OF ANY SUCH PLAN, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE (OR
ARE DEEMED FOR PURPOSES OF ERISA OR SECTION 4975 OF THE CODE, OR OTHER
APPLICABLE LAW, TO INCLUDE) THE ASSETS OF ANY SUCH PLAN (EACH OF THE FOREGOING A
"BENEFIT PLAN"), UNLESS THE BENEFIT PLAN IS NOT SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF PART 4, SUBTITLE B, TITLE I OF ERISA, DESCRIBED IN
SECTION 4975(E)(1) OF THE CODE OR SUBJECT TO SUBSTANTIALLY SIMILAR LEGAL
REQUIREMENTS (AN "ERISA BENEFIT PLAN"). AS USED HEREIN, THE TERM "CODE" MEANS
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND "ERISA" MEANS THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, IN EACH CASE INCLUDING ANY
SUCCESSOR OR AMENDATORY STATUTES.

      IF THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES THAT ALTERNATIVE
ERISA PLAN ASSETS REPRESENTATIONS AND AGREEMENTS APPLY, EACH PURCHASER OR
TRANSFEREE OF THIS CERTIFICATE OR ANY INTEREST HEREIN REPRESENTS, WARRANTS AND
AGREES THAT EITHER (A) THE PURCHASER IS NOT A PERSON WHO IS OR WHILE
CERTIFICATES ARE HELD WILL BE AN ERISA BENEFIT PLAN, AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE THE ASSETS OF ANY SUCH ERISA BENEFIT PLAN, OR A GOVERNMENTAL PLAN
OR OTHER BENEFIT PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR FOREIGN
LAW THAT IS
<PAGE>

SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE (OR AN ENTITY ANY OF WHOSE ASSETS ARE DEEMED FOR PURPOSES OF SUCH
SIMILAR LAW TO BE BENEFIT PLAN ASSETS) OR (B) ITS PURCHASE, HOLDING AND
DISPOSITION OF A CERTIFICATE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A
GOVERNMENTAL, OR OTHER BENEFIT PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE,
LOCAL OR FOREIGN LAW) FOR WHICH AN EXEMPTION IS NOT AVAILABLE.

      THE DEPOSITOR MAY VARY THE FOREGOING IN THE APPLICABLE PROSPECTUS
SUPPLEMENT.

      UNLESS THE ALTERNATIVE NON-PLAN ERISA RESTRICTIONS OR ALTERNATIVE ERISA
PLAN ASSETS REPRESENTATIONS APPLY, THE PURCHASER AND EACH OTHER PERSON WHO
ACQUIRES A CERTIFICATE, AND EACH FIDUCIARY WHICH CAUSES A PERSON TO ACQUIRE A
CERTIFICATE, IN SUCH FIDUCIARY'S INDIVIDUAL CAPACITY, HEREBY AGREES TO INDEMNIFY
AND HOLD HARMLESS THE DEPOSITOR, THE SWAP COUNTERPARTY, THE TRUSTEE AND THEIR
AFFILIATES FROM ANY COST, DAMAGE, LOSS OR EXPENSE INCURRED BY THEM AS A RESULT
OF SUCH PERSON BEING OR BEING DEEMED TO BE AN ERISA BENEFIT PLAN.

      IF THE TERMS SCHEDULE TO THE TRUST AGREEMENT PROVIDES THAT THE ALTERNATIVE
NON-PLAN ERISA RESTRICTIONS APPLY, EACH PROSPECTIVE TRANSFEREE OF THE
CERTIFICATES PURCHASED PURSUANT TO THIS PURCHASE AGREEMENT SHALL BE REQUIRED TO
CERTIFY WHETHER OR NOT IT IS A BENEFIT PLAN OR AN ERISA BENEFIT PLAN.

      EACH PURCHASER OR OTHER TRANSFEREE OF THIS CERTIFICATE OR ANY INTEREST
HEREIN (EACH, A "PURCHASER") OF THIS CERTIFICATE, BY ITS ACCEPTANCE HEREOF, IS
DEEMED TO REPRESENT AND WARRANT FOR THE BENEFIT OF THE TRUSTEE AND THE DEPOSITOR
OF THE TRUST, AND EACH UNDERWRITER AS DEFINED IN THE TRUST AGREEMENT, REFERRED
TO BELOW THAT SUCH PURCHASER IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT

      REGISTERED INITIAL AMOUNT: $__________ No. ______AGGREGATE INITIAL CUSIP
No. ___________AMOUNT OF ALL CERTIFICATES: $_________ FRACTIONAL SHARE: ___%
<PAGE>

                          COMCERTZ ABS TRUST CERTIFICATES

                                SERIES 200[ ]-[ ]

      This certifies that __________________________________________________ is
the registered owner of an undivided fractional interest in the Trust Property
referred to below. The amount due on this Certificate on any Distribution Date
is determined by multiplying the Fractional Share hereby represented by the
amount of Distribution, reduced by prior payments of the fees and expenses of
and any other applicable amounts payable to the Trustee and Depositor out of
Available Funds, on such Distribution Date.

      The Trust Property will be held in trust by the Trustee identified in
Schedule I hereto (the "Trust"). The Trust has been created pursuant to a Trust
Agreement (the "Trust Agreement"), executed as of the date set forth in Schedule
I hereto between [Name of Trustee], as Trustee of the Trust (the "Trustee"), and
Comcertz ABS Corporation

      To the extent not defined herein, all capitalized terms shall have the
meanings assigned to such terms in the Trust Agreement and the Terms Schedule
attached thereto. This Certificate is one of the Certificates described in the
Trust Agreement and is issued under and subject to the terms, provisions and
conditions of the Trust Agreement. Certain of those terms are set forth in
Schedule I hereto. By acceptance of this Certificate, the Holder assents to and
becomes bound by the Trust Agreement.

      The Trust Property consists of the Underlying Securities, the Swap
Agreement and any Permitted Investments. Pursuant to the Trust Agreement, the
Trust has granted a first priority security interest in such Trust Property to
the Swap Counterparty to secure the payment of any amounts owed by the Trust to
the Swap Counterparty pursuant to the Swap Agreement.

      Subject to the terms and conditions of the Trust Agreement (including the
availability of funds for distributions and any grace period or cure period
applicable to the Trust Property) and to the prior obligation of the Trust to
pay (i) all amounts due to the Swap Counterparty pursuant to the Swap Agreement
and (ii) all unpaid Extraordinary Trust Expenses, and until the obligations
created by the Trust Agreement shall have terminated in accordance therewith,
there will be distributed on each Distribution Date specified in Schedule I
hereto, to the Person in whose name this Certificate is registered at the close
of business on the second Business Day immediately preceding such Distribution
Date (the "Record Date"), such Holder's fractional undivided interest in the
amounts to be distributed to Holders pursuant to the Trust Agreement on such
Distribution Date. The amount to be distributed on the Scheduled Final
Distribution Date will include the full repayment of principal; provided,
however, that if the applicable Underlying Securities are not redeemed on the
Scheduled Final Distribution Date, a Holder will be entitled to receive an in
kind distribution of the Notes.

      Distributions on this Certificate (so long as the original principal
amount hereof is not less than $10,000,000) will be made by wire transfer in
accordance with a written notice to the Trustee providing appropriate wire
transfer instructions given no later than 15 calendar days prior to the
applicable Distribution Date. If no such notice has been given, distributions
will be made by the Trustee by check mailed to the Holder of record at its
address as it appears in the Certificate Register without the presentation or
surrender of this Certificate or the making of any notation hereon, by wire
transfer of immediately available funds. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York.

      This Certificate does not purport to summarize the Trust Agreement and
reference is hereby made to the Trust Agreement for information with respect to
the rights, benefits, obligations and duties evidenced thereby. A copy of the
Trust Agreement may be examined during normal business hours at the Corporate
Trust Office of the Trustee, located at [ o ], the Trustee's offices at [ o ],
and at such other places, if any, designated by the Trustee, by any Holder upon
request.

      Reference is hereby made to the further terms of this Certificate set
forth on the reverse hereof, which further terms shall for all purposes have the
same effect as if set forth at this place.
<PAGE>

      Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Certificate
shall not entitle the Holder hereof to any benefit under the Trust Agreement or
be valid for any purpose.

      IN WITNESS WHEREOF, the Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Certificate to be duly executed.

                                        COMCERTZ TRUST NO. ___

                                        By:  [NAME OF TRUSTEE], as Trustee

                                        By:  ______________________________
                                             Authorized Signatory***

DATED:

SEAL

Trustee's Certificate of Authentication:

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                        [NAME OF TRUSTEE], as Trustee

                                        By:  ____________________________
                                             Authorized Signatory
<PAGE>

Attachment: Schedule I

      Schedule I, not repeated here, shall be identical to the Schedule I
attached to the Trust Agreement, a form of which is Exhibit A to the Standard
Terms.

                             REVERSE OF CERTIFICATE

                          COMCERTZ ABS TRUST CERTIFICATES

                                SERIES 200[ ]-[ ]

      The Trust Agreement permits the amendment thereof, in certain
circumstances, without the consent of or notice to the Holders of any of the
Certificates.

      As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
and a Underwriting Agreement in form and substance satisfactory to the Trustee
duly completed and executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.

      As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates
representing different numbers of Certificates which evidence the same aggregate
interest in the Trust, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer or exchange,
but the Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.

      The Depositor, the Trustee and any agent of the Depositor or the Trustee
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Trustee, or any such
agent shall be affected by any notice to the contrary.

      The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby will terminate upon the payment to Holders of all
amounts required to be paid to them pursuant to the Trust Agreement.

      Notwithstanding anything contained in the Trust Agreement to the contrary
the Trust Agreement has been accepted by [Name of Trustee], not in its
individual capacity but solely as Trustee and in no event shall [Name of
Trustee] have any liability for the representations, warranties, covenants,
agreements or other obligations of the Depositor thereunder or in any of the
certificates, notices or agreements delivered pursuant thereto, as to all of
which recourse shall be had solely to the assets of the Depositor, and under no
circumstances shall [Name of Trustee] be personally liable for the payment of
any indebtedness or expenses of the Trust. The Certificates do not represent
interests in or obligations of the Trustee and the Trustee shall not be
responsible or accountable for any tax, accounting or other treatment proposed
to be applied to the Certificates or any interest therein except as expressly
provided in the Trust Agreement.
<PAGE>

                                   ASSIGNMENT

      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, including postal zip code, of
assignee)

________________________________________________________________________________

the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing

________________________________________________________________________________

Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.

Dated:

_______________________________ */
Signature Guaranteed:

_______________________________ */

*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.

                            OPTION TO ELECT EXCHANGE

      The undersigned hereby irrevocably requests and instructs the Trustee to
effect exchange of this Certificate for the Trust Property in which this
Certificate evidences a beneficial interest (or portion thereof specified below)
pursuant to its terms and in accordance with the Term Schedule and Section 5.12
of the Trust Agreement, to be delivered to the undersigned, at:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Please print or typewrite name and address of the undersigned.)

      If less than the entire Certificate Principal Balance of this Certificate
is to be redeemed, specify the portion thereof which the Holder elects to have
exchanged: ___________________; and specify the denomination or denominations
(which shall not be less than the minimum authorized denomination) of the
Certificates to be issued to the Holder for the portion of the within
Certificates not being exchanged (in the absence of any such specification, one
such Certificate will be issued for the portion not being redeemed):

Dated: __________________

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