SAXON SECURITIES ASSET TRUST 1997-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1997-1
TRUST AGREEMENT
dated as of March 1, 1997,
among
SAXON ASSET SECURITIES COMPANY,
as Depositor
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Master Servicer, Custodian, Certificate Registrar and Paying Agent
and
CITIBANK, N.A.
as Trustee
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT..................................................2
ARTICLE I DEFINITIONS.................................................2
Section 1.01. Standard Terms; Section References...................2
Section 1.02. Defined Terms........................................2
ARTICLE II FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS..........15
Section 2.01. Conveyance of Mortgage Loans........................15
ARTICLE III REMITTING TO CERTIFICATEHOLDERS..........................16
Section 3.01. Subaccount Distributions............................15
Section 3.02. Certificate Distributions...........................17
Section 3.03. Reports to the Depositor............................19
Section 3.04. Reports by Master Servicer..........................20
THE CERTIFICATES......................................................21
Section 4.01. The Certificates....................................21
Section 4.02. Denominations.......................................21
Section 4.03. Interest Fund.......................................21
ARTICLE V MISCELLANEOUS PROVISIONS....................................22
Section 5.01. Request for Opinions................................22
Section 5.02. Form of Certificates................................22
Section 5.03. Schedules and Exhibits..............................22
Section 5.04. Governing Law.......................................22
Section 5.05. REMIC Administration................................22
Section 5.06. Master Servicer; Month-End Interest.................23
Section 5.07. Trustee; Advances...................................24
Section 5.08. Auction Call........................................24
Schedule I: The Mortgage Loans: A. Group I Mortgage Loans
B. Group II Mortgage Loans
Schedule II: Sales Agreement and Servicing Agreements
Schedule III: Mortgage Loans for which first payment to the Trust will be after
April 1, 1997
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
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: Form of Class BF 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: Form of Class BV Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of March 1, 1997 (this "Agreement"), among
SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"), TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as Master Servicer, Custodian, Certificate
Registrar and Paying Agent (in such capacities, the "Master Servicer", the
"Custodian", the "Certificate Registrar" and the "Paying Agent"), and CITIBANK,
N.A., a national banking association, as Trustee (in such capacity, the
"Trustee"), under this Agreement and the Standard Terms to Trust Agreement
(January 1997 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
$464,142,000 to be known as the Saxon Securities Asset Trust 1997-1, Mortgage
Loan Asset Backed Certificates, Series 1997-1 (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 MF-1, Class MF-2, Class BF, Class
AV-1, Class MV-1, Class MV-2, Class BV, 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, the Custodian, the Certificate Registrar, the Paying Agent and the
Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms; Section References.
(a) The Depositor, the Master Servicer, the Custodian, the Certificate
Registrar, the Paying Agent and the Trustee acknowledge that the Standard Terms
prescribe their duties, responsibilities and obligations with respect to the
Certificates, 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 1.02 and 5.07 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.
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 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
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 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 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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"Auction Sale Bid Date": The first Master Servicer Remittance Date on
which the sum of the Group I Certificate Principal Balance and the Group II
Certificate Principal Balance has declined to 10% or less of such sum on the
Closing Date.
"Available Funds Cap": As of any Distribution Date, a per annum rate
equal to the quotient of (i) the excess of (A) the total annual scheduled
interest on Group II based on the Mortgage Interest Rates in effect during the
related Due Period over (B) twelve times the total of the Servicing Fees and
Master Servicing Fee for such Due Period for Group II divided by (ii) the Group
II Certificate Principal Balance.
"Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class MF-1, Class MF-2, Class BF, Class AV-1, Class MV-1,
Class MV-2 and Class BV Certificates, except to the extent provided in Section
5.03 of the Standard Terms.
"Certificate": Any of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class MF-1, Class MF-2, Class BF, Class AV-1, Class MV-1,
Class MV-2, Class BV, Class C or Class R Certificates.
"Certificate Registrar": Texas Commerce Bank 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 MF-1, Class MF-2, Class BF, Class AV-1, Class MV-1, Class MV-2,
Class BV, Class C or Class R.
"Certificate Definitions":
"Group I Certificates":
"Class AF-1 Certificate": Any "Class AF-2 Certificate": Any "Class AF-3 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-1 Certificate" on the face AF-2 Certificate" on the face AF-3 Certificate" on the face
thereof, in the form of Exhibit AF-1 thereof, in the form of Exhibit AF-2 thereof, in the form of Exhibit
hereto, representing the right to hereto, representing the right to AF-3 hereto, representing the right
distributions 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 Balance of the Class AF-2 Balance of the Class AF-3
Certificates. Certificates. Certificates.
"Class AF-1 Current Interest": "Class AF-2 Current Interest": "Class AF-3 Current Interest":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
Class AF-1 Certificate Principal Class AF-2 Certificate Principal Class AF-3 Certificate Principal
Balance immediately prior to such Balance immediately prior to such Balance immediately prior to such
Distribution Date during the related Distribution Date during the related Distribution Date during the
Accrual Period at the Class AF-1 Accrual Period at the Class AF-2 related Accrual Period at the Class
Pass-Through Rate plus any amount Pass-Through Rate plus any amount AF-3 Pass-Through Rate plus any
previously distributed with respect previously distributed with respect amount previously distributed with
to interest for Class AF-1 that is to interest for Class AF-2 that is respect to interest for Class AF-3
recovered during the related Accrual recovered during the related Accrual that is recovered during the
Period as a voidable preference by a Period as a voidable preference by a related Accrual Period as a
trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. 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 Distribution Dates over (B) the prior Distribution Dates over (B)
amount actually distributed to Class amount actually distributed to Class the amount actually distributed to
AF-1 with respect to interest on such AF-2 with respect to interest on such Class AF-3 with respect to interest
prior Distribution Dates and (ii) prior Distribution Dates and (ii) on such prior Distribution Dates
interest thereon at the Class AF-1 interest thereon at the Class AF-2 and (ii) interest thereon at the
Pass-Through Rate for the related Pass-Through Rate for the related Class AF-3 Pass-Through Rate for
Accrual Period. Accrual Period. the related Accrual Period.
"Class AF-1 Pass-Through Rate": "Class AF-2 Pass-Through Rate": "Class AF-3 Pass-Through Rate":
With respect to each Distribution With respect to each Distribution With respect to each Distribution
Date, the lesser of (i) 6.830% per Date, the lesser of (i) 7.085% per Date, the lesser of (i) 7.375% and
annum and (ii) the Group I Net Rate annum and (ii) the Group I Net Rate (ii) the Group I Net Rate for such
for such date. for such date. date.
"Class AF-4 Certificate": Any "Class AF-5 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class
AF-4 Certificate" on the face thereof, AF-5 Certificate" on the face thereof,
in the form of Exhibit AF-4 hereto, in the form of Exhibit AF-5 hereto,
representing the right to distributions representing the right to
as set forth herein. distributions as set forth herein.
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"Class AF-4 Certificate Principal "Class AF-5 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-4 Balance of the Class AF-5
Certificates. Certificates.
"Class AF-4 Current Interest": "Class AF-5 Current Interest":
With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the
Class AF-4 Certificate Principal Class AF-5 Certificate Principal
Balance immediately prior to such Balance immediately prior to such
Distribution Date during the related Distribution Date during the related
Accrual Period at the Class AF-4 Accrual Period at the Class AF-5
Pass-Through Rate plus any amount Pass-Through Rate plus any amount
previously distributed with respect previously distributed with respect
to interest for Class AF-4 that is to interest for Class AF-5 that is
recovered during the related Accrual recovered during the related Accrual
Period as a voidable preference by a Period as a voidable preference by a
trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
final non-appealable order. final non-appealable order.
"Class AF-4 Interest Carry Forward "Class AF-5 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 AF-4 Current excess of (A) Class AF-5 Current
Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the Distribution Dates over (B) the
amount actually distributed to Class amount actually distributed to Class
AF-4 with respect to interest on such AF-5 with respect to interest on such
prior Distribution Dates and (ii) prior Distribution Dates and (ii)
interest thereon at the Class AF-4 interest thereon at the Class AF-5
Pass-Through Rate for the related Pass-Through Rate for the related
Accrual Period. Accrual Period.
"Class AF-4 Pass-Through Rate": With "Class AF-5 Pass-Through Rate": With
respect to each Distribution Date, the respect to each Distribution Date, the
lesser of (i) 7.760% plus, after the lesser of (i) 7.325% per annum and
Step Up Date, 0.50% per annum and (ii) (ii) the Group I Net Rate for such
the Group I Net Rate for such date. date.
"Class AF-5 Distribution Amount":
With respect to any Distribution Date,
the product of (i) a fraction the
numerator of which is the Class AF-5
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
----------------- ----------
April 1997 - March 2000 0%
April 2000 - March 2002 45%
April 2002 - March 2003 80%
April 2003 - March 2004 100%
April 2004 and thereafter 300%
"Class MF-1 Applied Realized Loss "Class MF-2 Applied Realized Loss "Class BF Applied Realized Loss
Amount": As to any Distribution Amount": As to any Distribution Amount": As to any Distribution
Date, the sum of the Realized Losses Date, the sum of the Realized Losses Date, the sum of the Realized
with respect to Group I which have with respect to Group I which have Losses with respect to Group I
been applied in reduction of the been applied in reduction of the which have been applied in
Certificate Principal Balance of Certifucate Principal Balance of reduction of the Certificate
Class MF-1 pursuant to Section Class MF-2 pursuant to Section Principal Balance of Class BF
3.02(h) hereof. 3.02(h) hereof. pursuant to Section 3.02(h) hereof.
"Class MF-1 Certificate": Any "Class MF-2 Certificate": Any "Class BF Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
MF-1 Certificate" on the face MF-2 Certificate" on the face BF Certificate" on the face
thereof, in the form of Exhibit MF-1 thereof, in the form of Exhibit MF-2 thereof, in the form of Exhibit BF
hereto, representing the right to hereto, representing the right to hereto, representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
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"Class MF-1 Certificate Principal "Class MF-2 Certificate Principal "Class BF Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-1 Balance of the Class MF-2 Balance of the Class BF
Certificates less any Class MF-1 Certificates less any Class MF-2 Certificates less any Class BF
Applied Realized Loss Amount. Applied Realized Loss Amount. Applied Realized Loss Amount.
"Class MF-1 Current Interest": "Class MF-2 Current Interest": "Class BF Current Interest":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
Class MF-1 Certificate Principal Class MF-2 Certificate Principal Class BF Certificate Principal
Balance immediately prior to such Balance immediately prior to such Balance immediately prior to such
Distribution Date during the related Distribution Date during the related Distribution Date during the
Accrual Period at the Class MF-1 Accrual Period at the Class MF-2 related Accrual Period at the Class
Pass-Through Rate plus any amount Pass-Through Rate plus any amount BF Pass-Through Rate plus any
previously distributed with respect previously distributed with respect amount previously distributed with
to interest for Class MF-1 that is to interest for Class MF-2 that is respect to interest for Class BF
recovered during the related Accrual recovered during the related Accrual that is recovered during the
Period as a voidable preference by a Period as a voidable preference by a related Accrual Period as a
trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. 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 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, is the sum of (i) Distribution Date, is the sum of
excess of (A) Class MF-1 Current the excess of (A) Class MF-2 Current (i) the excess of (A) Class BF
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the Distribution Dates over (B) the prior Distribution Dates over (B)
amount actually distributed to Class amount actually distributed to Class the amount actually distributed to
MF-1 with respect to interest on such MF-2 with respect to interest on such Class BF with respect to interest
prior Distribution Dates and (ii) prior Distribution Dates and (ii) on such prior Distribution Dates
interest thereon at the Class MF-1 interest thereon at the Class MF-2 and (ii) interest thereon at the
Pass-Through Rate for the related Pass-Through Rate for the related Class BF Pass-Through Rate for the
Accrual Period. Accrual Period. related Accrual Period.
"Class MF-1 Pass-Through Rate": "Class MF-2 Pass-Through Rate": "Class BF Pass-Through Rate":
With respect to each Distribution With respect to each Distribution With respect to each Distribution
Date, the lesser of (i) 7.555% per Date, the lesser of (i) 7.750% per Date, the lesser of (i) 8.000% per
annum and (ii) the Group I Net Rate annum and (ii) the Group I Net Rate annum and (ii) the Group I Net Rate
on such date. on such date. on such date.
"Class MF-1 Unpaid Realized Loss "Class MF-2 Unpaid Realized Loss "Class BF Unpaid Realized Loss
Amount": As to any Distribution Amount": As to any Distribution Amount": As to any Distribution
Date, the excess of (i) Class MF-1 Date, the excess of (i) Class MF-2 Date, the excess of (i) Class BF
Applied Realized Loss Amount over Applied Realized Loss Amount over Applied Realized Loss Amount over
(ii) the sum of all distributions in (ii) the sum of all distributions in (ii) the sum of all distributions
reduction of the Class MF-1 Applied reduction of the Class MF-2 Applied in reduction of the Class BF
Realized Loss Amount on all previous Realized Loss Amount on all previous Applied Realized Loss Amount on all
Distribution Dates. Distribution Dates. previous Distribution Dates.
"Group II Certificates":
"Class MV-1 Applied Realized Loss
Amount:: As to any Distribution Date,
the sum of the Realized Losses with
respect to Group I which have been
applied in reduction of the
Certificate Principal Balance of Class
MV-1 pursuant to Section 3.02(i)
hereof.
"Class AV-1 Certificate": Any "Class MV-1 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class
AV-1 Certificate" on the face MV-1 Certificate" on the face thereof,
thereof, in the form of Exhibit AV-1 in the form of Exhibit MV-1 hereto
hereto representing the right to representing the right to
distributions as set forth herein. distributions as set forth herein.
"Class AV-1 Certificate Principal "Class MV-1 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AV-1 Balance of the Class MV-1
Certificates. Certificates less any Class MV-1
Applied Realized Loss Amount.
"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 Available Funds Cap, the excess of (i) the based upon the Available Funds Cap, the excess of (i)
amount of interest the Class AV-1 Certificates would be the amount of interest the Class MV-1 Certificates
entitled to receive on such Distribution Date had the would be entitled to receive on such Distribution Date
Class AV-1 Pass-Through Rate not been calculated based on had the Class MV-1 Pass-Through Rate not been
the Available Funds Cap over (ii) the amount of interest calculated based on the Available Funds Cap over (ii)
such Certificates received on such Distribution Date the amount of interest such Certificates received on
based on the Available Funds Cap, together with the such Distribution Date based on the Available Funds
unpaid portion of any such excess from prior Distribution Cap, together with the unpaid portion of any such
Dates (and interest accrued thereon at the then excess from prior Distribution Dates (and interest
applicable Pass-Through Rate, without giving effect to accrued thereon at the then applicable Pass-Through
the Available Funds Cap). Rate, without giving effect to the Available Funds Cap).
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"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 such Distribution Date during the related Accrual
the Class AV-1 Pass Through Rate plus any amount Period at the Class MV-1 Pass Through Rate plus any
previously distributed with respect to interest for Class amount previously distributed with respect to interest
AV-1 that is recovered during the Accrual Period as a for Class MV-1 that is recovered during the Accrual
voidable preference by a trustee in bankruptcy; pursuant Period as a voidable preference by a trustee in
to 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 "Class MV-1 Interest Carry Forward Amount": With
respect to any Distribution Date, the sum of (i) the respect to any Distribution Date, the sum of (i) the
excess of (A) Class AV-1 Current Interest with respect to excess of (A) Class MV-1 Current Interest with respect
prior Distribution Dates (excluding any Class AV-1 to prior Distribution Dates (excluding any Class MV-1
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class AV-1 with respect to interest on distributed to Class MV-1 with respect to interest on
such prior Distribution Dates and (ii) interest on such such prior Distribution Dates and (ii) interest on such
excess at the Class AV-1 Pass-Through Rate for the excess at the Class MV-1 Pass-Through Rate for the
related Accrual Period. 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 least of (x) One Month LIBOR plus, Distribution Date, the least of (x) One Month LIBOR
in the case of any Distribution Date prior to the Step Up plus, in the case of any Distribution Date prior to the
Date, 0.20% per annum, or in the case of any Distribution Step Up Date, 0.35% per annum, or in the case of any
Date that occurs on or after the Step Up Date, plus 0.40% Distribution Date that occurs on or after the Step Up
per annum, (y) the weighted average of the Maximum Date, plus 0.525% per annum, (y) the weighted average
Lifetime Mortgage Interest Rates on the Mortgage Loans of the Maximum Lifetime Mortgage Interest Rates on the
in Group II less the Group II Servicing Fee Rate Mortgage Loans in Group II less the Group II Servicing
and the Group II Master Servicing Fee Rate and (z) the Fee Rate and the Group II Master Servicing Fee Rate and
Available Funds Cap for such Distribution Date. (z) the Available Funds Cap for such Distribution Date.
"Class MV-1 Unpaid Realized Loss Amount": As to any
Distribution Date, the excess of (i) Class MV-1 Applied
Realized Loss Amount over (ii) the sum of all
distributions in reduction of the Class MV-1 Applied
Realized Loss Amounts on all previous Distribution
Dates.
"Class MV-2 Applied Realized Loss Amount:: As to any "Class BV 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 respect to Group II which have been applied in reduction
reduction of the Certificate Principal Balance of Class of the Certificate Principal Balance of Class BV
MV-2 pursuant to Section 3.02(i) hereof. pursuant to Section 3.02(i) hereof.
"Class MV-2 Certificate": Any Certificate designated "Class BV Certificate": Any Certificate designated as a
as a "Class MV-2 Certificate" on the face thereof, in "Class BV Certificate" on the face thereof, in the form
the form of Exhibit MV-2 hereto representing the right of Exhibit BV hereto representing the right to
to distributions as set forth herein. distributions as set forth herein.
"Class MV-2 Certificate Principal Balance": The "Class BV Certificate Principal Balance": The
Certificate Principal Balance of the Class MV-2 Certificate Principal Balance of the Class BV
Certificates less any Class MV-2 Applied Realized Loss Certificates less any Class BV Applied Realized Loss
Amount. Amount.
"Class MV-2 Certificates Carryover": If on any "Class BV Certificates Carryover": If on any
Distribution Date the Class MV-2 Pass-Through Rate is Distribution Date the Class BV Pass-Through Rate is
based upon the Available Funds Cap, the excess of (i) the based upon the Available Funds Cap, the excess of (i)
amount of interest the Class MV-2 Certificates would be the amount of interest the Class BV Certificates would
entitled to receive on such Distribution Date had the be entitled to receive on such Distribution Date had
Class MV-2 Pass-Through Rate not been calculated based on the Class BV Pass-Through Rate not been calculated
the Available Funds Cap over (ii) the amount of interest based on the Available Funds Cap over (ii) the amount
such Certificates received on such Distribution Date of interest such Certificates received on such
based on the Available Funds Cap, together with the Distribution Date based on the Available Funds Cap,
unpaid portion of any such excess from prior Distribution together with the unpaid portion of any such excess
Dates (and interest accrued thereon at the then from prior Distribution Dates (and interest accrued
applicable Pass-Through Rate, without giving effect to thereon at the then applicable Pass-Through Rate,
the Available Funds Cap). without giving effect to the Available Funds Cap).
"Class MV-2 Current Interest": With respect to any "Class BV Current Interest": With respect to any
Distribution Date, the interest accrued on the Class MV-2 Distribution Date, the interest accrued on the Class BV
Certificate Principal Balance immediately prior to such Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at Distribution Date during the related Accrual Period at
the Class MV-2 Pass Through Rate plus any amount the Class BV Pass Through Rate plus any amount
previously distributed with respect to interest for Class previously distributed with respect to interest for
MV-2 that is recovered during the Accrual Period as a Class BV that is recovered during the Accrual Period as
voidable preference by a trustee in bankruptcy; pursuant a voidable preference by a trustee in bankruptcy;
to a final, nonappealable order; provided, however, Class pursuant to a final, nonappealable order; provided,
MV-2 Current Interest shall not include any Class MV-2 however, Class BV Current Interest shall not include
Certificates Carryover. any Class BV Certificates Carryover.
6
"Class MV-2 Interest Carry Forward Amount": With "Class BV Interest Carry Forward Amount": With
respect to each Distribution Date, the sum of (i) the respect to each Distribution Date, the sum of (i) the
excess of (A) Class MV-2 Current Interest with respect to excess of (A) Class BV Current Interest with respect to
prior Distribution Dates (excluding any Class MV-2 prior Distribution Dates (excluding any Class BV
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class MV-2 with respect to interest on distributed to Class BV with respect to interest on
such prior Distribution Dates and (ii) interest on such such prior Distribution Dates and (ii) interest on such
excess at the Class MV-2 Pass-Through Rate for the excess at the Class BV Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class MV-2 Pass-Through Rate": With respect to any "Class BV Pass-Through Rate": With respect to any
Distribution Date, the least of (x) One Month LIBOR plus, Distribution Date, the least of (x) One Month LIBOR
in the case of any Distribution Date prior to the Step Up plus, in the case of any Distribution Date prior to the
Date, 0.50% per annum, or in the case of any Distribution Step Up Date, 0.90% per annum, or in the case of any
Date that occurs on or after the Step Up Date, plus 0.75% Distribution Date that occurs on or after the Step Up
per annum, (y) the weighted average of the Maximum Date, plus 1.35% per annum, (y) the weighted average of
Lifetime Mortgage Interest Rates on the Mortgage Loans in the Maximum Lifetime Mortgage Interest Rates on the
Group II less the Group II Servicing Fee Rate and the Mortgage Loans in Group II less the Group II Servicing
Group II Master Servicing Fee Rate and (z) the Available Fee Rate and the Group II Master Servicing Fee Rate and
Funds Cap for such Distribution Date. (z) the Available Funds Cap for such Distribution Date.
"Class MV-2 Unpaid Realized Loss Amount": As to any "Class BV Unpaid Realized Loss Amount": As to any
Distribution Date, the excess of (i) Class MV-2 Applied Distribution Date, the excess of (i) Class BV Applied
Realized Loss Amount over (ii) the sum of all Realized Loss Amount over (ii) the sum of all
distributions in reduction of the Class MV-2 Applied distributions in reduction of the Class BV Applied
Realized Loss Amount on all previous Distribution Dates. Realized Loss Amount on all previous Distribution Dates.
"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 MF-1 Balance and the excess of the
Group I Net Rate over the Class MF-1 Pass-Through Rate;
(g) the product of the MF-2 Balance and the excess of the
Group I Net Rate over the Class MF-2 Pass-Through Rate;
(h) the product of the BF Balance and the excess of the Group
I Net Rate over the Class BF Pass-Through Rate; and
(i) any excess of the amount specified pursuant to clauses (a) through
(h) above for prior Distribution Dates over the amount actually distributed
pursuant to such clauses on prior Distribution Dates.
"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": March 27, 1997.
"Custodian": Texas Commerce Bank National Association, a
national banking association, and its successors and assigns in such
capacity.
"Cut-Off Date": As of the close of business on March 1, 1997.
7
"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.
"Distribution Account": The account or accounts created and
maintained for the Trust pursuant to Section 3.01 hereof.
"Distribution Date": The 25th day of each month, or the next Business
Day if such 25th day is not a Business Day, commencing April 25, 1997.
"Final Scheduled Distribution Date": With respect to each Class of
Certificates, the date so designated in the table in Section 4.01 hereof and,
with respect to each Subaccount, the date so designated in Section 5.01 hereof.
"Fitch": Fitch Investors Service, L.P., and its successors (One ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10004).
Group Definitions:
"Group I": The pool of Mortgage Loans identified in "Group II": The pool of Mortgage Loans identified in the
the related Schedules of Mortgage Loans as having been related Schedules of Mortgage Loans as having been assigned
assigned to Group I, including any Group I Qualified to Group II, including any Group II Qualified Substitute
Substitute Mortgage Loans delivered in replacement Mortgage Loans delivered in replacement thereof.
thereof.
"Group I Certificate": Any of the Class AF-1, Class "Group II Certificate": Any of the Class AV-1, Class MV-1,
AF-2, Class AF-3, Class AF-4, Class AF-5, Class MF-1, Class MV-2 and Class BV Certificates.
Class MF-2 and Class BF Certificates.
"Group I Certificate Principal Balance": The sum of "Group II Certificate Principal Balance": The sum of the
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AV-1, Class MV-1, Class MV-2 and Class BV Certificate
Class AF-5, Class MF-1, Class MF-2 and Class BF Principal Balances.
Certificate Principal 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.
and Class AF-5 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 Stepdown Date and as to which a Group II Trigger Event
excess of (A) the Group I Class A Certificate Principal has not occurred, the excess of (A) the Group II Class
Balance immediately prior to such Distribution Date over A Certificate Principal Balance immediately prior to
(B) the lesser of (I) 75.40% of the Schedule Principal such Distribution Date over (B) the lesser of (I)
Balances of Group I on the preceding Due Date and (II) 66.30% of the Schedule Principal Balances of Group II
the Scheduled Principal Balances of Group I on the on the preceding Due Date and (II) the Scheduled
preceding Due Date less $533,228. Principal Balances of Group II on the preceding Due
Date less $1,787,487.
8
"Group I Class B Principal Distribution Amount": With "Group II Class B Principal Distribution Amount":
respect to any Distribution Date on and after the Group I With respect to any Distribution Date on and after the
Stepdown Date and as long as a Group I Trigger Event is Group II Stepdown Date and as long as a Group II
not in effect, the excess of (i) the sum of (A) the Group Trigger Event is not in effect, the excess of (i) the
I Class A Certificate Principal Balance, (B) the Class sum of (A) the Group II Class A Certificate Principal
MF-1 Certificate Principal Balance, (C) the Class MF-2 Balance, (B) the Class MV-1 Certificate Principal
Certificate Principal Balance and (D) the Class BF Balance, (C) the Class MV-2 Certificate Principal
Certificate Principal Balance immediately prior to such Balance and (D) the Class BV Certificate Principal
Distribution Date over (ii) the lesser of (A) 97% of the Balance immediately prior to such Distribution Date
Scheduled Principal Balances of Group I on the preceding over (ii) the lesser of (A) 96.80% of the Scheduled
Due Date and (B) the Scheduled Principal Balances of Principal Balances of the Group II on the preceding Due
Group I on the preceding Due Date less $533,228. Date and (B) the Scheduled Principal Balances of Group
II on the preceding Due Date less $1,787,487.
"Group I Class MF-1 Principal Distribution Amount": "Group II Class MV-1 Principal Distribution Amount":
With respect to any Distribution Date on and after the With respect to any Distribution Date on and after the Group
Group I Stepdown Date and as long as a Group I Trigger II Stepdown Date and as long as a Group II Trigger Event is
Event is not in effect, the excess of (i) the sum of (A) not in effect, the excess of (i) the sum of (A) the Group II
the Group I Class A Certificate Principal Balance and (B) Class A Certificate Principal Balance and (B) the Class MV-1
the Class MF-1 Certificate Principal Balance immediately Certificate Principal Balance immediately prior to such
prior to such Distribution Date over (ii) the lesser of Distribution Date over (ii) the lesser of (A) 74.30% of the
(A) 78.90% of the aggregate Scheduled Principal Balances Scheduled Principal Balances of Group II on the preceding Due
of Group I on the preceding Due Date and (B) the Scheduled Date and (B) the Scheduled Principal Balances of Group II on
Principal Balances of Group I on the preceding Due Date the preceding Due Date less $1,787,487.
less $533,228.
"Group I Class MF-2 Principal Distribution Amount": "Group II Class MV-2 Principal Distribution Amount":
With respect to any Distribution Date on and after the With respect to any Distribution Date on and after the Group
Group I Stepdown Date and as long as a Group I Trigger II Stepdown Date and as long as a Group II Trigger Event is
Event is not in effect, the excess of (i) the sum of not in effect, the excess of (i) the sum of (A) the Group II
(A) the Group I Class A Certificate Principal Balance, Class A Certificate Principal Balance, (B) the Class MV-1
(B) the Class MF-1 Certificate Principal Balance and Certificate Principal Balance and (C) the Class MV-2
(C) the Class MF-2 Certificate Principal Amount Certificate Principal Amount immediately prior to such
immediately prior to such Distribution Date over (ii) Distribution Date over (ii) the lesser of (A) 88.30% of the
the lesser of (A) 90.90% of the Scheduled Principal Scheduled Principal Balances of Group II on the preceding
Balances of Group I on the preceding Due Date and (B) Due Date and (B) the Scheduled Principal Balances of Group II
the Scheduled Principal Balances of Group I on the on the preceding Due Date less $1,787,487.
preceding Due Date less $533,228.
"Group I Extra Principal Distribution": With respect "Group II Extra Principal Distribution": With
to any Distribution Date, to the extent of Group I respect to any Distribution Date, to the extent of
Interest Funds and Group II Interest Funds available for Group II Interest Funds and Group I Interest Funds
the purpose pursuant to Section 3.02(a) and (b) hereof, available for the purpose pursuant to Section 3.02(a)
(i) prior to the Group I Stepdown Date, the excess of (A) and (b) hereof, (i) prior to the Group II Stepdown
the sum of (I) the Group I Certificate Principal Balance Date, the excess of (A) the sum of (I) the Group II
and (II) $1,599,683 over (B) the Scheduled Principal Certificate Principal Balance and (II) $5,719,958 over
Balances of Group I and (ii) on and after the Group I (B) the Scheduled Principal Balances of Group II and
Stepdown Date, the excess of (A) the sum of (I) the Group (ii) on and after the Group II Stepdown Date, the
I Certificate Principal Balance and (II) the greater of excess of (A) the sum of (I) the Group II Certificate
(x) 3% of the Scheduled Principal Balances of Group I and Principal Balance and (II) the greater of (x) 3.2% of
(y) $533,228 over (B) the Scheduled Principal Balances of the Scheduled Principal Balances of Group II and (y)
Group I. $1,787,487 over (B) the Scheduled Principal Balances of
Group II.
"Group I Interest Funds": With respect to Group I "Group II Interest 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 interest collected during the related Due all scheduled interest collected during the related Due
Period with respect to Group I less the Group I Servicing Period with respect to Group II less the Group II
Fee and the Group I Master Servicing Fee, (ii) all Servicing Fee and the Group II Master Servicing Fee,
Advances relating to interest with respect to Group I, (ii) all Advances relating to interest with respect to
(iii) all Month End Interest with respect to Group I and Group II, (iii) all Month End Interest with respect to
(iv) 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.
9
"Group I Master Servicing Fee": With respect to each "Group II Master Servicing Fee": With respect to each
Master Servicer Remittance Date, an amount payable (or Master Servicer Remittance Date, an amount payable (or
allocable) to the Master Servicer equal to the product allocable) to the Master Servicer equal to the product of
of one-twelfth of the Master Servicing Fee Rate and the one-twelfth of the Master Servicing Fee Rate and the
aggregate Scheduled Principal Balance of Group I on the aggregate Scheduled Principal Balance of Group II on the
first day of the Due Period preceding such Master first day of the Due Period preceding such Master Servicer
Servicer Remittance Date. Remittance Date.
"Group I Master Servicing Fee Rate": 0.031% per "Group II Master Servicing Fee Rate": 0.031% per
annum. annum.
"Group I Net Rate": The weighted average Net Rate "Group II Net Rate": The weighted average Net Rate
for Group I. for Group II.
"Group I Principal Distribution Amount": With respect "Group II Principal Distribution Amount": With respect
to any Distribution Date, the sum of (i) the Group I to any Distribution Date, the sum of (i) the Group II
Principal Funds and (ii) the Group I Extra Principal Principal Funds and (ii) the Group II Extra Principal
Distribution Amount. Distribution Amount.
"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 collected by the Servicers during the related Due
on 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 period, (iii) the Scheduled Principal Balance of each
Group I repurchased by the Depositor, (iv) any Mortgage Loan in Group II repurchased by the Depositor,
Substitution Shortfall with respect to Group I and (v) (iv) any Substitution Shortfall with respect to Group
all Liquidation Proceeds with respect to Group I II and (v) all Liquidation Proceeds with respect to
collected by the Servicer during the related Due Period Group II collected by the Servicer during the related
(to the extent such Liquidation Proceeds related to Due Period (to the extent such Liquidation Proceeds
principal) less all non-recoverable Advances relating to related to principal) less all non-recoverable Advances
principal with respect to Group I reimbursed during the relating to principal with respect to Group II
related Due Period. reimbursed during the related Due Period.
"Group I Servicing Fee": With respect to each "Group II Servicing Fee": With respect to each Mortgage
Mortgage Loan in Group I and each Remittance Date, the Loan in Group II and each Remittance Date, the product of
product of (x) one-twelfth of the Servicing Fee Rate (x) one-twelfth of the Servicing Fee Rate and (y) aggregate
and (y) aggregate Scheduled Principal Balance of such Scheduled Principal Balance of such Mortgage Loan as of the
Mortgage Loan as of the opening of business on the opening of business on the first day of the Due Period
first day of the Due Period preceding such Remittance preceding such Remittance Date.
Date.
10
"Group I Servicing Fee Rate": With respect to each "Group II Servicing Fee Rate": With respect to each Mortgage
Mortgage Loan in Group I, the fixed per annum rate Loan in Group II, the fixed per annum rate payable to the
payable to the applicable Servicer of that Mortgage applicable Servicer of that Mortgage Loan as set out on Schedule
Loan as set out on Schedule IA to this Agreement. IB to this Agreement.
"Group I Stepdown Date": With respect to Group I, "Group II Stepdown Date": With respect to Group II, the
the later to occur of (i) the Distribution Date in later to occur of (i) the Distribution Date in April 2000
April 2000 or (ii) the first Distribution Date on which or (ii) the first Distribution Date on which the Group II
the Group I Class A Certificate Principal Balance equals Class A Certificate Principal Balance equals or exceeds
or exceeds 75.40% of the Scheduled Principal Balances of 66.30% of the Scheduled Principal Balances of Group II.
Group I.
"Group I Subordinated Certificates": The Class MF-1, "Group II Subordinated Certificates": The Class
MF-2 and Class BF Certificates. MV-1, MV-2 and Class BV Certificates.
"Group I Trigger Event": With respect to Group I and "Group II Trigger Event": With respect to Group II
any Distribution Date after the Stepdown Date, a Group I and any Distribution Date after the Stepdown Date, a
Trigger Event exists if two times the quotient of (i) the Group II Trigger Event exists if 2.5 times the quotient
Scheduled Principal Balances of all 60+ Day Delinquent of (i) the Scheduled Principal Balances of all 60+ Day
Mortgage Loans in Group I and (ii) the Scheduled Delinquent Mortgage Loans in Group II and (ii) the
Principal Balances of Group I as of the the preceding Scheduled Principal Balances of Group II as of the the
Remittance Date equals or exceeds the quotient of the (x) preceding Remittance Date equals or exceeds the
excess of (A) the Scheduled Principal Balances of Group I quotient of the (x) excess of (A) the Scheduled
over (B) the Group I Class A Certificate Principal Principal Balances of Group II over (B) the Group II
Balance as of the preceding Remittance Date and (y) the Class A Certificate Principal Balance as of the
Group I Class A Certificate Principal Balance. preceding Remittance Date and (y) the Group II Class A
Certificate Principal Balance.
"Mortgage Loans": The mortgage loans listed on Schedule I to this
Agreement.
"Interest Determination Date": With respect to the first Accrual Period
for the Group II Certificates, March 26, 1997, and with respect to any
subsequent Accrual Period for the Group II Certificates, the second London
Business Day preceding such Accrual Period.
"Interest Fund": The Fund created and maintained with the Paying
Agent by the Trust 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": Texas Commerce Bank National Association, a national
banking association, and its successors, in its capacity as administrative agent
of the Trust.
"Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.
"Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.
"Master Servicing Fee": As applicable, the Group I Master
Servicing Fee or the Group II Master Servicing Fee.
"Meritech": Meritech Mortgage Services, Inc., a Texas corporation.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., and its successors (99
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇).
"Mortgage Loan Group": Either Group I or Group II.
11
"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.
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii) If to the Master Servicer:
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
(iii) If to the Trustee:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
"One Month LIBOR": As of any Interest Determination Date, the rate for
deposits in United States dollars for one-month U.S. dollar deposits which
appears in the Telerate Page 3750, as of 11:00 a.m., (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for that day will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period equal to the relevant Accrual Period (commencing
on the first day of such Accrual Period). The Paying Agent 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 Paying Agent, 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 Paying
Agent 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. The Trustee shall be entitled for a
determination of One Month LIBOR to rely on the Paying Agent.
"Paying Agent": Texas Commerce Bank National Association, a national
banking association, and its successors and assigns in such capacity.
"Private Certificate": Any of the Class C Certificates and the Class R
Certificates.
"Private Subordinated Certificate": Any of the Class C Certificates
and the Class R Certificates.
"Public Subordinated Certificate": Any of the Group I
Subordinated Certificates or the Group II Subordinated Certificates.
"Rating Agency": Each of ▇▇▇▇▇'▇ 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 and the
Master Servicer).
"Reference Banks" Leading banks selected by the Paying Agent and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
"Regular Certificates": Any of the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5, Class MF-1, Class MF-2, Class BF, Class AV-1, Class
MV-1, Class MV-2, Class BV 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.
12
"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 March 24, 1997, by and
between the Depositor and SMI regarding the sale of the Mortgage Loans.
"Servicing Agreement": The Servicing Agreements listed on Schedule II
hereto each of 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 Exhibit I.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Meritech or Long Beach Mortgage Company and their
permitted successors and assigns.
"State": New York.
"Step Up Date": If the auction provided for in Section 5.08 hereof has
not occurred, the first Distribution Date that is 90 days after the Auction Sale
Bid Date.
"Subaccount Definitions":
"Balance": With respect to each Subaccount, on any
Distribution date, the balance, if any, of such Subaccount immediately
prior to such Distribution Date (or, in the case of the first
Distribution Date, an amount equal to the initial balance of such
Subaccount as of the Closing Date) less the amounts to be applied on
such Distribution Date to reduce the balance of such Subaccount.
"Subaccounts": Any one of the Subaccounts created pursuant to
Section 5.05(a)(i) hereof.
Group I:
"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": "AF-2 Monthly Interest Amount": "AF-3 Monthly Interest Amount":
With respect to any Distribution With respect to any Distribution With respect to any Distribution
Date, the interest accrued on the Date, the interest accrued on the Date, the interest accrued on the
AF-1 Balance during the Accrual AF-2 Balance during the Accrual AF-3 Balance during the Accrual
Period for the Class AF-1 Period for the Class AF-2 Period for the Class AF-3
Certificates for that Distribution Certificates for that Distribution Certificates for that Distribution
Date at the Group I Net Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-1": The Subaccount "Subaccount AF-2": The Subaccount "Subaccount AF-3": The Subaccount
by that name created pursuant to by that name created pursuant to by that name created pursuant to
Section 5.05 hereof. Section 5.05 hereof. Section 5.05 hereof.
"AF-4 Balance" : The Balance of the "AF-5 Balance" : The Balance of
Subaccount AF-4. Subaccount AF-5.
"AF-4 Monthly Interest Amount": With "AF-5 Monthly Interest Amount": With
respect to any Distribution Date, the respect to any Distribution Date, the
interest accrued on the AF-4 Balance interest accrued on the AF-5 Balance
during the Accrual Period for the during the Accrual Period for the Class
Class AF-4 Certificates for that AF-5 Certificates for that Distribution
Distribution Date at the Group I Net Date at the Group I Net Rate.
Rate.
"Subaccount AF-4": The Subaccount "Subaccount AF-5": The Subaccount
by that name created pursuant to by that name created pursuant to
Section 5.05 hereof. Section 5.05 hereof.
"MF-1 Balance" : The Balance of "MF-2 Balance" : The Balance of "BF Balance" : The Balance of
Subaccount MF-1. Subaccount MF-2. Subaccount BF.
13
"MF-1 Monthly Interest Amount": "MF-2 Monthly Interest Amount": "BF Monthly Interest Amount": With
With respect to any Distribution With respect to any Distribution respect to any Distribution Date,
Date, the interest accrued on the Date, the interest accrued on the the interest accrued on the BF
MF-1 Balance during the Accrual MF-2 Balance during the Accrual Balance during the Accrual Period
Period for the Class MF-1 Period for the Class MF-2 for the Class BF Certificates for
Certificates for that Distribution Certificates for that Distribution that Distribution Date at the Group
Date at the Group I Net Rate. Date at the Group I Net Rate. I Net Rate.
"Subaccount MF-1": The Subaccount "Subaccount MF-2": The Subaccount "Subaccount BF": The Subaccount by
by that name created pursuant to by that name created pursuant to that name created pursuant to
Section 5.05 hereof. Section 5.05 hereof. Section 5.05 hereof.
Group II:
"AV-1 Balance": The Balance of the Subaccount AV-1. "MV-1 Balance": The Balance of Subaccount MV-2.
"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 5.05 hereof. created pursuant to Section 5.05 hereof.
"MV-2 Balance" : The Balance of Subaccount MV-2. "BV Balance": The Balance of Subaccount BV.
"MV-2 Monthly Interest Amounts": With respect to any "BV Monthly Interest Amounts": With respect to any
Distribution Date, the interest accrued on the MV-2 Distribution Date, the interest accrued on the BV
Balance during the Accrual Period for the Class MV-2 Balance during the Accrual Period for the Class BV
Certificates for that Distribution Date at the Group Certificates for that Distribution Date at the Group
II Net Rate. II Net Rate.
"Subaccount MV-2": The Subaccount by that "Subaccount BV": The Subaccount by that
name created pursuant to Section 5.05 hereof. name created pursuant to Section 5.05 hereof.
"Tax Matters Person": Texas Commerce Bank 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 ▇▇▇▇▇ 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.
"Trustee": Citibank, N.A., a national banking association, its
successor in interest or any successor trustee appointed in accordance with the
Trust Agreement.
"Trustee Fee": The fee payable monthly to the Trustee by the Master
Servicer.
"Underwriters": Prudential Securities Incorporated, ▇▇▇▇▇▇
Brothers Incorporated., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
PaineWebber Incorporated.
"Underwriting Agreement": The Underwriting Agreement dated March 24,
1997, among the Underwriters, the Depositor, SMI and Dominion Mortgage
Services, Inc.
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 all the
Depositor's right, title and interest in and to any and all benefits accruing to
14
the Depositor from: (i) the Mortgage Loans, which the Depositor is causing to be
delivered to the Trustee (or the Custodian) herewith (and all Qualified
Substitute Mortgage Loans substituted therefor as provided by Section 2.03 of
the Standard Terms and pursuant to the terms of the Sales Agreement), together
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) each 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 Depositor hereby assigns to the Master Servicer all right, title
and interest of the Depositor in and to (i) the Interest Fund and all amounts as
are deposited and maintained therein from time to time pursuant to the Trust
Agreement and (ii) all proceeds of the foregoing of every kind and nature
whatsoever, including, but not limited to, proceeds of proceeds and the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquidated property. The Master Servicer hereby pledges to the Trust and grants
to the Trustee, on behalf of the Certificateholders, a first priority security
interest in and to (i) the Interest Fund and all amounts as are deposited and
maintained therein from time to time pursuant to the Trust Agreement, excluding,
however, any earnings thereon, which are payable to Meritech, and (ii) all
proceeds of the foregoing of every kind and nature whatsoever, including, but
not limited to, proceeds of proceeds and the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquidated property in
trust, subject to the limitation set forth above with respect to earnings, to
have and to hold in trust to secure the Certificates. The Trustee acknowledges
this grant and agrees to hold the pledged property in accordance with the terms
hereof.
The Trustee acknowledges the sales, assignments and pledges created by
the foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
and the Certificate Insurer may be adequately and effectively protected in
accordance with the terms and conditions of this Agreement.
By its execution of this Agreement, the Trustee acknowledges and
declares that it holds and will hold or has agreed to hold all documents
delivered to it from time to time with respect to the Mortgage Loans and all
assets included in the Trust Estate in trust for the exclusive use and benefit
of all present and future Certificateholders.
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. Subaccount Distributions. On each Distribution Date, the
Trustee (or the Paying Agent on behalf of 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, MF-1, MF-2 and BF, pro rata, the AF-1, AF-2,
AF-3, AF-4, AF-5, MF-1, MF-2 and BF Monthly Interest Amounts;
(b) from the Group II Interest Funds to Subaccounts ▇▇-▇, ▇▇-▇,
▇▇-▇ and BV, pro rata, the ▇▇-▇, ▇▇-▇, ▇▇-▇ and BV 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;
15
(E) to Subaccount AF-5 until the AF-5 Balance
is reduced to zero;
(F) to Subaccount MF-1 until the MF-1 Balance
is reduced to zero;
(G) to Subaccount MF-2 until the MF-2 Balance
is reduced to zero; and
(H) to Subaccount BF until the BF Balance is
reduced to zero;
provided, however, that (a) the Group I Principal Funds shall
be applied to reduce Balances in the same order and manner
that the Group I Principal Distribution Amount (excluding the
Group I Extra Principal Distribution Amount) is applied to
reduce Group I Certificate Principal Balances and Realized
Losses with respect to Group I shall be applied to reduce
Balances first as provided with respect to Class MF-1, Class
MF-2 and Class BF Applied Realized Loss Amounts and second to
Subaccounts AF-5, AF-4, AF-3, AF-2 and AF-1 in that order.
(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 until the BV Balance is
reduced to zero;
provided, however, that (a) the Group II Principal Funds shall
be applied to reduce Balances in the same order and manner
that the Group II Principal Distribution Amount (excluding the
Group II Extra Principal Distribution Amount) is applied to
reduce Group II Certificate Principal Balances and Realized
Losses with respect to Group II shall be applied to reduce
Balances first as provided with respect to Class MV-1, Class
MV-2 and Class BV Applied Realized Loss Amounts and second to
Subaccount AV-1.
Section 3.02. Certificate Distributions (a) On each
Distribution Date, the Trustee (or the Paying Agent on behalf of 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 Certificates, the Class BF Current
Interest; and
(v) any remainder pursuant to Section 3.02(e) hereof.
(b) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of 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:
(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;
16
(iii) to the Class MV-2 Certificates, the Class MV-2
Current Interest;
(iv) to the Class BV Certificates, the Class BV Current
Interest; and
(v) any remainder pursuant to Section 3.02(f) hereof.
(c) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of 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-5
Distribution Amount to the Class AF-5 Certificates;
and (y) the balance of the Class A Principal
Distribution Amount sequentially to the Class AF-1,
Class AF-2, Class AF-3, Class AF-4 and Class AF-5
Certificates so that no such distribution pursuant
to this clause (y) will made to any such Class until
the Certificate Principal Balances of all Group I
Class A Certificates with a lower denomination
shall have been reduced to zero; provided,
however, that, on any Distribution Date on which
the Group I Class A 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;
(ii) to the Class MF-1 Certificates, the Class MF-1
Principal Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2
Principal Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount; and
(v) any remainder pursuant to Section 3.02(e) hereof.
(d) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of 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 Class A
Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1
Principal Distribution Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2
Principal Distribution Amount;
(iv) to the Class BV Certificates, the Class BV Principal
Distribution Amount; and
(v) any remainder pursuant to Section 3.02(f) hereof.
(e) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of Trustee) shall make the following allocations from the Distribution
Account of the remainders pursuant to Section 3.02(a)(v) and (c)(v) 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)(xii) 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-1 Certificates, the Class MF-1 Unpaid
Realized Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 the
Interest Carry Forward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid
Realized Loss Amount;
(vi) to the Class BF Certificates, the Class BF Interest
Carry Forward Amount;
(vii) to the Class BF Certificates, the Class BF Unpaid
Realized Loss Amount;
17
(viii) to the extent required to make the allocations set
forth in clauses (i) through (vii) of Section 3.02(f)
hereof, pursuant to Section 3.02(f) hereof; and
(ix) the remainder pursuant to Section 3.02(g) hereof.
(f) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of Trustee) shall make the following allocations from the Distribution
Account of the remainders pursuant to Section 3.02(b)(v) and (d)(v) hereof and,
to the extent required to make the allocations set forth below in clauses (i)
through (vii) 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-1 Certificates, the Class MV-1
Unpaid Realized Loss Amount;
(iv) to the Class MV-2 Certificates, the Class MV-2 the
Interest Carry Forward Amount;
(v) to the Class MV-2 Certificates, the Class MV-2
Unpaid Realized Loss Amount;
(vi) to the Class BV Certificates, the Class BV Interest
Carry Forward Amount;
(vii) to the Class BV Certificates, the Class BV Unpaid
Realized Loss Amount;
(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
Certificates, to the Class BV Certificates, the
Class BV Certificates Carryover;
(xii) to the extent required to make the allocations set
forth in clauses (i) through (vii) of Section
3.02(e) hereof, pursuant to Section 3.02(e) hereof;
and
(xiii) the remainder pursuant to Section 3.02(g) hereof.
(g) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of the Trustee) shall make the following allocations from the
Distribution Account of the remainders pursuant to Section 3.02(e)(ix) and
(f)(xiii) 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 (or the Paying Agent on
behalf of the Trustee) shall allocate any excess of the Group I Certificate
Principal Balance over the Schedule 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 Certificates until the Class BF
Certificate Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class
MF-2 Certificate Principal Balance is reduced to
zero; and
to the Class MF-1 Certificates until the Class MF-1 Certificate Principal
Balance is reduced to zero.
18
(i) On each Distribution Date the Trustee (or the Paying Agent on
behalf of 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 Certificates until the Class BV
Certificate Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero;
and
(iii) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
Section 3.03. Reports to the Depositor. On or before the Business Day preceding
each Distribution Date, based on information provided by the Servicers, the
Master Servicer shall notify the Depositor 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 Trigger Event has occurred.
Section 3.04. Reports by Master Servicer.
(a) On each Distribution Date, based on information provided by the
Servicers, 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 and any Extra Principal
Distribution Amount and any Applied
Realized Loss Amount with respect to, and
any Unpaid Realized Loss at, such
Distribution Date;
(e) the principal balance after giving effect
to any distribution allocable to principal;
and
(f) any Interest Carry Forward Amount;
(ii) the Group I Net Rate and the Group II Net Rate;
(iii) the largest Mortgage Loan balance outstanding in
each Group;
(iv) the Servicing Fees and Master Servicing Fees
allocable to each Group;
(v) One-Month LIBOR on the most recent Interest
Determination Date; and
(vi) the Pass-Through Rates for the Group II Certificates
for the current Accrual Period.
19
(b) On each Distribution Date, based on information provided by the
Servicers, the Master Servicer will distribute to the Depositor, each Holder,
the Underwriters and the Rating Agencies and the Trustee, together with the
information described in subsection (a) preceding, the following information
with respect to each Mortgage Loan Group in hard copy:
(i) the number and aggregate principal balances of Mortgage
Loans in each Group (a) 30-59 days Delinquent, (b) 60-89 days
Delinquent and (c) 90 or more days Delinquent, as of the close of
business as of the end of the related Prepayment Period.
(ii) the percentage that each of the Scheduled Principal
Balances set forth pursuant to clauses (a), (b) and (c) of paragraph
(i) above represent with respect to all Mortgage Loans in each Group;
(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;
(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.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
The Certificates shall be designated generally as the Mortgage Loan
Asset Backed Certificates, Series 1997-1. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $464,142,000, 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, the initial Certificate
Principal Balance and the Final Scheduled Distribution Date for each such Class:
Initial Certificate Final Scheduled
Class Principal Balance Distribution Date
----- ------------------- -----------------
AF-1 $36,500,000 January 25, 2012
AF-2 $26,997,000 July 25, 2020
AF-3 $10,000,000 November 25, 2023
AF-4 $12,118,000 February 25, 2027
AF-5 $9,512,000 January 25, 2012
MF-1 $1,866,000 February 25, 2027
MF-2 $6,399,000 February 25, 2027
BF $3,253,000 February 25, 2027
AV-1 $302,979,000 April 25, 2027
MV-1 $14,299,000 April 25, 2027
MV-2 $25,025,000 April 25, 2027
BV $15,194,000 April 25, 2027
C $0 May 25, 2027
R $0 May 25, 2027
The Class C Certificates have no stated principal balance or
Pass-Through Rate and are entitled to receive the Class C Distribution Amount.
20
The Class R Certificates have no stated principal balance or
Pass-Through Rate and are not entitled to any scheduled distributions of
principal or interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The Class 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.
Section 4.03. Interest Fund.
An Interest Fund shall be established by the Trustee (or the Paying
Agent on behalf of the Trustee). The Interest Fund shall initially consist of
cash in the amount of $34,952.11 (of which $19,694.39 is allocated to Group I
and $15,257.72 is allocated to Group II). The Interest Fund shall be an Eligible
Account and, as soon as practicable after the Closing Date, the Trustee (or the
Paying Agent on behalf of the Trustee) shall invest any moneys on deposit in the
Interest Fund in Permitted Investments at the direction of the Master Servicer.
On the Business Day preceding the April 25, 1997, Distribution Date, the Trustee
(or the Paying Agent on behalf of the Trustee) shall withdraw the entire amount
from the Interest Fund (excluding any earnings thereon) and deposit such amount
into the Asset Proceeds Account. Such entire amount shall be used to make
distributions of interest on such Distribution Date and to cover applicable
administrative costs (which do not include the Servicing Fees) relating to the
Mortgage Loans listed on Schedule III. The Interest Fund shall not be an asset
of either of the REMICs. Any earnings on the Interest Fund shall be payable on
such date to Meritech.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Request for Opinions.
(a) The Depositor hereby requests and authorizes ▇▇▇▇▇ & ▇▇▇▇▇▇, as its
counsel in this transaction, to issue on behalf of the Depositor such legal
opinions to the Trustee, the Master Servicer, and each Rating Agency as may be
(i) required by any and all documents, certificates or agreements executed in
connection with the Trust or (ii) requested by the Trustee, the Master Servicer,
any Rating Agency or their respective counsels.
(b) The Trustee and the Master Servicer hereby request and authorize
their respective counsel to issue on behalf of the Trustee and the Master
Servicer such legal opinions to the Depositor, the Master Servicer, the Trustee,
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.
The Certificates shall be substantially in the respective forms set
forth in Exhibit A hereto. All Certificates shall be dated the date of their
execution.
Section 5.03. Schedules and Exhibits.
Each of the Schedules and Exhibits attached hereto or referenced herein
is incorporated herein by reference as contemplated by the Standard Terms.
Section 5.04. Governing Law.
In accordance with Section 11.04 of the Standard Terms, this Agreement
shall be construed in accordance with and governed by the laws of the State,
without regard to any conflicts of laws principles thereof.
Section 5.05. REMIC Administration.
(a) Pooling REMIC. (i) The beneficial ownership of the Pooling
REMIC shall be evidenced by interests having the following terms:
21
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of Final Scheduled
Designation Balance Rate REMIC Provisions Payment Dates
Group I
Subaccount AF-1 $36,500,000 (1) Regular January 25, 2012
Subaccount AF-2 $26,997,000 (1) Regular July 25, 2020
Subaccount AF-3 $10,000,000 (1) Regular November 25, 2023
Subaccount AF-4 $12,118,000 (1) Regular February 25, 2027
Subaccount AF-5 $9,512,000 (1) Regular January 25, 2012
Subaccount MF-1 $1,866,000 (1) Regular February 25, 2027
Subaccount MF-2 $6,399,000 (1) Regular February 25, 2027
Subaccount BF $3,253,000 (1) Regular February 25, 2027
Group II
Subaccount AV-1 302,979,000 (2) Regular April 25, 2027
Subaccount MV-1 14,299,000 (2) Regular April 25, 2027
Subaccount MV-2 25,025,000 (2) Regular April 25, 2027
Subaccount BV 15,194,000 (2) Regular April 25, 2027
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 shall be issued in fully registered
certificate form as part of the Class R Certificate. All other
Subaccounts shall be deemed issued as non-certificated interests and
shall constitute assets of the Issuing REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans
and the Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC
shall be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class MF-1, Class MF-2, Class BF,
Class AV-1, Class MV-1, Class MV-2 and Class BV Certificates and each of the
separate interest-only rights making up the Class C Distribution Amount are
Regular Interests in the Issuing REMIC. Class R is 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 (or cause the Paying Agent to
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 February 25, 2029.
Section 5.06. Master Servicer; Month-End Interest. Texas Commerce Bank
National Association is hereby appointed (a) as administrative agent of the
Trust to perform the duties and responsibilities of the Master Servicer
hereunder, (b) Custodian, (c) Certificate Registrar and (d) Paying Agent.
Notwithstanding anything in the Trust Agreement to the contrary, neither the
Trustee nor the Master Servicer shall be obligated to pay Month End Interest
under any circumstance, including without limitation, the failure of a Servicer
to do so.
Section 5.07. Trustee; Advances. Sections 3.04(c) and (d) of the
Standard Terms (relating to the Trustee's obligation to make Advances) are
deleted in their entirety and references to "or the Trustee" in Section 3.04(e)
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of the Standard Terms and to "and Trustee" in the heading of Section 3.04 of the
Standard Terms are deleted. The Trustee shall not be obligated to make Advances.
Notwithstanding anything in the Trust Agreement to the contrary, the Trustee
shall not be obligated to pay Month-End Interest under any circumstance,
including without limitation, the failure of a Servicer to do so.
Section 5.08. Auction Call. Within 90 days of the Auction Sale Bid
Date, the Master Servicer will notify the investment banking or whole-loan
trading firm selected by the Depositor (such investment bank or trading firm,
the "Advisor") who will solicit and will have sole responsibility for soliciting
on behalf of the Trust competitive bids for the purchase of the Mortgage Loans
then remaining in the Trust for fair market value (such bidders may include the
Depositor or any of its affiliates). If satisfactory bids are received as
described below, the proceeds of the sale of such assets shall be deposited into
the Asset Proceeds Account. The Advisor will solicit, on behalf of the Trust,
good-faith bids from no fewer than two prospective purchasers that are
considered at the time to be competitive participants in the home loan mortgage
market. The Advisor will consult with any securities brokerage houses identified
by the Depositor as then making a market in the Certificates to obtain a
determination as to whether the fair market value of such assets has been
offered.
If the highest good-faith bid received by the Advisor from a qualified
bidder is, in the judgment of the Advisor, not less than the fair market value
of such Mortgage Loans and if such bid is sufficient to reduce the Certificate
Principal Balances of the Group I Certificates and Group II Certificates to zero
and to pay the Current Interest Amount and the Interest Carry-Forward Amount to
the Group I Class A Certificates and the Group II Class A Certificates and the
Current Interest Amount to the Group I Subordinated Certificates and Group II
Subordinated Certificates, the Master Servicer, upon the written direction of
the Advisor and the Depositor, will sell and assign such Mortgage Loans without
representation, warranty or recourse to such highest bidder and will redeem the
Certificates; provided, however, the Master Servicer will decline to consummate
such sale unless it receives from the Advisor written direction to proceed with
such sale and an opinion of counsel addressed to the Master Servicer that such
sale will not give rise either to "any prohibited transaction" tax under Section
860F(a)(1) of the Code or to any tax on contribution to the REMIC after the
Closing Date under Section 860G(d)(1) of the Code. If such sale is not
consummated in accordance with the foregoing, the Master Servicer will not be
under any obligation to solicit any further bids or otherwise to negotiate any
further sale of the Mortgage Loans. In such event, however, if directed by the
Depositor, the Master Servicer may notify the Advisor who will solicit bids from
time to time in the future for the purchase of the Mortgage Loans upon the same
terms described above. The Master Servicer may consult with the Advisor and the
advice of the Advisor shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by the Master Servicer
hereunder.
The Depositor shall not have the right to purchase from the Trust
provided for in Section 9.02 of the Standard Terms. No Class of the Certificates
shall be a Designated Class pursuant to Section 9.02 of the Standard Terms,
which Section 9.02 (and the provision for Optional Termination) shall not be
applicable to the Series 1997-1 Certificates.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Certificate
Registrar, the Paying Agent, the Custodian 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 March 1,
1997.
SAXON ASSET SECURITIES COMPANY
By: ____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Master Servicer, Custodian, Certificate
Registrar and Paying Agent
By: ________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
CITIBANK, N.A.
not in its individual capacity but solely as trustee
under the Trust Agreement
By: ________________________________________
▇▇▇▇▇ ▇▇▇▇▇, Assistant Vice President
24
COMMONWEALTH OF VIRGINIA )
) ss.:
CITY OF RICHMOND )
The foregoing instrument was acknowledged before me March 27, 1997, by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a Vice President of Saxon Asset Securities Company, a Virginia
corporation, on behalf of the corporation.
-------------------------------------------
Notary Public
My Commission expires:
25
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me on March 27,
1997, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Vice President of Texas Commerce Bank National
Association, a national banking association, on behalf of the bank.
-----------------------------------
Notary Public
My Commission expires:
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me March 27, 1997,
by ▇▇▇▇▇ ▇▇▇▇▇, an Assistant Vice President of Citibank, N.A., a national
banking association, on behalf of the bank.
------------------------------------
Notary Public
My Commission expires:
27
Schedule I
Mortgage Loans
A. Group I Mortgage Loans.
B. Group II Mortgage Loans.
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Schedule II
Sales Agreement
29
Schedule III
Mortgage Loans for which first payment to the Trust will
be after ______________________
30