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) February 25, 1999
Saxon Asset Securities Company
(Exact name of registrant as specified in charter)
Virginia 34-0-20552 52-1785164
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation)
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 February 25, 1999, the Registrant caused the issuance and sale of
Mortgage Loan Asset Backed Certificates, Series 1999-1, pursuant to a Trust
Agreement dated as of February 1, 1999, among the Registrant, Saxon Mortgage,
Inc., as Master Servicer, and Chase Bank of Texas, National Association, as
Trustee, (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)(3) $80,000,000
Class AF-2 Certificates 5.980% $38,000,000
Class AF-3 Certificates 6.170% $35,000,000
Class AF-4 Certificates 6.350% $28,000,000
Class AF-5 Certificates 6.775% (2) $17,389,000
Class AF-6 Certificates 6.350% $22,043,000
Class MF-1 Certificates 6.645% (2) $14,825,000
Class MF-2 Certificates 7.190% (2) $10,958,000
Class BF-1 Certificates 8.475% (2) $6,446,000
Class BF-2 Certificates Variable (3) $2,579,000
Class BF-3 Certificates Variable (3) $2,579,000
Class AV-1 Certificates Variable (3)(4) $200,358,000
Class MV-1 Certificates Variable (3)(4) $20,728,000
Class MV-2 Certificates Variable (3)(4) $16,331,000
Class BV-1 Certificates Variable (3)(4) $7,538,000
Class BV-2 Certificates Variable (3)(4) $2,513,000
Class BV-3 Certificates Variable (3)(4) $3,769,000
Class C Certificates Variable (3) (5)
Class R Certificates (6) (5)
</TABLE>
(1) Interest will accrue on the Class AF-1 Certificates at a per annum rate
equal to One Month LIBOR + 0.20%, 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) Variable.
(4) Subject to a cap equal to the Available Funds on the Adjustable Rate
Mortgage Loans for the applicable Accrual Period.
(5) The Class C and Class R Certificates do not have principal balances.
(6) 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 AV-1, Class MV-1, Class MV-2 and
certain of the Class BV-1 Certificates were purchased by Prudential Securities
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities LLC, First Chicago Capital Markets, Inc. and Chase
Securities Inc., (the "Underwriters"), from the Seller pursuant to an
Underwriting Agreement dated February 18, 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 February 18, 1999, among
Saxon Asset Securities Company, Saxon Mortgage Inc., Prudential Securities
Incorporated, Nationsbanc Montgomery Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, First Chicago Capital Markets, Inc. and Chase
Securities Inc.
Exhibit 2. Trust Agreement dated February 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: ____________________________________
Bradley D. Adams, Vice President
February 25, 1999
<PAGE>
INDEX TO EXHIBITS
1 Underwriting Agreement dated February 18, 1999, among Saxon Asset
Securities Company, Saxon Mortgage Inc., Prudential Securities
Incorporated, Nationsbanc Montgomery Securities LLC, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, First Chicago Capital
Markets, Inc. and Chase Securities Inc.
2 Trust Agreement dated February 1, 1999, among Saxon Asset
Securities Company, Saxon Mortgage, Inc., as Master Servicer, and
Chase Bank of Texas, National Association, as Trustee.
Saxon Asset Securities Company
Mortgage Loan Asset Backed Certificates,
Series 1999-1
UNDERWRITING AGREEMENT
Dated: February 18, 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 1999-1, Class
AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class
AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-2, Class
BF-3, Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class
BV-2, Class BV-3, 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 AV-1, Class MV-1 and Class MV-2 and certain of the
Class BV-1 Certificates are referred to herein as the
"Underwritten Certificates."
Underwriting Agreement: Subject to the terms and conditions
set forth and incorporated by reference herein, the Company hereby agrees to
issue and sell to Prudential Securities Incorporated, NationsBanc Montgomery
Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, First
Chicago Capital Markets, Inc. and Chase Securities Inc. (collectively, the
"Underwriters"), and the Underwriters hereby agree to purchase from the Company,
on or about February 25, 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
February 18, 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 February 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 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 $509,057,409 (as of the Cut-off Date), including
approximately $257,819,978 of fixed-rate Mortgage Loans and approximately
$251,231,431 of Variable Rate Mortgage Loans (in each case as of the Cut-off
Date).
Cut-Off Date: As of the close of business February 1, 1999.
<PAGE>
<TABLE>
<CAPTION>
Terms of the Certificates:
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Series 1999-1 Initial Pass-Through Proposed CUSIP Number Sale of the
Designation Principal Rate Ratings by Certificates
Amount Moody's and
Fitch
<S> <C> <C> <C> <C> <C>
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-1 $80,000,000 %(2) Aaa/AAA 805584 CU 3 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-2 $38,000,000 5.980% Aaa/AAA 805584 CV 1 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-3 $35,000,000 6.170% Aaa/AAA 805584 CW 9 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-4 $28,000,000 6.350% Aaa/AAA 805584 CX 7 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-5 $17,389,000 6.775%(3) Aaa/AAA 805584 CY 5 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AF-6 $22,043,000 6.350% Aaa/AAA 805584 DG 3 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class MF-1 $14,825,000 6.645%(3) Aa2/AA 805584 CZ 2 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class MF-2 $10,958,000 7.190%(3) A2/A 805584 DA 6 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class BF-1 $6,446,000 8.475%(3) Baa2/BBB 805584 DB 4 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class AV-1 $200,358,000 %(2)(4) Aaa/AAA 805584 DC 2 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class MV-1 $20,728,000 %(2)(4) Aa2/AA 805584 DD 0 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class MV-2 $16,331,000 %(2)(4) A2/A 805584 DE 8 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class BV-1 $4,000,000 %(2)(4) Baa2/BBB 805584 DF 5 (1)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class C N/A N/A (5) N/A (6)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
Class R N/A N/A (5) N/A (7)
- ---------------------- ---------------------- ----------------- ---------------- ---------------- ------------------
</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
privatel 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 and the Class BF-2, Class BF-3, Class BV-2 and Class
BV-3 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 March 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, the Class BF-1,
Class BV-1, Class BF-2, Class BV-2, Class BF-3, Class BV-3 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 and Class BF-1
Certificates, accrued interest at the applicable Pass-Through Rate from the
close of business on February 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 %99.75
Class AF-2 %99.75
Class AF-3 %99.75
Class AF-4 %99.75
Class AF-5 %99.75
Class AF-6 %99.75
Class MF-1 %99.65
Class MF-2 %99.65
Class BF-1 %99.50
Class AV-1 %99.75
Class MV-1 %99.65
Class MV-2 %99.65
Class BV-1 %99.50
<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 First Chicago
Series 1999-1 Prudential Securities Fenner & Smith Montgomery Capital Chase
Designation Incorporated Incorporated Securities LLC Markets Inc. Securities Inc.
<S> <C> <C> <C> <C> <C>
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-1 $24,000,000.00 $16,000,000.00 $14,000,000.00 $14,000,000.00 $12,000,000.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-2 $11,400,000.00 $7,600,000.00 $6,650,000.00 $6,650,000.00 $5,700,000.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-3 $10,500,000.00 $7,000,000.00 $6,125,000.00 $6,125,000.00 $5,250,000.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-4 $8,400,000.00 $5,600,000.00 $4,900,000.00 $4,900,000.00 $4,200,000.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-5 $5,216,700.00 $3,477,800.00 $3,043,075.00 $3,043,075.00 $2,608,350.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AF-6 $6,612,900.00 $4,408,600.00 $3,857,525.00 $3,857,525.00 $3,306,450.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class MF-1 $4,447,500.00 $2,965,000.00 $2,594,375.00 $2,594,375.00 $2,223,750.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class MF-2 $3,287,400.00 $2,191,600.00 $1,917,650.00 $1,917,650.00 $1,643,700.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class BF-1 $1,933,800.00 $1,289,200.00 $1,128,050.00 $1,128,050.00 $966,900.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class AV-1 $60,107,400.00 $40,071,600.00 $35,062,650.00 $35,062,650.00 $30,053,700.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class MV-1 $6,218,400.00 $4,145,600.00 $3,627,400.00 $3,627,400.00 $3,109,200.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class MV-2 $4,899,300.00 $3,266,200.00 $2,857,925.00 $2,857,925.00 $2,449,650.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
Class BV-1 $1,200,000.0 $800,000.00 $700,000.00 $700,000.00 $600,000.00
- ------------------ ---------------------- ---------------------- ----------------- ---------------- -----------------
</TABLE>
Closing Date and Location: 10:00 a.m. Eastern Time on February
25, 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 February 25, 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 Enchancer" 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
Prudential Securities Incorporated, One New York Plaza, 17th Floor, New York,
New York 10292-2017, Attention: Brendan Keane.
* * * * *
<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.
PRUDENTIAL SECURITIES INCORPORATED
on behalf of the Underwriters
By: /s/ Brendan Keane
----------------------------------
Name: Brendan Keane
Title: Director
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
SAXON ASSET SECURITIES TRUST 1999-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1999-1
TRUST AGREEMENT
dated as of February 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 OF CONTENTS
Article I Definitions........................................................1
Section 1.01. Standard Terms; Section References..........................1
Section 1.02. Defined Terms...............................................1
Article II Formation of Trust; Conveyance of Mortgage Loans.................19
Section 2.01.Conveyance of Mortgage Loans.................................19
Article III Remitting to Certificateholders.................................20
Section 3.01. Subaccount Distributions...................................20
Section 3.02.Certificate Distributions....................................21
Section 3.03. Reports to the Depositor:..................................26
Section 3.04. Reports by Master Servicer.................................26
Article IV The Certificates.................................................27
Section 4.01. The Certificates...........................................27
Section 4.02. Denominations..............................................28
Article V Miscellaneous Provisions..........................................28
Section 5.01. Request for Opinions.......................................28
Section 5.02. Form of Certificates; Schedules and Exhibits;
Governing Law..............................................29
Section 5.03. REMIC Administration.......................................29
Section 5.04. Optional Termination.......................................30
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent....31
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
Exhibit MF:1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF:1: Form of Class BF-1 Certificate
2: Form of Class BF-2 Certificate
3: Form of Class BF-3 Certificate
Exhibit AV 1: Form of Class AV-1 Certificate
Exhibit MV:1: Form of Class MV-1 Certificate
2: Form of Class MV-2 Certificate
Exhibit BV:1: Form of Class BV-1 Certificate
2: Form of Class BV-2 Certificate
3: Form of Class BV-3 Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of February 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 $509,056,000 to be known as
the Saxon Asset Securities Trust 1999-1, Mortgage Loan Asset Backed
Certificates, Series 1999-1 (the "Certificates"). The Certificates in the
aggregate evidence the entire beneficial ownership in the Trust. The
Certificates consist of the following: the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class
BF-2, Class BF-3, Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class BV-2,
Class BV-3, Class C and Class R Certificates.
In accordance with Section 10.01 of the Standard Terms, the Trustee will
make elections to treat certain assets of the Trust as real estate mortgage
investment conduits for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the Depositor, the Master
Servicer and the Trustee agree as follows:
Article I
Definitions
Section 1.01. Standard Terms; Section References.
(a) The Standard Terms prescribe the duties, responsibilities and
obligations of the Depositor, the Master Servicer and the Trustee with respect
to the Certificates. The Depositor, the Master Servicer, and the Trustee agree
to observe and perform such duties, responsibilities and obligations to the
extent they are not inconsistent with the provisions of this Agreement and
acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Sections
1.01 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) 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"
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 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 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) 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 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.
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"Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1,
Class MV-1, Class MV-2 and Class BV-1 Certificates except to the extent provided
in Section 5.03 of the Standard Terms. In addition, the Class BF-2, Class BF-3,
Class BV-2 and Class BV-3 Certificates have been issued in certificated form and
may be converted into Book-Entry Certificates at the election of the Depositor.
"Certificate": Any of the Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-2, Class
BF-3, Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class BV-2, Class BV-3,
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-2, Class BF-3,
Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class BV-2, Class BV-3, Class C
and Class R.
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"Certificate Definitions":
"Group I Certificates":
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"Class AF-1 Certificate": Any "Class AF-2 Certificate": Any "Class AF-3 Certificate": Any
Certificate designated as a "Class AF-1 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in AF-2 Certificate" on the face AF-3 Certificate" on the face
the form of Exhibit AF-1 hereto, thereof, in the form of Exhibit AF-2 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to AF-3 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
"Class AF-1 Certificate Principal "Class AF-2 Certificate Principal "Class AF-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-1 Certificates. Balance of the Class AF-2 Balance of the Class AF-3
Certificates. Certificates.
"Class AF-1 Current Interest": With "Class AF-2 Current Interest": "Class AF-3 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-2 Certificate Principal Class AF-3 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
at the Class AF-1 Pass-Through Rate Accrual Period at the Class AF-2 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount AF-3 Pass-Through Rate plus any
with respect to interest for Class AF-1 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class AF-2 that is respect to interest for Class AF-3
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class AF-1 Interest Carry Forward "Class AF-2 Interest Carry Forward "Class AF-3 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class AF-1 Current excess of (A) Class AF-2 Current (i) the excess of (A) Class AF-3
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class AF-1 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior AF-2 with respect to interest on such Class AF-3 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class AF-1 Pass-Through interest thereon at the Class AF-2 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class AF-3 Pass-Through Rate for
Accrual Period. the related Accrual Period.
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"Class AF-1 Pass-Through Rate": With "Class AF-2 Pass-Through Rate": "Class AF-3 Pass-Through Rate":
respect to any Distribution Date, the With respect to each Distribution With respect to each Distribution
lesser of (x) One Month LIBOR plus Date, 5.980% per annum. Date, 6.170% per annum.
0.200% 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 AF-4 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in AF-5 Certificate" on the face AF-6 Certificate" on the face
the form of Exhibit AF-4 hereto, thereof, in the form of Exhibit AF-5 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to AF-6 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
"Class AF-4 Certificate Principal "Class AF-5 Certificate Principal "Class AF-6 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-4 Certificates. Balance of the Class AF-5 Balance of the Class AF-6
Certificates. Certificates.
"Class AF-4 Current Interest": With "Class AF-5 Current Interest": "Class AF-6 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-4 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-5 Certificate Principal Class AF-6 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
at the Class AF-4 Pass-Through Rate Accrual Period at the Class AF-5 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount AF-6 Pass-Through Rate plus any
with respect to interest for Class AF-4 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class AF-5 that is respect to interest for Class AF-6
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class AF-4 Interest Carry Forward "Class AF-5 Interest Carry Forward "Class AF-6 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class AF-4 Current excess of (A) Class AF-5 Current (i) the excess of (A) Class AF-6
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class AF-4 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior AF-5 with respect to interest on such Class AF-6 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class AF-4 Pass-Through interest thereon at the Class AF-5 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class AF-6 Pass-Through Rate for
Accrual Period. the related Accrual Period.
"Class AF-4 Pass-Through Rate": With "Class AF-5 Pass-Through Rate": "Class AF-6 Pass-Through Rate":
respect to each Distribution Date, With respect to each Distribution With respect to each Distribution
6.350% per annum. Date, the lesser of (i) 6.775% per Date, 6.350% per annum.
annum plus, after the Initial Optional
Termination Date, 0.50% and (ii) the
Group I Net Rate for such
date.
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"Class AF-6 Principal Distribution Amount": With respect to any Distribution
Date, the product of (i) a fraction the numerator of which is the Class AF-6
Certificate Principal Balance and the denominator of which is the Group I Class
A Certificate Principal Balance, in each case immediately prior to such
Distribution Date, (ii) the Group I Class A Principal Distribution Amount for
such Distribution Date and (iii) the applicable percentage for such Distribution
Date set forth below:
Distribution Date Percentage
March 1999 - February 2002 0%
March 2002 - February 2004 45%
March 2004 - February 2005 80%
March 2005 - February 2006 100%
March 2006 and thereafter 300%
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"Class MF-1 Applied Realized Loss "Class MF-2 Applied Realized Loss "Class BF-1 Applied Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the sum of the Realized Losses with Date, the sum of the Realized Losses Date, the sum of the Realized
respect to Group I which have been with respect to Group I which have Losses with respect to Group I
applied in reduction of the Certificate been applied in reduction of the which have been applied in
Principal Balance of the Class MF-1 Certificate Principal Balance of the reduction of the Certificate
Certificates pursuant to Section Class MF-2 Certificates pursuant to Principal Balance of the Class BF-1
3.02(h) hereof. Section 3.02(h) hereof. Certificates pursuant to Section
3.02(h) hereof.
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"Class MF-1 Certificate": Any "Class MF-2 Certificate": Any "Class BF-1 Certificate": Any
Certificate designated as a "Class MF-1 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in MF-2 Certificate" on the face BF-1 Certificate" on the face
the form of Exhibit MF-1 hereto, thereof, in the form of Exhibit MF-2 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to BF-1 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
"Class MF-1 Certificate Principal "Class MF-2 Certificate Principal "Class BF-1 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-1 Certificates Balance of the Class MF-2 Balance of the Class BF-1
less any Class MF-1 Unpaid Realized Certificates less any Class MF-2 Certificates less any Class BF-1
Loss Amount. Unpaid Realized Loss Amount. Unpaid Realized Loss Amount.
"Class MF-1 Current Interest": With "Class MF-2 Current Interest": "Class BF-1 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class MF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class MF-2 Certificate Principal Class BF-1 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
at the Class MF-1 Pass-Through Rate Accrual Period at the Class MF-2 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount BF-1 Pass-Through Rate plus any
with respect to interest for Class MF-1 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class MF-2 that is respect to interest for Class BF-1
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class MF-1 Interest Carry Forward "Class MF-2 Interest Carry Forward "Class BF-1 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class MF-1 Current excess of (A) Class MF-2 Current (i) the excess of (A) Class BF-1
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class MF-1 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior MF-2 with respect to interest on such Class BF-1 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class MF-1 Pass-Through interest thereon at the Class MF-2 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class BF-1 Pass-Through Rate for
Accrual Period. the related Accrual Period.
"Class MF-1 Pass-Through Rate": With "Class MF-2 Pass-Through Rate": "Class BF-1 Pass-Through Rate":
respect to each Distribution Date, the With respect to each Distribution With respect to each Distribution
lesser of (i) 6.645% per annum and (ii) Date, the lesser of (i) 7.190% per Date, the lesser of (i) 8.475% per
the Group I Net Rate on such date. annum and (ii) the Group I Net Rate annum and (ii) the Group I Net Rate
on such date. on such date.
"Class MF-1 Unpaid Realized Loss "Class MF-2 Unpaid Realized Loss "Class BF-1 Unpaid Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the excess of (i) the Class MF-1 Date, the excess of (i) the Class Date, the excess of (i) the Class
Applied Realized Loss Amount over (ii) MF-2 Applied Realized Loss Amount BF-1 Applied Realized Loss Amount
the sum of all increases in the Class over (ii) the sum of all increases over (ii) the sum of all increases
MF-1 Certificate Principal Balance on in the Class MF-2 Certificate in the Class BF-1 Certificate
all previous Distribution Dates Principal Balance on all previous Principal Balance on all previous
pursuant to Section 3.02(j) hereof. Distribution Dates pursuant to Distribution Dates pursuant to
Section 3.02(j) hereof.. Section 3.02(j) hereof.
"Class BF-2 Applied Realized Loss "Class BF-3 Applied Realized Loss "Class BF-1 Applied Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the sum of the Realized Losses with Date, the sum of the Realized Losses Date, the sum of the Realized Losses
respect to Group I which have been with respect to Group I which have with respect to Group I which have
applied in reduction of the Certificate been applied in reduction of the been applied in reduction of the
Principal Balance of the Class BF-2 Certificate Principal Balance of the Certificate Principal Balance of the
Certificates pursuant to Section Class BF-3 Certificates pursuant to Class BF-1 Certificates pursuant to
3.02(h) hereof. Section 3.02(h) hereof. Section 3.02(h) hereof.
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"Class BF-2 Certificate": Any "Class BF-3 Certificate": Any
Certificate designated as a "Class BF-2 Certificate designated as a "Class
Certificate" on the face thereof, in BF-3 Certificate" on the face
the form of Exhibit BF-2 hereto, thereof, in the form of Exhibit BF-3
representing the right to distributions hereto, representing the right to
as set forth herein. distributions as set forth herein.
"Class BF-2 Certificate Principal "Class BF-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class BF-2 Certificates Balance of the Class BF-3
less any Class BF-2 Unpaid Realized Certificates less any Class BF-3
Loss Amount. Unpaid Realized Loss Amount.
"Class BF-2 Current Interest": With "Class BF-3 Current Interest":
respect to any Distribution Date, the With respect to any Distribution
interest accrued on the Class BF-2 Date, the interest accrued on the
Certificate Principal Balance Class BF-3 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related
at the Class BF-2 Pass-Through Rate Accrual Period at the Class BF-3
plus any amount previously distributed Pass-Through Rate plus any amount
with respect to interest for Class BF-2 previously distributed with respect
that is recovered during the related to interest for Class BF-3 that is
Accrual Period as a voidable preference recovered during the related Accrual
by a trustee in bankruptcy pursuant to Period as a voidable preference by a
a final non-appealable order. trustee in bankruptcy pursuant to a
final non-appealable order.
"Class BF-2 Interest Carry Forward "Class BF-3 Interest Carry Forward
Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the
excess of (A) Class BF-2 Current excess of (A) Class BF-3 Current
Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the
actually distributed to Class BF-2 with amount actually distributed to Class
respect to interest on such prior BF-3 with respect to interest on such
Distribution Dates and (ii) interest prior Distribution Dates and (ii)
thereon at the Class BF-2 Pass-Through interest thereon at the Class BF-3
Rate for the related Accrual Period. Pass-Through Rate for the related
Accrual Period.
"Class BF-2 Pass-Through Rate": With "Class BF-3 Pass-Through Rate":
respect to each Distribution Date, the With respect to each Distribution
Group I Net Rate on such date. Date, the Group I Net Rate on such
date.
"Class BF-2 Unpaid Realized Loss "Class BF-3 Unpaid Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution
the excess of (i) the Class BF-2 Date, the excess of (i) the Class
Applied Realized Loss Amount over (ii) BF-3 Applied Realized Loss Amount
the sum of all increases in the Class over (ii) the sum of all increases in
BF-2 Certified Principal Balance on all the Class BF-3 Certified Principal
previous Distribution Dates pursuant to Balance on all previous Distribution
Section 3.02(j) hereof. Dates pursuant to Section 3.02(j)
hereof.
"Group II Certificates":
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"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 "Class MV-1 Certificate": Any Certificate designated
a "Class AV-1 Certificate" on the face thereof, in the as a "Class MV-1 Certificate" on the face thereof, in
form of Exhibit AV-1 hereto representing the right to the form of Exhibit MV-1 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class AV-1 Certificate Principal Balance": The "Class MV-1 Certificate Principal Balance": The
Certificate Principal Balance of the Class AV-1 Certificate Principal Balance of the Class MV-1
Certificates. Certificates less any Class MV-1 Unpaid Realized Loss
Amount.
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"Class AV-1 Certificates Carryover": If on any "Class MV-1 Certificates Carryover": If on any
Distribution Date the Class AV-1 Pass-Through Rate is Distribution Date the Class MV-1 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess of based upon the Group II Available Funds Cap, the excess
(i) the amount of interest the Class AV-1 Certificates of (i) the amount of interest the Class MV-1
would be entitled to receive on such Distribution Date had Certificates would be entitled to receive on such
the Class AV-1 Pass-Through Rate not been calculated based Distribution Date had the Class MV-1 Pass-Through Rate
on the Group II Available Funds Cap (but not more than the not been calculated based on the Group II Available
weighted average of the Maximum Lifetime Mortgage Interest Funds Cap (but not more than the weighted average of
Rates on the Mortgage Loans in Group II less the Group II the Maximum Lifetime Mortgage Interest Rates on the
Servicing Fee Rate and the Group II Master Servicing Fee Mortgage Loans in Group II less the Group II Servicing
Rate) over (ii) the amount of interest such Certificates Fee Rate and the Group II Master Servicing Fee Rate)
received on such Distribution Date based on the Group II over (ii) the amount of interest such Certificates
Available Funds Cap, together with the unpaid portion of received on such Distribution Date based on the Group
any such excess from prior Distribution Dates (and II Available Funds Cap, together with the unpaid
interest accrued thereon at the then applicable portion of any such excess from prior Distribution
Pass-Through Rate, without giving effect to the Group II Dates (and interest accrued thereon at the then
Available Funds Cap). applicable Pass-Through Rate, without giving effect to
the Group II Available Funds Cap).
"Class AV-1 Current Interest": With respect to any "Class MV-1 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class AV-1 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such MV-1 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at the such Distribution Date during the related Accrual
Class AV-1 Pass Through Rate plus any amount previously Period at the Class MV-1 Pass Through Rate plus any
distributed with respect to interest for Class AV-1 that amount previously distributed with respect to interest
is recovered during the related Accrual Period as a for Class MV-1 that is recovered during the related
voidable preference by a trustee in bankruptcy pursuant to Accrual Period as a voidable preference by a trustee in
a final, nonappealable order; provided, however, Class bankruptcy pursuant to a final, nonappealable order;
AV-1 Current Interest shall not include any Class AV-1 provided, however, Class MV-1 Current Interest shall
Certificates Carryover. not include any Class MV-1 Certificates Carryover.
"Class AV-1 Interest Carry Forward Amount": With respect "Class MV-1 Interest Carry Forward Amount": With
to any Distribution Date, the sum of (i) the excess of (A) respect to any Distribution Date, the sum of (i) the
Class AV-1 Current Interest with respect to prior excess of (A) Class MV-1 Current Interest with respect
Distribution Dates (excluding any Class AV-1 Certificates to prior Distribution Dates (excluding any Class MV-1
Carryover) over (B) the amount actually distributed to Certificates Carryover) over (B) the amount actually
Class AV-1 with respect to interest (other than in respect distributed to Class MV-1 with respect to interest
of Class AV-1 Certificate Carryover) on such prior (other than in respect of Class MV-1 Certificate
Distribution Dates and (ii) interest on such excess at the Carryover) on such prior Distribution Dates and (ii)
Class AV-1 Pass-Through Rate for the related Accrual interest on such excess at the Class MV-1 Pass-Through
Period. Rate for the related Accrual Period.
"Class AV-1 Pass-Through Rate": With respect to any "Class MV-1 Pass-Through Rate": With respect to any
Distribution Date, the lesser of (x) One Month LIBOR plus, Distribution Date, the lesser of (x) One Month LIBOR
in the case of any Distribution Date prior to the Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 0.300% per annum, or in the Initial Optional Termination Date, 0.620% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 0.600% per annum after the Initial Optional Termination Date, plus
and (y) the Group II Available Funds Cap for such 0.930% per annum and (y) the Group II Available Funds
Distribution Date. 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 "Class BV-1 Applied Realized Loss Amount: As to any
Distribution Date, the sum of the Realized Losses with Distribution Date, the sum of the Realized Losses with
respect to Group II which have been applied in reduction respect to Group II which have been applied in
of the Certificate Principal Balance of the Class MV-2 reduction of the Certificate Principal Balance of the
Certificates pursuant to Section 3.02(i) hereof. Class BV-1 Certificates pursuant to Section 3.02(i)
hereof.
"Class MV-2 Certificate": Any Certificate designated as "Class BV-1 Certificate": Any Certificate designated
a "Class MV-2 Certificate" on the face thereof, in the as a "Class BV-1 Certificate" on the face thereof, in
form of Exhibit MV-2 hereto representing the right to the form of Exhibit BV-1 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class MV-2 Certificate Principal Balance": The "Class BV-1 Certificate Principal Balance": The
Certificate Principal Balance of the Class MV-2 Certificate Principal Balance of the Class BV-1
Certificates less any Class MV-2 Unpaid Realized Loss Certificates less any Class BV-1 Unpaid Realized Loss
Amount. Amount.
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"Class MV-2 Certificates Carryover": If on any "Class BV-1 Certificates Carryover": If on any
Distribution Date the Class MV-2 Pass-Through Rate is Distribution Date the Class BV-1 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess of based upon the Group II Available Funds Cap, the excess
(I) the amount of interest the Class MV-2 Certificates of (i) the amount of interest the Class BV-1
would be entitled to receive on such Distribution Date had Certificates would be entitled to receive on such
the Class MV-2 Pass-Through Rate not been calculated based Distribution Date had the Class BV-1 Pass-Through Rate
on the Group II Available Funds Cap (but not more than the not been calculated based on the Group II Available
weighted average of the Maximum Lifetime Mortgage Interest Funds Cap (but not more than the weighted average of
Rates on the Mortgage Loans in Group II less the Group II the Maximum Lifetime Mortgage Interest Rates on the
Servicing Fee Rate and the Group II Master Servicing Fee Mortgage Loans in Group II less the Group II Servicing
Rate) over (ii) the amount of interest such Certificates Fee Rate and the Group II Master Servicing Fee Rate)
received on such Distribution Date based on the Group II over (ii) the amount of interest such Certificates
Available Funds Cap, together with the unpaid portion of received on such Distribution Date based on the Group
any such excess from prior Distribution Dates (and II Available Funds Cap, together with the unpaid
interest accrued thereon at the then applicable portion of any such excess from prior Distribution
Pass-Through Rate, without giving effect to the Group II Dates (and interest accrued thereon at the then
Available Funds Cap). applicable Pass-Through Rate, without giving effect to
the Group II Available Funds Cap).
"Class MV-2 Current Interest": With respect to any "Class BV-1 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class MV-2 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such BV-1 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at the such Distribution Date during the related Accrual
Class MV-2 Pass Through Rate plus any amount previously Period at the Class BV-1 Pass Through Rate plus any
distributed with respect to interest for Class MV-2 that amount previously distributed with respect to interest
is recovered during the related Accrual Period as a for Class BV-1 that is recovered during the related
voidable preference by a trustee in bankruptcy pursuant to Accrual Period as a voidable preference by a trustee in
a final, nonappealable order; provided, however, Class bankruptcy pursuant to a final, nonappealable order;
MV-2 Current Interest shall not include any Class MV-2 provided, however, Class BV-1 Current Interest shall
Certificates Carryover. not include any Class BV-1 Certificates Carryover.
"Class MV-2 Interest Carry Forward Amount": With respect "Class BV-1 Interest Carry Forward Amount": With
to each Distribution Date, the sum of (i) the excess of respect to each Distribution Date, the sum of (i) the
(A) Class MV-2 Current Interest with respect to prior excess of (A) Class BV-1 Current Interest with respect
Distribution Dates (excluding any Class MV-2 Certificates to prior Distribution Dates (excluding any Class BV-1
Carryover) over (B) the amount actually distributed to Certificates Carryover) over (B) the amount actually
Class MV-2 with respect to interest (other than in respect distributed to Class BV-1 with respect to interest
of Class MV-2 Certificate Carryover) on such prior (other than in respect of Class BV-1 Certificate
Distribution Dates and (ii) interest on such excess at the Carryover) on such prior Distribution Dates and (ii)
Class MV-2 Pass-Through Rate for the related Accrual interest on such excess at the Class BV-1 Pass-Through
Period. Rate for the related Accrual Period.
"Class MV-2 Pass-Through Rate": With respect to any "Class BV-1 Pass-Through Rate": With respect to any
Distribution Date, the lesser of (x) One Month LIBOR plus, Distribution Date, the lesser of (x) One Month LIBOR
in the case of any Distribution Date prior to the Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 1.120% per annum, or in the Initial Optional Termination Date, 2.750% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 1.680% per annum after the Initial Optional Termination Date, plus
and (y) the Group II Available Funds Cap for such 4.125% per annum and (y) the Group II Available Funds
Distribution Date. Cap for such Distribution Date.
"Class MV-2 Unpaid Realized Loss Amount": As to any "Class BV-1 Unpaid Realized Loss Amount": As to
Distribution Date, the excess of (i) the Class MV-2 any Distribution Date, the excess of (i) the Class BV-1
Applied Realized Loss Amount over (ii) the sum of all Applied Realized Loss Amount over (ii) the sum of all
increases in the Class MV-2 Certificate Principal Balance increases in the Class BV-1 Certificate Principal
on all previous Distribution Dates pursuant to Section Balance on all previous Distribution Dates pursuant to
3.02(k) hereof. Section 3.02(k) hereof.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Class BV-2 Applied Realized Loss Amount: As to any "Class BV-3 Applied Realized Loss Amount: As to any
Distribution Date, the sum of the Realized Losses with Distribution Date, the sum of the Realized Losses with
respect to Group II which have been applied in reduction respect to Group II which have been applied in
of the Certificate Principal Balance of the Class BV-2 reduction of the Certificate Principal Balance of the
Certificates pursuant to Section 3.02(i) hereof. Class BV-3 Certificates pursuant to Section 3.02(i)
hereof.
"Class BV-2 Certificate": Any Certificate designated as "Class BV-3 Certificate": Any Certificate designated
a "Class BV-2 Certificate" on the face thereof, in the as a "Class BV-3 Certificate" on the face thereof, in
form of Exhibit BV-2 hereto representing the right to the form of Exhibit BV-3 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class BV-2 Certificate Principal Balance": The "Class BV-3 Certificate Principal Balance": The
Certificate Principal Balance of the Class BV-2 Certificate Principal Balance of the Class BV-3
Certificates less any Class BV-2 Unpaid Realized Loss Certificates less any Class BV-3 Unpaid Realized Loss
Amount. Amount.
"Class BV-2 Certificates Carryover": If on any "Class BV-3 Certificates Carryover": If on any
Distribution Date the Class BV-2 Pass-Through Rate is Distribution Date the Class BV-3 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess of based upon the Group II Available Funds Cap, the excess
(I) the amount of interest the Class BV-2 Certificates of (i) the amount of interest the Class BV-3
would be entitled to receive on such Distribution Date had Certificates would be entitled to receive on such
the Class BV-2 Pass-Through Rate not been calculated based Distribution Date had the Class BV-3 Pass-Through Rate
on the Group II Available Funds Cap (but not more than the not been calculated based on the Group II Available
weighted average of the Maximum Lifetime Mortgage Interest Funds Cap (but not more than the weighted average of
Rates on the Mortgage Loans in Group II less the Group II the Maximum Lifetime Mortgage Interest Rates on the
Servicing Fee Rate and the Group II Master Servicing Fee Mortgage Loans in Group II less the Group II Servicing
Rate) over (ii) the amount of interest such Certificates Fee Rate and the Group II Master Servicing Fee Rate)
received on such Distribution Date based on the Group II over (ii) the amount of interest such Certificates
Available Funds Cap, together with the unpaid portion of received on such Distribution Date based on the Group
any such excess from prior Distribution Dates (and II Available Funds Cap, together with the unpaid
interest accrued thereon at the then applicable portion of any such excess from prior Distribution
Pass-Through Rate, without giving effect to the Group II Dates (and interest accrued thereon at the then
Available Funds Cap). applicable Pass-Through Rate, without giving effect to
the Group II Available Funds Cap).
"Class BV-2 Current Interest": With respect to any "Class BV-3 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class BV-2 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such BV-3 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at the such Distribution Date during the related Accrual
Class BV-2 Pass Through Rate plus any amount previously Period at the Class BV-3 Pass Through Rate plus any
distributed with respect to interest for Class BV-2 that amount previously distributed with respect to interest
is recovered during the related Accrual Period as a for Class BV-3 that is recovered during the related
voidable preference by a trustee in bankruptcy pursuant to Accrual Period as a voidable preference by a trustee in
a final, nonappealable order; provided, however, Class bankruptcy pursuant to a final, nonappealable order;
BV-2 Current Interest shall not include any Class BV-2 provided, however, Class BV-3 Current Interest shall
Certificates Carryover. not include any Class BV-3 Certificates Carryover.
"Class BV-2 Interest Carry Forward Amount": With respect "Class BV-3 Interest Carry Forward Amount": With
to each Distribution Date, the sum of (i) the excess of respect to each Distribution Date, the sum of (i) the
(A) Class BV-2 Current Interest with respect to prior excess of (A) Class BV-3 Current Interest with respect
Distribution Dates (excluding any Class BV-2 Certificates to prior Distribution Dates (excluding any Class BV-3
Carryover) over (B) the amount actually distributed to Certificates Carryover) over (B) the amount actually
Class BV-2 with respect to interest (other than in respect distributed to Class BV-3 with respect to interest
of Class BV-2 Certificate Carryover) on such prior (other than in respect of Class BV-3 Certificate
Distribution Dates and (ii) interest on such excess at the Carryover) on such prior Distribution Dates and (ii)
Class BV-2 Pass-Through Rate for the related Accrual interest on such excess at the Class BV-3 Pass-Through
Period. Rate for the related Accrual Period.
"Class BV-2 Pass-Through Rate": With respect to any "Class BV-3 Pass-Through Rate": With respect to any
Distribution Date, the lesser of (x) One Month LIBOR plus Distribution Date, the lesser of (x) One Month LIBOR
3.95% per annum and (y) the Group II Available Funds Cap plus 3.95% per annum and (y) the Group II Available
for such Distribution Date. Funds Cap for such Distribution Date.
"Class BV-2 Unpaid Realized Loss Amount": As to any "Class BV-3 Unpaid Realized Loss Amount": As to
Distribution Date, the excess of (i) the Class BV-2 any Distribution Date, the excess of (i) the Class BV-3
Applied Realized Loss Amount over (ii) the sum of all Applied Realized Loss Amount over (ii) the sum of all
increases in the Class BV-2 Certificate Principal Balance increases in the Class BV-3 Certificate Principal
on all previous Distribution Dates pursuant to Section Balance on all previous Distribution Dates pursuant to
3.02(k) hereof. Section 3.02(k) hereof.
</TABLE>
<PAGE>
"Class C Certificate": Any of the Certificates designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C hereto representing
the right to distributions as set forth herein.
"Class C Distribution Amount": With respect to any Distribution Date,
one-twelfth of the sum of:
(a) the product of the AF-1 Balance and the excess of the Group I Net Rate over
the Class AF-1 Pass-Through Rate;
(b) the product of the AF-2 Balance and the excess of the Group I Net Rate over
the Class AF-2 Pass-Through Rate;
(c) the product of the AF-3 Balance and the excess of the Group I Net Rate over
the Class AF-3 Pass-Through Rate;
(d) the product of the AF-4 Balance and the excess of the Group I Net Rate over
the Class AF-4 Pass-Through Rate;
(e) the product of the AF-5 Balance and the excess of the Group I Net Rate over
the Class AF-5 Pass-Through Rate;
(f) the product of the AF-6 Balance and the excess of the Group I Net Rate over
the Class AF-6 Pass-Through Rate;
(g) the product of the MF-1 Balance and the excess of the Group I Net Rate over
the Class MF-1 Pass-Through Rate;
(h) the product of the MF-2 Balance and the excess of the Group I Net Rate over
the Class MF-2 Pass-Through Rate;
(i) the product of the BF-1 Balance and the excess of the Group I Net Rate over
the Class BF-1 Pass-Through Rate;
(j) the product of the BF-2 Balance and the excess of the Group I Net Rate over
the Class BF-2 Pass-Through Rate;
(k) the product of the BF-3 Balance and the excess of the Group I Net Rate over
the Class BF-3 Pass-Through Rate;
(l) the product of the AV-1 Balance and the excess of the Group II Net Rate over
the Class AV-1 Pass-Through Rate;
(m) the product of the MV-1 Balance and the excess of the Group II Net Rate over
the Class MV-1 Pass-Through Rate;
(n) the product of the MV-2 Balance and the excess of the Group II Net Rate over
the Class MV-2 Pass-Through Rate;
(o) the product of the BV-1 Balance and the excess of the Group II Net Rate over
the Class BV-1 Pass-Through Rate;
(p) the product of the BV-2 Balance and the excess of the Group II Net Rate over
the Class BV-2 Pass-Through Rate;
(q) the product of the BV-3 Balance and the excess of the Group II Net Rate over
the Class BV-3 Pass-Through Rate; and
(r) any excess of the amount specified pursuant to clauses (a) through (q) above
for prior Distribution Dates over the amount actually distributed pursuant to
such clauses on prior Distribution Dates.
<PAGE>
"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": February 25, 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 February 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 March 25, 1999.
"Fitch": Fitch IBCA, Inc., and its successors (One State Street Plaza,
33rd Floor, New York, New York 10004).
<PAGE>
<TABLE>
Group Definitions:
<S> <C>
"Group I": The pool of Mortgage Loans identified in "Group II": The pool of Mortgage Loans identified
the related Schedules of Mortgage Loans as having been in the related Schedules of Mortgage Loans as having
assigned to Group I, including any Group I Qualified been assigned to Group II, including any Group II
Substitute Mortgage Loans delivered in replacement thereof. Qualified Substitute Mortgage Loans delivered in
replacement thereof.
"Group I Available Funds Cap": As of any "Group II Available Funds Cap": As of any
Distribution Date, the weighted average of the Net Rates Distribution Date, the weighted average of the Net
on the Mortgage Loans in Group I (weighted on the basis of Rates on the Mortgage Loans in Group II (weighted on
the principal balances thereof as of the first day of the the basis of the principal balances thereof as of the
month preceding the month of such Distribution Date). first day of the month preceding the month of such
Distribution Date).
"Group I Certificate": Any of the Class AF-1, Class "Group II Certificate": Any of the Class AV-1,
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MV-1, Class MV-2, Class BV-1, Class BV-2 and
Class MF-1, Class MF-2, Class BF-1, Class BF-2 and Class Class BV-3 Certificates.
BF-3 Certificates.
"Group I Certificate Principal Balance": The sum of "Group II Certificate Principal Balance": The sum
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class of the Class AV-1, Class MV-1, Class MV-2, Class BV-1,
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BV-2 and Class BV-3 Certificate Principal
Class BF-2 and Class BF-3 Certificate Principal Balances. Balances.
"Group I Class A Certificate Principal Balance": The "Group II Class A Certificate Principal Balance":
sum of the Class AF-1, Class AF-2, Class AF-3, Class AF-4, The Class AV-1 Certificate Principal Balance.
Class AF-5 and Class AF-6 Certificate Principal Balances.
"Group I Class A Principal Distribution Amount": With "Group II Class A Principal Distribution Amount":
respect to any Distribution Date before the Group I With respect to any Distribution Date before the Group
Stepdown Date or as to which a Group I Trigger Event has II Stepdown Date or as to which a Group II Trigger
occurred, 100% of the Group I Principal Distribution Event has occurred, 100% of the Group II Principal
Amount for such Distribution Date and with respect to any Distribution Amount for such Distribution Date and with
Distribution Date on or after the Stepdown Date and as to respect to any Distribution Date on or after the
which a Group I Trigger Event has not occurred, the excess Stepdown Date and as to which a Group II Trigger Event
of (i) the Group I Class A Certificate Principal Balance has not occurred, the excess of (i) the Group II Class
immediately prior to such Distribution Date over (ii) the A Certificate Principal Balance immediately prior to
lesser of (A) 71.00% of the Schedule Principal Balances of such Distribution Date over (ii) the lesser of (A)
Group I on the preceding Due Date and (B) the excess of 59.50% of the Schedule Principal Balances of Group II
(I) the Scheduled Principal Balances of Group I on the on the preceding Due Date and (B) the excess of (I) the
preceding Due Date over (II) $1,289,100. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,256,187.
"Group I Class MF-1 Principal Distribution Amount": "Group II Class MV-1 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution on and, after
Group I Stepdown Date and as long as a Group I Trigger the Group II Stepdown Date and as long as a Group II
Event is not in effect (subject to the proviso set forth Trigger Event is not in effect (subject to the proviso
in Section 3.02(c) hereof), the excess of (i) the sum of set forth in Section 3.02(d) hereof), the excess of (i)
(A) the Group I Class A Certificate Principal Balance and the sum of (A) the Group II Class A Certificate
(B) the Class MF-1 Certificate Principal Balance Principal Balance and (B) the Class MV-1 Certificate
immediately prior to such Distribution Date over (ii) the Principal Balance immediately prior to such
lesser of (A) 82.50% of the aggregate Scheduled Principal Distribution Date over (ii) the lesser of (A) 76.00% of
Balances of Group I on the preceding Due Date and (B) the the Scheduled Principal Balances of Group II on the
excess of (I) the Scheduled Principal Balances of Group I preceding Due Date and (B) the excess of (I) the
on the preceding Due Date over (II) $1,289,100. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,256,187.
<PAGE>
"Group I Class MF-2 Principal Distribution Amount": "Group II Class MV-2 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution on and after
Group I Stepdown Date and as long as a Group I Trigger the Group II Stepdown Date and as long as a Group II
Event is not in effect (subject to the proviso set forth Trigger Event is not in effect (subject to the proviso
in Section 3.02(c) hereof), the excess of (i) the sum of set forth in Section 3.02(d) hereof), the excess of (i)
(A) the Group I Class A Certificate Principal Balance, (B) the sum of (A) the Group II Class A Certificate
the Class MF-1 Certificate Principal Balance and (C) the Principal Balance, (B) the Class MV-1 Certificate
Class MF-2 Certificate Principal Amount immediately prior Principal Balance and (C) the Class MV-2 Certificate
to such Distribution Date over (ii) the lesser of (A) Principal Amount immediately prior to such Distribution
91.00% of the Scheduled Principal Balances of Group I on Date over (ii) the lesser of (A) 89.00% of the
the preceding Due Date and (B) the excess of (I) the Scheduled Principal Balances of Group II on the
Scheduled Principal Balances of Group I over on the preceding Due Date and (B) the excess of (I) the
preceding Due Date over (II) $1,289,100. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,256,187.
"Group I Class BF-1 Principal Distribution Amount": "Group II Class BV-1 Principal Distribution
With respect to any Distribution on and after the Group I Amount": With respect to any Distribution Date on and
Stepdown Date and as long as a Group I Trigger Event is after the Group II Stepdown Date and as long as a Group
not in effect (subject to the proviso set forth in Section II Trigger Event is not in effect (subject to the
3.02(c) hereof), the excess of (i) the sum of (A) the proviso set forth in Section 3.02(d) hereof), the
Group I Class A Certificate Principal Balance, (B) the excess of (i) the sum of (A) the Group II Class A
Class MF-1 Certificate Principal Balance, (C) the Class Certificate Principal Balance, (B) the Class MV-1
MF-2 Certificate Principal Balance and (D) the Class BF-1 Certificate Principal Balance, (C) the Class MV-2
Certificate Principal Balance immediately prior to such Certificate Principal Balance and (D) the Class BV-1
Distribution Date over (ii) the lesser of (A) 96.00% of Certificate Principal Balance immediately prior to such
the Scheduled Principal Balances of Group I on the Distribution Date over (ii) the lesser of (A) 95.00% of
preceding Due Date and (B) the excess of (I) the Scheduled the Scheduled Principal Balances of Group II on the
Principal Balances of Group I on the preceding Due Date preceding Due Date and (B) the excess of (I) the
over (II) $1,289,100. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,256,187.
"Group I Class BF-2 Principal Distribution Amount": "Group II Class BV-2 Principal Distribution
With respect to any Distribution on and after the Group I Amount": With respect to any Distribution Date on and
Stepdown Date and as long as a Group I Trigger Event is after the Group II Stepdown Date and as long as a Group
not in effect (subject to the proviso set forth in Section II Trigger Event is not in effect (subject to the
3.02(c) hereof), the excess of (i) the sum of (A) the proviso set forth in Section 3.02(d) hereof), the
Group I Class A Certificate Principal Balance, (B) the excess of (i) the sum of (A) the Group II Class A
Class MF-1 Certificate Principal Balance, (C) the Class Certificate Principal Balance, (B) the Class MV-1
MF-2 Certificate Principal Balance (D) the Class BF-1 Certificate Principal Balance, (C) the Class MV-2
Certificate Principal Balance and (E) the Class BF-2 Certificate Principal Balance (D) the Class BV-1
Certificate Principal Balance immediately prior to such Certificate Principal Balance and (E) the Class BV-2
Distribution Date over (ii) the lesser of (A) 98.00% of Certificate Principal Balance immediately prior to such
the Scheduled Principal Balances of Group I on the Distribution Date over (ii) the lesser of (A) 97.00% of
preceding Due Date and (B) the excess of (I) the Scheduled the Scheduled Principal Balances of Group II on the
Principal Balances of Group I on the preceding Due Date preceding Due Date and (B) the excess of (I) the
over (II) $1,289,100. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,256,187.
"Group I Class BF-3 Principal Distribution Amount": "Group II Class BV-3 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution Date on and
Group I Stepdown Date and as long as a Group I Trigger after the Group II Stepdown Date and as long as a Group
Event is not in effect (subject to the proviso set forth II Trigger Event is not in effect (subject to the
in Section 3.02(c) hereof), the excess of (i) the Group I proviso set forth in Section 3.02(d) hereof), the
Principal Distribution Amount for such day over (ii) the excess of (i) the Group II Principal Distribution
sum of (A) the Group I Class A Principal Distribution Amount for each day over (ii) the sum of (A) the Group
Amount, (B) the Class MF-1 Principal Distribution Amount, II Class A Principal Distribution Amount, (B) the
(C) the Class MF-2, Principal Distribution Amount, (D) the Class MV-1 Principal Distribution Amount, (C) the Class
Class BF-1 Principal Distribution Amount, and (E) the MV-2 Principal Distribution Amount, (D) the Class BV-1
Class BF-2 Principal Distribution Amount. Principal Distribution Amount, and (E) the Class BV-2
Principal Distribution Amount.
<PAGE>
"Group I Extra Principal Distribution Amount": With "Group II Extra Principal Distribution Amount":
respect to any Distribution Date, to the extent of Group I With respect to any Distribution Date, to the extent of
Interest Funds pursuant to Section 3.02(a)(v) and Group II Group II Interest Funds pursuant to Section 3.02(b)(v)
Interest Funds available for the purpose pursuant to and Group I Interest Funds available for the purpose
Section 3.02(f)(viii) hereof, an amount equal to the pursuant to Section 3.02(e)(viii) hereof, an amount
excess of (i) all Realized Losses with respect to Group I equal to the excess of (i) all Realizes Losses with
(including any such losses for such date) over (ii) all respect to Group II (including any such losses for such
Extra Principal Distribution Amounts for Group I on the date) over (ii) all Extra Principal Distribution
preceding Due Date. Amounts for Group II on the preceding Due Date.
"Group I Interest Funds": With respect to Group I and "Group II Interest Funds": With respect to Group
any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled interest collected during the related Due Period all scheduled interest collected during the related Due
with respect to Group I less the Group I Servicing Fee and Period with respect to Group II less the Group II
the Group I Master Servicing Fee, (ii) all Advances Servicing Fee and the Group II Master Servicing Fee,
relating to interest with respect to Group I, (iii) all (ii) all Advances relating to interest with respect to
Month End Interest with respect to Group I and (iv) Group II, (iii) all Month End Interest with respect to
Liquidation Proceeds with respect to Group I (to the Group II and (iv) Liquidation Proceeds with respect to
extent such Liquidation Proceeds relate to interest) less Group II (to the extent such Liquidation Proceeds
all Non-Recoverable Advances relating to interest and relate to interest) less all Non-Recoverable Advances
expenses pursuant to Section 6.03 of the Standard Terms. relating to interest and expenses pursuant to Section
6.03 of the Standard Terms.
"Group I Master Servicing Fee": With respect to each "Group II Master Servicing Fee": With respect to
Master Servicer Remittance Date, an amount payable (or each Master Servicer Remittance Date, an amount payable
allocable) to the Master Servicer equal to the product of (or allocable) to the Master Servicer equal to the
one-twelfth of the Group I Master Servicing Fee Rate and product of one-twelfth of the Group II Master Servicing
the aggregate Scheduled Principal Balance of Group I on Fee Rate and the aggregate Scheduled Principal Balance
the first day of the Due Period preceding such Master of Group II on the first day of the Due Period
Servicer Remittance Date. preceding such Master Servicer Remittance Date.
"Group I Master Servicing Fee Rate": 0.05% per annum. "Group II Master Servicing Fee Rate": 0.05% per
annum.
"Group I Net Rate": The weighted average Net Rate for "Group II Net Rate": The weighted average Net Rate
Group I. for Group II.
"Group I Principal Distribution Amount": With respect "Group II Principal Distribution Amount": With
to any Distribution Date, the sum of (i) the Group I respect to any Distribution Date, the sum of (i) the
Principal Funds and (ii) the Group I Extra Principal Group II Principal Funds and (ii) the Group II Extra
Distribution Amount. Principal Distribution Amount.
<PAGE>
"Group I Principal Funds": With respect to Group I "Group II Principal Funds": With respect to Group
and any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled principal with respect to Group I collected by all scheduled principal with respect to Group II
the Servicers during the related Due Period or advanced on collected by the Servicers during the related Due
or before such Master Servicer Remittance Date, (ii) Period or advanced on or before such Master Servicer
prepayments with respect to Group I collected by the Remittance Date, (ii) prepayments with respect to Group
Servicers in the related Prepayment Period, (iii) the II collected by the Servicers in the related Prepayment
Scheduled Principal Balance of each Mortgage Loan in Group Period, (iii) the Scheduled Principal Balance of each
I repurchased by the Depositor, (iv) any Substitution Mortgage Loan in Group II repurchased by the Depositor,
Shortfall with respect to Group I and (v) all Liquidation (iv) any Substitution Shortfall with respect to Group
Proceeds with respect to Group I collected by the Servicer II and (v) all Liquidation Proceeds with respect to
during the related Due Period (to the extent such Group II collected by the Servicer during the related
Liquidation Proceeds related to principal) less all Due Period (to the extent such Liquidation Proceeds
non-recoverable Advances relating to principal with related to principal) less all non-recoverable Advances
respect to Group I reimbursed during the related Due relating to principal with respect to Group II
Period. reimbursed during the related Due Period.
"Group I Servicing Fee": With respect to each Mortgage "Group II Servicing Fee": With respect to each
Loan in Group I and each Remittance Date, the product of Mortgage Loan in Group II and each Remittance Date, the
(x) one-twelfth of the Servicing Fee Rate and (y) product of (x) one-twelfth of the Servicing Fee Rate
aggregate Scheduled Principal Balance of such Mortgage and (y) aggregate Scheduled Principal Balance of such
Loan as of the opening of business on the first day of the Mortgage Loan as of the opening of business on the
Due Period preceding such Remittance Date. first day of the Due Period preceding such Remittance
Date.
"Group I Servicing Fee Rate": With respect to each "Group II Servicing Fee Rate": With respect to each
Mortgage Loan in Group I, the fixed per annum rate payable Mortgage Loan in Group II, the fixed per annum rate
to the Servicer as set out on Schedule IA to this payable to the Servicer as set out on Schedule IB to
Agreement. this Agreement.
"Group I Stepdown Date": With respect to Group I, the "Group II Stepdown Date": With respect to Group II,
earlier to occur of (i) the later to occur of (A) the the earlier to occur of (i) the later to occur of (A)
Distribution Date in March 2002 and (B) the first the Distribution Date in March 2002 and (B) the first
Distribution Date on which the Group I Class A Certificate Distribution Date on which the Group II Class A
Principal Balance immediately prior to such Distribution Certificate Principal Balance immediately prior to such
Date (less the Group I Principal Funds for such Distribution Date (less the Group II Principal Funds
Distribution Date) is less than or equal to 71.00% of the for such Distribution Date) is less than or equal to
Scheduled Principal Balances of Group I and (ii) the 59.50% of the Scheduled Principal Balances of Group II
Distribution Date on which the Group I Class A Certificate and (ii) the Distribution Date on which the Group II
Principal Balance has been reduced to zero. Class A Certificate Principal Balance has been reduced
to zero.
"Group I Subordinated Certificates": The Class MF-1, "Group II Subordinated Certificates": The Class
Class MF-2, Class BF-1, Class BF-2 and Class BF-3 MV-1, Class MV-2, Class BV-1, Class BV-2 and Class BV-3
Certificates. Certificates.
<PAGE>
"Group I Subordinated Trigger Event": With respect to "Group II Subordinated Trigger Event": With
Group I, any Distribution Date after the Group I Stepdown respect to Group II, any Distribution Date after the
Date on which: Group II Stepdown Date on which:
(a) Realized Losses since the Cut-Off Date with (a) Realized Losses since the Cut-Off Date with
respect to the Mortgage Loans in Group I as a percentage respect to the Mortgage Loans in Group II as a
of the initial Scheduled Principal Balance of Group I percentage of the initial Scheduled Principal
exceed the percentage set out below with respect to such Balance of Group II exceed the percentage set out below
Distribution Date: with respect to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
April 2001 - March 2002 1.50% April 2001 - March 2002 2.00%
April 2002 - March 2003 2.50 April 2002 - March 2003 3.40
April 2003 - March 2004 3.10 April 2003 - March 2004 4.30
April 2004 - March 2005 3.50 April 2004 - March 2005 4.80
April 2005 - March 2006 3.80 April 2005 - March 2006 5.20
April 2006 and thereafter 4.00 April 2006 and thereafter 5.50
and and
(b) the Scheduled Principal Balance of the (b) the Scheduled Principal Balance of the Mortgage
Mortgage Loans in Group I that, as of such Distribution Loans in Group II that, as of such Distribution Date,
Date, are 60 or more days Delinquent as a percentage of are 60 or more days Delinquent as a percentage of the
the Scheduled Principal Balance of the Mortgage Loans in Scheduled Principal Balance of the Mortgage Loans in
Group I exceeds the percentage set out below with Group II exceeds the percentage set out below with
respect to such Distribution Date: respect to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
April 2001 - March 2002 4.00% April 2001 - March 2002 6.00%
April 2002 - March 2003 4.00 April 2002 - March 2003 6.00
April 2003 - March 2004 6.50 April 2003 - March 2004 9.00
April 2004 - March 2005 6.50 April 2004 - March 2005 9.00
April 2005 - March 2006 8.00 April 2005 - March 2006 12.00
April 2006 and thereafter 8.00 April 2006 and thereafter 12.00
"Group I Trigger Event": With respect to Group I and "Group II Trigger Event": With respect to Group II
any Distribution Date after the Group I Stepdown Date, a and any Distribution Date after the Group II Stepdown
Group I Trigger Event exists if two times the quotient of Date, a Group II Trigger Event exists if 2.5 times the
(i) the Scheduled Principal Balances of all 60 or more quotient of (i) the Scheduled Principal Balances of all
days Delinquent Mortgage Loans in Group I and (ii) the 60 or more days Delinquent Mortgage Loans in Group II
Scheduled Principal Balances of Group I as of the and (ii) the Scheduled Principal Balances of Group II
preceding Master Servicer Remittance Date equals or as of the preceding Master Servicer Remittance Date
exceeds 29.00%. equals or exceeds 40.50%.
</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 February 23, 1999,
and with respect to any subsequent Accrual Period for the Class AF-1
Certificates and the Group II Certificates, the second London Business Day
preceding such Accrual Period.
"Interest Fund": The Fund created and maintained by the Trustee pursuant
to Section 4.03.
"London Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Master Servicer": Saxon Mortgage, Inc., a Virginia corporation, and its
successors and assigns in such capacity.
<PAGE>
"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
"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 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 BF-2, Class BF-3, Class BV-2,
Class BV-3, Class C and Class R Certificates.
<PAGE>
"Private Subordinated Certificate": Any of the Class BF-2, Class BF-3,
Class BV-2, Class BV-3, Class C and Class R Certificates.
"Public Subordinated Certificate": Any of the Class MF-1, Class MF-2,
Class BF-1, Class MV-1, Class MV-2 and Class BV-1 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 February 18, 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.
<PAGE>
"Subaccounts": Any one of the Subaccounts created pursuant to Section
5.03(a)(i) hereof.
<TABLE>
Group I:
<S> <C> <C>
"AF-1 Balance" : The Balance of the "AF-2 Balance" : The Balance of "AF-3 Balance" : The Balance of
Subaccount AF-1. Subaccount AF-2. Subaccount AF-3.
"AF-1 Monthly Interest Amount": With "AF-2 Monthly Interest Amount": "AF-3 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the AF-1 Balance Date, the interest accrued on the Date, the interest accrued on the
during the Accrual Period for the AF-2 Balance during the Accrual AF-3 Balance during the Accrual
Class AF-1 Certificates for that Period for the Class AF-2 Period for the Class AF-3
Distribution Date at the Group I Net Certificates for that Distribution Certificates for that Distribution
Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-1": The Subaccount by "Subaccount AF-2": The Subaccount "Subaccount AF-3": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"AF-4 Balance" : The Balance of the "AF-5 Balance" : The Balance of "AF-6 Balance" : The Balance of
Subaccount AF-4. Subaccount AF-5. Subaccount AF-6.
"AF-4 Monthly Interest Amount": With "AF-5 Monthly Interest Amount": "AF-6 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the AF-4 Balance Date, the interest accrued on the Date, the interest accrued on the
during the Accrual Period for the AF-5 Balance during the Accrual AF-6 Balance during the Accrual
Class AF-4 Certificates for that Period for the Class AF-5 Period for the Class AF-6
Distribution Date at the Group I Net Certificates for that Distribution Certificates for that Distribution
Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-4": The Subaccount by "Subaccount AF-5": The Subaccount "Subaccount AF-6": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"MF-1 Balance" : The Balance of "MF-2 Balance" : The Balance of "BF-1 Balance" : The Balance of
Subaccount MF-1. Subaccount MF-2. Subaccount BF-1.
"MF-1 Monthly Interest Amount": With "MF-2 Monthly Interest Amount": "BF-1 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the MF-1 Balance Date, the interest accrued on the Date, the interest accrued on the
during the Accrual Period for the MF-2 Balance during the Accrual BF-1 Balance during the Accrual
Class MF-1 Certificates for that Period for the Class MF-2 Period for the Class BF-1
Distribution Date at the Group I Net Certificates for that Distribution Certificates for that Distribution
Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
<PAGE>
"Subaccount MF-1": The Subaccount by "Subaccount MF-2": The Subaccount "Subaccount BF-1": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"BF-2 Balance" : The Balance of "BF-3 Balance" : The Balance of
Subaccount BF-2. Subaccount BF-3.
"BF-2 Monthly Interest Amount": With "BF-3 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution
interest accrued on the BF-2 Balance Date, the interest accrued on the
during the Accrual Period for the BF-3 Balance during the Accrual
Class BF-2 Certificates for that Period for the Class BF-3
Distribution Date at the Group I Net Certificates for that Distribution
Rate. Date at the Group I Net Rate.
"Subaccount BF-2": The Subaccount by "Subaccount BF-3": The Subaccount
that name created pursuant to Section by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
</TABLE>
<TABLE>
Group II:
<S> <C>
"AV-1 Balance" : The Balance of the Subaccount AV-1. "MV-1 Balance" : The Balance of Subaccount MV-1.
"AV-1 Monthly Interest Amount": With respect to any "MV-1 Monthly Interest Amount": With respect to any
Distribution Date, the interest accrued on the AV-1 Distribution Date, the interest accrued on the MV-1
Balance during the Accrual Period for the Class AV-1 Balance during the Accrual Period for the Class MV-1
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount AV-1": The Subaccount by that name "Subaccount MV-1": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created 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
Distribution Date, the interest accrued on the MV-2 any Distribution Date, the interest accrued on the BV-1
Balance during the Accrual Period for the Class MV-2 Balance during the Accrual Period for the Class BV-1
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount MV-2": The Subaccount by that name "Subaccount BV-1": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
"BV-2 Balance": The Balance of Subaccount BV-2. "BV-3 Balance": The Balance of Subaccount BV-3.
"BV-2 Monthly Interest Amount": With respect to any "BV-3 Monthly Interest Amount": With respect to
Distribution Date, the interest accrued on the BV-2 any Distribution Date, the interest accrued on the BV-3
Balance during the Accrual Period for the Class BV-2 Balance during the Accrual Period for the Class BV-3
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the
Net Rate. Group II Net Rate.
"Subaccount BV-2": The Subaccount by that name "Subaccount BV-3": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
</TABLE>
"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": Prudential Securities Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery Securities, LLC,
First Chicago Capital Markets, Inc., and Chase Securities, Inc.
"Underwriting Agreement": The Underwriting Agreement dated February 18,
1999, between the Depositor and SMI and the Underwriters.
<PAGE>
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.
<PAGE>
Article III
Remitting to Certificateholders
Section 3.01. Subaccount Distributions.
On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers from the Asset Proceeds Account to the
Distribution Account, which shall be an Eligible Account, in the following order
of priority:
(a) from the Group I Interest Funds to Subaccounts AF-1, AF-2, AF-3,
AF-4, AF-5, AF-6, MF-1, MF-2, BF-1, BF-2 and BF-3, pro rata, the
AF-1, AF-2, AF-3, AF-4, AF-5, AF-6, MF-1, MF-2, BF-1, BF-2 and BF-3
Monthly Interest Amounts;
(b) from the Group II Interest Funds to Subaccounts AV-1, MV-1, MV-2,
BV-1, BV-2 and BV-3, pro rata, the AV-1, MV-1, MV-2, BV-1, BV-2 and
BV-3 Monthly Interest Amounts;
(c) from the Group I Principal Funds:
(A) to Subaccount AF-1 until the AF-1 Balance is reduced to zero;
(B) to Subaccount AF-2 until the AF-2 Balance is reduced to zero;
(C) to Subaccount AF-3 until the AF-3 Balance is reduced to zero;
(D) to Subaccount AF-4 until the AF-4 Balance is reduced to zero;
(E) to Subaccount AF-5 until the AF-5 Balance is reduced to zero;
(F) to Subaccount AF-6 until the AF-6 Balance is reduced to zero;
(G) to Subaccount MF-1 until the MF-1 Balance is reduced to zero;
(H) to Subaccount MF-2 until the MF-2 Balance is reduced to zero;
(I) to Subaccount BF-1 until the BF-1 Balance is reduced to zero;
(J) to Subaccount BF-2 until the BF-2 Balance is reduced to zero; and
(K) to Subaccount BF-3 until the BF-3 Balance is reduced to zero;
provided, however, that (a) such Balances shall be reduced and
increased in the same order and manner that the Class of
Certificates having the corresponding class designation is increased
or decreased; and
(d) from the Group II Principal Funds:
(A) to Subaccount AV-1 until the AV-1 Balance is reduced to zero;
(B) to Subaccount 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;
(E) to Subaccount BV-2 until the BV-2 Balance is reduced to zero; and
(F) to Subaccount BV-3 until the BV-3 Balance is reduced to zero;
provided, however, that (a) such Balances shall be reduced and
increased in the same order and manner that the Class of
Certificates having the corresponding class designation is increased
or decreased.
<PAGE>
Section 3.02. Certificate Distributions.
(a) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations have been made until such
amount shall have been fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Current Interest
and any Interest Carry Forward Amount for the Group I Class
A Certificates; provided, however, if such amount is not
sufficient to make a full distribution of the Current
Interest and any Interest Carry Forward Amount with respect to
all the Group I Class A Certificates, such amount will be
distributed pro rata among each Class of the Group I Class A
Certificates based on the ratio of (x) the Current Interest and
Interest Carry Forward Amount for each Class of the Group I
Class A Certificates to (y) the total amount of Current
Interest and any Interest Carry Forward Amount for the Group I
Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current Interest;
(iv) to the Class BF-1 Certificates, the Class BF-1 Current Interest;
(v) to the Class BF-2 Certificates, the Class BF-2 Current Interest;
(vi) to the Class BF-3 Certificates, the Class BF-3 Current Interest; and
(vii) any remainder pursuant to Section 3.02(e) hereof.
(b) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations shall have been made until
such amount shall have been fully allocated for such Distribution Date:
(i) to the Group II Class A Certificates, the Current Interest and
any Interest Carry Forward Amount for the Group II Class A
Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current Interest;
(iv) to the Class BV-1 Certificates, the Class BV-1 Current Interest;
(v) to the Class BV-2 Certificates, the Class BV-2 Current Interest;
(vi) to the Class BV-3 Certificates, the Class BV-3 Current Interest; and
(vii) any remainder pursuant to Section 3.02(f) hereof.
<PAGE>
(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, to the Class
BF-1, Class MF-2, Class MF-1 and Group I Class A Certificates,
in that order, the remainder of the Group I Principal Funds;
provided however, that any such amounts distributable to the
Group I Class A Certificates shall be distributable pro rata;
(vi) to the Class BF-2 Certificates, the Group I Class BF-2
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero (so long as a
Subordinated Group I Trigger Event does not exist on such
Distribution Date);
(vii)to the Class BF-3 Certificates, the Group I Class BF-3
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero (so long as a
Subordinated Group I Trigger Event does not exist on such
Distribution Date); and
(viii)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 Amount shall equal the Group I Principal Distribution Amount, (d)
after the Certificate Principal Balance of the Class BF-1 Certificates has been
reduced to zero, the Class BF-2 Principal Distribution Amount shall equal the
Group I Principal Distribution Amount and (e) after the Certificate Principal
Balance of the Class BF-2 Certificates has been reduced to zero, the Class BF-3
Principal Distribution Amount shall equal the Group I Principal Distribution
Amount;
<PAGE>
(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, to
the Class BV-1, Class MV-2, Class MV-1 and
Group II Class A Certificates, in that order, the
remainder of the Group II Principal Funds;
(vi) to the Class BV-2 Certificates, the Group II
Class BV-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero (so long as a Group II Subordinated
Trigger Event does not exist on such Distribution
Date);
(vii)to the Class BV-3 Certificates, the Group II
Class BV-3 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero (so long as a Group II Subordinated
Trigger Event does not exist on such Distribution
Date); and
(viii)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; (d) after the Certificate Principal Balance of the Class
BV-1 Certificates has been reduced to zero, the Class BV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (e) after the Certificate Principal Balance of the
Class BV-2 Certificates has been reduced to zero, the Class BV-3 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount 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)(vii) hereof and, to the extent required to make the allocations set
forth below in clauses (i) through (vii) of this Section 3.02(e), Section
3.02(f)(vii) hereof in the following order of priority, and each such allocation
shall be made only after all preceding allocations shall have been made until
such remainders shall have been fully allocated:
(i) the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest Carry Forward
Amount;
(iii)to the Class MF-2 Certificates, the Class MF-2 Interest Carry Forward
Amount;
(iv) to the Class BF-1 Certificates, the Class BF-1 Interest Carry Forward
Amount;
(v) to the Class BF-2 Certificates, the Class BF-2 Interest Carry Forward
Amount;
(vi) to the Class BF-3 Certificates, the Class BF-3 Interest Carry Forward
Amount;
(vii)to the extent required to make the allocations set forth in
clauses (i) through (vi) of Section 3.02(f) hereof, pursuant
to Section 3.02(f) hereof; and
(viii) the remainder pursuant to Section 3.02(g) hereof.
<PAGE>
(f) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(b)(vii) hereof and, to the extent required to make the allocations set
forth below in clauses (i) through (vi) of this Section 3.02(f), Section
3.02(e)(viii) hereof in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such remainders have been fully allocated:
(i) the Group II Extra Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Interest Carry Forward
Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2 Interest Carry Forward
Amount;
(iv) to the Class BV-1 Certificates, the Class BV-1 Interest Carry Forward
Amount;
(v) to the Class BV-2 Certificates, the Class BV-2 Interest Carry Forward
Amount;
(vi) to the Class BV-3 Certificates, the Class BV-3 Interest Carry Forward
Amount;
(vii) to the extent required to make the allocations set forth in
clauses (i) through (vi) of Section 3.02(e) hereof;
(viii) on any Distribution Date on or before the last Distribution
Date with respect to the Class AV-1 Certificates, to the Class
AV-1 Certificates, the Class AV-1 Certificates Carryover;
(ix) on any Distribution Date on or before the last Distribution
Date with respect to the Class MV-1 Certificates, to the Class
MV-1 Certificates, the Class MV-1 Certificates Carryover;
(x) on any Distribution Date on or before the last Distribution
Date with respect to the Class MV-2 Certificates, to the Class
MV-2 Certificates, the Class MV-2 Certificates Carryover;
(xi) on any Distribution Date on or before the last Distribution
Date with respect to the Class BV-1 Certificates, to the Class
BV-1 Certificates, the Class BV-1 Certificates Carryover;
(xii) on any Distribution Date on or before the last Distribution
Date with respect to the Class BV-2 Certificates, the Class
BV-2 Certificates Carryover;
(xiii) on any Distribution Date on or before the last Distribution
Date with respect to the Class BV-3 Certificates, the Class
BV-3 Certificates Carryover; and
(xiv) the remainder pursuant to Section 3.02(g) hereof.
(g) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(e)(viii) and (f)(xiv) hereof in the following order of priority, and each
such allocation shall be made only after the preceding allocations shall have
been made until such remainders have been fully allocated:
(i) to the Class C Certificates, the Class C Distribution
Amount; and
(ii) to the Class R Certificates, the remainder.
(h) On each Distribution Date, the Trustee shall allocate any excess of the
Group I Certificate Principal Balance over the 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-3 Certificates until the Class BF-3
Certificate Principal Balance is reduced to zero;
(ii) to the Class BF-2 Certificates until the Class BF-2
Certificate Principal Balance is reduced to zero;
(iii) to the Class BF-1 Certificates until the Class BF-1
Certificate Principal Balance is reduced to zero;
(iv) to the Class MF-2 Certificates until the Class MF-2
Certificate Principal Balance is reduced to zero; and
(v) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate any excess of the
Group II Certificate Principal Balance over the Scheduled Principal Balances of
Group II to reduce the Certificate Principal Balances of the Group II
Subordinated Certificates in the following order of priority:
(i) to the Class BV-3 Certificates until the Class BV-3
Certificate Principal Balance is reduced to zero;
(ii) to the Class BV-2 Certificates until the Class BV-2
Certificate Principal Balance is reduced to zero;
(iii) to the Class BV-1 Certificates until the Class BV-1
Certificate Principal Balance is reduced to zero;
(iv) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero; and
(v) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
(j) On each Distribution Date, the Trustee shall allocate an amount equal to the
Group I Extra Principal Distribution Amount for such Distribution Date as an
increase in the Certificate Principal Balances of the Group I Subordinated
Certificates in the following order of priority:
(i) to the Class MF-1 Certificates in an amount up to the Class
MF-1 Unpaid Realized Loss Amount;
(ii) to the Class MF-2 Certificates in an amount up to the Class
MF-2 Unpaid Realized Loss Amount;
(iii) to the Class BF-2 Certificates in an amount up to the Class
BF-1 Unpaid Realized Loss Amount;
(iv) to the Class BF-2 Certificates in an amount up to the Class
BF-2 Unpaid Realized Loss Amount; and
(v) to the Class BF-3 Certificates in an amount up to the Class
BFl-3 Unpaid Realized Loss Amount.
(k) On each Distribution Date, the Trustee shall allocate an amount equal to the
Group II Extra Principal Distribution Amount for such Distribution Date as an
increase in the Certificate Principal Balances of the Group II Subordinated
Certificates in the following order of priority:
(i) to the Class MV-1 Certificates in an amount up to the Class
MV-1 Unpaid Realized Loss Amount;
(ii) to the Class MV-2 Certificates in an amount up to the Class
MV-2 Unpaid Realized Loss Amount;
(iii) to the Class BV-1 Certificates in an amount up to the Class
BV-1 Unpaid Realized Loss Amount;
(iv) to the Class BV-2 Certificates in an amount up to the Class
BV-2 Unpaid Realized Loss Amount; and
(v) to the Class BV-3 Certificates in an amount up to the Class
BV-3 Unpaid Realized Loss Amount.
<PAGE>
Section 3.03. Reports to the Depositor:
On or before the Business Day preceding each Distribution Date, based on
information provided by the Servicer, the Master Servicer shall notify the
Depositor and the Trustee of the following information with respect to the next
Distribution Date (which notification may be given by facsimile, or by telephone
promptly confirmed in writing):
(a) the aggregate amount then on deposit in the Asset Proceeds
Account and the source thereof (identified as interest, scheduled
principal or unscheduled principal);
(b) the amount of any Realized Losses, Applied Realized Loss
Amounts and Unpaid Realized Loss Amounts;
(c) the application of the amounts described in clauses (a) and (b)
on such Distribution Date in accordance with Section 3.02 hereof; and
(d) whether a Group I or Group II Trigger Event [or a Group I or
Group II Subordinated Trigger Event] has occurred.
Section 3.04. Reports by Master Servicer.
(a) On 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-2, Class BF-3,
Class MV-1, Class MV-2, Class BV-1, Class BV-2 and Class BV-3
Applied Realized Loss Amount with respect to, and any Class MF-1,
Class MF-2, Class BF-1, Class BF-2, Class BF-3, Class MV-1, Class
MV-2, Class BV-1, Class BV-2 and Class BV-3 Unpaid Realized Loss
Amount at, such Distribution Date;
(d) the principal balance after giving effect to any distribution
allocable to principal; and
(e) any Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5,
Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class BF-2 and Class
BF-3 Interest Carry Forward Amount, any Class AV-1, Class MV-1,
Class MV-2, Class BV-1, Class BV-2 and Class BV-3 Interest Carry
Forward Amount or any Class AV-1, Class MV-1, Class MV-2, Class
BV-1, Class BV-2 and Class BV-3 Certificates Carryover ;
(ii) the Group I Net Rate and the Group II Net Rate;
(iii) the 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;
<PAGE>
(ii) the percentage that each of the Scheduled Principal Balances
set forth pursuant to clauses (a), (b) and (c) of paragraph (i) above
represent with respect to all Mortgage Loans in each Group;
(iii) the number and Scheduled Principal Balance of all Mortgage
Loans in each Group in foreclosure proceedings as of the close of business
as of the end of the related Prepayment Period and in the immediately
preceding Prepayment Period;
(iv) the number of Mortgagors and the Scheduled Principal Balances
of Mortgage Loans in each Group involved in bankruptcy proceedings as of
the close of business as of the end of the related Prepayment Period;
(v) the aggregate number and aggregate book value of any REO
Property in each Group as of the close of business as of the end of the
related Prepayment Period; 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 February
1, 1999) pursuant to Section 5.05 of the Standard Terms.
<PAGE>
Article IV
The Certificates
Section 4.01. The Certificates.
The Certificates shall be designated generally as the Mortgage Loan Asset
Backed Certificates, Series 1999-1. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $509,056,000, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates and the initial
Certificate Principal Balance for each such Class:
Initial
Certificate
Class Principal Balance
AF-1 $80,000,000
AF-2 $38,000,000
AF-3 $35,000,000
AF-4 $28,000,000
AF-5 $17,389,000
AF-6 $22,043,000
MF-1 $14,825,000
MF-2 $10,958,000
BF-1 $6,446,000
BF-2 $2,579,000
BF-3 $2,579,000
AV-1 $200,358,000
MV-1 $20,728,000
MV-2 $16,331,000
BV-1 $7,538,000
BV-2 $2,513,000
BV-3 $3,769,000
C (1)
R (2)
- ---------------------
(1) The Class C Certificates have no stated principal balance or Pass-Through
Rate and are entitled to receive the Class C Distribution Amount.
(2) The Class R Certificates have no stated principal balance or Pass-Through
Rate and are not entitled to any scheduled distributions of principal or
interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof in the case of the Public Certificates and in denominations of
$250,000 and integral multiples of $1,000 in excess thereof in the case of the
Private Certificates. So long as the Private Certificates are Book-Entry
Certificates, each Person which becomes a Beneficial Owner of Private
Certificates will be deemed to make the representations and agreements set forth
in the form of Rule 144A Agreement-QIB Certification attached as Exhibit D to
the Standard Terms, and to indemnify the Depositor, the Trustee and the Master
Servicer against any liability that may result if any transfer of a Private
Certificate by such person is not exempt from registration under the Securities
Act and all applicable state securities laws or is not made in accordance with
such federal and state laws. The Class C and Class R Certificates shall be
issued in certificated, fully-registered form in minimum Percentage Interests of
25% and integral multiples of 1% in excess thereof, except that two Class R
Certificates may be issued in different denominations.
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.
<PAGE>
(b) The Trustee hereby requests and authorizes its counsel to issue on
behalf of the Trustee such legal opinions to the Depositor, the Master Servicer,
and each Rating Agency as may be required by any and all documents, certificates
or agreements executed in connection with the establishment of the Trust and the
issuance of the Certificates.
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing
Law.
(a) The Certificates shall be substantially in the respective forms set
forth in the Exhibits hereto. All Certificates shall be dated the date of their
execution.
(b) Each of the Schedules and Exhibits attached hereto or referenced
herein is incorporated herein by reference as contemplated by the Standard
Terms.
(c) In accordance with Section 11.04 of the Standard Terms, this Agreement
shall be construed in accordance with and governed by the laws of the State,
without regard to any conflicts of laws principles thereof.
(d) Notwithstanding Section 5.05(a) of the Standard Terms, the Class BF-2,
Class BF-3, Class BV-2, Class BV-3, Class C and Class R 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:
Type of
Pooling Interest Initial Pass-Through Interest
Designation Subaccount Rate For Purposes
Balance of
REMIC
Provisions
Group I
Subaccount AF-1 $80,000,000 (1) Regular
Subaccount AF-2 $38,000,000 (1) Regular
Subaccount AF-3 $35,000,000 (1) Regular
Subaccount AF-4 $28,000,000 (1) Regular
Subaccount AF-5 $17,389,000 (1) Regular
Subaccount AF-6 $22,043,000 (1) Regular
Subaccount MF-1 $14,825,000 (1) Regular
Subaccount MF-2 $10,958,000 (1) Regular
Subaccount BF-1 $6,446,000 (1) Regular
Subaccount BF-2 $2,579,000 (1) Regular
Subaccount BF-3 $2,579,000 (1) Regular
Group II
Subaccount AV-1 $200,358,000 (2) Regular
Subaccount MV-1 $20,728,000 (2) Regular
Subaccount MV-2 $16,331,000 (2) Regular
Subaccount BV-1 $7,538,000 (2) Regular
Subaccount BV-2 $2,513,000 (2) Regular
Subaccount BV-3 $3,769,000 (2) Regular
Subaccount R (3) (3) Residual
(1) On any Distribution Date, the Group I Net Rate.
(2) On any Distribution Date, the Group II Net Rate.
(3) Subaccount R is not issued with a Balance or a Pass-Through Rate.
(ii) Subaccount R is the residual interest in the Pooling REMIC and
shall be issued in fully registered certificate form as part of the Class
R Certificate. All other Subaccounts shall be deemed issued as
non-certificated interests and shall constitute assets of the Issuing
REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans and the
Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
<PAGE>
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC shall
be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF-1, Class BF-2 and Class BF-3, Class AV-1, Class MV-1, Class MV-2, Class BV-1,
Class BV-2 and Class BV-3 Certificates and each of the separate interest-only
rights making up the Class C Distribution Amount are Regular Interests in the
Issuing REMIC. The Class R Certificates are the residual interest in the Issuing
REMIC.
(ii) The assets of the Issuing REMIC are the Subaccounts in the
Pooling REMIC other than Subaccount R and the Distribution Account.
(iii) On each Distribution Date, amounts in the Distribution Account
will be distributed as provided in Section 3.02 hereof.
(c) General.
(i) The Closing Date is designated as the "start up" day of the
Pooling REMIC and Issuing REMIC.
(ii) The Trustee shall make elections to treat the Pooling REMIC and
the Issuing REMIC as REMICs under the Code.
(d) The "latest possible maturity date" for purposes of the REMIC
regulations and each REMIC established hereby is March 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.
<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 February 1, 1999.
SAXON ASSET SECURITIES COMPANY
By: ____________________________________
Bradley D. Adams, Vice President
SAXON MORTGAGE, INC.
as Master Servicer
By: __________________________________________
Michael L. Sawyer, President
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
as Trustee
By: _________________________________
Lila R. Garlin, Vice President
<PAGE>
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me February __, 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 February __,
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 February __, 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 March 1, 1999
