SAXON SECURITIES ASSET TRUST 1997-3
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1997-3
TRUST AGREEMENT
dated as of November 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
----
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Standard Terms; Section References..............................................................1
Section 1.02. Defined Terms...................................................................................3
ARTICLE II FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS......................................................18
Section 2.01. Conveyance of Mortgage Loans...................................................................18
ARTICLE III REMITTING TO CERTIFICATEHOLDERS......................................................................18
Section 3.01. Subaccount Distributions.......................................................................18
Section 3.02. Certificate Distributions......................................................................19
Section 3.03. Reports to the Depositor.......................................................................24
Section 3.04. Reports by Master Servicer.....................................................................24
ARTICLE IV THE CERTIFICATES......................................................................................25
Section 4.01. The Certificates...............................................................................25
Section 4.02. Denominations..................................................................................26
Section 4.03. Interest Fund..................................................................................26
ARTICLE V MISCELLANEOUS PROVISIONS...............................................................................26
Section 5.01. Request for Opinions...........................................................................26
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing Law....................................26
Section 5.03. REMIC Administration...........................................................................26
Section 5.04. Master Servicer; Month-End Interest............................................................28
Section 5.05. Trustee; Advances..............................................................................28
Section 5.06. Optional Termination...........................................................................28
Schedule I: The Mortgage Loans: A. Group I Mortgage Loans
B. Group II Mortgage Loans
i. Subgroup A
ii. Subgroup B
Schedule II: Sales Agreement and Servicing Agreements
Schedule III: Mortgage Loans for which first payment to the Trust will be after November 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
6: Form of Class AF-6 Certificate
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: Form of Class BF Certificate
Exhibit AV 1: Form of Class AV-1 Certificate
Exhibit AV 2: Form of Class AV-2 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 November 1, 1997 (this "Agreement"),
among SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"),
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as
Master Servicer, Custodian, Paying Agent and Certificate Registrar (in such
capacities, the "Master Servicer", the "Custodian", "Certificate Registrar" and
the "Paying Agent"), and CITIBANK, N.A., a national banking association, as
Trustee (in that 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
$600,308,000 to be known as the Saxon Securities Asset Trust 1997-3, Mortgage
Loan Asset Backed Certificates, Series 1997-3 (the "Certificates"). The
Certificates in the aggregate evidence the entire beneficial ownership in the
Trust. The Certificates consist of the following: the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF, Class AV-1, Class AV-2, 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 and the Paying Agent and the
Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms; Section References.
(a) The Standard Terms prescribe the duties, responsibilities and
obligations of the Depositor, the Master Servicer, the Custodian, the
Certificate Registrar, the Paying Agent and the Trustee with respect to the
Certificates. The Depositor, the Master Servicer, the Custodian, the Certificate
Registrar, the Paying Agent and the Trustee agree to observe and perform such
duties, responsibilities and obligations to the extent they are not inconsistent
with the provisions of this Agreement and acknowledge that, except to the extent
inconsistent with the provisions of this Agreement, the Standard Terms as of the
Closing Date, as modified by Sections 1.01, 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.
(c) The definition of "Qualified Substitute Mortgage Loan" is amended to
read as follows:
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
by Saxon or a Seller for a Deleted Mortgage Loan that, on the date of
such substitution: (i) has an Unpaid Principal Balance not greater than
the Unpaid Principal Balance of the Deleted Mortgage Loan, (ii) has a
Mortgage Interest Rate not less than (and not more than one percentage
point in excess of) the Mortgage Interest Rate of the Deleted Mortgage
Loan, (iii) has a Net Rate not less than the Net Rate of the Deleted
Mortgage Loan, (iv) has a remaining term to maturity not later than one
year prior to the "latest possible maturity date" specified in the
Trust Agreement, (v) has a Loan-to-Value Ratio as of the first day of
the month in which the substitution occurs equal to or less than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date (in
each case, using the fair market value at origination and after taking
into account the Monthly Payment due on such date), and (vi) complies
with each applicable representation, warranty, and covenant pertaining
to an individual Mortgage Loan set forth in the Trust Agreement and, if
a Seller is effecting the substitution, complies with each applicable
representation, warranty, or covenant pertaining to an individual
Mortgage Loan set forth in the related Sales Agreement or Subsequent
Sales Agreement; provided, however, that no ARM Loan may be substituted
for a Deleted Mortgage Loan unless such Deleted Mortgage Loan is also
an ARM Loan and, in addition to meeting the conditions set forth above,
the ARM Loan to be substituted, on the date of the substitution: (a)
provides for a lowest possible Net Rate that is not lower than the
lowest possible Net Rate for the Deleted Mortgage Loan and a highest
possible Net Rate that is not lower than the highest possible Net Rate
for the Deleted Mortgage Loan, (b) has a Gross Margin that is not less
than the Gross Margin of the Deleted Mortgage Loan, (c) has a Periodic
Rate Cap not less than the Periodic Rate Cap on the Deleted Mortgage
Loan, (d) has a next interest adjustment date that is the same as the
next interest adjustment date for the Deleted Mortgage Loan or occurs
not more than two months prior to or two months later than the next
interest adjustment date for the Deleted Mortgage Loan, (e) does not
have a permitted increase or decrease in the Monthly Payment less than
the permitted increase or decrease applicable to the Deleted Mortgage
Loan, (f) was underwritten on the basis of credit underwriting
standards at least as strict as the credit underwriting standards used
with respect to the Deleted Mortgage Loan and (g) is not convertible to
a fixed Mortgage Interest Rate unless the Deleted Mortgage Loan is so
convertible. If more than one mortgage loan is substituted for one or
more Deleted Mortgage Loans, the amount described in clause (i) of the
preceding sentence shall be determined on the basis of aggregate Unpaid
Principal Balances, the rates described in clauses (ii) and (iii) of
the preceding sentence and clause (a) of the proviso to the preceding
sentence shall be determined on the basis of weighted average Mortgage
Interest Rates and Net Rates, as the case may be, the Gross Margins
described in clause (b) of the proviso to the preceding sentence shall
be determined on the basis of weighted average Gross Margins, and the
interest adjustment dates described in clause (d) of the proviso to the
preceding sentence shall be determined on the basis of weighted average
interest adjustment dates. In the case of a Trust for which a REMIC
election has been or will be made, a Qualified Substitute Mortgage Loan
also shall satisfy the following criteria as of the date of its
substitution for a Deleted Mortgage Loan: (A) the Borrower shall not be
59 or more days delinquent in payment on the Qualified Substitute
Mortgage Loan, (B) the Trustee Mortgage Loan File for such Mortgage
Loan shall not contain any material deficiencies in documentation and
shall include an executed Mortgage Note and a recorded Security
Instrument; (C) the Loan to Value Ratio of such Mortgage Loan must be
125% or less on the date of origination of such Mortgage Loan or, if
any of the terms of such Mortgage Loan were modified other than in
connection with a default or imminent default on such Mortgage Loan, on
the date of such modification; (D) no property securing such Mortgage
Loan may be subject to foreclosure, bankruptcy, or insolvency
proceedings; (E) such Mortgage Loan must be secured by a valid lien on
the related Mortgaged Premises; and (F) shall otherwise constitute an
eligible asset for a REMIC under the REMIC Provisions.
(d) Paragraph (e) of the definition of "Trustee Mortgage Loan File" in
the Standard Terms is amended to read as follows:
"(e) in the case of a Mortgage Loan that is not identified in the
Mortgage Loan Schedule as a Junior Mortgage Loan of the type described
below, an original Title Insurance Policy, Certificate of Title
Insurance or a written commitment to issue a Title Insurance Policy or
Certificate of Title Insurance or a copy of a Title Insurance Policy or
Certificate of Title Insurance certified as true and correct by the
applicable Insurer and, in the case of a Mortgage Loan identified as a
Junior Mortgage Loan with a principal balance of $50,000 or less, a
representation of the Seller in the Sales Agreement that (i) the
related senior mortgage loan is held by an institutional lender such as
a bank, other financial institution or mortgage company and (ii) the
Seller has determined based on a review of a property profile or title
report acceptable to such Seller that the Borrower has valid title to
the Mortgaged Premises;"
(e) Section 3.04(a)(iii) of the Standard Terms is amended by adding the
following sentence at the end thereof:
"Such other action shall first be submitted in writing to SMI and
subsequently approved by SMI."
(f) Section 3.08(a) of the Standard Terms is amended by adding the
following sentence after the first sentence thereof:
"The Master Servicer shall use all reasonable efforts to obtain no more
frequently than monthly from the Servicer and to furnish to SMI a
statement itemizing the Servicer's marketing and liquidation efforts
and an accounting of the proceeds and expenses associated with the
liquidation of the REO Property."
(g) The fifth sentence of Section 3.10 of the Standard Terms is deleted
and the following sentence is inserted in place thereof:
"The Master Servicer, with approval from SMI, may waive compliance by
the Servicer with certain provisions of the Servicing Agreement".
(h) The sixth sentence of Section 3.10 of the Standard Terms is deleted
and the following two sentences are added in place thereof:
"The Master Servicer shall then promptly instruct the Servicer or
otherwise respond to any request of the Servicer. The Master Servicer
shall immediately forward to SMI for approval all requests regarding
forebearance or modification, partial release of collateral or
disposition of REO Property. SMI shall promptly review the request and
communicate its recommendation to the Master Servicer".
Section 1.02. Defined Terms.
Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein, the definition herein shall control.
"Accrual Period": With respect to the Group I Certificates (other than
Class AF-1 Certificates) and any Distribution Date, the calendar month
immediately preceding such Distribution Date; a "calendar month" shall be deemed
to be 30 days. With respect to the Class AF-1 Certificates and the Group II
Certificates and any Distribution Date, the period commencing on the immediately
preceding Distribution Date (or in the case of the first Distribution Date, the
Closing Date) and ending on the day immediately preceding the current
Distribution Date. All calculations of interest on the Group I Certificates
(other than Class AF-1 Certificates) will be made on the basis of a 360-day year
assumed to consist of twelve 30-day months and all calculations of interest on
the Class AF-1 Certificates and the Group II Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period and in
a year of 360 days.
"Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF, Class AV-1,
Class AV-2, 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 AF-6, Class MF-1, Class MF-2, Class BF, Class AV-1,
Class AV-2, 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 AF-6, Class MF-1, Class MF-2, Class BF, Class AV-1, Class AV-2,
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 thereof, AF-2 Certificate" on the face AF-3 Certificate" on the face
in the form of Exhibit AF-1 hereto, thereof, in the form of Exhibit AF-2 thereof, in the form of Exhibit AF-3
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.
"Class AF-1 Certificate Principal "Class AF-2 Certificate Principal "Class AF-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-1 Certificates. Balance of the Class AF-2 Balance of the Class AF-3
Certificates. Certificates.
"Class AF-1 Current Interest": With "Class AF-2 Current Interest": "Class AF-3 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-2 Certificate Principal Class AF-3 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class AF-1 Pass-Through Rate Accrual Period at the Class AF-2 Accrual Period at the Class AF-3
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
AF-1 that is recovered during the to interest for Class AF-2 that is to interest for Class AF-3 that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. final non-appealable order.
"Class AF-1 Interest Carry Forward "Class AF-2 Interest Carry Forward "Class AF-3 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class AF-1 Current the excess of (A) Class AF-2 Current the excess of (A) Class AF-3 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class AF-1 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior AF-2 with respect to interest on AF-3 with respect to interest on
Distribution Dates and (ii) interest such prior Distribution Dates and such prior Distribution Dates and
thereon at the Class AF-1 Pass-Through (ii) interest thereon at the Class (ii) interest thereon at the Class
Rate for the related Accrual Period. AF-2 Pass-Through Rate for the AF-3 Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class AF-1 Available Funds Cap": As
of any Distribution Date, a per annum
rate equal to (w)(i) the total scheduled
interest on the Mortgage Loans in Group I
for the related Due Period less (ii) the
Servicing Fees and Master Servicing Fee
for the related Due Period divided by (x)
the Group I Certificate Principal Balance
divided by (y) the actual number of days
in the related Accrual Period and multi-
plied by (z) 360.
"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 least of (x) One Month LIBOR Date, 6.715% per annum. Date, 6.775% per annum.
plus 0.16%, (y) the weighted average
of the Mortgage Interest Rates on the
Mortgage Loans in Group I less the
applicable Servicing Fee Rate and the
Master Servicing Fee Rate and (z) the
Class AF-1 Available Funds Cap.
"Class AF-4 Certificate": Any "Class AF-5 Certificate": Any "Class AF-6 Certificate": Any
Certificate designated as a "Class Certificate designated as a "Class Certificate designated as a "Class
AF-4 Certificate" on the face thereof, AF-5 Certificate" on the face AF-6 Certificate" on the face
in the form of Exhibit AF-4 hereto, thereof, in the form of Exhibit AF-5 thereof, in the form of Exhibit AF-6
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.
"Class AF-4 Certificate Principal "Class AF-5 Certificate Principal "Class AF-6 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-4 Certificates. Balance of the Class AF-5 Balance of the Class AF-6
Certificates. Certificates.
"Class AF-4 Current Interest": With "Class AF-5 Current Interest": "Class AF-6 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-4 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-5 Certificate Principal Class AF-6 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class AF-4 Pass-Through Rate Accrual Period at the Class AF-5 Accrual Period at the Class AF-6
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
AF-4 that is recovered during the to interest for Class AF-5 that is to interest for Class AF-6 that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. final non-appealable order.
"Class AF-4 Interest Carry Forward "Class AF-5 Interest Carry Forward "Class AF-6 Interest Carry Forward
Amount": With respect to each Amount": With respect to each Amount": With respect to each
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class AF-4 Current the excess of (A) Class AF-5 Current the excess of (A) Class AF-6 Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class AF-4 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior AF-5 with respect to interest on AF-6 with respect to interest on
Distribution Dates and (ii) interest such prior Distribution Dates and such prior Distribution Dates and
thereon at the Class AF-4 Pass-Through (ii) interest thereon at the Class (ii) interest thereon at the Class
Rate for the related Accrual Period. AF-5 Pass-Through Rate for the AF-6 Pass-Through Rate for the
related Accrual Period. related Accrual Period.
"Class AF-4 Pass-Through Rate": With "Class AF-5 Pass-Through Rate": "Class AF-6 Pass-Through Rate":
respect to each Distribution Date, With respect to each Distribution With respect to each Distribution
6.950% per annum. Date, the lesser of (i) 7.065% per Date, 6.730% per annum.
annum plus, after the Initial Optional
Termination Date, 0.50% and (ii) the
Group I Net Rate for such date.
"Class AF-6 Distribution Amount": With respect to any Distribution Date, the
product of (i) a fraction the numerator of which is the Class AF-6 Certificate
Principal Balance and the denominator of which is the Group I Class A
Certificate Principal Balance, in each case immediately prior to such
Distribution Date, (ii) the Group I Class A Principal Distribution Amount for
such Distribution Date and (iii) the applicable percentage for such Distribution
Date set forth below:
Distribution Date Percentage
----------------- ----------
November 1997 - October 2000 0%
November 2000 - October 2002 45%
November 2002 - October 2003 80%
November 2003 - October 2004 100%
November 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 Date, Amount": As to any Distribution Amount": As to any Distribution
the sum of the Realized Losses with Date, the sum of the Realized Losses Date, the sum of the Realized Losses
respect to Group I which have been with respect to Group I which have with respect to Group I which have
applied in reduction of the been applied in reduction of the been applied in reduction of the
Certificate Principal Balance of the Certificate Principal Balance of the Certificate Principal Balance of the
Class MF-1 Certificates pursuant to Class MF-2 Certificates pursuant to Class BF Certificates pursuant to
Section 3.02(h) hereof. Section 3.02(h) hereof. 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 thereof, MF-2 Certificate" on the face BF Certificate" on the face thereof,
in the form of Exhibit MF-1 hereto, thereof, in the form of Exhibit MF-2 in the form of Exhibit BF hereto,
representing the right to hereto, representing the right to representing the right to
distributions as set forth herein. distributions as set forth herein. distributions as set forth herein.
"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 Certificates Balance of the Class MF-2 Balance of the Class BF Certificates
less any Class MF-1 Applied Realized Certificates less any Class MF-2 less any Class BF Applied Realized
Loss Amount. Applied Realized Loss Amount. Loss Amount.
"Class MF-1 Current Interest": With "Class MF-2 Current Interest": "Class BF Current Interest": With
respect to any Distribution Date, the With respect to any Distribution respect to any Distribution Date,
interest accrued on the Class MF-1 Date, the interest accrued on the the interest accrued on the Class BF
Certificate Principal Balance Class MF-2 Certificate Principal Certificate Principal Balance
immediately prior to such Distribution Balance immediately prior to such immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the related
at the Class MF-1 Pass-Through Rate Accrual Period at the Class MF-2 Accrual Period at the Class BF
plus any amount previously distributed Pass-Through Rate plus any amount Pass-Through Rate plus any amount
with respect to interest for Class previously distributed with respect previously distributed with respect
MF-1 that is recovered during the to interest for Class MF-2 that is to interest for Class BF that is
related Accrual Period as a voidable recovered during the related Accrual recovered during the related Accrual
preference by a trustee in bankruptcy Period as a voidable preference by a Period as a voidable preference by a
pursuant to a final non-appealable trustee in bankruptcy pursuant to a trustee in bankruptcy pursuant to a
order. final non-appealable order. 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, the sum of (i) Distribution Date, the sum of (i)
excess of (A) Class MF-1 Current the excess of (A) Class MF-2 Current the excess of (A) Class BF Current
Interest with respect to prior Interest with respect to prior Interest with respect to prior
Distribution Dates over (B) the amount Distribution Dates over (B) the Distribution Dates over (B) the
actually distributed to Class MF-1 amount actually distributed to Class amount actually distributed to Class
with respect to interest on such prior MF-2 with respect to interest on BF with respect to interest on such
Distribution Dates and (ii) interest such prior Distribution Dates and prior Distribution Dates and (ii)
thereon at the Class MF-1 Pass-Through (ii) interest thereon at the Class interest thereon at the Class BF
Rate for the related Accrual Period. MF-2 Pass-Through Rate for the Pass-Through Rate for the related
related Accrual Period. Accrual Period.
"Class MF-1 Pass-Through Rate": With "Class MF-2 Pass-Through Rate": "Class BF Pass-Through Rate": With
respect to each Distribution Date, With respect to each Distribution respect to each Distribution Date,
6.935% per annum. Date 7.115% per annum. the lesser of (i) 7.460% per annum
and (ii) the Group I Net Rate 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 Date, Amount": As to any Distribution Amount": As to any Distribution
the excess of (i) Class MF-1 Applied Date, the excess of (i) Class MF-2 Date, the excess of (i) Class BF
Realized Loss Amount over (ii) the sum Applied Realized Loss Amount over Applied Realized Loss Amount over
of all distributions in reduction of (ii) the sum of all distributions in (ii) the sum of all distributions in
the Class MF-1 Applied Realized Loss reduction of the Class MF-2 Applied reduction of the Class BF Applied
Amount on all previous Distribution Realized Loss Amount on all previous Realized Loss Amount on all previous
Dates. Distribution Dates. Distribution Dates.
"Group II Certificates":
"Class AV-1 Certificate": Any Certificate designated "Class AV-2 Certificate": Any Certificate designated
as a "Class AV-1 Certificate" on the face thereof, in the as a "Class AV-2 Certificate" on the face thereof, in
form of Exhibit AV-1 hereto representing the right to the form of Exhibit AV-2 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class AV-1 Certificate Principal Balance": The "Class AV-2 Certificate Principal Balance": The
Certificate Principal Balance of the Class AV-1 Certificate Principal Balance of the Class AV-2
Certificates. Certificates.
"Class AV-1 Certificates Carryover": If on any "Class AV-2 Certificates Carryover": If on any
Distribution Date the Class AV-1 Pass-Through Rate is Distribution Date the Class AV-2 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess based upon the Group II Available Funds Cap, the excess
of (i) the amount of interest the Class AV-1 Certificates of (i) the amount of interest the Class AV-2
would be entitled to receive on such Distribution Date Certificates would be entitled to receive on such
had the Class AV-1 Pass-Through Rate not been calculated Distribution Date had the Class AV-2 Pass-Through Rate
based on the Group II Available Funds Cap over (ii) the not been calculated based on the Group II Available
amount of interest such Certificates received on such Funds Cap over (ii) the amount of interest such
Distribution Date based on the Group II Available Funds Certificates received on such Distribution Date based
Cap, together with the unpaid portion of any such excess on the Group II Available Funds Cap, together with the
from prior Distribution Dates (and interest accrued unpaid portion of any such excess from prior
thereon at the then applicable Pass-Through Rate, without Distribution Dates (and interest accrued thereon at the
giving effect to the Group II Available Funds Cap). then applicable Pass-Through Rate, without giving
effect to the Group II Available Funds Cap).
"Class AV-1 Current Interest": With respect to any "Class AV-2 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 AV-2 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 AV-2 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 AV-2 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 AV-2 Current Interest shall
Certificates Carryover. not include any Class AV-2 Certificates Carryover.
"Class AV-1 Interest Carry Forward Amount": With "Class AV-2 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 AV-2 Current Interest with respect
prior Distribution Dates (excluding any Class AV-1 to prior Distribution Dates (excluding any Class AV-2
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class AV-1 with respect to interest (other distributed to Class AV-2 with respect to interest
than in respect of Class AV-1 Certificate Carryover) on (other than in respect of Class AV-2 Certificate
such prior Distribution Dates and (ii) interest on such Carryover) on such prior Distribution Dates and (ii)
excess at the Class AV-1 Pass-Through Rate for the interest on such excess at the Class AV-2 Pass-Through
related Accrual Period. Rate for the related Accrual Period.
"Class AV-1 Pass-Through Rate": With respect to any "Class AV-2 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 Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 0.18% per annum, or in the Initial Optional Termination Date, 0.19% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 0.36% per annum, after the Initial Optional Termination Date, plus 0.38%
(y) the weighted average of the Maximum Lifetime Mortgage per annum, (y) the weighted average of the Maximum
Interest Rates on the Mortgage Loans in Group II less the Lifetime Mortgage Interest Rates on the Mortgage Loans
Group II Servicing Fee Rate and the Group II Master in Group II less the Group II Servicing Fee Rate and
Servicing Fee Rate and (z) the Group II Available Funds the Group II Master Servicing Fee Rate and (z) the
Cap for such Distribution Date. Group II Available Funds Cap for such Distribution Date.
"Class MV-1 Applied Realized Loss Amount": As to any "Class MV-2 Applied Realized Loss Amount": As to any
Distribution Date, the sum of the Realized Losses with Distribution Date, the sum of the Realized Losses with
respect to Group II which have been applied in reduction respect to Group II which have been applied in reduction
of the Certificate Principal Balance of the Class MV-1 of the Certificate Principal Balance of the Class MV-2
Certificates pursuant to Section 3.02(i) hereof. Certificates pursuant to Section 3.02(i) hereof.
"Class MV-1 Certificate": Any Certificate designated "Class MV-2 Certificate": Any Certificate designated
as a "Class MV-1 Certificate" on the face thereof, in the as a "Class MV-2 Certificate" on the face thereof, in
form of Exhibit MV-1 hereto representing the right to the form of Exhibit MV-2 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class MV-1 Certificate Principal Balance": The "Class MV-2 Certificate Principal Balance": The
Certificate Principal Balance of the Class MV-1 Certificate Principal Balance of the Class MV-2
Certificates less any Class MV-1 Applied Realized Loss Certificates less any Class MV-2 Applied Realized Loss
Amount. Amount.
"Class MV-1 Certificates Carryover": If on any "Class MV-2 Certificates Carryover": If on any
Distribution Date the Class MV-1 Pass-Through Rate is Distribution Date the Class MV-2 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess based upon the Group II Available Funds Cap, the excess
of (i) the amount of interest the Class MV-1 Certificates of (i) the amount of interest the Class MV-2
would be entitled to receive on such Distribution Date Certificates would be entitled to receive on such
had the Class MV-1 Pass-Through Rate not been calculated Distribution Date had the Class MV-2 Pass-Through Rate
based on the Group II Available Funds Cap over (ii) the not been calculated based on the Group II Available
amount of interest such Certificates received on such Funds Cap over (ii) the amount of interest such
Distribution Date based on the Group II Available Funds Certificates received on such Distribution Date based
Cap, together with the unpaid portion of any such excess on the Group II Available Funds Cap, together with the
from prior Distribution Dates (and interest accrued unpaid portion of any such excess from prior
thereon at the then applicable Pass-Through Rate, without Distribution Dates (and interest accrued thereon at the
giving effect to the Group II Available Funds Cap). then applicable Pass-Through Rate, without giving
effect to the Group II Available Funds Cap).
"Class MV-1 Current Interest": With respect to any "Class MV-2 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class MV-1 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such MV-2 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at such Distribution Date during the related Accrual
the Class MV-1 Pass Through Rate plus any amount Period at the Class MV-2 Pass Through Rate plus any
previously distributed with respect to interest for Class amount previously distributed with respect to interest
MV-1 that is recovered during the Accrual Period as a for Class MV-2 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;
MV-1 Current Interest shall not include any Class MV-1 provided, however, Class MV-2 Current Interest shall
Certificates Carryover. not include any Class MV-2 Certificates Carryover.
"Class MV-1 Interest Carry Forward Amount": With "Class MV-2 Interest Carry Forward Amount": With
respect to any Distribution Date, the sum of (i) the respect to each Distribution Date, the sum of (i) the
excess of (A) Class MV-1 Current Interest with respect to excess of (A) Class MV-2 Current Interest with respect
prior Distribution Dates (excluding any Class MV-1 to prior Distribution Dates (excluding any Class MV-2
Certificates Carryover) over (B) the amount actually Certificates Carryover) over (B) the amount actually
distributed to Class MV-1 with respect to interest (other distributed to Class MV-2 with respect to interest
than in respect of Class MV-1 Certificate Carryover) on (other than in respect of Class MV-2 Certificate
such prior Distribution Dates and (ii) interest on such Carryover) on such prior Distribution Dates and (ii)
excess at the Class MV-1 Pass-Through Rate for the interest on such excess at the Class MV-2 Pass-Through
related Accrual Period. Rate for the related Accrual Period.
"Class MV-1 Pass-Through Rate": With respect to any "Class MV-2 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 Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 0.375% per annum, or in the Initial Optional Termination Date, 0.60% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 0.5625% per after the Initial Optional Termination Date, plus 0.90%
annum, (y) the weighted average of the Maximum Lifetime per annum, (y) the weighted average of the Maximum
Mortgage Interest Rates on the Mortgage Loans in Group II Lifetime Mortgage Interest Rates on the Mortgage Loans
less the Group II Servicing Fee Rate and the Group II in Group II less the Group II Servicing Fee Rate and
Master Servicing Fee Rate and (z) the Group II Available the Group II Master Servicing Fee Rate and (z) the
Funds Cap for such Distribution Date. Group II Available Funds Cap for such Distribution Date.
"Class MV-1 Unpaid Realized Loss Amount": As to any "Class MV-2 Unpaid Realized Loss Amount": As to any
Distribution Date, the excess of (i) Class MV-1 Applied Distribution Date, the excess of (i) Class MV-2 Applied
Realized Loss Amount over (ii) the sum of all distribu- Realized Loss Amount over (ii) the sum of all distribu-
tions in reduction of the Class MV-1 Applied Realized tions in reduction of the Class MV-2 Applied Realized
Loss Amount on all previous Distribution Dates. Loss Amount on all previous Distribution Dates.
"Class BV Applied Realized Loss Amount: As to any Distribution Date, the sum
of the Realized Losses with respect to Group II which have been applied in
reduction of the Certificate Principal Balance of the Class BV Certificates
pursuant to Section 3.02(i) hereof.
"Class BV Certificate": Any Certificate designated as a "Class BV Certificate"
on the face thereof, in the form of Exhibit BV hereto representing the right to
distributions as set forth herein..
"Class BV Certificate Principal Balance": The Certificate Principal Balance of
the Class BV Certificates less any Class BV Applied Realized Loss Amount.
"Class BV Certificates Carryover": If on any Distribution Date the Class BV
Pass-Through Rate is based upon the Group II Available Funds Cap, the excess of
(i) the amount of interest the Class BV Certificates would be entitled to
receive on such Distribution Date had the Class BV Pass-Through Rate not been
calculated based on the Group II Available Funds Cap over (ii) the amount of
interest such Certificates received on such Distribution Date based on the Group
II Available Funds Cap, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate, without giving effect to the Group II Available Funds Cap).
"Class BV Current Interest": With respect to any Distribution Date, the
interest accrued on the Class BV Certificate Principal Balance immediately prior
to such Distribution Date during the related Accrual Period at the Class BV Pass
Through Rate plus any amount previously distributed with respect to interest for
Class BV that is recovered during the Accrual Period as a voidable preference by
a trustee in bankruptcy pursuant to a final, nonappealable order; provided,
however, Class BV Current Interest shall not include any Class BV Certificates
Carryover.
"Class BV Interest Carry Forward Amount": With respect to each Distribution
Date, the sum of (i) the excess of (A) Class BV Current Interest with respect to
prior Distribution Dates (excluding any Class BV Certificates Carryover) over
(B) the amount actually distributed to Class BV with respect to interest (other
than in respect of Class BV Certificate Carryover) on such prior Distribution
Dates and (ii) interest on such excess at the Class BV Pass-Through Rate for the
related Accrual Period.
"Class BV Pass-Through Rate": With respect to any Distribution Date, the least
of (x) One Month LIBOR plus, in the case of any Distribution Date prior to the
Initial Optional Termination Date, 1.00% per annum, or in the case of any
Distribution Date that occurs on or after the Step Up Date, plus 1.50% per
annum, (y) the weighted average of the Maximum Lifetime Mortgage Interest Rates
on the Mortgage Loans in Group II less the Group II Servicing Fee Rate and the
Group II Master Servicing Fee Rate and (z) the Group II Available Funds Cap for
such Distribution Date.
"Class BV Unpaid Realized Loss Amount": As to any Distribution Date, the
excess of (i) Class BV Applied Realized Loss Amount over (ii) the sum of all
distributions in reduction of the Class BV Applied 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 AF-6 Balance and the excess of the Group I Net
Rate over the Class AF-6 Pass-Through Rate;
(g) the product of the MF-1 Balance and the excess of the Group I Net
Rate over the Class MF-1 Pass-Through Rate;
(h) the product of the MF-2 Balance and the excess of the Group I Net
Rate over the Class MF-2 Pass-Through Rate;
(i) the product of the BF Balance and the excess of the Group I Net
Rate over the Class BF Pass-Through Rate; and
(j) any excess of the amount specified pursuant to clauses (a) through
(i) 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": November 13, 1997.
"Current Interest": As to any Class, the definition therefor having the
corresponding designation as such Class.
"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 October 1, 1997.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon
is not made by the close of business on the last day of the Prepayment Period
immediately following the day such payment is scheduled to be due. A Mortgage
Loan is "30 days Delinquent" if such payment has not been received by the close
of business on the last day of the Prepayment Period of the month immediately
succeeding the month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Designated Class": There is no designated Class for purposes of
Section 9.02 of the Standard Terms.
"Distribution Account": The account or accounts created and maintained
for the Trust pursuant to Section 3.01 hereof.
"Distribution Amount": As to each Distribution Date and Class of
Certificates, the aggregate amount to be distributed to such Class on such date
pursuant to Section 3.02 hereof.
"Distribution Date": The 25th day of each month, or the next Business
Day if such 25th day is not a Business Day, commencing November 25, 1997.
"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
the related Schedules of Mortgage Loans as having been in the related Schedules of Mortgage Loans as having
assigned to Group I, including any Group I Qualified been assigned to Group II, including any Group II
Substitute Mortgage Loans delivered in replacement Qualified Substitute Mortgage Loans delivered in
thereof. replacement thereof.
"Group II Available Funds Cap": As of any
Distribution Date, a per annum rate equal to (w)(i) the
total scheduled interest on the Mortgage Loans in Group
II for the related Due Period less (ii) the Group II
Servicing Fees and Group II Master Servicing Fee for
such Due Period divided by (x) the Group II Certificate
Principal Balance divided by (y) actual number of days
in the related Accrual Period and multiplied by (z)
360.
"Group I Certificate": Any of the Class AF-1, Class "Group II Certificate": Any of the Class AV-1,
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-2, Class MV-1, Class MV-2 and Class BV
Class MF-1, Class MF-2 and Class BF Certificates. Certificates.
"Group I Certificate Principal Balance": The sum of "Group II Certificate Principal Balance": The sum
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, of the Class AV-1, Class AV-2, Class MV-1, Class MV-2
Class AF-5, Class AF-6, Class MF-1, Class MF-2 and and Class BV Certificate Principal Balances.
Class BF 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 The Class AV-1 and Class AV-2 Certificate Principal
AF-4, Class AF-5 and Class AF-6 Certificate Principal Balance.
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) 73.00% of the Schedule Principal such Distribution Date over (B) the lesser of (I)
Balances of Group I on the preceding Due Date and (II) 60.00% 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 $1,170,347. Principal Balances of Group II on the preceding Due
Date less $1,831,195.
"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 (subject to the proviso set forth in Trigger Event is not in effect (subject to the proviso
Section 3.02(c) hereof), the excess of (i) the sum of (A) set forth in Section 3.02(d) hereof), the excess of (i)
the Group I Class A Certificate Principal Balance, (B) the sum of (A) the Group II Class A Certificate
the Class MF-1 Certificate Principal Balance, (C) the Principal Balance, (B) the Class MV-1 Certificate
Class MF-2 Certificate Principal Balance and (D) the Principal Balance, (C) the Class MV-2 Certificate
Class BF Certificate Principal Balance immediately prior Principal Balance and (D) the Class BV Certificate
to such Distribution Date over (ii) the lesser of (A) Principal Balance immediately prior to such
95.00% of the Scheduled Principal Balances of Group I on Distribution Date over (ii) the lesser of (A) 94.50% of
the preceding Due Date and (B) the Scheduled Principal the Scheduled Principal Balances of the Group II on the
Balances of Group I on the preceding Due Date less preceding Due Date and (B) the Scheduled Principal
$1,170,347. Balances of Group II on the preceding Due Date less
$1,831,195.
"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 I Stepdown Date and as long as a Group I Trigger Group II Stepdown Date and as long as a Group II Trigger
Event is not in effect (subject to the proviso set forth Event is not in effect (subject to the proviso set forth
in Section 3.02(c) hereof), the excess of (i) the sum of in Section 3.02(d) hereof), the excess of (i) the sum of
(A) the Group I Class A Certificate Principal Balance and (A) the Group II Class A Certificate Principal Balance
(B) the Class MF-1 Certificate Principal Balance and (B) the Class MV-1 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the immediately prior to such Distribution Date over (ii) the
lesser of (A) 82.00% of the aggregate Scheduled Principal lesser of (A) 75.50% of the Scheduled Principal Balances
Balances of Group I on the preceding Due Date and (B) the of Group II on the preceding Due Date and (B) the
Scheduled Principal Balances of Group I on the preceding Scheduled Principal Balances of Group II on the preceding
Due Date less $1,170,347. Due Date less $1,831,195.
"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 I Stepdown Date and as long as a Group I Trigger Group II Stepdown Date and as long as a Group II Trigger
Event is not in effect (subject to the proviso set forth Event is not in effect (subject to the proviso set forth
in Section 3.02(c) hereof), the excess of (i) the sum of in Section 3.02(d) hereof), the excess of (i) the sum of
(A) the Group I Class A Certificate Principal Balance, (A) the Group II Class A Certificate Principal Balance,
(B) the Class MF-1 Certificate Principal Balance and (C) (B) the Class MV-1 Certificate Principal Balance and (C)
the Class MF-2 Certificate Principal Amount immediately the Class MV-2 Certificate Principal Amount immediately
prior to such Distribution Date over (ii) the lesser of prior to such Distribution Date over (ii) the lesser of
(A) 90.00% of the Scheduled Principal Balances of Group I (A) 87.50% of the Scheduled Principal Balances of Group
on the preceding Due Date and (B) the Scheduled Principal II on the preceding Due Date and (B) the Scheduled
Balances of Group I on the preceding Due Date less Principal Balances of Group II on the preceding Due Date
$1,170,347.
"Group I Extra Principal Distribution Amount": With "Group II Extra Principal Distribution Amount":
respect to any Distribution Date, to the extent of Group With respect to any Distribution Date, to the extent of
I Interest Funds pursuant to Section 3.02(a)(v) and Group Group II Interest Funds pursuant to Section 3.02(b)(v)
II Interest Funds available for the purpose pursuant to and Group I Interest Funds available for the purpose
Section 3.02(f)(viii) hereof, (i) prior to the Group I pursuant to Section 3.02(e)(viii) hereof, (i) prior to
Stepdown Date, the excess of (A) the sum of (I) the Group the Group II Stepdown Date, the excess of (A) the sum
I Certificate Principal Balance and (II) $5,851,735 over of (I) the Group II Certificate Principal Balance and
(B) the Scheduled Principal Balances of Group I and (ii) (II) $10,071,574 over (B) the Scheduled Principal
on and after the Group I Stepdown Date, the excess of (A) Balances of Group II and (ii) on and after the Group II
the sum of (I) the Group I Certificate Principal Balance Stepdown Date, the excess of (A) the sum of (I) the
and (II) the greater of (x) 5.00% of the Scheduled Group II Certificate Principal Balance and (II) the
Principal Balances of Group I and (y) $1,170,347 over (B) greater of (x) 5.50% of the Scheduled Principal
the Scheduled Principal Balances of Group I. Balances of Group II and (y) $1,831,195 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.
"Group I Master Servicing Fee": With respect to each "Group II Master Servicing Fee": With respect to
Master Servicer Remittance Date, an amount payable (or each Master Servicer Remittance Date, an amount payable
allocable) to the Master Servicer equal to the product of (or allocable) to the Master Servicer equal to the
one-twelfth of the Group I Master Servicing Fee Rate and product of one-twelfth of the Group II Master Servicing
the aggregate Scheduled Principal Balance of Group I on Fee Rate and the aggregate Scheduled Principal Balance
the first day of the Due Period preceding such Master of Group II on the first day of the Due Period
Servicer Remittance Date. preceding such Master Servicer Remittance Date.
"Group I Master Servicing Fee Rate": 0.029% per "Group II Master Servicing Fee Rate": 0.029% 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 "Group II Principal Distribution Amount": With
respect to any Distribution Date, the sum of (i) the respect to any Distribution Date, the sum of (i) the
Group I Principal Funds and (ii) the Group I Extra Group II Principal Funds and (ii) the Group II Extra
Principal Distribution Amount. Principal 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 and (x) one-twelfth of the Servicing Fee Rate and (y) aggregate
(y) aggregate Scheduled Principal Balance of such Mortgage Scheduled Principal Balance of such Mortgage Loan as of the
Loan as of the opening of business on the first day of opening of business on the first day of the Due Period preceding
the Due Period preceding such Remittance Date. such Remittance Date.
"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 applicable
payable to the applicable Servicer of that Mortgage Servicer of that Mortgage Loan as set out on Schedule IB to this
Loan as set out on Schedule IA to this Agreement. Agreement.
"Group I Stepdown Date": With respect to Group I, the "Group II Stepdown Date": With respect to Group II,
earlier to occur of (i) the later to occur of (A) the the earlier to occur of (i) the later to occur of (A) the
Distribution Date in November 2000 and (B) the first Distribution Date in November 2000 and (B) the first
Distribution Date on which the Group I Class A Distribution Date on which the Group II Class A
Certificate Principal Balance immediately prior to such Certificate Principal Balance immediately prior to such
Distribution Date (less the Group I Principal Funds for Distribution Date (less the Group II Principal Funds for
such Distribution Date) is less than or equal to 73.00% such Distribution Date) is less than or equal to 60.00%
of the Scheduled Principal Balances of Group I and (ii) of the Scheduled Principal Balances of Group II and (ii)
the Distribution Date on which the Group I Class A the Distribution Date on which the Group II Class A
Certificate Principal Balance has been reduced to zero. Certificate Principal Balance has been reduced to zero.
"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 Subordinated Trigger Event": With respect "Group II Subordinated Trigger Event": With
to Group I, any Distribution Date after the Group I respect to Group II, any Distribution Date after the
Stepdown Date on which: Group II Stepdown Date on which:
(a) Realized Losses since the Cut-Off Date with (a) Realized Losses since the Cut-Off Date with respect
respect to the Mortgage Loans in Group I as a percentage to the Mortgage Loans in Group II as a percentage of the
of the initial Scheduled Principal Balance of Group I initial Scheduled Principal Balance of Group II exceed the
exceed the percentage set out below with respect to such percentage set out below with urespect to such Distribution
Distribution Date: Date:
Distribution Date (inclusive) Distribution Date (inclusive)
November 1999 - October 2000 1.60% November 1999 - October 2000 2.20%
November 2000 - October 2001 2.70 November 2000 - October 2001 3.70
November 2001 - October 2002 3.40 November 2001 - October 2002 4.70
November 2002 - October 2003 3.90 November 2002 - October 2003 5.30
November 2003 - October 2004 4.20 November 2003 - October 2004 5.70
November 2004 and thereafter 4.40 November 2004 and thereafter 6.00
and and
(b) the Scheduled Principal Balance of the (b) the Scheduled Principal Balanceof the Mortgage Loans
Mortgage Loans in Group I that, as of such Distribution in Group II that, as of such Distribution Date, are 60 or more
Date, are 60 or more days Delinquent as a percentage of days Delinquent as a percentage of the Scheduled Principal
the Scheduled Principal Balance of the Mortgage Loans in Balance of the Mortgage Loans in Group II exceeds the percentage
Group I exceeds the percentage set out below with respect set out below with respect to such Distribution Date:
to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
November 1999 - October 2000 5.00% November 1999 - October 2000 5.50%
November 2000 - October 2001 5.00 November 2000 - October 2001 5.50
November 2001 - October 2002 7.50 November 2001 - October 2002 8.25
November 2002 - October 2003 7.50 November 2002 - October 2003 8.25
November 2003 - October 2004 10.00 November 2003 - October 2004 11.00
November 2004 and thereafter 10.00 November 2004 and thereafter 11.00
"Group I Trigger Event": With respect to Group I and "Group II Trigger Event": With respect to Group II
any Distribution Date after the Group I Stepdown Date, a and any Distribution Date after the Group II Stepdown
Group I Trigger Event exists if two times the quotient of Date, a Group II Trigger Event exists if 2.5 times the
(i) the Scheduled Principal Balances of all 60 or more quotient of (i) the Scheduled Principal Balances of all
days Delinquent Mortgage Loans in Group I and (ii) the 60 or more days Delinquent Mortgage Loans in Group II
Scheduled Principal Balances of Group I as of the and (ii) the Scheduled Principal Balances of Group II
preceding Master Servicer Remittance Date equals or as of the preceding Master Servicer Remittance Date
exceeds 27.00%. equals or exceeds 40.00%.
"Initial Optional Termination Date": The Distribution Date immediately
following the Due Period with respect to which the aggregate Scheduled Principal
Balances of the Mortgage Loans have declined to less than 10% of the aggregate
Scheduled Principal Balances on the Closing Date.
"Interest Carry Forward Amount": As to any Class, the definition
therefor having the corresponding designation as such Class.
"Interest Determination Date": With respect to the first Accrual Period
for the Class AF-1 Certificates and the Group II Certificates, November 10,
1997, and with respect to any subsequent Accrual Period for the Class AF-1
Certificates and the Group II Certificates, the second London Business Day
preceding such Accrual Period.
"Interest Fund": The Fund created and maintained by the 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 and assigns in such capacity.
"Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.
"Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.
"Master Servicing Fee": As applicable, the Group I Master Servicing Fee
or the Group II Master Servicing Fee.
"Meritech": Meritech Mortgage Services, Inc., a Texas corporation.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., and its successors (99
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇).
"Mortgage Loan Group": Either Group I or Group II.
"Mortgage Loans": The mortgage loans listed on Schedule I.
"Net Rate": As to each Mortgage Loan and Distribution Date, the related
Mortgage Interest Rate less the sum of the Group I or Group II Servicing Fee
Rate and the Group I or Group II Master Servicing Fee Rate, in each case, as
applicable.
"Notice Address": For purposes of Section 11.05 of the Standard Terms,
the addresses of the Depositor, the Master Servicer, the Custodian, the
Certificate Registrar and the Paying Agent and the Trustee, are as follows:
(i) If to the Depositor:
Saxon Asset Securities Company.
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii) If to the Master Servicer, Custodian, Certificate Registrar
and Paying Agent:
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Master Servicing
(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 to
rely on the Paying Agent for the determination of One Month LIBOR.
"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).
"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 AF-6, Class MF-1, Class MF-2, Class BF, Class
AV-1, Class AV-2, 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.
"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 November 6, 1997, 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 Schedule I.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Meritech or Ameriquest Mortgage Company and their permitted
successors and assigns.
"State": New York.
"Subaccount Definitions":
"Balance": With respect to each Subaccount, on any
Distribution date, the balance, if any, of such Subaccount immediately
prior to such Distribution Date (or, in the case of the first
Distribution Date, an amount equal to the initial balance of such
Subaccount as of the Closing Date) less the amounts to be applied on
such Distribution Date to reduce the balance of such Subaccount.
"Subaccounts": Any one of the Subaccounts created pursuant to
Section 5.05(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(a)(i) hereof. Section 5.05(a)(i) hereof. Section 5.05(a)(i) hereof.
"AF-4 Balance" : The Balance of the "AF-5 Balance" : The Balance of "AF-6 Balance" : The Balance of
Subaccount AF-4. Subaccount AF-5. Subaccount AF-6.
"AF-4 Monthly Interest Amount": "AF-5 Monthly Interest Amount": "AF-6 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-4 Balance during the Accrual AF-5 Balance during the Accrual AF-6 Balance during the Accrual
Period for the Class AF-4 Period for the Class AF-5 Period for the Class AF-6
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-4": The Subaccount "Subaccount AF-5": The Subaccount "Subaccount AF-6": The Subaccount
by that name created pursuant to by that name created pursuant to by that name created pursuant to
Section 5.05(a)(i) hereof. Section 5.05(a)(i) hereof. Section 5.05(a)(i) 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.
"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(a)(i) hereof. Section 5.05(a)(i) hereof. Section 5.05(a)(i) hereof.
Group II:
"AV-1 Balance" : The Balance of the Subaccount AV-1. "AV-2 Balance" : The Balance of the Subaccount
AV-2.
"AV-1 Monthly Interest Amount": With respect to any "AV-2 Monthly Interest Amount": With respect to any
Distribution Date, the interest accrued on the AV-1 Distribution Date, the interest accrued on the AV-2
Balance during the Accrual Period for the Class AV-1 Balance during the Accrual Period for the Class AV-2
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 AV-2": The Subaccount by that name
created pursuant to Section 5.05(a)(i) hereof. created pursuant to Section 5.05(a)(i) hereof.
"MV-1 Balance" : The Balance of Subaccount MV-1. "MV-2 Balance" : The Balance of Subaccount MV-2.
"MV-1 Monthly Interest Amount": With respect to any "MV-2 Monthly Interest Amounts": With respect to
Distribution Date, the interest accrued on the MV-1 any Distribution Date, the interest accrued on the MV-2
Balance during the Accrual Period for the Class MV-1 Balance during the Accrual Period for the Class MV-2
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount MV-1": The Subaccount by that name "Subaccount MV-2": The Subaccount by that name
created pursuant to Section 5.05(a)(i) hereof. created pursuant to Section 5.05(a)(i) hereof.
"BV Balance": The Balance of Subaccount BV.
"BV Monthly Interest Amounts": With respect to any Distribution Date, the
interest accrued on the BV Balance during the Accrual Period for the Class BV
Certificates for that Distribution Date at the Group II Net Rate.
"Subaccount BV": The Subaccount by that name created pursuant to Section 5.05)a)(i) hereof.
"Subgroup A": The pool of Mortgage Loans identified in the related
Schedules of Mortgage Loans as having been assigned to Subgroup A within Group
II, including any Subgroup A Qualified Substitute Mortgage Loans delivered in
replacement thereof.
"Subgroup B": The pool of Mortgage Loans identified in the related
Schedules of Mortgage Loans as having been assigned to Subgroup B within Group
II, including any Subgroup B Qualified Substitute Mortgage Loans delivered in
replacement thereof.
"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 hereof.
"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, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ & Co. Incorporated, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated
"Underwriting Agreement": The Underwriting Agreement dated November 6,
1997, between the Depositor and SMI and the Underwriters.
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans
To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, the distribution of all other sums
distributable under the Trust Agreement with respect to the Certificates and the
performance of the covenants contained in the Trust Agreement, the Depositor
hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Certificateholders all the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from: (i) the Mortgage Loans, which the Depositor is causing to be
delivered to the Trustee (or the Custodian) herewith (and all 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
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, AF-6, MF-1, MF-2 and BF, pro rata, the AF-1,
AF-2, AF-3, AF-4, AF-5, AF-6, 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;
(E) to Subaccount AF-5 until the AF-5 Balance is
reduced to zero;
(F) to Subaccount AF-6 until the AF-6 Balance is
reduced to zero;
(G) to Subaccount MF-1 until the MF-1 Balance is
reduced to zero;
(H) to Subaccount MF-2 until the MF-2 Balance is
reduced to zero; and
(I) 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 Balance of the Class of
Certificates having the corresponding class designation 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-6, 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 AV-2 until the AV-2 Balance is
reduced to zero;
(C) to Subaccount MV-1 until the MV-1 Balance is
reduced to zero;
(D) to Subaccount MV-2 until the MV-2 Balance is
reduced to zero;
(E) 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 Balance of the Class of
Certificates having the corresponding class designation 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 and Subaccount AV-2.
Section 3.02. Certificate Distributions.
(a) 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 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
Carryforward 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 the Trustee) shall make the following allocations from the
Distribution Account of an amount equal to the Group II Interest Funds in the
following order of priority, and each such allocation shall be made only after
all preceding allocations shall have been made until such amount shall have been
fully allocated:
(i) to the Group II Class A Certificates, the Current
Interest and any Interest Carry Forward Amount for
the Group II 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 II
Class A Certificates, such amount will be distributed
pro rata among each Class of the Group II Class A
Certificates based on the ratio of (x) the Current
Interest and Interest Carry Forward Amount for each
Class of the Group II Class A Certificates to (y) the
total amount of Current Interest and any Interest
Carry Forward Amount for the Group II Class A
Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1
Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2
Current Interest;
(iv) to the Class BV 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 the Trustee) shall make the following allocations from the
Distribution Account of an amount equal to the Group I Principal Distribution
Amount in the following order of priority, and each such allocation shall be
made only after all preceding allocations shall have been made until such amount
shall have been fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Group I
Class A Principal Distribution Amount to be
distributed as follows: (x) the Class AF-6
Distribution Amount to the Class AF-6 Certificates;
and (y) the balance of the Group I Class A Principal
Distribution Amount sequentially to the Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5 and
Class AF-6 Certificates so that no such distribution
pursuant to this clause (y) will be made to any such
Class until the Certificate Principal Balances of all
Group I Class A Certificates with a lower
denomination shall have been reduced to zero;
provided, however, that, on any Distribution Date on
which the Group I Class A Certificate Principal
Balance is equal to or greater than the Scheduled
Principal Balances of Group I, the Group I Class A
Principal Distribution Amount will be distributed pro
rata and not sequentially to the Group I Class A
Certificates;
(ii) to the Class MF-1 Certificates, the Group I Class
MF-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iii) to the Class MF-2 Certificates, the Group I Class
MF-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iv) to the Class BF Certificates, the Group I Class BF
Principal Distribution Amount, until the Certificate
Principal Balance thereof has been reduced to zero;
(v) any remainder pursuant to Section 3.02(e) hereof;
provided, however, that, (i) if a Group I Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group I
Class A Certificates has been reduced to zero, the Class MF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MF-1 Certificates has been reduced to zero, the Class MF-2 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; and (c) after the Certificate Principal Balance of the
Class MF-2 Certificates has been reduced to zero, the Class BF Principal
Distribution Amount shall equal the Group I Principal Distribution Amount; and
(ii)(a) if the Group I Class A Certificate Principal Balance has been reduced to
zero before November 2000, the Class MF-1 Principal Distribution Amount shall
equal the Group I Principal Distribution Amount until the Distribution Date in
November 2000 (or until the Class MF-1 Certificate Principal Balance has been
reduced to zero); (b) if the Class MF-1 Certificate Principal Balance has been
reduced to zero before November 2000, the Class MF-2 Principal Distribution
Amount shall equal the Group I Principal Distribution Amount until the
Distribution Date in November 2000 (or until the Class MF-2 Certificate
Principal Amount has been reduced to zero); and (c) if the Class MF-2
Certificate Principal Balance has been reduced to zero before November 2000, the
Class BF Certificate Principal Distribution Amount shall equal the Group I
Principal Distribution Amount until the Distribution Date in November 2000.
(d) 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 an amount equal to the Group II Principal Distribution
Amount in the following order of priority, and each such allocation shall be
made only after all preceding allocations shall have been made until such amount
shall have been fully allocated for such Distribution Date:
(i) to the Group II Class A Certificates, the Group II
Class A Principal Distribution Amount, to be
distributed as follows: (x) amounts constituting
Principal Funds attributable to Subgroup A to the
Class AV-1 Certificates and amounts constituting
Principal Funds attributable to Subgroup B to the
Class AV-2 Certificates and (y) the excess of the
Class A Principal Distribution Amount over the
amounts specified in clause (x) shall be prorated
between the Class AV-1 Certificates and the Class
AV-2 Certificates, based on the outstanding
Certificate Principal Balances thereof; provided,
however, when the Certificate Principal Balance of
the Class AV-1 Certificates or the Class AV-2
Certificates has been reduced to zero, the Class A
Principal Distribution Amount shall be distributed to
the remaining Group II Class A Certificates;
(ii) to the Class MV-1 Certificates, the Group II Class
MV-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iii) to the Class MV-2 Certificates, the Group II Class
MV-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof has been
reduced to zero;
(iv) to the Class BV Certificates, the Group II Class BV
Principal Distribution Amount, until the Certificate
Principal Balance thereof has been reduced to zero;
and
(v) any remainder pursuant to Section 3.02(f) hereof;
provided, however, that, (i) if a Group II Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group II
Class A Certificates has been reduced to zero, the Group II Class MV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MV-1 Certificates has been reduced to zero, the Class MV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (c) after the Certificate Principal Balance of the
Class MV-2 Certificates has been reduced to zero, the Class BV Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (ii)(a) if the Group II Class A Certificate
Principal Balance has been reduced to zero before November 2000, the Class MV-1
Principal Distribution Amount shall equal the Group II Principal Distribution
Amount until the Distribution Date in November 2000 (or until the Class MV-1
Certificate Principal Balance has been reduced to zero); (b) if the Class MV-1
Certificate Principal Balance has been reduced to zero before November 2000, the
Class MV-2 Principal Distribution Amount shall equal the Group II Principal
Distribution Amount until the Distribution Date in November 2000 (or until the
Class MV-2 Certificate Principal Amount has been reduced to zero); and (c) if
the Class MV-2 Certificate Principal Balance has been reduced to zero before
November 2000, the Class BV Certificate Principal Distribution Amount shall
equal the Group II Principal Distribution Amount until the Distribution Date in
November 2000.
(e) 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(a)(v) and (c)(v)
hereof and, to the extent required to make the allocations set forth below in
clauses (i) through (vii) of this Section 3.02(e), Section 3.02(f)(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 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
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;
(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;
(ix) if a Group I Subordinated Trigger Event exists, to
the Class BF, Class MF-2 and Class MF-1 Certificates,
in that order (such that no such amounts shall be
distributed to any such Class unless the Certificate
Principal Balance of each such Class having lower
priority has been reduced to zero), the excess of (x)
the Group I Principal Funds for such Distribution
Date over (y) the sum of (A) the Group I Class A
Principal Distribution Amount, (B) the Group I Class
MF-1 Principal Distribution Amount, (C) the Group I
Class MF-2 Principal Distribution Amount and (D) the
Group I Class BF Principal Distribution Amount in
each case for such Distribution Date; and
(x) the remainder pursuant to Section 3.02(g) hereof.
(f) 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(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
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) 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;
(ix) on any Distribution Date on or before the last
Distribution Date with respect to the Class AV-1
Certificates or the Class AV-2 Certificates, pro
rata, to the Class AV-1 Certificates, the Class AV-1
Certificates Carryover and to the Class AV-2
Certificates, the Class AV-2 Certificates Carryover;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) if a Group II Subordinated Trigger Event exists, to
the Class BV, Class MV-2 and Class MV-1 Certificates,
in that order (such that no such amounts shall be
distributed to any such Class unless the Certificate
Principal Balance of each such Class having lower
priority has been reduced to zero), the excess of (x)
the Group II Principal Funds for such Distribution
Date over (y) the sum of (A) the Group II Class A
Principal Distribution Amount, (B) the Group II Class
MV-1 Principal Distribution Amount, (C) the Group II
Class MV-2 Principal Distribution Amount and (D) the
Group II Class BV Principal Distribution Amount in
each case for such Distribution Date; and
(xiv) 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)(x) and
(f)(xiv) hereof in the following order of priority, and each such allocation
shall be made only after the preceding allocations shall have been made until
such remainders have been fully allocated:
(i) to the Class C Certificates, the Class C Distribution
Amount; and
(ii) to the Class R Certificates, the remainder.
(h) On each Distribution Date, the Trustee (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
(iii) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(i) On each Distribution Date the Trustee (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.Certificates so that no such
distribution shall be made to any such Class until the Certificate Principal
Balances of all prior Classes shall have been reduced to zero;
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 Group I or Group II Trigger Event or a Group I
or Group II Subordinated Trigger Event has occurred.
Section 3.04. Reports by Master Servicer.
(a) On 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 Group I or
Group II Extra Principal Distribution Amount and any Class
MF-1, Class MF-2, Class BF, Class MV-1, Class MV-2 or Class BV
Applied Realized Loss Amount with respect to, and any Class
MF-1, Class MF-2, Class BF, Class MV-1, Class MV-2 or Class BV
Unpaid Realized Loss at, such Distribution Date;
(d) the principal balance after giving effect to any
distribution allocable to principal; and
(e) any Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2 and Class
BF Interest Carry Forward Amount, any Class AV-1, Class AV-2,
Class MV-1, Class MV-2 and Class BV Interest Carry Forward
Amount or any Class AV-1, Class AV-2, Class MV-1, Class MV-2
and Class BV Certificates Carryover ;
(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 Class AF-1 Certificates
and the Group II Certificates for the current Accrual Period
and, if the Pass-Through Rates for any Class of the Group I
Certificates for the current Accrual Period is based on the
Group I Net Rate, the Pass-Through Rates for the Group I
Certificates with respect to which the Group I Net Rate
applies.
(b) On each Distribution Date, based on information provided by the
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 1997-3. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $600,308,000, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates and the initial
Certificate Principal Balance for each such Class:
Initial Certificate
Class Principal Balance
----- -----------------
AF-1 $124,075,000
AF-2 $22,000,000
AF-3 $10,000,000
AF-4 $15,000,000
AF-5 $16,414,000
AF-6 $20,832,000
MF-1 $10,533,000
MF-2 $9,363,000
BF $5,852,000
AV-1 $124,125,000
AV-2 $178,938,000
MV-1 $28,384,000
MV-2 $21,974,000
BV $12,818,000
C (1)
R (2)
---------------------
(1)The Class C Certificates have no stated principal balance or Pass-Through
Rate and are entitled to receive the Class C Distribution Amount.
(2)The Class R Certificates have no stated principal balance or Pass-Through
Rate and are not entitled to any scheduled distributions of principal or
interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. 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 $154,374.36 (of which $125,154.99 is allocated to Group I
and $29,219.37 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 November 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; Schedules and Exhibits; Governing
Law.
(a) The Certificates shall be substantially in the respective forms set
forth in the Exhibits hereto. All Certificates shall be dated the date of their
execution.
(b) Each of the Schedules and Exhibits attached hereto or referenced
herein is incorporated herein by reference as contemplated by the Standard
Terms.
(c) In accordance with Section 11.04 of the Standard Terms, this
Agreement shall be construed in accordance with and governed by the laws of the
State, without regard to any conflicts of laws principles thereof.
Section 5.03. REMIC Administration.
(a) Pooling REMIC. (i) The beneficial ownership of the Pooling REMIC
shall be evidenced by interests having the following terms:
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of
Designation Balance Rate REMIC Provisions
Group I
Subaccount AF-1 $124,075,000 (1) Regular
Subaccount AF-2 $22,000,000 (1) Regular
Subaccount AF-3 $10,000,000 (1) Regular
Subaccount AF-4 $15,000,000 (1) Regular
Subaccount AF-5 $16,414,000 (1) Regular
Subaccount AF-6 $20,832,000 (1) Regular
Subaccount MF-1 $10,533,000 (1) Regular
Subaccount MF-2 $9,363,000 (1) Regular
Subaccount BF $5,852,000 (1) Regular
Group II
Subaccount AV-1 $124,125,000 (2) Regular
Subaccount AV-2 $178,938,000 (2) Regular
Subaccount MV-1 $28,384,000 (2) Regular
Subaccount MV-2 $21,974,000 (2) Regular
Subaccount BV $12,818,000 (2) Regular
Subaccount R (3) (3) Residual
---------------------
(1) On any Distribution Date, the Group I Net Rate.
(2) On any Distribution Date, the Group II Net Rate.
(3) Subaccount R is not issued with a Balance or a Pass-Through Rate.
(ii) Subaccount R shall be issued in fully registered
certificate form as part of the Class R Certificate. All other
Subaccounts shall be deemed issued as non-certificated interests and
shall constitute assets of the Issuing REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans
and the Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC
shall be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2,
Class BF, Class AV-1, Class AV-2, 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 shall causd 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 November 25, 2029.
Section 5.04. 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) 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 5.05. Optional Termination.
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, Meritech may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Mortgage Loans and all
property theretofore acquired in respect of any Mortgage Loan by foreclosure,
deed in lieu of foreclosure, or otherwise then remaining in the Trust Estate at
a price equal to 100% of the aggregate Scheduled Principal Balances of the
Mortgage Loans (including any REO Property) as of the day of purchase minus
amounts remitted from the Master Servicer Custodial Account to the Asset
Proceeds Account representing collections of principal on the Mortgage Loans
during the current Remittance Period, plus one month's interest on such amount,
plus in all cases all accrued and unpaid Servicing Fees and Master Servicing
Fees plus any unpaid Reimbursement Amounts plus the aggregate amount of any
unreimbursed Advances and any Advances which Meritech or any other Servicer or
the Master Servicer has theretofore failed to remit; but in any event such
purchase amount shall be sufficient to retire all Group I and Group II
Certificates in full. In connection with such purchase, the Master Servicer
shall remit to the Trustee (or the Paying Agent on behalf of the Trustee) all
amounts then on deposit in the Master Servicer Custodial Account for deposit to
the Asset Proceeds Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
(b) Meritech shall direct the Trustee to adopt and the Trustee shall
adopt, as to the REMIC, a plan of complete liquidation as contemplated by
Section 860F(a)(4) of the Code and as prepared by the Master Servicer, and shall
provide to the Trustee an Opinion of Counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that such purchase and
liquidation constitutes, as to the REMIC, a Qualified Liquidation. In addition,
Meritech shall provide to the Trustee an Opinion of Counsel acceptable to the
Trustee to the effect that such purchase and liquidation does not constitute a
preference payment pursuant to the United States Bankruptcy Code.
(c) Promptly following any purchase described in this Section 5.07, the
Trustee will release the Trustee Mortgage Loan File to Meritech or otherwise
upon its order.
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 of the Master Servicer
hereunder and (b) as Certificate Registrar and 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.
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Custodian,
the Certificate Registrar, the Paying Agent 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 November 1,
1997.
SAXON ASSET SECURITIES COMPANY
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Master Servicer, Custodian, Certificate
Registrar and Paying Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
CITIBANK, N.A.
not in its individual capacity but solely as
Trustee under the Trust Agreement
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me November 13, 1997,
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a Vice President of Saxon Asset Securities Company, a
Virginia corporation, on behalf of the corporation.
-----------------------------------
Notary Public
My Commission expires:
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me on November 13,
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:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me November 13,
1997, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an Vice President of Citibank, N.A., a national
banking association, on behalf of the bank.
-------------------------------
Notary Public
My Commission expires:
Schedule I
Mortgage Loans
A. Group I Mortgage Loans.
B. Group II Mortgage Loans.
Subgroup A
Subgroup B
Schedule II
Sales Agreement
Schedule III
Mortgage Loans for which first payment to the Trust will
be after November 1, 1997