<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 11, 1999
Saxon Asset Securities Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Virginia 34-0-20552 52-1785164
- ------------------------------- ------------------------- -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4880 Cox Road, Glen Allen, Virginia 23060
-----------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (804) 967-7400
--------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 1. Changes in Control of Registrant. Not Applicable.
Item 2. Acquisition or Disposition of Assets. Not Applicable.
Item 3. Bankruptcy or Receivership. Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant. Not Applicable.
Item 5. Other Events.
On May 11, 1999, the Registrant caused the issuance and sale of
Mortgage Loan Asset Backed Certificates, Series 1999-2, pursuant to a Trust
Agreement dated as of May 1, 1999, among the Registrant, Saxon Mortgage, Inc.,
as Master Servicer, and Chase Bank of Texas, National Association, as Trustee,
(the "Trust Agreement"). Capitalized terms used and not defined herein shall
have the meanings assigned to them in the Trust Agreement.
Certificates were issued with original principal amounts and pass-
through rates set forth below:
<TABLE>
<CAPTION>
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE
<S> <C> <C>
Class AF-1 Certificates Variable/(1)//(2)/ $ 80,000,000
Class AF-2 Certificates 5.970% $ 33,000,000
Class AF-3 Certificates 6.105% $ 36,000,000
Class AF-4 Certificates 6.445% $ 27,000,000
Class AF-5 Certificates 6.815%/(2)/ $ 16,713,000
Class AF-6 Certificates 6.415%/(2)/ $ 21,412,800
Class MF-1 Certificates 6.780%/(2)/ $ 12,449,000
Class MF-2 Certificates 7.175%/(2)/ $ 9,337,000
Class BF-1 Certificates 8.410%/(2)/ $ 8,092,000
Class BF-1A Certificates 7.925%/(2)/ $ 4,980,000
Class AV-1 Certificates Variable/(3)/ $177,840,800
Class MV-1 Certificates Variable/(3)/ $ 16,884,000
Class MV-2 Certificates Variable/(3)/ $ 14,070,000
Class BV-1 Certificates Variable/(3)/ $ 9,567,000
Class BV-1A Certificates 8.305%/(3)/ $ 6,704,000
Class C Certificates Variable /(4)/
Class R Certificates /(5)/ /(4)/
</TABLE>
(1) Interest will accrue on the Class AF-1 Certificates at a per annum rate
equal to One Month LIBOR + 0.09%, subject to the applicable available funds
cap.
(2) Subject to a cap equal to the Net Rate on the Fixed Rate Mortgage Loans for
the applicable Accrual Period.
(3) Subject to a cap equal to the Available Funds on the Adjustable Rate
Mortgage Loans for the applicable Accrual Period.
(4) The Class C and Class R Certificates do not have principal balances.
(5) The Class R Certificates do not have an interest rate.
<PAGE>
The Certificates represent undivided ownership interest in pools of
mortgage loans (the "Mortgage Loans") held by a trust (the "Trust") created
pursuant to the Trust Agreement . The Mortgage Loans were acquired by the
Registrant from Saxon Mortgage, Inc. ("SMI"), an affiliate of the Registrant
which originated or acquired the Mortgage Loans from various mortgage banking
institutions. The Mortgage Loans are secured by liens on single family
residential properties, including investment properties (which may be
condominiums, one family residences, one to four family residences or homes in
planned unit developments). The Mortgage Loans will be serviced by Meritech
Mortgage Services, Inc., an affiliate of the Registrant.
The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class
AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-1A, Class AV-1, Class MV-1,
Class MV-2, Class BV-1 and Class BV-1A Certificates were purchased by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery Securities
LLC, Prudential Securities Incorporated and Chase Securities Inc., (the
"Underwriters"), from the Seller pursuant to an Underwriting Agreement dated
April 30, 1999, and offered pursuant to Registration Statement No. 333-59479 by
the Underwriters from time to time in negotiated transactions or otherwise, at
varying prices to be determined at the time of sale.
Elections will be made to treat certain assets of the Trust as a real
estate mortgage investment conduits ("REMICs") for federal income tax purposes.
Each Class of Certificates listed above (other than the Class R Certificates)
will constitute "regular interests" in the Issuing REMIC.
Item 6. Resignations of Registrant's Directors. Not Applicable.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired. Not Applicable.
(b) Pro forma financial information. Not Applicable.
(c) Exhibits
Exhibit 1. Underwriting Agreement dated April 30, 1999, among
Saxon Asset Securities Company, Saxon Mortgage Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Nationsbanc Montgomery Securities LLC, Prudential
Securities Incorporated and Chase Securities, Inc.
Exhibit 2. Trust Agreement dated May 1, 1999, among Saxon Asset
Securities Company, Saxon Mortgage, Inc., as Master Servicer, and Chase Bank of
Texas, National Association, as Trustee.
Item 8. Change in Fiscal Year. Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
---------------------
Bradley D. Adams, Vice President
May 11, 1999
<PAGE>
INDEX TO EXHIBITS
1 Underwriting Agreement dated April 30, 1999, among Saxon Asset Securities
Company, Saxon Mortgage Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Nationsbanc Montgomery Securities LLC, Prudential Securities
Incorporated and Chase Securities Inc.
2 Trust Agreement dated May 1, 1999, among Saxon Asset Securities Company,
Saxon Mortgage, Inc., as Master Servicer, and Chase Bank of Texas, National
Association, as Trustee.
<PAGE>
EXHIBIT 1
---------
SAXON ASSET SECURITIES COMPANY
MORTGAGE LOAN ASSET BACKED CERTIFICATES,
SERIES 1999-2
UNDERWRITING AGREEMENT
----------------------
Dated: April 30, 1999
To: Saxon Asset Securities Company (the "Company")
Saxon Mortgage Inc. ("SMI")
Re: Standard Terms to Underwriting Agreement (June 1997 Edition)
Series
Designation: Mortgage Loan Asset Backed Certificates, Series 1999-2, Class AF-
- -----------
1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6,
Class MF-1, Class MF-2, Class BF-1, Class BF-1A, Class AV-1,
Class MV-1, Class MV-2, Class BV-1, Class BV-1A, Class C and
Class R (collectively the "Certificates"). The Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1,
Class MF-2, Class BF-1, Class BF-1A, Class AV-1, Class MV-1,
Class MV-2, Class BV-1 and Class BV-1A Certificates are referred
to herein as the "Underwritten Certificates."
UNDERWRITING AGREEMENT: Subject to the terms and conditions set
forth and incorporated by reference herein, the Company hereby agrees to issue
and sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities LLC, Prudential Securities Incorporated, and Chase
Securities Inc. (collectively, the "Underwriters"), and the Underwriters hereby
agree to purchase from the Company, on or about May 11, 1999, the Underwritten
Certificates at the purchase price and on the terms set forth below; provided,
--------
however, that the obligations of the Underwriters are subject to: (i) receipt by
- -------
the Company of (a) the ratings specified in the table below by Moody's Investors
Service, Inc. ("Moody's") and Fitch Investors Service, L.P. ("Fitch" and
together with Moody's, the "Rating Agencies") with respect to each of the
Classes of Certificates; (ii) receipt of a Prospectus Supplement in form and
substance satisfactory to the Underwriters; and (iii) the Sales Agreement dated
as of April 30, 1999 by and between the Company and Saxon Mortgage, Inc. ("SMI")
and the Trust Agreement (as defined below) each being in form and substance
satisfactory to the Underwriters.
The Certificates will be issued pursuant to a Trust Agreement,
dated as of May 1, 1999 (the "Trust Agreement"), by and among the Company, SMI,
as Master Servicer (the "Master Servicer"), and Chase Bank of Texas, National
Association, as Trustee (the "Trustee"). The Certificates will represent in the
aggregate the entire beneficial ownership interest in the assets of the Trust
created under the Trust Agreement (the "Trust"), which will consist primarily of
two pools of conventional, one- to four-family, mortgage loans (the "Mortgage
Loans") with
<PAGE>
original terms to stated maturity of not more than 30 years which have the
characteristics described in the Prospectus Supplement.
<PAGE>
The Company and SMI specifically covenant to make available on the
Closing Date for sale, transfer and assignment to the Trust, Mortgage Loans
having the characteristics described in the Prospectus Supplement; provided,
however, that there may be immaterial variances from the description of the
Mortgage Loans in the Prospectus Supplement and the actual Mortgage Loans
delivered on the Closing Date. Upon delivery of the Mortgage Loans to the
Company, the Company will deliver such Mortgage Loans to the Trust.
REGISTRATION STATEMENT: References in the Agreement (as defined below)
to the Registration Statement shall be deemed to include registration statement
no. 333-59479.
AGGREGATE SCHEDULED PRINCIPAL BALANCE OF INITIAL MORTGAGE LOANS:
Approximately $474,049,674 (as of the Cut-off Date), including approximately
$248,983,839 of fixed-rate Mortgage Loans and approximately $225,065,835 of
Variable Rate Mortgage Loans (in each case as of the Cut-off Date).
CUT-OFF DATE: As of the close of business May 1, 1999.
<PAGE>
TERMS OF THE CERTIFICATES:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Initial Proposed
Series 1999-2 Principal Pass-Through Ratings by CUSIP Number Sale of the
Designation Amount Rate Moody's and Certificates
Fitch
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class AF-1 $ 80,000,000 %(2) Aaa/AAA 805564DM0 (1)
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Class AF-2 $ 33,000,000 5.970% Aaa/AAA 805564DN8 (1)
- ------------------------------------------------------------------------------------------------------------------
Class AF-3 $ 36,000,000 6.105% Aaa/AAA 805564DP3 (1)
- ------------------------------------------------------------------------------------------------------------------
Class AF-4 $ 27,000,000 6.445% Aaa/AAA 805564DQ1 (1)
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Class AF-5 $ 16,713,000 6.815%(3) Aaa/AAA 805564DR9 (1)
- ------------------------------------------------------------------------------------------------------------------
Class AF-6 $ 21,412,800 6.415% Aaa/AAA 805564DS7 (1)
- ------------------------------------------------------------------------------------------------------------------
Class MF-1 $ 12,449,000 6780%(3) Aa2/AA 805564DT5 (1)
- ------------------------------------------------------------------------------------------------------------------
Class MF-2 $ 9,337,000 7.175%(3) A2/A 805564DU2 (1)
- ------------------------------------------------------------------------------------------------------------------
Class BF-1 $ 8,092,000 8.410%(3) Baa2/BBB 805564DV0 (1)
- ------------------------------------------------------------------------------------------------------------------
Class BF-1A $ 4,980,000 7.925% Baa2/BBB 805564DW8 (1)
- ------------------------------------------------------------------------------------------------------------------
Class AV-1 $177,840,800 %(2)(4) Aaa/AAA 805564DX6 (1)
- ------------------------------------------------------------------------------------------------------------------
Class MV-1 $ 16,884,000 %(2)(4) Aa2/AA 805564DY4 (1)
- ------------------------------------------------------------------------------------------------------------------
Class MV-2 $ 14,070,000 %(2)(4) A2/A 805564DZ1 (1)
- ------------------------------------------------------------------------------------------------------------------
Class BV-1 $ 9,567,000 %(2)(4) Baa2/BBB 805564EA5 (1)
- ------------------------------------------------------------------------------------------------------------------
Class BV-1A $ 6,704,000 8.305% Baa2/BBB 805564EB3
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Class C N/A N/A (5) N/A (6)
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Class R N/A N/A (5) N/A (7)
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</TABLE>
_________________________
(1) The Underwritten Certificates will be purchased by the Underwriters from
the Company and will be offered by the Underwriters to the public from time
to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
(2) On each Distribution Date, the Variable Rate Pass-Through Rates per annum
will equal the least of: (i) One Month LIBOR plus the related spread; (ii)
the weighted Average of, (A) in the case of the Class AF-1 Certificates,
the maximum lifetime Mortgage Interest Rates on the Mortgage Loans in the
Fixed Rate Group and, (B) in the case of the AV-1, MV-1, MV-2 and BV-1
Certificates, the maximum lifetime Mortgage Interest Rates on the Mortgage
Loans in the Variable Rate Group, in each case less the Servicing Fee Rate
and Master Servicing Fee Rate; and (iii) the applicable Available Funds Cap
(as further described in the Prospectus Supplement).
(3) On any Distribution Date, the Pass-Through Rates for the Class AF-5, Class
MF-1, Class MF-2 and Class BF-1 Certificates will equal the lesser of (i)
the Pass-Through Rate set forth above (subject, in the case of the AF-5
Certificates, to a 0.50% increase for any Distribution Date after the
Initial Optional Redemption Date) and (ii) the Weighted Average Interest
Rates on the Mortgage Loans in the Fixed Rate Group less the Servicing Fee
Rate and Master Servicing Fee Rate per annum (as further described in the
Prospectus Supplement).
(4) The Applicable Spread for these Classes are subject to adjustment on or
after the Step-Up Date, as further described in the Prospectus Supplement.
(5) No ratings have been requested by the Underwriters for the Class C and
Class R Certificates.
(6) The Class C Certificates will be sold to the Company in a privately
negotiated transaction.
(7) The Class R Certificates will be sold to the Company in a privately
negotiated transaction.
<PAGE>
UNDERWRITTEN CERTIFICATES RATINGS: It is agreed that as a further
condition of the Underwriters' obligation to purchase the Underwritten
Certificates, the ratings indicated above by the Rating Agencies on the
Underwritten Certificates shall not have been rescinded and there shall not have
occurred any downgrading, or public notification of a possible downgrading or
public notice of a possible change, without indication of direction, in the
ratings accorded the Underwritten Certificates.
MORTGAGE LOANS: Mortgage Loans having the approximate characteristics
described in the Prospectus Supplement with the final schedule attached as
Schedule I to the Trust Agreement.
PRINCIPAL AND INTEREST DISTRIBUTION DATES: Each Distribution Date
shall be the 25th day of each month, or if such day is not a business day, the
next succeeding business day, commencing in June 1999.
REMIC ELECTION: One or more elections will be made to treat the
Mortgage Loans and related assets of the Trust as a real estate mortgage
investment conduit (the "REMIC"). The Underwritten Certificates and the Class C
Certificates will be designated as "regular interests" in the REMIC. The Class
R Certificates will be designated as the "residual interest" in the REMIC.
PURCHASE PRICE: The Underwriters hereby agree to purchase each Class
of Underwritten Securities from the Company at the applicable purchase price set
forth below, plus, in the case of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1 and BF-1A
Certificates, accrued interest at the applicable Pass-Through Rate from the
close of business on May 1 through the Closing Date. Each such purchase price is
expressed as a percentage of the initial principal amount of the related
Mortgage Loan pool.
Purchase Price
---------------
Class AF-1 100.000000%
Class AF-2 99.995292%
Class AF-3 99.995273%
Class AF-4 99.999590%
Class AF-5 99.986286%
Class AF-6 99.999510%
Class MF-1 99.986530%
Class MF-2 99.982296%
Class BF-1 99.987682%
Class BF-1A 99.999506%
Class AV-1 100.000000%
Class MV-1 100.000000%
Class MV-2 100.000000%
Class BV-1 100.000000%
Class BV-1A 99.998963%
<PAGE>
Each of the Underwriters agrees, severally and not jointly, subject to the
terms and conditions contained herein and in the Standard Terms to Underwriting
Agreement (June 1997 Edition), to purchase the principal balances of the Classes
of Certificates specified opposite its name below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce, NationsBanc Montgomery Prudential Chase
Series 1999-2 Fenner & Smith Securities LLC Securities Securities Inc.
Designation Incorporated Incorporated
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class AF-1 $24,000,000.00 $20,000,000.00 $20,000,000.00 $16,000,000.00
- ---------------------------------------------------------------------------------------------------------------------
Class AF-2 $ 9,900,000.00 $ 8,250,000.00 $ 8,250,000.00 $ 6,600,000.00
- ---------------------------------------------------------------------------------------------------------------------
Class AF-3 $10,800,000.00 $ 9,000,000.00 $ 9,000,000.00 $ 7,200,000.00
- ---------------------------------------------------------------------------------------------------------------------
Class AF-4 $ 8,100,000.00 $ 6,750,000.00 $ 6,750,000.00 $ 5,400,000.00
- ---------------------------------------------------------------------------------------------------------------------
Class AF-5 $ 5,013,900.00 $ 4,178,250.00 $ 4,178,250.00 $ 3,342,600.00
- ---------------------------------------------------------------------------------------------------------------------
Class AF-6 $ 6,423,840.00 $ 5,353,200.00 $ 5,353,200.00 $ 4,282,560.00
- ---------------------------------------------------------------------------------------------------------------------
Class MF-1 $ 3,734,700.00 $ 3,112,250.00 $ 3,112,250.00 $ 2,489,800.00
- ---------------------------------------------------------------------------------------------------------------------
Class MF-2 $ 2,801,100.00 $ 2,334,250.00 $ 2,334,250.00 $ 1,867,400.00
- ---------------------------------------------------------------------------------------------------------------------
Class BF-1 $ 2,427,600.00 $ 2,023,000.00 $ 2,023,000.00 $ 1,618,400.00
- ---------------------------------------------------------------------------------------------------------------------
Class BF-1A $ 4,980,000.00 - - -
- ---------------------------------------------------------------------------------------------------------------------
Class AV-1 $53,352,240.00 $44,460,200.00 $44,460,200.00 $35,568,160.00
- ---------------------------------------------------------------------------------------------------------------------
Class MV-1 $ 5,065,200.00 $ 4,221,000.00 $ 4,221,000.00 $ 3,376,800.00
- ---------------------------------------------------------------------------------------------------------------------
Class MV-2 $ 4,221,000.00 $ 3,517,500.00 $ 3,517,500.00 $ 2,814,000.00
- ---------------------------------------------------------------------------------------------------------------------
Class BV-1 $ 2,870,100.00 $ 2,391,750.00 $ 2,391,750.00 $ 1,913,400.00
- ---------------------------------------------------------------------------------------------------------------------
Class BV-1A $ 6,704,000.00 - - -
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
CLOSING DATE AND LOCATION: 10:00 a.m. Eastern Time on May 11, 1999, at
the offices of McGuire, Woods, Battle & Boothe LLP, One James Center, 901 E.
Cary Street, Richmond, VA 23219. The Company will deliver the Underwritten
Certificates in book-entry form only through the same day funds settlement
system of the relevant Depositories, and the Class C and Class R Certificates in
certificated, fully registered form on May 11, 1999.
DUE DILIGENCE: At any time prior to the Closing Date, the Underwriters
have the right to inspect the Mortgage Loan files, the related mortgaged
properties and the loan origination procedures to ensure conformity with the
Prospectus and the Prospectus Supplement.
CONTROLLING AGREEMENT: This Underwriting Agreement, together with the
Standard Terms to Underwriting Agreement (June 1997 Edition) (together, the
"Agreement"), completely sets forth the agreements between the Company and SMI
and the Underwriters and fully supersedes all prior agreements, both written and
oral, relating to the issuance of the Underwritten Certificates and all matters
set forth herein. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement. Notwithstanding
the foregoing, the Standard Terms are hereby amended for purposes of the
Agreement such that there shall be added to the final sentence of Section 1(ii)
thereof the words ", the Trustee, DTC," immediately following the phrase "any
Credit Enhancer" therein.
INFORMATION PROVIDED BY THE UNDERWRITERS: It is understood and agreed
that the information set forth under the heading "Underwriting" in the
Prospectus Supplement and the sentence regarding the Underwriters's intention to
establish a market in the Underwritten Certificates on the inside front Cover
Page of the Prospectus Supplement is the only information furnished by the
Underwriters to the Company for inclusion in the Registration Statement and the
Final Prospectus.
<PAGE>
COLLATERAL TERM SHEETS, STRUCTURAL TERM SHEETS AND COMPUTATIONAL
MATERIALS: The Underwriters hereby represent and warrant that (i) a hard copy of
the information provided by the Underwriters to the Company in electronic form
and attached hereto as Exhibit A, if any, constitutes all "Collateral Term
Sheets" or "Structural Term Sheets" (that are required to be filed with the
Commission within two business days of first use under the terms of the Public
Securities Association letter) disseminated by the Underwriters to investors in
connection with the Underwritten Certificates and (ii) a hard copy of the
information provided by the Underwriters to the Company and attached hereto as
Exhibit B, if any, constitutes all "Computational Materials" disseminated by the
Underwriters in connection with the Underwritten Certificates.
TRUSTEE: Chase Bank of Texas, National Association will act as Trustee
of the Trust.
BLUE SKY QUALIFICATIONS: The Underwriters specify, and the parties
intend to qualify the Underwritten Certificates in, no jurisdictions pursuant to
the Agreement.
STATE LAW TAX OPINION: At Closing, the Underwriters shall have
received from Locke, Liddell & Sapp LLP an opinion dated the Closing Date and
satisfactory in form and substance to the Underwriters, as to the tax treatment
of the Certificates under Texas law.
APPLICABLE LAW: THE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
NOTICES: All communications hereunder, if sent to the Underwriters,
will be mailed, delivered or telegraphed and confirmed to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, World Financial Center, 10th Floor, New York, New
York 10281-1330, Attention: Peter Cerwin.
* * * * *
<PAGE>
The Underwriters agree, subject to the terms and provisions of the
Agreement, a copy of which is attached, and which is incorporated by reference
herein in its entirety and made a part hereof to the same extent as if such
provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
on behalf of the Underwriters
By: /s/ Peter Cerwin
-------------------------------
Name: Peter Cerwin
Title: Vice President
Accepted and Acknowledged
As of the Date First Above
Written:
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
----------------------------
Name: Bradley D. Adams
Title: Vice President
SAXON MORTGAGE, INC.
By: /s/ Bradley D. Adams
----------------------------
Name: Bradley D. Adams
Title: Vice President
<PAGE>
EXHIBIT 2
SAXON ASSET SECURITIES TRUST 1999-2
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1999-2
TRUST AGREEMENT
dated as of May 1, 1999
among
SAXON ASSET SECURITIES COMPANY,
as Depositor
SAXON MORTGAGE, INC.,
as Master Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
ARTICLE I DEFINITIONS............................................................................................. 1
Section 1.01. Standard Terms; Section References.............................................................. 1
Section 1.02. Defined Terms................................................................................... 3
ARTICLE II FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS...................................................... 21
Section 2.01.Conveyance of Mortgage Loans..................................................................... 21
ARTICLE III REMITTING TO CERTIFICATEHOLDERS...................................................................... 22
Section 3.01. Subaccount Distributions....................................................................... 22
Section 3.02.Certificate Distributions........................................................................ 23
Section 3.03. Reports to the Depositor:...................................................................... 27
Section 3.04. Reports by Master Servicer..................................................................... 28
ARTICLE IV THE CERTIFICATES...................................................................................... 29
Section 4.01. The Certificates............................................................................... 29
Section 4.02. Denominations.................................................................................. 30
ARTICLE V MISCELLANEOUS PROVISIONS............................................................................... 30
Section 5.01. Request for Opinions........................................................................... 30
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing Law.................................... 31
Section 5.03. REMIC Administration........................................................................... 31
Section 5.04. Optional Termination........................................................................... 31
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent........................................ 32
</TABLE>
Schedule I: The Mortgage Loans: A. Group I Mortgage Loans
B. Group II Mortgage Loans
Schedule II: Sales Agreement and Servicing Agreement
Schedule III: Mortgage Loans for which first payment to the Trust will be
after November 1, 1998
Exhibit AF: 1: Form of Class AF-1 Certificate
2: Form of Class AF-2 Certificate
3: Form of Class AF-3 Certificate
4: Form of Class AF-4 Certificate
5: Form of Class AF-5 Certificate
6: Form of Class AF-6 Certificate
<PAGE>
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: 1: Form of Class BF-1 Certificate
2: Form of Class BF-1A Certificate
Exhibit AV 1: Form of Class AV-1 Certificate
Exhibit MV: 1: Form of Class MV-1 Certificate
2: Form of Class MV-2 Certificate
Exhibit BV: 1: Form of Class BV-1 Certificate
2: Form of Class BV-1A Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
Exhibit I: Reportable Exceptions
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of May 1, 1999 (this "Agreement"), among
SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"), SAXON
MORTGAGE, INC., a Virginia corporation, as Master Servicer (the "Master
Servicer"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, as Trustee, under this Agreement and the Standard Terms to Trust
Agreement (July 1998 Edition) (the "Standard Terms"), all the provisions of
which, unless otherwise specified herein, are incorporated herein and shall be a
part of this Agreement as if set forth herein in full (this Agreement with the
Standard Terms so incorporated, the "Trust Agreement").
PRELIMINARY STATEMENT
The Board of Directors of the Depositor has duly authorized the
formation of a trust (the "Trust") to issue a series of asset backed
certificates with an aggregate initial Certificate Principal Balance of
$474,049,600 to be known as the Saxon Asset Securities Trust 1999-2, Mortgage
Loan Asset Backed Certificates, Series 1999-2 (the "Certificates"). The
Certificates in the aggregate evidence the entire beneficial ownership in the
Trust. The Certificates consist of the following: the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF-1, Class BF-1A, Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class BV-1A,
Class C and Class R Certificates.
In accordance with Section 10.01 of the Standard Terms, the Trustee
will make elections to treat certain assets of the Trust as real estate mortgage
investment conduits for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the Depositor, the Master
Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. STANDARD TERMS; SECTION REFERENCES.
(a) The Standard Terms prescribe the duties, responsibilities and
obligations of the Depositor, the Master Servicer and the Trustee with respect
to the Certificates. The Depositor, the Master Servicer, and the Trustee agree
to observe and perform such duties, responsibilities and obligations to the
extent they are not inconsistent with the provisions of this Agreement and
acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Sections
1.01 and 1.02 hereof, are and shall be a part of this Agreement to the same
extent as if set forth herein in full.
(b) Unless otherwise specified herein, all references in this
Agreement to sections shall mean sections contained in this Agreement.
(c) Upon the occurrence of a Group I or Group II Trigger Event, the
Trustee shall advise the Certificateholders of that fact and, if requested to do
so by the holders of Certificates representing a majority of the Voting Rights,
the Trustee shall terminate Meritech as the Servicer.
(d) The definition of "Guide" in the Standard Terms is amended to
read as follows:
"Unless otherwise provided in the Trust Agreement, the SMI
Underwriting Manual and Shipping Manual, as supplemented and
amended from time to time through the Closing Date."
(e) The definition of "Trustee Mortgage Loan File" in the Standard
Terms is amended to:
(i) add the following immediately after the words "original
Mortgage Note" in subparagraph (a):
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<PAGE>
"or lost note affidavits in lieu thereof, provided the
total original principal balances of such Mortgage Loans
evidenced by such affidavits do not exceed in the
aggregate 5% of the total original principal balances of
the Mortgage Loans on the Mortgage Loan Schedule;
(ii) add the following immediately after the words "buydown
agreement" in subparagraph (a) and immediately after the
words "or riders thereto" in subparagraph (b):
"in each case as has been identified on the Mortgage Loan
Schedule"
(iii) add the following immediately after the words
"endorsements from the originator" in subparagraph (a)
and immediately after the words "related Services,
Trustee or Custodian, as applicable," in subparagraph
(c):
"(provided, however, that SMI may direct such originator
to endorse the Mortgage Note directly to the Custodian
pursuant to the Guide)" and
(iv) add the following immediately after the words "assignment
of the Security Instrument" in subparagraph (c) and (d):
",regardless of the date of such assignment or the date
of the acknowledgment thereon,"
(f) Section 2.02(b)(iv) of the Standard Terms is amended to read as
follows:
"(iv) such documents have been reviewed by it, or by a
Custodian on its behalf, relate to such Mortgage Loan and
are not torn or mutilated; and"
(g) Section 2.02 of the Standard Terms is amended by adding a new
paragraph (g) at the end to read as follows:
"(g) During the Custodian's review, the Custodian will report
the exceptions set forth on Exhibit I hereto and shall be under
no duty or obligation to report any other exceptions to a
Mortgage File. Exhibit I may be replaced from time to time with
the consent of the Depositor, the Trustee and the Master
Servicer."
(h) Section 2.02(b)(v)(D) of the Standard Terms is amended to add
the following immediately after the words "Instrument from the Seller":
", or from the originator of the related Mortgage Loan to the
Custodian as the case may be,"
(i) Section 3.06 of the Standard Terms is amended by adding a new
paragraph at the end to read as follows:
"The Master Servicer or Servicer may provide an electronic
transmission for release of documents in a form, which complies in all
respects to the requirements of FNMA or GNMA or in a form mutually
acceptable to the Custodian and either the Master Servicer or Servicer,
and is agreed to in advance of initial transmission by both the Master
Servicer or Servicer, as applicable, and the Custodian, containing
information readable without intervention by the Custodian's data
processing operations computer hardware and software staff, and
arranged in a record layout to be specified by the Custodian. The
Master Servicer and Servicer agree to maintain and control access to
electronic signature information and assume liability for any
unauthorized use thereof. The Master Servicer and Servicer also agree
to maintain accurate records of electronic transactions related to the
Mortgage Files. For purposes of this Agreement the term "electronic
signature" is defined as an "electronic identifier intended by the
person using it to have the same force and effect as the use of a
manual signature."
2
<PAGE>
SECTION 1.02. DEFINED TERMS.
Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein, the definition herein shall control.
"ACCRUAL PERIOD": With respect to the Group I Certificates (other than the
Class AF-1 Certificates) and the Class BV-1A Certificates and any Distribution
Date, the calendar month immediately preceding such Distribution Date; a
"calendar month" shall be deemed to be 30 days. With respect to the Class AF-I
Certificates and the Group II Certificates (other than the Class BV-1A
Certificates) and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
the current Distribution Date. All calculations of interest on the Group I
Certificates (other than the Class AF-1 Certificates) and the Class BV-1A
Certificates will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months and all calculations of interest on the Class AF-I
Certificates and the Group II Certificates (other than the Class BV-1A
Certificates) will be made on the basis of the actual number of days elapsed in
the related Accrual Period and in a year of 360 days.
"BOOK-ENTRY CERTIFICATES": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-1A,
Class AV-1, Class MV-1, Class MV-2, Class BV-1 and Class BV-1A Certificates
except to the extent provided in Section 5.03 of the Standard Terms.
"CERTIFICATE": Any of the Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-1A, Class
AV-1, Class MV-1, Class MV-2, Class BV-1, Class BV-1A, Class C and Class R
Certificates.
"CERTIFICATE REGISTRAR": Chase Bank of Texas, National Association, a
national banking association, and its successors and assigns in such capacity.
"CLASS": Any of Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-
5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-1A, Class AV-1,
Class MV-1, Class MV-2, Class BV-1, Class BV-1A, Class C and Class R.
"CERTIFICATE DEFINITIONS":
"GROUP I CERTIFICATES":
<TABLE>
<S> <C> <C>
"CLASS AF-1 CERTIFICATE": Any "CLASS AF-2 CERTIFICATE": Any "CLASS AF-3 CERTIFICATE": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-1 Certificate" on the face AF-2 Certificate" on the face AF-3 Certificate" on the face
thereof, in the form of Exhibit thereof, in the form of Exhibit thereof, in the form of Exhibit AF-3
AF-1 hereto, representing the right AF-2 hereto, representing the right hereto, representing the right to
to distributions as set forth herein. to distributions as set forth herein. distributions as set forth herein.
"CLASS AF-1 CERTIFICATE PRINCIPAL "CLASS AF-2 CERTIFICATE PRINCIPAL "CLASS AF-3 CERTIFICATE PRINCIPAL
BALANCE": The Certificate Principal BALANCE": The Certificate Principal BALANCE": The Certificate Principal
Balance of the Class AF-1 Certificates. Balance of the Class AF-2 Certificates. Balance of the Class AF-3 Certificates.
"CLASS AF-1 CURRENT INTEREST": With "CLASS AF-2 CURRENT INTEREST": With "CLASS AF-3 CURRENT INTEREST": With
respect to any Distribution Date, the respect to any Distribution Date, the respect to any Distribution Date, the
interest accrued on the Class AF-1 interest accrued on the Class AF-2 interest accrued on the Class AF-3
Certificate Principal Balance Certificate Principal Balance Certificate Principal Balance
immediately prior to such Distribution immediately prior to such Distribution immediately prior to such Distribution
Date during the related Accrual Period Date during the related Accrual Period Date during the related Accrual Period
at the Class AF-1 Pass-Through Rate plus at the Class AF-2 Pass-Through Rate plus at the Class AF-3 Pass-Through Rate plus
any amount previously distributed with any amount previously distributed with any amount previously distributed with
respect to interest for Class AF-1 that respect to interest for Class AF-2 that respect to interest for Class AF-3 that
is recovered during the related Accrual is recovered during the related Accrual is recovered during the related Accrual
Period as a voidable preference by a Period as a voidable preference by a Period as a voidable preference by a
trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
final non-appealable order. final non-appealable order. final non-appealable order.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
"CLASS AF-1 INTEREST CARRY FORWARD "CLASS AF-2 INTEREST CARRY FORWARD "CLASS AF-3 INTEREST CARRY FORWARD
AMOUNT": With respect to each AMOUNT": With respect to each AMOUNT": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the
excess of (A) Class AF-1 Current excess of (A) Class AF-2 Current excess of (A) Class AF-3 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the Distribution Dates over (B) the amount Distribution Dates over (B) the amount
amount actually distributed to Class actually distributed to Class AF-2 actually distributed to Class AF-3
AF-1 with respect to interest on with respect to interest on such prior with respect to interest on such prior
such prior Distribution Dates and (ii) Distribution Dates and (ii) interest Distribution Dates and (ii) interest
interest thereon at the Class AF-1 thereon at the Class AF-2 thereon at the Class AF-3
Pass-Through Rate for the related Pass-Through Rate for the related Pass-Through Rate for the related
Accrual Period. Accrual Period. Accrual Period.
"CLASS AF-1 PASS-THROUGH RATE": "CLASS AF-2 PASS-THROUGH RATE": "CLASS AF-3 PASS-THROUGH RATE":
With respect to any Distribution Date, With respect to each Distribution Date, With respect to each Distribution Date,
the lesser of (x) One Month LIBOR plus 5.970% per annum. 6.105% per annum.
0.090% per annum and (y) the Group I
Available Funds Cap for such
Distribution Date.
"CLASS AF-4 CERTIFICATE": Any "CLASS AF-5 CERTIFICATE": Any "CLASS AF-6 CERTIFICATE": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-4 Certificate" on the face thereof, AF-5 Certificate" on the face thereof, AF-6 Certificate" on the face thereof,
in the form of Exhibit AF-4 hereto, in the form of Exhibit AF-5 hereto, in the form of Exhibit AF-6 hereto,
representing the right to distributions representing the right to distributions representing the right to distributions
as set forth herein. as set forth herein. as set forth herein.
"CLASS AF-4 CERTIFICATE PRINCIPAL "CLASS AF-5 CERTIFICATE PRINCIPAL "CLASS AF-6 CERTIFICATE PRINCIPAL
BALANCE": The Certificate Principal BALANCE": The Certificate Principal BALANCE": The Certificate Principal
Balance of the Class AF-4 Certificates. Balance of the Class AF-5 Certificates. Balance of the Class AF-6 Certificates.
"CLASS AF-4 CURRENT INTEREST": With "CLASS AF-5 CURRENT INTEREST": With "CLASS AF-6 CURRENT INTEREST": With
respect to any Distribution Date, the respect to any Distribution Date, the respect to any Distribution Date, the
interest accrued on the Class AF-4 interest accrued on the Class AF-5 interest accrued on the Class AF-6
Certificate Principal Balance immediately Certificate Principal Balance immediately Certificate Principal Balance immediately
prior to such Distribution Date during prior to such Distribution Date during prior to such Distribution Date during
the related Accrual Period at the Class the related Accrual Period at the Class the related Accrual Period at the Class
AF-4 Pass-Through Rate plus any amount AF-5 Pass-Through Rate plus any amount AF-6 Pass-Through Rate plus any amount
previously distributed with respect to previously distributed with respect to previously distributed with respect to
interest for Class AF-4 that is recovered interest for Class AF-5 that is recovered interest for Class AF-6 that is recovered
during the related Accrual Period as a during the related Accrual Period as a during the related Accrual Period as a
voidable preference by a trustee in voidable preference by a trustee in voidable preference by a trustee in
bankruptcy pursuant to a final bankruptcy pursuant to a final bankruptcy pursuant to a final
non-appealable order. non-appealable order. non-appealable order.
"CLASS AF-4 INTEREST CARRY FORWARD "CLASS AF-5 INTEREST CARRY FORWARD "CLASS AF-6 INTEREST CARRY FORWARD
AMOUNT": With respect to each AMOUNT": With respect to each AMOUNT": With respect to each
Distribution Date, the sum of (i) Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the
the excess of (A) Class AF-4 Current excess of (A) Class AF-5 Current Interest excess of (A) Class AF-6 Current Interest
Interest with respect to prior with respect to prior Distribution Dates with respect to prior Distribution Dates
Distribution Dates over (B) the amount over (B) the amount actually distributed over (B) the amount actually distributed
actually distributed to Class AF-4 with to Class AF-5 with respect to interest on to Class AF-6 with respect to interest on
respect to interest on such prior such prior Distribution Dates and (ii) such prior Distribution Dates and (ii)
Distribution Dates and (ii) interest interest thereon at the Class AF-5 interest thereon at the Class AF-6
thereon at the Class AF-4 Pass-Through Pass-Through Rate for the related Pass-Through Rate for the related
Rate for the related Accrual Period. Accrual Period. Accrual Period.
"CLASS AF-4 PASS-THROUGH RATE": With "CLASS AF-5 PASS-THROUGH RATE": With "CLASS AF-6 PASS-THROUGH RATE": With
respect to each Distribution Date, respect to each Distribution Date, the respect to each Distribution Date, the
6.445% per annum. lesser of (i) 6.815% per annum plus, lesser of (i) 6.415% per annum and (ii)
after the Initial Optional Termination the Group I Net Rate for such date.
Date, 0.50% and (ii) the Group I Net
Rate for such date.
"CLASS AF-6 PRINCIPAL DISTRIBUTION AMOUNT": With respect to any Distribution Date, the product of (i) a fraction the numerator of
which is the
</TABLE>
4
<PAGE>
Class AF-6 Certificate Principal Balance and the denominator of which is the
Group I Class A Certificate Principal Balance, in each case immediately prior to
such Distribution Date, (ii) the Group I Class A Principal Distribution Amount
for such Distribution Date and (iii) the applicable percentage for such
Distribution Date set forth below:
<TABLE>
<CAPTION>
Distribution Date Percentage
----------------- ----------
<S> <C>
June 1999 -May 2002 0%
June 2002 -May 2004 45%
June 2004 -May 2005 80%
June 2005 -May 2006 100%
June 2006 and thereafter 300%
</TABLE>
<TABLE>
<S> <C> <C>
"CLASS MF-1 APPLIED REALIZED LOSS "CLASS MF-2 APPLIED REALIZED LOSS "CLASS BF-1 APPLIED REALIZED LOSS
AMOUNT": As to any Distribution Date, AMOUNT": As to any Distribution Date, AMOUNT": As to any Distribution Date,
the sum of the Realized Losses with the sum of the Realized Losses with the sum of the Realized Losses with
respect to Group I which have been respect to Group I which have been respect to Group I which have been
applied in reduction of the Certificate applied in reduction of the Certificate applied in reduction of the Certificate
Principal Balance of the Class MF-1 Principal Balance of the Class MF-2 Principal Balance of the Class BF-1
Certificates pursuant to Section Certificates pursuant to Section Certificates pursuant to Section
3.02(h) hereof. 3.02(h) hereof. 3.02(h) hereof.
"CLASS MF-1 CERTIFICATE": Any "CLASS MF-2 CERTIFICATE": Any "CLASS BF-1 CERTIFICATE": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
MF-1 Certificate" on the face thereof, MF-2 Certificate" on the face thereof, BF-1 Certificate" on the face thereof,
in the form of Exhibit MF-1 hereto, in the form of Exhibit MF-2 hereto, in the form of Exhibit BF-1 hereto,
representing the right to distributions representing the right to distributions representing the right to distributions
as set forth herein. as set forth herein. as set forth herein.
"CLASS MF-1 CERTIFICATE PRINCIPAL "CLASS MF-2 CERTIFICATE PRINCIPAL "CLASS BF-1 CERTIFICATE PRINCIPAL
BALANCE": The Certificate Principal BALANCE": The Certificate Principal BALANCE": The Certificate Principal Balance
Balance of the Class MF-1 Certificates Balance of the Class MF-2 Certificates of the Class BF-1 Certificates less any
less any Class MF-1 Unpaid Realized less any Class MF-2 Unpaid Realized Class BF-1 Unpaid Realized Loss Amount.
Loss Amount. Loss Amount.
"CLASS MF-1 CURRENT INTEREST": With "CLASS MF-2 CURRENT INTEREST": With "CLASS BF-1 CURRENT INTEREST": With
respect to any Distribution Date, the respect to any Distribution Date, the respect to any Distribution Date, the
interest accrued on the Class MF-1 interest accrued on the Class MF-2 interest accrued on the Class BF-1
Certificate Principal Balance immediately Certificate Principal Balance immediately Certificate Principal Balance immediately
prior to such Distribution Date during prior to such Distribution Date during the prior to such Distribution Date during
the related Accrual Period at the Class related Accrual Period at the Class MF-2 the related Accrual Period at the Class
MF-1 Pass-Through Rate plus any amount Pass-Through Rate plus any amount BF-1 Pass-Through Rate plus any amount
previously distributed with respect to previously distributed with respect to previously distributed with respect
interest for Class MF-1 that is recovered interest for Class MF-2 that is recovered to interestfor Class BF-1 that is recovered
during the related Accrual Period as a during the related Accrual Period as a during the related Accrual Period as a
voidable preference by a trustee in voidable preference by a trustee in voidable preference by a trustee in
bankruptcy pursuant to a final bankruptcy pursuant to a final bankruptcy pursuant to a final
non-appealable order. non-appealable order. non-appealable order.
"CLASS MF-1 INTEREST CARRY FORWARD AMOUNT": "CLASS MF-2 INTEREST CARRY FORWARD "CLASS BF-1 INTEREST CARRY
With respect to each Distribution Date, AMOUNT": With respect to each FORWARD AMOUNT": With respect to
the sum of (i) the excess of (A) Class MF-1 Distribution Date, the sum of each Distribution Date, the sum of
Current Interest with respect to prior (i) the excess of (A) Class MF-2 (i) the excess of (A) Class BF-1
Distribution Dates over (B) the amount Current Interest with respect to prior Current Interest with respect to
actually distributed to Class MF-1 with Distribution Dates over (B) the amount prior Distribution Dates over (B)
respect to interest on such prior actually distributed to Class MF-2 with the amount actually distributed to
Distribution Dates and (ii) interest respect to interest on such prior Class BF-1 with respect to interest
thereon at the Class MF-1 Pass-Through Distribution Dates and (ii) interest on such prior Distribution Dates and
Rate for the related Accrual Period. thereon at the Class MF-2 Pass-Through (ii) interest thereon at the Class
Rate for the related Accrual Period. BF-1 Pass-Through Rate for the
related Accrual Period.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
"CLASS MF-1 PASS-THROUGH RATE": With respect "CLASS MF-2 PASS-THROUGH RATE": With respect to "CLASS BF-1 PASS-THROUGH RATE":
to each Distribution Date, the lesser of (i) each Distribution Date, the lesser of (i) With respect to each Distribution
6.780% per annum and (ii) the Group I Net 7.175% per annum and (ii) the Group I Net Rate Date, the lesser of (i) 8.410% per
Rate on such date. on such date. annum and (ii) the Group I Net
Rate on such date.
"CLASS MF-1 UNPAID REALIZED LOSS AMOUNT": As "CLASS MF-2 UNPAID REALIZED LOSS AMOUNT": As "CLASS BF-1 UNPAID REALIZED LOSS
to any Distribution Date, the excess of (i) to any Distribution Date, the excess of (i) the AMOUNT": As to any Distribution
the Class MF-1 Applied Realized Loss Amount Class MF-2 Applied Realized Loss Amount over Date, the excess of (i) the Class
over (ii) the sum of all increases in the (ii) the sum of all increases in the Class MF-2 BF-1 Applied Realized Loss Amount
Class MF-1 Certificate Principal Balance on Certificate Principal Balance on all previous over (ii) the sum of all increases
all previous Distribution Dates pursuant to Distribution Dates pursuant to Section 3.02(j) in the Class BF-1 Certificate
Section 3.02(j) hereof. hereof. Principal Balance on all previous
Distribution Dates pursuant to
Section 3.02(j) hereof.
</TABLE>
"CLASS BF-1A APPLIED REALIZED LOSS
AMOUNT": As to any Distribution Date, the sum
of the Realized Losses with respect to Group I
which have been applied in reduction of the
Certificate Principal Balance of the Class
BF-1A Certificates pursuant to Section
3.02(h) hereof.
"CLASS BF-1A CERTIFICATE": Any
Certificate designated as a "Class BF-1A
Certificate" on the face thereof, in the form
of Exhibit BF-1A hereto, representing the right
to distributions as set forth herein.
"CLASS BF-1A CERTIFICATE PRINCIPAL BALANCE":
The Certificate Principal Balance of the
Class BF-1A Certificates less any Class
BF-1A Unpaid Realized Loss Amount.
"CLASS BF-1A CURRENT INTEREST": With
respect to any Distribution Date, the
interest accrued on the Class BF-1A Certificate
Principal Balance immediately prior to such
Distribution Date during the related Accrual
Period at the Class BF-1A Pass-Through Rate
plus any amount previously distributed with
respect to interest for Class BF-1A that is
recovered during the related Accrual Period
as a voidable preference by a trustee in
bankruptcy pursuant to a final
non-appealable order.
"CLASS BF-1A INTEREST CARRY FORWARD AMOUNT":
With respect to each Distribution Date, the
sum of (i) the excess of (A) Class BF-1A
Current Interest with respect to prior
Distribution Dates over (B) the amount
actually distributed to Class BF-1A with
respect to interest on such prior
Distribution Dates and (ii) interest
thereon at the Class BF-1A Pass-Through
Rate for the related Accrual Period.
"CLASS BF-1A PASS-THROUGH RATE": With
respect to each Distribution Date, the
lesser of (i) 7.925% per annum and (ii)
the Group I Net
6
<PAGE>
Rate on such date.
"CLASS BF-1A UNPAID REALIZED LOSS AMOUNT":
As to ny Distribution Date, the excess of (i)
the Class BF-1A Applied Realized Loss Amonut
over (ii) the sum of all increses Balance on
all previous Distribution Dates pursuant to
Section 3.0(j) hereof.
"GROUP II CERTIFICATES":
<TABLE>
<S> <C>
"CLASS MV-1 APPLIED REALIZED LOSS AMOUNT": As to any
Distribution Date, the sum of the Realized Losses with
respect to Group II which have been applied in reduction
of the Certificate Principal Balance of the Class MV-1
Certificates pursuant to Section 3.02(i) hereof.
"CLASS AV-1 CERTIFICATE": Any Certificate designated as a "Class "CLASS MV-1 CERTIFICATE": Any Certificate designated as
AV-1 Certificate" on the face thereof, in the form of Exhibit AV-1 a "Class MV-1 Certificate" on the face thereof, in the
hereto representing the right to distributions as set forth herein. form of Exhibit MV-1 hereto representing the right to
distributions as set forth herein.
"CLASS AV-1 CERTIFICATE PRINCIPAL BALANCE": The Certificate "CLASS MV-1 CERTIFICATE PRINCIPAL BALANCE": The
Principal Balance of the Class AV-1 Certificates. Certificate Principal Balance of the Class MV-1
Certificates less any Class MV-1 Unpaid Realized Loss
Amount.
"CLASS AV-1 CERTIFICATES CARRYOVER": If on any Distribution Date "CLASS MV-1 CERTIFICATES CARRYOVER": If on any
the Class AV-1 Pass-Through Rate is based upon the Group II Distribution Date the Class MV-1 Pass-Through Rate is based
Available Funds Cap, the excess of (i) the amount of interest the upon the Group II Available Funds Cap, the excess of (i)
Class AV-1 Certificates would be entitled to receive on such the amount of interest the Class MV-1 Certificates would be
Distribution Date had the Class AV-1 Pass-Through Rate not been entitled to receive on such Distribution Date had the
calculated based on the Group II Available Funds Cap (but not more Class MV-1 Pass-Through Rate not been calculated based on
than the weighted average of the Maximum Lifetime Mortgage Interest the Group II Available Funds Cap (but not more than the
Rates on the Mortgage Loans in Group II less the Group II Servicing weighted average of the Maximum Lifetime Mortgage Interest
Fee Rate and the Group II Master Servicing Fee Rate) over (ii) the Rates on the Mortgage Loans in Group II less the Group II
amount of interest such Certificates received on such Distribution Servicing Fee Rate and the Group II Master Servicing Fee
Date based on the Group II Available Funds Cap, together with the Rate) over (ii) the amount of interest such Certificates
unpaid portion of any such excess from prior Distribution Dates received on such Distribution Date based on the Group II
(and interest accrued thereon at the then applicable Pass-Through Available Funds Cap, together with the unpaid portion of
Rate, without giving effect to the Group II Available Funds Cap). any such excess from prior Distribution Dates (and interest
accrued thereon at the then applicable Pass-Through Rate,
without giving effect to the Group II Available Funds Cap).
"CLASS AV-1 CURRENT INTEREST": With respect to any Distribution "CLASS MV-1 CURRENT INTEREST": With respect to any
Date, the interest accrued on the Class AV-1 Certificate Principal Distribution Date, the interest accrued on the Class MV-1
Balance immediately prior to such Distribution Date during the Certificate Principal Balance immediately prior to such
related Accrual Period at the Class AV-1 Pass Through Rate plus any Distribution Date during the related Accrual Period at the
amount previously distributed with respect to interest for Class Class MV-1 Pass Through Rate plus any amount previously
AV-1 that is recovered during the related Accrual Period as a distributed with respect to interest for Class MV-1 that is
voidable preference by a trustee in bankruptcy pursuant to a final, recovered distributed with respect to interest for Class
nonappealable order; provided, however, Class AV-1 Current Interest MV-1 that is recovered during the related Accrual Period
shall not include any Class AV-1 Certificates Carryover. as a voidable preference by a trustee in bankruptcy
pursuant to a final, nonappealable order; provided, however,
Class MV-1 Current Interest shall not include any Class
MV-1 Certificates Carryover.
"CLASS AV-1 INTEREST CARRY FORWARD AMOUNT": With respect to any "CLASS MV-1 INTEREST CARRY FORWARD AMOUNT": With respect
Distribution Date, the sum of (i) the excess of (A) Class AV-1 to any Distribution Date, the sum of (i) the excess of (A)
Current Interest with respect to prior Distribution Dates Class MV-1 Current Interest with respect to prior
(excluding any Class AV-1 Certificates Carryover) over (B) the Distribution Dates (excluding any Class MV-1 Certificates
amount actually distributed to Class AV-1 with respect to interest Carryover) over (B) the amount actually distributed to
(other than in respect of Class AV-1 Certificate Carryover) on such Class MV-1 with respect to interest (other than in respect
prior Distribution Dates and (ii) interest on such excess at the of Class MV-1 Certificate Carryover) on such prior
Class AV-1 Pass-Through Rate for the related Accrual Period. Distribution Dates and (ii) interest on such excess at the
Class MV-1 Pass-Through Rate for the related Accrual Period.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
"CLASS AV-1 PASS-THROUGH RATE": With respect to any Distribution "CLASS MV-1 PASS-THROUGH RATE": With respect to any
Date, the lesser of (x) One Month LIBOR plus, in the case of any Distribution Date, the lesser of (x) One Month LIBOR plus,
Distribution Date prior to the Initial Optional Termination Date, in the case of any Distribution Date prior to the Initial
0.230% per annum, or in the case of any Distribution Date that Optional Termination Date, 0.450% per annum, or in the
occurs on or after the Initial Optional Termination Date, plus case of any Distribution Date that occurs on or after the
0.460% per annum and (y) the Group II Available Funds Cap for such Initial Optional Termination Date, plus 0.675% per annum
Distribution Date. and (y) the Group II Available Funds Cap for such
Distribution Date.
"CLASS MV-1 UNPAID REALIZED LOSS AMOUNT": As to any
Distribution Date, the excess of (i) the Class MV-1
Applied Realized Loss Amount over (ii) the sum of all
increases in the Class MV-1 Certificate Principal Balance
on all previous Distribution Dates pursuant to Section 3.02
(k) hereof.
"Class MV-2 Applied Realized Loss Amount": As to any Distribution "CLASS BV-1 APPLIED REALIZED LOSS AMOUNT: As to any
Date, the sum of the Realized Losses with respect to Group II which Distribution Date, the sum of the Realized Losses with
have been applied in reduction of the Certificate Principal Balance respect to Group II which have been applied in reduction of
of the Class MV-2 Certificates pursuant to Section 3.02(i) hereof. the Certificate Principal Balance of the Class BV-1
Certificates pursuant to Section 3.02(i) hereof.
"CLASS MV-2 CERTIFICATE": Any Certificate designated as a "Class "CLASS BV-1 CERTIFICATE": Any Certificate designated as
MV-2 Certificate" on the face thereof, in the form of Exhibit MV-2 a "Class BV-1 Certificate" on the face thereof, in the form
hereto representing the right to distributions as set forth herein. of Exhibit BV-1 hereto representing the right to
distributions as set forth herein.
"CLASS MV-2 CERTIFICATE PRINCIPAL BALANCE": The Certificate "CLASS BV-1 CERTIFICATE PRINCIPAL BALANCE": The
Principal Balance of the Class MV-2 Certificates less any Class Certificate Principal Balance of the Class BV-1
MV-2 Unpaid Realized Loss Amount. Certificates less any Class BV-1 Unpaid Realized Loss
Amount.
"CLASS MV-2 CERTIFICATES CARRYOVER": If on any Distribution Date "CLASS BV-1 CERTIFICATES CARRYOVER": If on any
the Class MV-2 Pass-Through Rate is based upon the Group II Distribution Date the Class BV-1 Pass-Through Rate is based
Available Funds Cap, the excess of (I) the amount of interest the upon the Group II Available Funds Cap, the excess of (i) the
Class MV-2 Certificates would be entitled to receive on such amount of interest the Class BV-1 Certificates would be
Distribution Date had the Class MV-2 Pass-Through Rate not been entitled to receive on such Distribution Date had the Class
calculated based on the Group II Available Funds Cap (but not more BV-1 Pass-Through Rate not been calculated based on the Group
than the weighted average of the Maximum Lifetime Mortgage Interest II Available Funds Cap (but not more than the weighted average
Rates on the Mortgage Loans in Group II less the Group II Servicing of the Maximum Lifetime Mortgage Interest Rates on the
Fee Rate and the Group II Master Servicing Fee Rate) over (ii) the Mortgage Loans in Group II less the Group II Servicing Fee
amount of interest such Certificates received on such Distribution Rate and the Group II Master Servicing Fee Rate) over (ii) the
Date based on the Group II Available Funds Cap, together with the amount of interest such Certificates received on such
unpaid portion of any such excess from prior Distribution Dates Distribution Date based on the Group II Available Funds Cap,
(and interest accrued thereon at the then applicable Pass-Through together with the unpaid portion of any such excess from
Rate, without giving effect to the Group II Available Funds Cap). prior Distribution Dates (and interest accrued thereon at the
then cable Pass-Through Rate, without giving effect to the
Group II Available Funds Cap).
"CLASS MV-2 CURRENT INTEREST": With respect to any Distribution "CLASS BV-1 CURRENT INTEREST": With respect to any
Date, the interest accrued on the Class MV-2 Certificate Principal Distribution Date, the interest accrued on the Class BV-1
Balance immediately prior to such Distribution Date during the Certificate Principal Balance immediately prior to such
related Accrual Period at the Class MV-2 Pass Through Rate plus any Distribution Date during the related Accrual Period at the
amount previously distributed with respect to interest for Class Class BV-1 Pass Through Rate plus any amount previously
MV-2 that is recovered during the related Accrual Period as a distributed with respect to interest for Class BV-1 that is
voidable preference by a trustee in bankruptcy pursuant to a final, recovered during the related Accrual Period as a voidable
nonappealable order; provided, however, Class MV-2 Current Interest preference by a trustee in bankruptcy pursuant to a final,
shall not include any Class MV-2 Certificates Carryover. nonappealable order; provided, however, Class BV-1 Current
Interest shall not include any Class BV-1 Certificates
Carryover.
"CLASS MV-2 INTEREST CARRY FORWARD AMOUNT": With respect to each "CLASS BV-1 INTEREST CARRY FORWARD AMOUNT": With respect
Distribution Date, the sum of (i) the excess of (A) Class MV-2 to each Distribution Date, the sum of (i) the excess of (A)
Current Interest with respect to prior Distribution Dates Class BV-1 Current Interest with respect to prior
(excluding any Class MV-2 Certificates Carryover) over (B) the Distribution Dates (excluding any Class BV-1 Certificates
amount actually distributed to Class MV-2 with respect to interest Carryover) over (B) the amount actually distributed to
(other than in Class BV-1 with respect to interest (other than in respect
of Class
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respect of Class MV-2 Certificate Carryover) on such prior BV-1 Certificate Carryover) on such prior
Distribution Dates and (ii) interest on such excess at the Distribution Dates and (ii) interest on such excess at the
Class MV-2 Pass-Through Rate for the related Accrual Period. Class BV-1 Pass-Through Rate for the related Accrual Period.
"CLASS MV-2 PASS-THROUGH RATE": With respect to any Distribution "CLASS BV-1 PASS-THROUGH RATE": With respect to any
Date, the lesser of (x) One Month LIBOR plus, in the case of any Distribution Date, the lesser of (x) One Month LIBOR plus,
Distribution Date prior to the Initial Optional Termination Date, in the case of any Distribution Date prior to the Initial
0.950% per annum, or in the case of any Distribution Date that Optional Termination Date, 2.700% per annum, or in the case
occurs on or after the Initial Optional Termination Date, plus of any Distribution Date that occurs on or after the Initial
1.425% per annum and (y) the Group II Available Funds Cap for such Optional Termination Date, plus 4.050% per annum and (y) the
Distribution Date. Group II Available Funds Cap for such Distribution Date.
"CLASS MV-2 UNPAID REALIZED LOSS AMOUNT": As to any Distribution "CLASS BV-1 UNPAID REALIZED LOSS AMOUNT": As to any
Date, the excess of (i) the Class MV-2 Applied Realized Loss Amount Distribution Date, the excess of (i) the Class BV-1 Applied
over (ii) the sum of all increases in the Class MV-2 Certificate Realized Loss Amount over (ii) the sum of all increases in
Principal Balance on all previous Distribution Dates pursuant to the Class BV-1 Certificate Principal Balance on all previous
Section 3.02(k) hereof. Distribution Dates pursuant to Section 3.02(k) hereof.
"CLASS BV-1A APPLIED REALIZED LOSS AMOUNT: As to any Distribution
Date, the sum of the Realized Losses with respect to Group II which
have been applied in reduction of the Certificate Principal Balance
of the Class BV-1A Certificates pursuant to Section 3.02(i) hereof.
"Class BV-1A CERTIFICATE": Any Certificate designated as a "Class
BV-1A Certificate" on the face thereof, in the form of Exhibit
BV-1A hereto representing the right to distributions as set forth
herein.
"CLASS BV-1A CERTIFICATE PRINCIPAL BALANCE": The Certificate
Principal Balance of the Class BV-1A Certificates less any Class
BV-1A Unpaid Realized Loss Amount.
"CLASS BV-1A CERTIFICATES CARRYOVER": If on any Distribution Date
the Class BV-1A Pass-Through Rate is based upon the Group II
Available Funds Cap, the excess of (I) the amount of interest the
Class BV-1A Certificates would be entitled to receive on such
Distribution Date had the Class BV-1A Pass-Through Rate not been
calculated based on the Group II Available Funds Cap (but not more
than the weighted average of the Maximum Lifetime Mortgage Interest
Rates on the Mortgage Loans in Group II less the Group II Servicing
Fee Rate and the Group II Master Servicing Fee Rate) over (ii) the
amount of interest such Certificates received on such Distribution
Date based on the Group II Available Funds Cap, together with the
unpaid portion of any such excess from prior Distribution Dates
(and interest accrued thereon at the then applicable Pass-Through
Rate, without giving effect to the Group II Available Funds Cap).
"CLASS BV-1A CURRENT INTEREST": With respect to any Distribution
Date, the interest accrued on the Class BV-1A Certificate Principal
Balance immediately prior to such Distribution Date during the
related Accrual Period at the Class BV-1A Pass Through Rate plus
any amount previously distributed with respect to interest for
Class BV-1A that is recovered during the related Accrual Period as
a voidable preference by a trustee in bankruptcy pursuant to a
final, nonappealable order; provided, however, Class BV-1A Current
Interest shall not include any Class BV-1A Certificates Carryover.
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"CLASS BV-1A INTEREST CARRY FORWARD AMOUNT": With respect to each
Distribution Date, the sum of (i) the excess of (A) Class BV-1A
Current Interest with respect to prior Distribution Dates
(excluding any Class BV-1A Certificates Carryover) over (B) the
amount actually distributed to Class BV-1A with respect to interest
(other than in respect of Class BV-1A Certificate Carryover) on
such prior Distribution Dates and (ii) interest on such excess at
the Class BV-1A Pass-Through Rate for the related Accrual Period.
"Class BV-1A Pass-Through Rate": With respect to any Distribution
Date, the lesser of (x) 8.305% per annum and (y) the Group II
Available Funds Cap for such Distribution Date.
"CLASS BV-1A UNPAID REALIZED LOSS AMOUNT": As to any Distribution
Date, the excess of (i) the Class BV-1A Applied Realized Loss
Amount over (ii) the sum of all increases in the Class BV-1A
Certificate Principal Balance on all previous Distribution Dates
pursuant to Section 3.02(k) hereof.
"CLASS C CERTIFICATE": Any of the Certificates designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C hereto representing
the right to distributions as set forth herein.
"CLASS C DISTRIBUTION AMOUNT": With respect to any Distribution Date, one-
twelfth of the sum of:
(a) the product of the AF-1 Balance and the excess of the Group I Net Rate
over the Class AF-1 Pass-Through Rate;
(b) the product of the AF-2 Balance and the excess of the Group I Net Rate
over the Class AF-2 Pass-Through Rate;
(c) the product of the AF-3 Balance and the excess of the Group I Net Rate
over the Class AF-3 Pass-Through Rate;
(d) the product of the AF-4 Balance and the excess of the Group I Net Rate
over the Class AF-4 Pass-Through Rate;
(e) the product of the AF-5 Balance and the excess of the Group I Net Rate
over the Class AF-5 Pass-Through Rate;
(f) the product of the AF-6 Balance and the excess of the Group I Net Rate
over the Class AF-6 Pass-Through Rate;
(g) the product of the MF-1 Balance and the excess of the Group I Net Rate
over the Class MF-1 Pass-Through Rate;
(h) the product of the MF-2 Balance and the excess of the Group I Net Rate
over the Class MF-2 Pass-Through Rate;
(i) the product of the BF-1 Balance and the excess of the Group I Net Rate
over the Class BF-1 Pass-Through Rate;
(j) the product of the BF-1A Balance and the excess of the Group I Net
Rate over the Class BF-1A Pass-Through Rate; and
(k) any excess of the amount specified pursuant to clauses (a) through (j)
above for prior Distribution Dates over the amount actually distributed pursuant
to such clauses on prior Distribution Dates.
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"CLASS R CERTIFICATE": Any of the Certificates designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit R hereto and evidencing
an interest designated as the "residual interest" in the Pooling and Issuing
REMICs for purposes of the REMIC Provisions.
"CLOSING DATE": May 11, 1999.
"CURRENT INTEREST": As to any Class, the definition therefor having the
corresponding designation as such Class.
"CUSTODIAN": Chase Bank of Texas, National Association, a national banking
association, and its successors and assigns in such capacity.
"CUT-OFF DATE": As of the close of business on May 1, 1999.
"DELINQUENT": A Mortgage Loan is "Delinquent" if any payment due thereon is
not made by the close of business on the last day of the Prepayment Period
immediately following the day such payment is scheduled to be due. A Mortgage
Loan is "30 days Delinquent" if such payment has not been received by the close
of business on the last day of the Prepayment Period of the month immediately
succeeding the month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"DESIGNATED CLASS": There is no designated Class for purposes of Section
9.02 of the Standard Terms.
"DISTRIBUTION ACCOUNT": The account or accounts created and maintained for
the Trust pursuant to Section 3.01 hereof.
"DISTRIBUTION AMOUNT": As to each Distribution Date and Class of
Certificates, the aggregate amount to be distributed to such Class on such date
pursuant to Section 3.02 hereof.
"DISTRIBUTION DATE": The 25th day of each month, or the next Business Day
if such 25th day is not a Business Day, commencing June 25, 1999.
"FITCH": Fitch IBCA, Inc., and its successors (One State Street Plaza, 33rd
Floor, New York, New York 10004).
GROUP DEFINITIONS:
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"GROUP I": The pool of Mortgage Loans identified "GROUP II": The pool of Mortgage Loans identified in
in the related Schedules of Mortgage Loans as having the related Schedules of Mortgage Loans as having been
been assigned to Group I, including any Group I assigned to Group II, including any Group II Qualified
Qualified Substitute Mortgage Loans delivered in Substitute Mortgage Loans delivered in replacement
replacement thereof. thereof.
"GROUP I APPLICABLE PERCENTAGE": For each "GROUP II APPLICABLE PERCENTAGE": For each Distribution
Distribution Date, and as to Group I, the percentage Date, and as to Group II, the percentage set out below
set out below with respect to such Distribution Date: with respect to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
June 1999 - May 2001 45% June 1999 - May 2001 55%
June 2001 and thereafter 100% June 2001 and thereafter 100%
; provided, however, that (i) if the average of the ; provided, however, that (i) if the average of the
Group I Realized Loss Percentages for the immediately Group II Realized Loss Percentages for the immediately
preceding three Distribution Dates exceeds the preceding three Distribution Dates exceeds the
percentage set forth below with respect to such percentage set forth below with respect to such
Distribution Date or (ii) if the average of the Group Distribution Date or (ii) if the average of the Group II
I Delinquency Percentages for the immediately Delinquency Percentages for the immediately preceding
preceding three Distribution Dates exceeds the three Distribution Dates exceeds the percentage set
percentage set forth below with respect to such forth below with respect to such Distribution Date, the
Distribution Date, the Group I Applicable Percentage Group
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will be as set forth below: II Applicable Percentage will be as set forth below
Distribution Applicable Distribution Applicable
Date Losses % Delinquency % Percentage Date Losses % Delinquency % Percentage
---- -------- ------------- ---------- ------------ -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
06/99-09/99 0.03% 2.00% 75% 06/99-09/99 0.10% 4.00% 85%
10/99-12/99 0.05% 3.00% 75% 10/99-12/99 0.15% 5.00% 85%
01/00-03/00 0.10% 3.50% 75% 01/00-03/00 0.20% 6.50% 85%
04/00-06/00 0.15% 4.25% 75% 04/00-06/00 0.25% 9.00% 85%
07/00-09/00 0.30% 5.00% 100% 07/00-09/00 0.50% 12.00% 100%
10/00-12/00 0.50% 6.00% 100% 10/00-12/00 0.60% 14.00% 100%
01/01-03/01 0.60% 7.50% 100% 01/01-03/01 0.75% 15.00% 100%
04/01-06/01 0.80% 9.00% 100% 04/01-06/01 0.90% 16.00% 100%
"GROUP I AVAILABLE FUNDS CAP": As of any "GROUP II AVAILABLE FUNDS CAP": As of any Distribution
Distribution Date, the weighted average of the Net Date, the weighted average of the Net Rates on the
Rates on the Mortgage Loans in Group I (weighted Mortgage Loans in Group II (weighted on the basis of the
the basis of the principal balances thereof as principal balances thereof as of the first day of the
the first day of the month preceding the month month preceding the month of such Distribution Date).
of such Distribution Date).
"GROUP I CERTIFICATE": Any of the Class AF-1, "GROUP II CERTIFICATE": Any of the Class AV-1, Class
Class AF-2, Class AF-3, Class AF-4, Class AF-5, V-1, Class MV-2, Class BV-1 and Class BV-1A Certificates.
AF-6, Class MF-1, Class MF-2, Class BF-1 and Class
BF-1A Certificates.
"GROUP I CERTIFICATE PRINCIPAL BALANCE": The "GROUP II CERTIFICATE PRINCIPAL BALANCE": The sum of
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, the Class AV-1, Class MV-1, Class MV-2, Class BV-1 and
Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BV-1A Certificate Principal Balances.
Class BF-1 and Class BF-1A Certificate Principal
Balances.
"GROUP I CLASS A CERTIFICATE PRINCIPAL BALANCE": "GROUP II CLASS A CERTIFICATE PRINCIPAL BALANCE": The
The sum of the Class AF-1, Class AF-2, Class AF-3, Class AV-1 Certificate Principal Balance.
Class AF-4, Class AF-5 and Class AF-6 Certificate
Principal Balances.
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"GROUP I CLASS A PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II CLASS A PRINCIPAL DISTRIBUTION AMOUNT": With
With respect to any Distribution Date before the respect to any Distribution Date before the Group II
Group I Stepdown Date or as to which a Group I Trigger Event Stepdown Date or as to which a Group II Trigger Event
has occurred, 100% of the Group I Principal has occurred, 100% of the Group II Principal
Distribution Amount for such Distribution Date and Distribution Amount for such Distribution Date and with
with respect to any Distribution Date on or after respect to any Distribution Date on or after the
the Stepdown Date and as to which a Group I Trigger Stepdown Date and as to which a Group II Trigger Event
Event has not occurred, the excess of (i) the Group has not occurred, the excess of (i) the Group II Class A
I Class A Certificate Principal Balance immediately Certificate Principal Balance immediately prior to such
prior to such Distribution Date over (ii) the lesser Distribution Date over (ii) the lesser of (A) 58.00% of
of (A) 72.00% of the Schedule Principal Balances of the Schedule Principal Balances of Group II on the
Group I on the preceding Due Date and (B) the excess preceding Due Date and (B) the excess of (I) the
of (I) the Scheduled Principal Balances of Group I Scheduled Principal Balances of Group II on the
on the preceding Due Date over (II) $1,244,919. preceding Due Date over (II) $1,125,329.
"GROUP I CLASS MF-1 PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II CLASS MV-1 PRINCIPAL DISTRIBUTION AMOUNT":
With respect to any Distribution Date on and after With respect to any Distribution on and, after the Group
the Group I Stepdown Date and as long as a Group I II Stepdown Date and as long as a Group II Trigger Event
Trigger Event is not in effect (subject to the is not in effect (subject to the proviso set forth in
proviso set forth in Section 3.02(c) hereof), the Section 3.02(d) hereof), the excess of (i) the sum of
excess of (i) the sum of (A) the Group I Class A (A) the Group II Class A Certificate Principal Balance
Certificate Principal Balance and (B) the Class MF-1 and (B) the Class MV-1 Certificate Principal Balance
Certificate Principal Balance immediately prior to immediately prior to such Distribution Date over (ii)
such Distribution Date over (ii) the lesser of (A) the lesser of (A) 73.00% of the Scheduled Principal
82.00% of the aggregate Scheduled Principal Balances Balances of Group II on the preceding Due Date and (B)
of Group I on the preceding Due Date and (B) the the excess of (I) the Scheduled Principal Balances of
excess of (I) the Scheduled Principal Balances of Group II on the preceding Due Date over (II) $1,125,329.
Group I on the preceding Due Date over (II)
$1,244,919.
"GROUP I CLASS MF-2 PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II CLASS MV-2 PRINCIPAL DISTRIBUTION AMOUNT":
With respect to any Distribution Date on and after With respect to any Distribution on and after the Group
the Group I Stepdown Date and as long as a Group I II Stepdown Date and as long as a Group II Trigger Event
Trigger Event is not in effect (subject to the is not in effect (subject to the proviso set forth in
proviso set forth in Section 3.02(c) hereof), the Section 3.02(d) hereof), the excess of (i) the sum of
excess of (i) the sum of (A) the Group I Class A (A) the Group II Class A Certificate Principal Balance,
Certificate Principal Balance, (B) the Class MF-1 (B) the Class MV-1 Certificate Principal Balance and (C)
Certificate Principal Balance and (C) the Class MF-2 the Class MV-2 Certificate Principal Amount immediately
Certificate Principal Amount immediately prior to prior to such Distribution Date over (ii) the lesser of
such Distribution Date over (ii) the lesser of (A) (A) 85.50% of the Scheduled Principal Balances of Group
89.50% of the Scheduled Principal Balances of Group II on the preceding Due Date and (B) the excess of (I)
I on the preceding Due Date and (B) the excess of the Scheduled Principal Balances of Group II on the
(I) the Scheduled Principal Balances of Group I over preceding Due Date over (II) $1,125,329.
on the preceding Due Date over (II) $1,244,919.
"GROUP I CLASS BF-1 PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II CLASS BV-1 PRINCIPAL DISTRIBUTION AMOUNT":
With respect to any Distribution on and after the With respect to any Distribution Date on and after the
Group I Stepdown Date and as long as a Group I Group II Stepdown Date and as long as a Group II Trigger
Trigger Event is not in effect (subject to the Event is not in effect (subject to the proviso set forth
proviso set forth in Section 3.02(c) hereof), the in Section 3.02(d) hereof), the excess of (i) the sum of
excess of (i) the sum of (A) the Group I Class A (A) the Group II Class A Certificate Principal Balance,
Certificate Principal Balance, (B) the Class MF-1 (B) the Class MV-1 Certificate Principal Balance, (C)
Certificate Principal Balance, (C) the Class MF-2 the Class MV-2 Certificate Principal
Certificate Principal Balance and (D) the
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Class BF-1 Certificate Principal Balance Balance and (D) the immediately Certificate Principal
immediately prior to such Distribution Date over Balance immediately prior to such Distribution Date
the lesser of (A) 96.00% of the Scheduled over (ii) the lesser of (A) 94.00% of the Scheduled
Principal Balances of Group I on the preceding Principal Balances of Group II on the preceding Due
Due Date and (B) the excess of (I) the Scheduled Date and (B) the excess of (I) the Scheduled Principal
Principal Balances of Group I on the the preceding Due Balances of Group II on the preceding Due Date over
Date over (II) $1,244,919. (II) $1,125,329.
"GROUP I CLASS BF-1A PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II CLASS BV-1A PRINCIPAL DISTRIBUTION AMOUNT":
With respect to any Distribution Date on and after With respect to any Distribution Date on and after the
the Group I Stepdown Date and as long as a Group I Group II Stepdown Date and as long as a Group II Trigger
Trigger Event is not in effect (subject to the Event is not in effect (subject to the proviso set forth
proviso set forth in Section 3.02(c) hereof), the in Section 3.02(d) hereof), the excess of (i) the Group
excess of (i) the Group I Principal Distribution II Principal Distribution Amount for each day over (ii)
Amount for such day over (ii) the sum of (A) the the sum of (A) the Group II Class A Principal Group
the Class MF-1 Principal Distribution Amount, (C) Distribution Amount, (B) the Class MV-1l Principal
the Class MF-2, Principal Distribution Amount and Distribution Amount (C) the Class MV-2 Principal Distribution
(D) Class BF-1 Principal Distribution Amount. Amount and (D) the Class BV-1 Principal Distribution Amount.
"GROUP I DELINQUENCY PERCENTAGE": For each "GROUP II DELINQUENCY PERCENTAGE": For each
Distribution Date and as to Group I , the Scheduled Distribution Date and as to Group II , the Scheduled
Principal Balance of the Mortgage Loans in Group I Principal Balance of the Mortgage Loans in Group II
that, as of such Distribution Date, are 60 or more that, as of such Distribution Date, are 60 or more days
days Delinquent as a percentage of the Scheduled Delinquent as a percentage of the Scheduled Principal
Principal Balance of the Mortgage Loans in Group I. Balance of the Mortgage Loans in Group II.
"GROUP I EXTRA PRINCIPAL DISTRIBUTION AMOUNT": "GROUP II EXTRA PRINCIPAL DISTRIBUTION AMOUNT": With
With respect to any Distribution Date, to the extent respect to any Distribution Date, to the extent of Group
of Group I Interest Funds pursuant to Section II Interest Funds pursuant to Section 3.02(b)(v) and
3.02(a)(v) and Group II Interest Funds available Group I Interest Funds available for the purpose
for the purpose pursuant to Section 3.02(f)(v) pursuant to Section 3.02(e)(v) hereof, an amount equal
hereof, an amount equal to the excess of (i) all to the excess of (i) all Realizes Losses with respect to
Realized Losses with respect to Group I (including Group II (including any such losses for such date) over
any such losses for such date) over (ii) all Extra (ii) all Extra Principal Distribution Amounts for Group
Principal Distribution Amounts for Group I on the II on the preceding Due Date.
preceding Due Date.
"GROUP I INTEREST FUNDS": With respect to Group I "GROUP II INTEREST FUNDS": With respect to Group II and
and any Master Servicer Remittance Date, to the any Master Servicer Remittance Date, to the extent
extent actually deposited in the Master Servicer actually deposited in the Master Servicer Custodial
Custodial Account, the sum, without duplication, of Account, the sum, without duplication, of (i) all
(i) all scheduled interest collected during the scheduled interest collected during the related Due
related Due Period with respect to Group I less the Period with respect to Group II less the Group II
Group I Servicing Fee and the Group I Master Servicing Fee and the Group II Master Servicing Fee,
Servicing Fee, (ii) all Advances relating to (ii) all Advances relating to interest with respect to
interest with respect to Group I, (iii) all Month Group II, (iii) all Month End Interest with respect to
End Interest with respect to Group I and (iv) Group II and (iv) Liquidation Proceeds with respect to
Liquidation Proceeds with respect to Group I (to Group II (to the extent such Liquidation Proceeds relate
the extent such Liquidation Proceeds relate to to interest) less all Non-Recoverable Advances relating
interest) less all Non-Recoverable Advances to interest and expenses pursuant to Section 6.03 of the
relating to interest and expenses pursuant to Standard Terms.
Section 6.03 of the Standard Terms.
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"GROUP I MASTER SERVICING FEE": With respect to "GROUP II MASTER SERVICING FEE": With respect to each
each Master Servicer Remittance Date, an amount Master Servicer Remittance Date, an amount payable (or
payable (or allocable) to the Master Servicer equal allocable) to the Master Servicer equal to the product
to the product of one-twelfth of the Group I Master of one-twelfth of the Group II Master Servicing Fee Rate
Servicing Fee Rate and the aggregate Scheduled and the aggregate Scheduled Principal Balance of Group II
Principal Balance of Group I on the first day of on the first day of the Due Period preceding such Master
the Due Period preceding such Master Servicer Servicer Remittance Date.
Remittance Date.
"GROUP I MASTER SERVICING FEE RATE": 0.05% per "GROUP II MASTER SERVICING FEE RATE": 0.05% per annum.
annum.
"GROUP I NET RATE": The weighted average Net Rate "GROUP II NET RATE": The weighted average Net Rate for
for Group I. Group II.
"GROUP I OVERCOLLATERALIZATION AMOUNT": With "GROUP II OVERCOLLATERALIZATION AMOUNT": With respect to
respect to any Distribution Date the sum of (i) the any Distribution Date the sum of (i) the excess of the
excess of the aggregate Scheduled Principal Balance aggregate Scheduled Principal Balance of the Group II Mortgage
of the Group I Mortgage Loans over the Group I Loans over the Group II Certificate Principal Balance and (ii)
Certificate Principal Balance and (ii) the Class the Class BV-1A Certificate Principal Balance.
BF-1A Certificate Principal Balance.
"GROUP I PRINCIPAL DISTRIBUTION AMOUNT": With "GROUP II PRINCIPAL DISTRIBUTION AMOUNT": With respect
respect to any Distribution Date, the excess of (A) to any Distribution Date, the excess of (A) the sum of
the sum of (i) the Group I Principal Funds and (ii) (i) the Group II Principal Funds and (ii) the Group II
the Group I Extra Principal Distribution Amount Extra Principal Distribution Amount over (B) the Group
over (B) the Group I Released Principal Amount. II Released Principal Amount.
"GROUP I PRINCIPAL FUNDS": With respect to Group "GROUP II PRINCIPAL FUNDS": With respect to Group II
I and any Master Servicer Remittance Date, to the and any Master Servicer Remittance Date, to the extent
extent actually deposited in the Master Servicer actually deposited in the Master Servicer Custodial
Custodial Account, the sum, without duplication, of Account, the sum, without duplication, of (i) all
(i) all scheduled principal with respect to Group I scheduled principal with respect to Group II collected
collected by the Servicers during the related Due by the Servicers during the related Due Period or
Period or advanced on or before such Master advanced on or before such Master Servicer Remittance
Servicer Remittance Date, (ii) prepayments with Date, (ii) prepayments with respect to Group II
respect to Group I collected by the Servicers in collected by the Servicers in the related Prepayment
the related Prepayment Period, (iii) the Scheduled Period, (iii) the Scheduled Principal Balance of each
Principal Balance of each Mortgage Loan in Group I Mortgage Loan in Group II repurchased by the Depositor,
repurchased by the Depositor, (iv) any Substitution (iv) any Substitution Shortfall with respect to Group II
Shortfall with respect to Group I and (v) all and (v) all Liquidation Proceeds with respect to Group
Liquidation Proceeds with respect to Group I II collected by the Servicer during the related Due
collected by the Servicer during the related Due Period (to the extent such Liquidation Proceeds related
Period (to the extent such Liquidation Proceeds to principal) less all non-recoverable Advances relating
related to principal) less all non-recoverable to principal with respect to Group II reimbursed during
Advances relating to principal with respect to the related Due Period.
Group I reimbursed during the related Due Period.
"GROUP I REALIZED LOSS PERCENTAGE": For each "GROUP II REALIZED LOSS PERCENTAGE": For each
Distribution Date and as to Group I, Realized Distribution Date and as to Group II, Realized Losses
Losses since the Cut-Off Date with respect to the since the Cut-Off Date with respect to the Mortgage
Mortgage Loans in
</TABLE>
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<TABLE>
<S> <C>
Group I as a percentage of the Scheduled Principal Loans in Group II as a percentage of the Scheduled
Balance of Group I as of the Cut-Off Date. Principal Balance of Group II as of the Cut-Off Date.
"GROUP I RELEASED PRINCIPAL AMOUNT": With respect "GROUP II RELEASED PRINCIPAL AMOUNT": With respect to
to any Distribution Date (i) if a Group I any Distribution Date (i) if a Group II Subordinated
Subordinated Trigger Event exists, zero and (ii) if Trigger Event exists, zero and (ii) if a Group II
a Group I Subordinated Trigger Event does not Subordinated Trigger Event does not exist, the amount by
exist, the amount by which the Group I which the Group II Overcollateralization Amount exceeds
Overcollateralization Amount exceeds the Group I the Group II Required Overcollateralization Amount.
Required Overcollateralization Amount.
"GROUP I REQUIRED OVERCOLLATERALIZATION AMOUNT": "GROUP II REQUIRED OVERCOLLATERALIZATION AMOUNT": With
With respect to any Distribution Date (i) prior to respect to any Distribution Date (i) prior to the Group
the Group I Stepdown Date, 2.00% of the Scheduled II Stepdown Date, 3.00% of the Scheduled Principal
Principal Balance of the Mortgage Loans in Group I Balance of the Mortgage Loans in Group II as of the
as of the Cut-Off Date and (ii) on and after the Cut-Off Date and (ii) on and after the Group II Stepdown
Group I Stepdown Date the greater of (x) the lesser Date the greater of (x) the lesser of (I) 3.00% of the
of (I) 2.00% of the Scheduled Principal Balance of Scheduled Principal Balance of the Mortgage Loans in
the Mortgage Loans in Group I with respect to the Group II with respect to the Cut-Off Date and (II) 6.00%
Cut-Off Date and (II) 4.00% of the Scheduled of the Scheduled Principal Balance of the Mortgage Loans
Principal Balance of the Mortgage Loans in Group I in Group II on such Distribution Date and (y) 0.50% of
on such Distribution Date and (y) 0.50% of the Scheduled Principal Balance of the Mortgage Loans in
Scheduled Principal Balance of the Mortgage Loans Group II as of the Cut-Off Date.
in Group I as of the Cut-Off Date.
"GROUP I SERVICING FEE": With respect to each "GROUP II SERVICING FEE": With respect to each Mortgage
Mortgage Loan in Group I and each Remittance Date, Loan in Group II and each Remittance Date, the product
the product of (x) one-twelfth of the Servicing Fee of (x) one-twelfth of the Servicing Fee Rate and (y)
Rate and (y) aggregate Scheduled Principal Balance aggregate Scheduled Principal Balance of such Mortgage
of such Mortgage Loan as of the opening of business Loan as of the opening of business on the first day of
on the first day of the Due Period preceding such the Due Period preceding such Remittance Date.
Remittance Date.
"GROUP I SERVICING FEE RATE": With respect to each "GROUP II SERVICING FEE RATE": With respect to each
Mortgage Loan in Group I, the fixed per annum rate Mortgage Loan in Group II, the fixed per annum rate
payable to the Servicer as set out on Schedule IA payable to the Servicer as set out on Schedule IB to
to this Agreement. this Agreement.
"Group I Stepdown Date": With respect to Group I, "GROUP II STEPDOWN DATE": With respect to Group II, the
the earlier to occur of (i) the later to occur of earlier to occur of (i) the later to occur of (A) the
(A) the Distribution Date in July 2002 and (B) the Distribution Date in July 2002 and (B) the first
first Distribution Date on which the Group I Class Distribution Date on which the Group II Class A
A Certificate Principal Balance immediately prior Certificate Principal Balance immediately prior to such
to such Distribution Date (less the Group I Distribution Date (less the Group II Principal Funds for
Principal Funds for such Distribution Date) is less such Distribution Date) is less than or equal to 58.00%
than or equal to 72.00% of the Scheduled Principal of the Scheduled Principal Balances of Group II and (ii)
Balances of Group I and (ii) the Distribution Date the Distribution Date on which the Group II Class A
on which the Group I Class A Certificate Principal Certificate Principal Balance has been reduced to zero.
Balance has been reduced to zero.
"Group I Subordinated Certificates": The Class "GROUP II SUBORDINATED CERTIFICATES": The Class MV-1,
MF-1, Class MF-2, Class BF-1 and Class BF-1A Class MV-2, Class BV-1 and Class BV-1A Certificates.
Certificates.
</TABLE>
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<TABLE>
<S> <C>
"GROUP I SUBORDINATED TRIGGER EVENT": With respect "GROUP II SUBORDINATED TRIGGER EVENT": With respect to
to Group I, any Distribution Date after the Group I Group II, any Distribution Date after the Group II
Stepdown Date on which: Stepdown Date on which:
(a) Realized Losses since the Cut-Off Date with (a) Realized Losses since the Cut-Off Date with respect
respect to the Mortgage Loans in Group I as a to the Mortgage Loans in Group II as a percentage of the
percentage of the Scheduled Principal Balance of Scheduled Principal Balance of Group II as of the
Group I as of the Cut-Off Date exceed the percentage Cut-Off Date exceed the percentage set out below with
set out below with respect to such Distribution Date: respect to such Distribution Date:
Distribution Date (inclusive) DISTRIBUTION DATE (INCLUSIVE)
July 2001 - June 2002 1.40% July 2001 - June 2002 2.00%
July 2002 - June 2003 2.40 July 2002 - June 2003 3.30
July 2003 - June 2004 3.00 July 2003 - June 2004 4.00
July 2004 - June 2005 3.40 July 2004 - June 2005 4.30
July 2005 - June 2006 3.70 July 2005 - June 2006 4.50
July 2006 and thereafter 4.00 July 2006 and thereafter 5.00
And And
(b) the Scheduled Principal Balance of the (b) the Scheduled Principal Balance of the
Mortgage Loans in Group I that, as of such Mortgage Loans in Group II that, as of such Distribution
Distribution Date, are 60 or more days Delinquent Date, are 60 or more days Delinquent as a percentage of the
as a percentage of the Scheduled Principal Balance of Scheduled Principal Balance of the Mortgage Loans in
the Mortgage Loans in Group I exceeds the percentage Group II exceeds the percentage set out below with
set out below with respect to such Distribution Date: respect to such Distribution Date:
DISTRIBUTION DATE (INCLUSIVE) DISTRIBUTION DATE (INCLUSIVE)
July 2001 - June 2002 4.00% July 2001 - June 2002 6.00%
July 2002 - June 2003 4.00 July 2002 - June 2003 6.00
July 2003 - June 2004 6.50 July 2003 - June 2004 9.00
July 2004 - June 2005 6.50 July 2004 - June 2005 9.00
July 2005 - June 2006 8.00 July 2005 - June 2006 12.00
July 2006 and thereafter 8.00 July 2006 and thereafter 12.00
"GROUP I TRIGGER EVENT": With respect to Group I "GROUP II TRIGGER EVENT": With respect to Group II and
and any Distribution Date after the Group I any Distribution Date after the Group II Stepdown Date,
Stepdown Date, a Group I Trigger Event exists if a Group II Trigger Event exists if 2.5 times the
two times the quotient of (i) the Scheduled quotient of (i) the Scheduled Principal Balances of all
Principal Balances of all 60 or more days 60 or more days Delinquent Mortgage Loans in Group II
Delinquent Mortgage Loans in Group I and (ii) the and (ii) the Scheduled Principal Balances of Group II as
Scheduled Principal Balances of Group I as of the of the preceding Master Servicer Remittance Date equals
preceding Master Servicer Remittance Date equals or or exceeds 42.00%.
exceeds 28.00%.
</TABLE>
"INITIAL OPTIONAL TERMINATION DATE": The Distribution Date immediately
following the Due Period with respect to which the aggregate Scheduled Principal
Balances of the Mortgage Loans have declined to less than 10% of the aggregate
Scheduled Principal Balances on the Closing Date.
"INTEREST CARRY FORWARD AMOUNT": As to any Class, the definition therefor
having the corresponding designation as such Class.
"INTEREST DETERMINATION DATE": With respect to the first Accrual Period for
the Class AF-1 Certificates and the Group II Certificates (other than the Class
BV-1A Certificates) May 7, 1999, and with respect to any subsequent Accrual
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Period for the Class AF-1 Certificates and the Group II Certificates (other than
the Class BV-1A Certificates), the second London Business Day preceding such
Accrual Period.
"INTEREST FUND": The Fund created and maintained by the Trustee pursuant to
Section 4.03.
"LONDON BUSINESS DAY": A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.
"MASTER SERVICER": Saxon Mortgage, Inc., a Virginia corporation, and its
successors and assigns in such capacity.
"MASTER SERVICER REMITTANCE DATE": The Business Day preceding each
Distribution Date.
"MASTER SERVICER REPORTING DATE": The opening of business on the third
Business Day preceding each Distribution Date.
"MASTER SERVICING FEE": As applicable, the Group I Master Servicing Fee or
the Group II Master Servicing Fee.
"MERITECH": Meritech Mortgage Services, Inc., a Texas corporation.
"MOODY'S": Moody's Investors Service, Inc., and its successors (99 Church
Street, New York, New York 10007).
"MORTGAGE LOAN GROUP": Either Group I or Group II.
"MORTGAGE LOANS": The mortgage loans listed on Schedule I.
"NET RATE": As to each Mortgage Loan and Distribution Date, the related
Mortgage Interest Rate less the sum of the Group I or Group II Servicing Fee
Rate and the Group I or Group II Master Servicing Fee Rate, in each case, as
applicable.
"NOTICE ADDRESS": For purposes of Section 11.05 of the Standard Terms, the
addresses of the Depositor, the Master Servicer and the Trustee, are as follows:
(i) If to the Depositor:
Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
(ii) If to the Master Servicer:
Saxon Mortgage, Inc.
4880 Cox Road
Glen Allen, Virginia 23060
(iii) If to the Trustee:
Chase Bank of Texas, National Association
600 Travis, 10th Floor
Houston, Texas 77002
Attention: Capital Markets Fiduciary Services - Saxon 1999-2
"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 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
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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 Master
Servicer shall review Telerate Page 3750 at the required time, make the required
requests to the principal offices of the Reference Banks and selections of major
banks in New York City and shall determine the rate which constitutes One Month
LIBOR for each Interest Determination Date.
"PAYING AGENT": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"PRIVATE CERTIFICATE": Any of the Class C and Class R Certificates.
"PRIVATE SUBORDINATED CERTIFICATE": Any of the Class C and Class R
Certificates.
"PUBLIC SUBORDINATED CERTIFICATE": Any of the Class MF-1, Class MF-2, Class
BF-1, Class BF-1A, Class MV-1, Class MV-2, Class BV-1 and Class BV-1A
Certificates.
"RATING AGENCY": Each of Moody's and Fitch (or, if any such agency or a
successor is no longer in existence, such other nationally recognized
statistical rating agency, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Trustee).
"REFERENCE BANKS": Leading banks selected by the Master Servicer and engaged
in transactions in U.S. dollar deposits in the London interbank market.
"REGULAR CERTIFICATES": Any of the Group I Certificates, Group II
Certificates and Class C Certificates which represent the "Regular Interests" in
the Issuing REMIC for purposes of the REMIC Provisions.
"REMITTANCE DATE": With respect to each Servicing Agreement, the date so
specified therein which date shall in no case be later than the 21st of each
month, or if the 21st of any month does not fall on a Business Day, then the
Business Day immediately preceding the 21st.
"RESIDUAL CERTIFICATES": The Class R Certificates, which represent the
"residual interest" in the Pooling and Issuing REMICs for purposes of the REMIC
Provisions.
"SALES AGREEMENT": The Sales Agreement dated April 30, 1999, between the
Depositor and SMI regarding the sale of the Mortgage Loans.
"SERVICER": Meritech and its permitted successors and assigns.
"SERVICING AGREEMENT": The Servicing Agreement listed on Schedule II hereto
which shall be deemed to be a "Servicing Agreement" for purposes of the Standard
Terms.
"SERVICING FEE RATE": With respect to each Mortgage Loan, the Servicing Rate
specified on Schedule I.
"STATE": New York.
"SUBACCOUNT DEFINITIONS":
"BALANCE": With respect to each Subaccount, on any Distribution Date,
the balance, if any, of such Subaccount immediately prior to such
Distribution Date (or, in the case of the first Distribution Date, an amount
equal to the initial balance of such Subaccount as of the Closing Date) less
the amounts to be applied on such Distribution Date to reduce the balance of
such Subaccount.
"SUBACCOUNTS": Any one of the Subaccounts created pursuant to Section
5.03(a)(i) hereof.
GROUP I:
<TABLE>
<S> <C> <C>
"AF-1 Balance": The Balance of the "AF-2 BALANCE": The Balance of Subaccount AF-2. "AF-3 BALANCE": The Balance of
Subaccount AF-1. Subaccount AF-3.
"AF-1 Monthly Interest Amount": With "AF-2 MONTHLY INTEREST AMOUNT": With respect "AF-3 MONTHLY INTEREST AMOUNT":
respect to any Distribution Date, the to any Distribution Date, the interest With respect to any Distribution
interest the interest
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
accrued on the AF-1 Balance during the accrued on the AF-2 Balance during the Accrual accrued on the AF-3 Balance during the
Accrual Period for the Class AF-1 Period for the Class AF-2 Certificates for that Accrual Period for the Class AF-3
Certificates for that Distribution Date Distribution Date at the Group I Net Rate. Certificates for that Distribution
at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-1": The Subaccount by "Subaccount AF-2": The Subaccount by that "Subaccount AF-3": The Subaccount
that name created pursuant to Section name created pursuant to Section 5.03(a)(i) by that name created pursuant to
5.03(a)(i) hereof. hereof. Section 5.03(a)(i) hereof.
"AF-4 Balance": The Balance of the "AF-5 Balance": The Balance of Subaccount "AF-6 Balance": The Balance of
Subaccount AF-4. AF-5. Subaccount AF-6.
"AF-4 Monthly Interest Amount": With "AF-5 Monthly Interest Amount": With respect "AF-6 Monthly Interest Amount": With
respect to any Distribution Date, the to any Distribution Date, the interest accrued respect to any Distribution Date, the
interest accrued on the AF-4 Balance on the AF-5 Balance during the Accrual Period interest accrued on the AF-6 Balance
during the Accrual Period for the Class for the Class AF-5 Certificates for that during the Accrual Period for the
AF-4 Certificates for that Distribution Distribution Date at the Group I Net Rate. Class AF-6 Certificates for that
Date at the Group I Net Rate. Distribution Date at the Group I Net
Rate.
"Subaccount AF-4": The Subaccount by "Subaccount AF-5": The Subaccount by that "Subaccount AF-6": The Subaccount by
that name created pursuant to Section name created pursuant to Section 5.03(a)(i) that name created pursuant to Section
5.03(a)(i) hereof. hereof. 5.03(a)(i) hereof.
"MF-1 Balance": The Balance of "MF-2 Balance": The Balance of Subaccount "BF-1 balance" : The Balance of
Subaccount MF-1. MF-2. Subaccount BF-1.
"MF-1 Monthly Interest Amount": With "MF-2 Monthly Interest Amount": With respect "BF-1 Monthly Interest Amount": With
respect to any Distribution Date, the to any Distribution Date, the interest accrued respect to any Distribution Date, the
interest accrued on the MF-1 Balance on the MF-2 Balance during the Accrual Period interest accrued on the BF-1 Balance
during the Accrual Period for the Class for the Class MF-2 Certificates for that during the Accrual Period for the
MF-1 Certificates for that Distribution Distribution Date at the Group I Net Rate. Class BF-1 Certificates for that
Date at the Group I Net Rate. Distribution Date at the Group I Net
Rate.
"Subaccount MF-1": The Subaccount by "Subaccount MF-2": The Subaccount by that "Subaccount BF-1": The Subaccount by
that name created pursuant to Section name created pursuant to Section 5.03(a)(i) that name created pursuant to Section
5.03(a)(i) hereof. hereof. 5.03(a)(i) hereof.
"BF-1A Balance": The Balance of
Subaccount BF-1A.
"BF-1A Monthly Interest Amount": With
respect to any Distribution Date, the
interest accrued on the BF-1A Balance
during the Accrual Period for the Class
BF-1A Certificates for that Distribution
Date at the Group I Net Rate.
</TABLE>
20
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<TABLE>
<S> <C>
"Subaccount BF-1A": The Subaccount by
that name created pursuant to Section
5.03(a)(i) hereof.
Group II:
"AV-1 Balance": The Balance of the "MV-1 Balance": The Balance of Subaccount MV-1.
Subaccount AV-1.
"AV-1 Monthly Interest Amount": With respect to any Distribution "MV-1 Monthly interest Amount": With respect to any
Date, the interest accrued on the AV-1 Balance during the Accrual Distribution Date, the interest accrued on the MV-1 Balance
Period for the Class AV-1 Certificates for that Distribution Date during the Accrual Period for the Class MV-1 Certificates for
at the Group II Net Rate. that Distribution Date at the Group II Net Rate.
"Subaccount AV-1": The Subaccount by that name created pursuant "Subaccount MV-1": The Subaccount by that name created
to Section 5.03(a)(i) hereof. pursuant to Section 5.03(a)(i) hereof.
"MV-2 Balance" : The Balance of Subaccount MV-2. "BV-1 Balance": The Balance of Subaccount BV-1.
"MV-2 Monthly Interest Amounts": With respect to any "BV-1 Monthly InteresT Amount": With respect to any
Distribution Date, the interest accrued on the MV-2 Distribution Date, the interest accrued on the BV-1 Balance
Balance during the Accrual Period for the Class MV-2 Certificates during the Accrual Period for the Class BV-1 Certificates for
for that Distribution Date at the Group II Net Rate. that Distribution Date at the Group II Net Rate.
"Subaccount MV-2": The Subaccount by that name created pursuant "Subaccount BV-1": The Subaccount by that name created
to Section 5.03(a)(i) hereof. pursuant to Section 5.03(a)(i) hereof.
"BV-1A Balance": The Balance of Subaccount BV-1A.
"BV-1A Monthly Interest Amount": With respect to any
Distribution Date, the interest accrued on the BV-1A Balance
during the Accrual Period for the Class BV-1A Certificates for
that Distribution Date at the Group II Net Rate.
"Subaccount BV-1A": The Subaccount by that name created
pursuant to Section 5.03(a)(i) hereof.
</TABLE>
"Subaccount R": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"Tax Matters Person": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"Telerate Page 3750" the display page currently so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices).
"Trust Estate": As defined in Section 2.01 hereof.
"Trustee": Chase Bank of Texas, National Association, a national banking
association, its successor in interest or any successor trustee appointed in
accordance with the Trust Agreement.
"Trustee Fee": The fee payable monthly to the Trustee by the Master Servicer.
"Underwriters": Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Montgomery Securities LLC, Prudential Securities Incorporated, and
Chase Securities Inc.
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<PAGE>
"Underwriting Agreement": The Underwriting Agreement dated April 30, 1999,
between the Depositor and SMI and the Underwriters.
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans
To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, the distribution of all other sums
distributable under the Trust Agreement with respect to the Certificates and the
performance of the covenants contained in the Trust Agreement, the Depositor
hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Certificateholders as
their interests may appear, all the Depositor's right, title and interest in and
to any and all benefits accruing to the Depositor from: (i) the Mortgage Loans
(except for any prepayment penalties payable at any time with respect thereto),
which the Depositor is causing to be delivered to the Trustee (or the Custodian)
herewith (and all Qualified Substitute Mortgage Loans (except for any prepayment
penalties payable at any time with respect thereto) substituted therefor as
provided by Section 2.03 of the Standard Terms and pursuant to the terms of the
Sales Agreement), together in each case with the related Trustee Mortgage Loan
Files and the Depositor's interest in any Collateral that secured a Mortgage
Loan but that is acquired by foreclosure or deed-in-lieu of foreclosure after
the Closing Date, and all Monthly Payments due after the Cut-Off Date and all
curtailments or other principal prepayments received with respect to the
Mortgage Loans paid by the Borrower after the Cut-Off Date (except for any
prepayments received after the Cut-Off Date but reflected in the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date) and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (ii) the
Servicing Agreement; (iii) the Sales Agreement, except that the Depositor does
not assign to the Trustee any of its rights under Sections 9 and 12 of the Sales
Agreement; (iv) the Asset Proceeds Account and the Distribution Account, whether
in the form of cash, instruments, securities or other properties; and (v) all
proceeds of any of the foregoing (including, but not limited to, all proceeds of
any mortgage insurance, hazard insurance, or title insurance policy relating to
the Mortgage Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and 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 Estate").
The Trustee acknowledges the sales, assignments and pledges created by the
foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
may be adequately and effectively protected in accordance with the terms and
conditions of this Agreement.
By its execution of this Agreement, the Trustee acknowledges and declares
that it holds and will hold or has agreed to hold all documents delivered to it
from time to time with respect to the Mortgage Loans and all assets included in
the Trust Estate in trust for the exclusive use and benefit of all present and
future Certificateholders.
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. Subaccount Distributions.
On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers from the Asset Proceeds Account to the
Distribution Account, which shall be an Eligible Account, in the following order
of priority:
(a) from the Group I Interest Funds to Subaccounts AF-1, AF-2, AF-3, AF-4,
AF-5, AF-6, MF-1, MF-2, BF-1 and BF-1A, pro rata, the AF-1, AF-2, AF-
3, AF-4, AF-5, AF-6, MF-1, MF-2, BF-1 and BF-1A Monthly Interest
Amounts;
(b) from the Group II Interest Funds to Subaccounts AV-1, MV-1, MV-2, BV-1
and BV-1A, pro rata, the AV-1, MV-1, MV-2, BV-1 and BV-1A Monthly
Interest Amounts;
(c) from the Group I Principal Funds:
<PAGE>
(A) to Subaccount AF-1 until the AF-1 Balance is reduced to zero;
(B) to Subaccount AF-2 until the AF-2 Balance is reduced to zero;
(C) to Subaccount AF-3 until the AF-3 Balance is reduced to zero;
(D) to Subaccount AF-4 until the AF-4 Balance is reduced to zero;
(E) to Subaccount AF-5 until the AF-5 Balance is reduced to zero;
(F) to Subaccount AF-6 until the AF-6 Balance is reduced to zero;
(G) to Subaccount MF-1 until the MF-1 Balance is reduced to zero;
(H) to Subaccount MF-2 until the MF-2 Balance is reduced to zero;
(I) to Subaccount BF-1 until the BF-1 Balance is reduced to zero; and
(J) to Subaccount BF-1A until the BF-1A Balance is reduced to zero;
provided, however, that (a) such Balances shall be reduced and increased
in the same order and manner that the Class of Certificates having the
corresponding class designation is increased or decreased; and
(d) from the Group II Principal Funds:
(A) to Subaccount AV-1 until the AV-1 Balance is reduced to zero;
(B) to Subaccount MV-1 until the MV-1 Balance is reduced to zero;
(C) to Subaccount MV-2 until the MV-2 Balance is reduced to zero;
(D) to Subaccount BV-1 until the BV-1 Balance is reduced to zero; and
(E) to Subaccount BV-1A until the BV-1A Balance is reduced to zero;
provided, however, that (a) such Balances shall be reduced and increased
in the same order and manner that the Class of Certificates having the
corresponding class designation is increased or decreased.
SECTION 3.02. CERTIFICATE DISTRIBUTIONS.
(a) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations have been made until such
amount shall have been fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Current Interest and any
Interest Carry Forward Amount for the Group I Class A
Certificates; provided, however, if such amount is not sufficient
to make a full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to all the Group I
Class A Certificates, such amount will be distributed pro rata
among each Class of the Group I Class A Certificates based on the
ratio of (x) the Current Interest and Interest Carry Forward
Amount for each Class of the Group I Class A Certificates to (y)
the total amount of Current Interest and any Interest Carry
Forward Amount for the Group I Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current Interest;
(iv) pro rata, to the Class BF-1 and Class BF-1A Certificates, the
Class BF-1 and Class BF-1A Current Interest; and
23
<PAGE>
(v) any remainder pursuant to Section 3.02(e) hereof.
(b) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations shall have been made until
such amount shall have been fully allocated for such Distribution Date:
(i) to the Group II Class A Certificates, the Current Interest and any
Interest Carry Forward Amount for the Group II Class A
Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current Interest;
(iv) pro rata, to the Class BV-1 and Class BV-1A Certificates, the
Class BV-1 and Class BV-1A Current Interest; and
(v) any remainder pursuant to Section 3.02(f) hereof.
(c) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Principal Distribution Amount in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group I Class A Certificates, the Group I Class A Principal
Distribution Amount to be distributed as follows: (x) the Class
AF-6 Principal Distribution Amount to the Class AF-6 Certificates;
and (y) the balance of the Group I Class A Principal Distribution
Amount sequentially to the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5 and Class AF-6 Certificates so that no such
distribution pursuant to this clause (y) will be made to any such
Class until the Certificate Principal Balances of all Group I
Class A Certificates with a lower numeral designation shall have
been reduced to zero; provided, however, that, on any Distribution
Date on which the Group I Class A Certificate Principal Balance is
equal to or greater than the Scheduled Principal Balances of Group
I, the Group I Class A Principal Distribution Amount will be
distributed pro rata and not sequentially to the Group I Class A
Certificates;
(ii) to the Class MF-1 Certificates, the Group I Class MF-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iii) to the Class MF-2 Certificates, the Group I Class MF-2 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iv) to the Class BF-1 Certificates, the Group I Class BF-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(v) if a Group I Subordinated Trigger Event exists on such
Distribution Date, sequentially, to the Class BF-1, Class MF-2 and
Class MF-1 Certificates, in that order, the Group I Class BF-1A
Principal Distribution Amount;
(vi) to the Class BF-1A Certificates, the Group I Class BF-1A Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero (provided that a Group I
Subordinated Trigger Event does not exist on such Distribution
Date); and
(vii) to the Class R Certificates;
provided, however, that, if a Group I Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group I
Class A Certificates has been reduced to zero, the Class MF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MF-1 Certificates has been reduced to zero, the Class MF-2 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (c) after the Certificate Principal Balance of the Class
MF-2 Certificates has been reduced to zero, the Class BF-1 Principal
Distribution
24
<PAGE>
Amount shall equal the Group I Principal Distribution Amount, and (d) after the
Certificate Principal Balance of the Class BF-1 Certificates has been reduced to
zero, the Class BF-1A Principal Distribution Amount shall equal the Group I
Principal Distribution Amount;
(d) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Principal Distribution Amount in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group II Class A Certificates, the Group II Class A
Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Group II Class MV-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iii) to the Class MV-2 Certificates, the Group II Class MV-2 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iv) to the Class BV-1 Certificates, the Group II Class BV-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(v) if a Group II Subordinated Trigger Event exists on such
Distribution Date, sequentially, to the Class BV-1, Class MV-2 and
Class MV-1 Certificates, in that order, the Group II Class BV-1A
Principal Distribution Amount;
(vi) to the Class BV-1A Certificates, the Group II Class BV-1A
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero (provided that a Group II
Subordinated Trigger Event does not exist on such Distribution
Date); and
(vii) to the Class R Certificates;
provided, however, that, if a Group II Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group II
Class A Certificates has been reduced to zero, the Group II Class MV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MV-1 Certificates has been reduced to zero, the Class MV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (c) after the Certificate Principal Balance of the Class
MV-2 Certificates has been reduced to zero, the Class BV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (d) after the Certificate Principal Balance of the
Class BV-1 Certificates has been reduced to zero, the Class BV-1A Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date.
(e) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(a)(v) hereof and, to the extent required to make the allocations set forth
below in clauses (i) through (iv) of this Section 3.02(e), Section 3.02(f)(v)
hereof in the following order of priority, and each such allocation shall be
made only after all preceding allocations shall have been made until such
remainders shall have been fully allocated:
(i) the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest Carry
Forward Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2 Interest Carry
Forward Amount;
(iv) pro rata, to the Class BF-1 and Class BF-1A Certificates, the
Class BF-1 and Class BF-1A Interest Carry Forward Amount;
(v) to the extent required to make the allocations set forth in
clauses (i) through (iv) of Section 3.02(f) hereof, pursuant to
Section 3.02(f) hereof;
(vi) to the Class BF-1A Certificates, an amount equal to the Group I
Applicable Percentage of the remaining amount, in reduction of the
Certificate Principal Balance thereof, until the Class BF-1A
Certificate Principal Balance has been reduced to zero; and
25
<PAGE>
(vii) the remainder pursuant to Section 3.02(g) hereof.
(f) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(b)(v) hereof and, to the extent required to make the allocations set forth
below in clauses (i) through (iv) of this Section 3.02(f), Section 3.02(e)(v)
hereof in the following order of priority, and each such allocation shall be
made only after all preceding allocations shall have been made until such
remainders have been fully allocated:
(i) the Group II Extra Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Interest Carry
Forward Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2 Interest Carry
Forward Amount;
(iv) pro rata, to the Class BV-1 and Class BV-1A Certificates, the
Class BV-1 and Class BV-1A Interest Carry Forward Amount;
(v) to the extent required to make the allocations set forth in
clauses (i) through (iv) of Section 3.02(e) hereof;
(vi) on any Distribution Date on or before the last Distribution Date
with respect to the Class AV-1 Certificates, to the Class AV-1
Certificates, the Class AV-1 Certificates Carryover;
(vii) on any Distribution Date on or before the last Distribution Date
with respect to the Class MV-1 Certificates, to the Class MV-1
Certificates, the Class MV-1 Certificates Carryover;
(viii) on any Distribution Date on or before the last Distribution Date
with respect to the Class MV-2 Certificates, to the Class MV-2
Certificates, the Class MV-2 Certificates Carryover;
(ix) on any Distribution Date on or before the last Distribution Date
with respect to the Class BV-1 Certificates, to the Class BV-1
Certificates, the Class BV-1 Certificates Carryover;
(x) on any Distribution Date on or before the last Distribution Date
with respect to the Class BV-1A Certificates, the Class BV-1A
Certificates Carryover;
(xi) to the Class BV-1A Certificates, an amount equal to the Group II
Applicable Percentage of the remaining amount, in reduction of the
Certificate Principal Balance thereof, until the Class BV-1A
Certificate Principal Balance has been reduced to zero; and
(xii) the remainder pursuant to Section 3.02(g) hereof.
(g) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(e)(vii) and (f)(xii) hereof in the following order of priority, and each
such allocation shall be made only after the preceding allocations shall have
been made until such remainders have been fully allocated:
(i) to the Class C Certificates, the Class C Distribution Amount; and
(ii) to the Class R Certificates, the remainder.
(h) On each Distribution Date, the Trustee shall allocate any excess of the
Group I Certificate Principal Balance over the Scheduled Principal Balances of
Group I to reduce the Certificate Principal Balances of the Group I Subordinated
Certificates in the following order of priority:
(i) to the Class BF-1A Certificates until the Class BF-1A Certificate
Principal Balance is reduced to zero;
(ii) to the Class BF-1 Certificates until the Class BF-1 Certificate
Principal Balance is reduced to zero;
(iii) to the Class MF-2 Certificates until the Class MF-2 Certificate
Principal Balance is reduced to zero; and
26
<PAGE>
(iv) to the Class MF-1 Certificates until the Class MF-1 Certificate
Principal Balance is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate any excess of the
Group II Certificate Principal Balance over the Scheduled Principal Balances of
Group II to reduce the Certificate Principal Balances of the Group II
Subordinated Certificates in the following order of priority:
(i) to the Class BV-1A Certificates until the Class BV-1A Certificate
Principal Balance is reduced to zero;
(ii) to the Class BV-1 Certificates until the Class BV-1 Certificate
Principal Balance is reduced to zero;
(iii) to the Class MV-2 Certificates until the Class MV-2 Certificate
Principal Balance is reduced to zero; and
(iv) to the Class MV-1 Certificates until the Class MV-1 Certificate
Principal Balance is reduced to zero.
(j) On each Distribution Date, the Trustee shall allocate an amount equal to
the Group I Extra Principal Distribution Amount for such Distribution Date as an
increase in the Certificate Principal Balances of the Group I Subordinated
Certificates in the following order of priority:
(i) to the Class MF-1 Certificates in an amount up to the Class MF-1
Unpaid Realized Loss Amount;
(ii) to the Class MF-2 Certificates in an amount up to the Class MF-2
Unpaid Realized Loss Amount;
(iii) to the Class BF-1 Certificates in an amount up to the Class BF-1
Unpaid Realized Loss Amount; and
(iv) to the Class BF-1A Certificates in an amount up to the Class BF-1A
Unpaid Realized Loss Amount.
(k) On each Distribution Date, the Trustee shall allocate an amount equal to
the Group II Extra Principal Distribution Amount for such Distribution Date as
an increase in the Certificate Principal Balances of the Group II Subordinated
Certificates in the following order of priority:
(i) to the Class MV-1 Certificates in an amount up to the Class MV-1
Unpaid Realized Loss Amount;
(ii) to the Class MV-2 Certificates in an amount up to the Class MV-2
Unpaid Realized Loss Amount;
(iii) to the Class BV-1 Certificates in an amount up to the Class BV-1
Unpaid Realized Loss Amount; and
(iv) to the Class BV-1A Certificates in an amount up to the Class BV-1A
Unpaid Realized Loss Amount.
SECTION 3.03. REPORTS TO THE DEPOSITOR:
On or before the Business Day preceding each Distribution Date, based on
information provided by the Servicer, the Master Servicer shall notify the
Depositor and the Trustee of the following information with respect to the next
Distribution Date (which notification may be given by facsimile, or by telephone
promptly confirmed in writing):
(a) the aggregate amount then on deposit in the Asset Proceeds Account
and the source thereof (identified as interest, scheduled principal or
unscheduled principal);
(b) the amount of any Realized Losses, Applied Realized Loss Amounts
and Unpaid Realized Loss Amounts;
27
<PAGE>
(c) the application of the amounts described in clauses (a) and (b) on
such Distribution Date in accordance with Section 3.02 hereof; and
(d) whether a Group I or Group II Trigger Event or a Group I or Group
II Subordinated Trigger Event has occurred.
SECTION 3.04. REPORTS BY MASTER SERVICER.
(a) On or before the Business Day preceding each Distribution Date, based on
information provided by the Servicer, the Master Servicer shall report in
writing to the Depositor (in hard copy), each Holder of a Certificate, the
Underwriters and the Trustee and their designees (designated in writing to the
Master Servicer) and the Rating Agencies:
(i) with respect to each Class of Certificates (other than Class C and
Class R) (based on a Certificate in the original principal amount of $1,000):
(a) the amount of the distributions on such Distribution Date;
(b) the amount of such distribution allocable to interest;
(c) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any prepayments,
Substitution Shortfalls, repurchase amounts pursuant to Section 2.03 of
the Standard Terms or other recoveries of principal included therein, any
Group I or Group II Extra Principal Distribution Amount and any Class MF-
1, Class MF-2, Class BF-1, Class BF-1A, Class MV-1, Class MV-2, Class BV-
1 and Class BV-1A Applied Realized Loss Amount with respect to, and any
Class MF-1, Class MF-2, Class BF-1, Class BF-1A, Class MV-1, Class MV-2,
Class BV-1 and Class BV-1A Unpaid Realized Loss Amount at, such
Distribution Date;
(d) the principal balance after giving effect to any distribution
allocable to principal; and
(e) any Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-
5, Class AF-6, Class MF-1, Class MF-2, Class BF-1 and Class BF-1A
Interest Carry Forward Amount, any Class AV-1, Class MV-1, Class MV-2,
Class BV-1 and Class BV-1A Interest Carry Forward Amount or any Class AV-
1, Class MV-1, Class MV-2, Class BV-1 and Class BV-1A Certificates
Carryover ;
(ii) the Group I Net Rate and the Group II Net Rate;
(iii) the 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 Servicing Fees and Master Servicing Fees allocable to each
Group;
(vi) One-Month LIBOR on the most recent Interest Determination Date;
and
(vii) the Pass-Through Rates for the Group II Certificates for the
current Accrual Period and, if the Pass-Through Rates for any Class of the
Group I Certificates for the current Accrual Period is based on the Group I
Net Rate, the Pass-Through Rates for the Group I Certificates with respect to
which the Group I Net Rate applies.
(b) On each Distribution Date, based on information provided by the Servicer,
the Master Servicer will distribute to the Depositor, each Holder, the
Underwriters, the Rating Agencies and the Trustee, together with the information
described in subsection (a) preceding, the following information with respect to
each Mortgage Loan Group in hard copy:
(i) the number and aggregate principal balances of Mortgage Loans in
each Group (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business as of the end of the
related prepayment period;
(ii) the percentage that each of the Scheduled Principal Balances set
forth pursuant to clauses (a), (b) and (c) of paragraph (i) above represent
with respect to all Mortgage Loans in each Group;
28
<PAGE>
(iii) the number and Scheduled Principal Balance of all Mortgage Loans
in each Group in foreclosure proceedings as of the close of business as of
the end of the related Prepayment Period and in the immediately preceding
Prepayment Period;
(iv) the number of Mortgagors and the Scheduled Principal Balances of
Mortgage Loans in each Group involved in bankruptcy proceedings as of the
close of business as of the end of the related Prepayment Period;
(v) the aggregate number and aggregate book value of any REO Property
in each Group as of the close of business as of the end of the related
Prepayment Period; and
(vi) the number and amount by principal balance of 60+ Day Delinquent
Loans in each Group, in each case by Servicer and as of the end of the
related Prepayment Period.
(c) All allocations made by the Trustee shall be based on information the
Trustee receives from the Master Servicer which the Trustee shall be protected
in relying on.
(d) At the request of any Holder of any Private Certificate and a prospective
purchaser of a Private Certificate designated by any such Holder, the Master
Servicer on behalf of the Depositor will furnish to such persons a copy of the
Confidential Private Placement Memorandum, prepared by the Depositor with
respect to the private offering of such Certificates and copies of the reports
required to be furnished to Certificateholders pursuant to Section 3.04 hereof
for the preceding two years (or such shorter period commencing May 1, 1999)
pursuant to Section 5.05 of the Standard Terms.
ARTICLE IV
THE CERTIFICATES
SECTION 4.01. THE CERTIFICATES.
The Certificates shall be designated generally as the Mortgage Loan Asset
Backed Certificates, Series 1999-2. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $474,049,600, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates and the initial
Certificate Principal Balance for each such Class:
29
<PAGE>
<TABLE>
<CAPTION>
INITIAL CERTIFICATE
CLASS PRINCIPAL BALANCE
<S> <C>
AF-1 $ 80,000,000
AF-2 $ 33,000,000
AF-3 $ 36,000,000
AF-4 $ 27,000,000
AF-5 $ 16,713,000
AF-6 $ 21,412,800
MF-1 $ 12,449,000
MF-2 $ 9,337,000
BF-1 $ 8,092,000
BF-1A $ 4,980,000
AV-1 $177,840,800
MV-1 $ 16,884,000
MV-2 $ 14,070,000
BV-1 $ 9,567,000
BV-1A $ 6,704,000
C (1)
R (2)
</TABLE>
_____________________
/(1)/ The Class C Certificates have no stated principal balance or Pass-Through
Rate and are entitled to receive the Class C Distribution Amount.
/(2)/ The Class R Certificates have no stated principal balance or Pass-Through
Rate and are not entitled to any scheduled distributions of principal or
interest.
SECTION 4.02. DENOMINATIONS.
The Book-Entry Certificates shall be registered as one or more certificates
in the name of the Clearing Agency or its nominee. Beneficial interests in the
Book-Entry Certificates shall be held by the Beneficial Owners thereof through
the book-entry facilities of the Clearing Agency as described herein, in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof in
the case of the Public Certificates and in denominations of $250,000 and
integral multiples of $1,000 in excess thereof in the case of the Private
Certificates. So long as the Private Certificates are Book-Entry Certificates,
each Person which becomes a Beneficial Owner of Private Certificates will be
deemed to make the representations and agreements set forth in the form of Rule
144A Agreement-QIB Certification attached as Exhibit D to the Standard Terms,
and to indemnify the Depositor, the Trustee and the Master Servicer against any
liability that may result if any transfer of a Private Certificate by such
person is not exempt from registration under the Securities Act and all
applicable state securities laws or is not made in accordance with such federal
and state laws. The Class C and Class R Certificates shall be issued in
certificated, fully-registered form in minimum Percentage Interests of 25% and
integral multiples of 1% in excess thereof, except that two Class R Certificates
may be issued in different denominations.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. REQUEST FOR OPINIONS.
(a) The Depositor and the Master Servicer hereby request and authorize
McGuire, Woods, Battle & Boothe LLP, as their counsel in this transaction, to
issue on behalf of the Depositor and the Master Servicer such legal opinions to
the Trustee and each Rating Agency as may be (i) required by any and all
documents, certificates or agreements executed in connection with the Trust or
(ii) requested by the Trustee, any Rating Agency or their respective counsels.
(b) The Trustee hereby requests and authorizes its counsel to issue on behalf
of the Trustee such legal opinions to the Depositor, the Master Servicer, and
each Rating Agency as may be required by any and all documents, certificates or
agreements executed in connection with the establishment of the Trust and the
issuance of the Certificates.
30
<PAGE>
SECTION 5.02. FORM OF CERTIFICATES; SCHEDULES AND EXHIBITS; GOVERNING LAW.
(a) The Certificates shall be substantially in the respective forms set
forth in the Exhibits hereto. All Certificates shall be dated the date of their
execution.
(b) Each of the Schedules and Exhibits attached hereto or referenced
herein is incorporated herein by reference as contemplated by the Standard
Terms.
(c) In accordance with Section 11.04 of the Standard Terms, this Agreement
shall be construed in accordance with and governed by the laws of the State,
without regard to any conflicts of laws principles thereof.
(d) Notwithstanding Section 5.05(a) of the Standard Terms, Class C and
Class R Certificates shall only be transferable to an affiliate of the Depositor
or a Qualified Institutional Buyer.
SECTION 5.03. REMIC ADMINISTRATION.
(a) Pooling REMIC. (i) The beneficial ownership of the Pooling REMIC shall
be evidenced by interests having the following terms:
<TABLE>
<CAPTION>
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of
Designation Balance Rate REMIC Provisions
<S> <C> <C> <C>
Group I
Subaccount AF-1 $ 80,000,000 (1) Regular
Subaccount AF-2 $ 33,000,000 (1) Regular
Subaccount AF-3 $ 36,000,000 (1) Regular
Subaccount AF-4 $ 27,000,000 (1) Regular
Subaccount AF-5 $ 16,713,000 (1) Regular
Subaccount AF-6 $ 21,412,800 (1) Regular
Subaccount MF-1 $ 12,449,000 (1) Regular
Subaccount MF-2 $ 9,337,000 (1) Regular
Subaccount BF-1 $ 8,092,000 (1) Regular
Subaccount BF-1A $ 4,980,000 (1) Regular
Group II
Subaccount AV-1 $177,840,800 (2) Regular
Subaccount MV-1 $ 16,884,000 (2) Regular
Subaccount MV-2 $ 14,070,000 (2) Regular
Subaccount BV-1 $ 9,567,000 (2) Regular
Subaccount BV-1A $ 6,704,000 (2) Regular
Subaccount R (3) (3) Residual
</TABLE>
(1) On any Distribution Date, the Group I Net Rate.
(2) On any Distribution Date, the Group II Net Rate.
(3) Subaccount R is not issued with a Balance or a Pass-Through Rate.
(ii) Subaccount R is the residual interest in the Pooling REMIC and
shall be issued in fully registered certificate form as part of the Class R
Certificate. All other Subaccounts shall be deemed issued as non-
certificated interests and shall constitute assets of the Issuing REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans and the
Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC shall
be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF-1, Class BF-1A, Class AV-1, Class MV-1, Class MV-2, Class BV-1 and Class BV-
1A Certificates and
31
<PAGE>
each of the separate interest-only rights making up the Class C Distribution
Amount are Regular Interests in the Issuing REMIC. The Class R Certificates are
the residual interest in the Issuing REMIC.
(ii) The assets of the Issuing REMIC are the Subaccounts in the
Pooling REMIC other than Subaccount R and the Distribution Account.
(iii) On each Distribution Date, amounts in the Distribution Account
will be distributed as provided in Section 3.02 hereof.
(c) General.
(i) The Closing Date is designated as the "start up" day of the
Pooling REMIC and Issuing REMIC.
(ii) The Trustee shall make elections to treat the Pooling REMIC and
the Issuing REMIC as REMICs under the Code.
(d) The "latest possible maturity date" for purposes of the REMIC
regulations and each REMIC established hereby is May 25, 2032.
SECTION 5.04. OPTIONAL TERMINATION.
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, the Master Servicer may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans
and all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the Mortgage
Loans during the current Remittance Period, plus one month's interest on such
amount, plus in all cases all accrued and unpaid Servicing Fees and Master
Servicing Fees plus the aggregate amount of any unreimbursed Advances and any
Advances which the Servicer or the Master Servicer has theretofore failed to
remit; but in any event such purchase amount shall be sufficient to retire all
Group I and Group II Certificates in full. In connection with such purchase, the
Master Servicer shall remit to the Trustee all amounts then on deposit in the
Master Servicer Custodial Account for deposit to the Asset Proceeds Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) The Master Servicer shall direct the Trustee to adopt and the Trustee
shall adopt, as to each REMIC, a plan of complete liquidation as contemplated by
Section 860F(a)(4) of the Code and as prepared by the Master Servicer, and shall
provide to the Trustee an Opinion of Counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that such purchase and
liquidation constitutes, as to each REMIC, a Qualified Liquidation. In addition,
the Master Servicer shall provide to the Trustee an Opinion of Counsel
acceptable to the Trustee to the effect that such purchase and liquidation does
not constitute a preference payment pursuant to the United States Bankruptcy
Code.
(c) Promptly following any purchase described in this Section 5.04, the
Trustee will release the Trustee Mortgage Loan File to the Master Servicer or
otherwise upon its order.
SECTION 5.05. MASTER SERVICER; CERTIFICATE REGISTRAR AND PAYING AGENT
(a) Saxon Mortgage, Inc. is hereby appointed as Master Servicer
hereunder.
(b) Chase Bank of Texas, National Association is hereby appointed as
Certificate Registrar and Paying Agent.
32
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers thereunto
duly authorized and their respective signatures duly attested all as of May 1,
1999.
SAXON ASSET SECURITIES COMPANY
BY: /s/ Bradley D. Adams
------------------------------------
BRADLEY D. ADAMS, VICE PRESIDENT
SAXON MORTGAGE, INC.
AS MASTER SERVICER
BY: /s/ Michael L. Sawyer
------------------------------------
MICHAEL L. SAWYER, PRESIDENT
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
AS TRUSTEE
BY: /s/ Lila R. Garlin
------------------------------------
LILA R. GARLIN, VICE PRESIDENT
<PAGE>
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me May __, 1999, by
Bradley D. Adams, a Vice President of Saxon Asset Securities Company, a Virginia
corporation, on behalf of the corporation.
___________________________________________
Notary Public
My Commission expires: ____________
<PAGE>
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me on May __, 1999, by
Michael L. Sawyer, President of Saxon Mortgage, Inc., a Virginia corporation, on
behalf of the corporation.
___________________________________
Notary Public
My Commission expires: _____________
<PAGE>
CITY OF RICHMOND )
) ss.:
COMMONWEALTH OF VIRGINIA )
The foregoing instrument was acknowledged before me May __, 1999, by Lila
R. Garlin, a Vice President of Chase Bank of Texas, National Association, a
national banking association, on behalf of the bank.
____________________________________
Notary Public
My Commission expires: ______________
<PAGE>
Schedule I
Mortgage Loans
--------------
A. Group I Mortgage Loans.
B. Group II Mortgage Loans.
<PAGE>
Schedule II
Sales Agreement
---------------
<PAGE>
Schedule III
Mortgage Loans for which first payment to the Trust will
--------------------------------------------------------
be after __________, 1999
-------------------------
