SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) June 27, 1996
The Money Store Inc. (as Representative under a Pooling and
Servicing Agreement dated as of May 31, 1996 providing for the
issuance of The Money Store Asset Backed Certificates, Series
1996-B) and each of the Originators listed on Schedule A
attached hereto.
THE MONEY STORE INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 33-98734 22-2293022
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
2840 MORRIS AVENUE, UNION, NEW JERSEY 07083
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (908) 686-2000
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. OTHER EVENTS
The Money Store Inc., as representative (the "Representative") of the
Originators listed on Schedule A attached hereto, registered issuances of up to
$3,000,000,000 principal amount of TMS Asset Backed Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 33-98734) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, the Representative caused the issuance of $1,250,000,000
principal amount of The Money Store Asset Backed Certificates, Series 1996-B
(the "Certificates"), on June 27, 1996 (the "Closing Date"). This Current Report
on Form 8-K is being filed to file a detailed description of the Initial
Mortgage Loans, a copy of the Pooling and Servicing Agreement referred to below
and the Underwriting Agreement entered into among the Representative, the
Originators and Lehman Brothers Inc., as representative of the underwriters
named therein.
The Certificates were issued pursuant to a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of May 31, 1996 (the "Cut-Off
Date"), among the Representative, the Originators and The Bank of New York, as
trustee (the "Trustee"), and consist of Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class A-12, Class A-13, Class A-14, Class A-15 and Class A-16 Certificates
(collectively, the "Class A Certificates") and Class R Certificates (the "Class
R Certificates"). As of the Closing Date, the initial principal amount of the
(i) Class A-1 Certificates was $168,932,000, (ii) Class A-2 Certificates was
$84,260,000, (iii) Class A-3 Certificates was $84,673,000, (iv) Class A-4
Certificates was $95,170,000, (v) Class A-5 Certificates was $157,038,000, (vi)
Class A-6 Certificates was $65,967,000, (vii) Class A-7 Certificates was
$98,867,000, (viii) Class A-8 Certificates was $107,254,000, (ix) Class A-9
Certificates was $67,839,000, (x) Class A-10 Certificates was $125,000,000, (xi)
Class A-11 Certificates was $75,000,000, (xii) Class A-12 Certificates was
$18,958,000, (xiii) Class A-13 Certificates was $46,341,000, (xiv) Class A-14
was $14,337,000, (xv) Class A-15 was $20,364,000 and (xvi) Class A-16 was
$20,000,000.
Capitalized terms not defined herein have the meanings assigned in the
Pooling and Servicing Agreement.
CERTAIN CHARACTERISTICS OF POOL I
Set forth below is a description of certain characteristics of Pool I and
the Initial Pool I Mortgage Loans. Certain of the percentage columns may not sum
to 100.00% due to rounding.
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Cutoff Date Balance Loans % Balance Coupon Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 25,000.00 2,729 6.8 47,262,028.85 less than 7.000 1 0.0 42,478.12
25,000.01- 50,000.00 4,248 22.7 158,460,111.55 7.001- 7.500 3 0.0 98,101.88
50,000.01- 75,000.00 2,689 23.8 165,649,319.15 7.501- 8.000 13 0.2 1,166,201.25
75,000.01- 100,000.00 1,357 17.0 118,139,055.14 8.001- 8.500 23 0.4 2,750,800.66
100,000.01- 125,000.00 635 10.2 70,731,524.16 8.501- 9.000 593 7.0 49,083,481.56
125,000.01- 150,000.00 368 7.3 50,614,244.93 9.001- 9.500 833 8.8 61,360,086.36
150,000.01- 175,000.00 156 3.6 25,293,357.48 9.501-10.000 2,060 20.3 141,443,666.08
175,000.01- 200,000.00 103 2.8 19,433,844.37 10.001-10.500 1,500 13.1 91,432,415.73
200,000.01- 225,000.00 64 2.0 13,598,320.93 10.501-11.000 2,179 18.1 125,828,001.78
225,000.01- 250,000.00 43 1.5 10,200,905.27 11.001-11.500 1,496 9.5 66,538,638.31
250,000.01- 275,000.00 15 0.6 3,911,760.72 11.501-12.000 1,550 9.9 69,197,210.42
275,000.01- 300,000.00 12 0.5 3,511,503.70 12.001-12.500 1,208 6.4 44,463,351.32
300,000.01- 325,000.00 8 0.4 2,497,820.09 12.501-13.000 437 2.8 19,548,927.77
325,000.01- 350,000.00 3 0.1 1,007,672.33 13.001-13.500 157 1.1 7,634,231.92
350,000.01- 375,000.00 4 0.2 1,465,194.18 13.501-14.000 204 1.3 9,211,207.25
375,000.01- 400,000.00 7 0.4 2,697,431.87 14.001-14.500 96 0.6 4,081,943.96
400,000.01- 425,000.00 1 0.1 410,956.84 14.501-15.000 69 0.3 2,049,182.06
425,000.01- 450,000.00 1 0.1 439,815.49 15.001-15.500 14 0.1 593,707.65
475,000.01- 500,000.00 3 0.2 1,482,698.19 15.501-16.000 8 0.0 246,341.48
16.501-17.000 1 0.0 25,500.00
Total: 12,446 100.0 696,807,565.24 17.501-18.000 1 0.0 12,089.68
NZ Min: 4,913.60 Max: 497,744.13 Avg: 55,986.47 Total: 12,446 100.0 696,807,565.24
NZ Min: 7.00 0 Max: 17.990 WAC10.710
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date No of Cutoff Date
Original Balance Loans % Balance Stated Remaining Term Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 25,000.00 2,717 6.7 46,980,146.14
25,000.01- 50,000.00 4,253 22.7 158,440,402.33
50,000.01- 75,000.00 2,687 23.7 165,361,170.14 1-12 3 0.0 118,526.42
75,000.01- 100,000.00 1,359 16.9 118,054,873.79 25- 36 4 0.0 37,191.05
100,000.01- 125,000.00 640 10.2 71,169,568.91 37- 48 7 0.0 95,889.63
125,000.01- 150,000.00 370 7.3 50,850,122.47 49- 60 266 0.5 3,728,336.20
150,000.01- 175,000.00 155 3.6 25,118,797.33 61- 72 19 0.0 317,015.19
175,000.01- 200,000.00 104 2.8 19,608,404.52 73- 84 107 0.4 2,540,986.43
200,000.01- 225,000.00 64 2.0 13,598,320.93 85- 96 33 0.1 557,302.96
225,000.01- 250,000.00 43 1.5 10,200,905.27 97 -108 13 0.1 806,099.20
250,000.01- 275,000.00 15 0.6 3,911,760.72 109-120 1,185 3.8 26,760,917.87
275,000.01- 300,000.00 12 0.5 3,511,503.70 121-132 3 0.0 79,408.26
300,000.01- 325,000.00 8 0.4 2,497,820.09 133-144 15 0.1 507,676.91
325,000.01- 350,000.00 3 0.1 1,007,672.33 145-156 1 0.0 27,100.00
350,000.01- 375,000.00 4 0.2 1,465,194.18 157-168 20 0.1 968,993.20
375,000.01- 400,000.00 7 0.4 2,697,431.87 169-180 5,687 40.7 283,408,766.08
400,000.01- 425,000.00 1 0.1 410,956.84 181-192 1 0.0 48,353.12
425,000.01- 450,000.00 1 0.1 439,815.49 193-204 1 0.0 47,000.00
475,000.01- 500,000.00 3 0.2 1,482,698.19 229-240 515 4.2 29,216,035.67
277-288 1 0.0 26,319.16
Total: 12,446 100.0 696,807,565.24 289-300 320 2.2 15,248,380.51
301-312 1 0.0 23,130.95
NZ Min: 5,000.00 Max: 500,000.0 Avg: 56,118.22 325-336 1 0.0 39,661.64
337-348 12 0.2 1,276,761.07
349-360 4,231 47.5 330,927,713.72
Total: 12,446 100.0 696,807,565.24
Min: 1 Max : 360 NZ WA: 266
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Seasoning Loans % Balance States Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
Less than 0 5,229 39.9 277,821,476.20 CA 1,047 10.1 70,631,071.63
1-6 7,075 58.7 409,269,103.50 NY 952 9.3 65,022,331.49
7-12 112 1.2 8,098,869.91 IL 864 7.3 50,772,903.17
13- 18 15 0.1 744,538.67 PA 902 6.5 45,179,415.60
19- 24 5 0.0 284,226.57 OH 792 6.0 42,152,319.85
25- 30 1 0.0 39,661.64 WA 665 5.9 40,854,598.10
67- 72 5 0.0 205,538.20 NJ 555 5.8 40,640,618.38
73- 78 4 0.0 344,150.53 FL 567 4.5 31,074,618.49
IN 653 4.3 29,716,172.19
Total: 12,446 100.0 696,807,565.24 MI 455 3.0 20,866,518.71
NC 353 3.0 20,611,017.70
Min: 0 Max: 76 WA: 1.215 MO 447 2.7 18,815,194.86
GA 337 2.6 18,406,615.87
CO 335 2.3 16,287,211.47
MA 243 2.1 14,873,049.26
No. of Cutoff Date MD 223 2.1 14,285,344.32
CLTV Loans % Balance UT 236 1.9 13,402,257.72
AZ 224 1.8 12,827,546.36
0.0001- 5.0000 2 0.0 14,710.86 KY 236 1.6 11,393,946.75
5.0001- 10.0000 33 0.1 589,696.80 SC 216 1.5 10,689,937.51
10.0001- 15.0000 58 0.2 1,049,394.64 OR 193 1.4 9,862,792.21
15.0001- 20.0000 73 0.2 1,715,487.87 ID 189 1.4 9,812,565.32
20.0001- 25.0000 108 0.4 3,043,755.46 MN 182 1.4 9,485,265.54
25.0001- 30.0000 154 0.7 4,654,541.94 TN 175 1.3 8,715,024.50
30.0001- 35.0000 195 1.0 6,838,927.48 NV 163 1.2 8,503,372.04
35.0001- 40.0000 257 1.6 10,812,997.03 CT 121 1.1 7,436,965.35
40.0001- 45.0000 298 1.8 12,431,845.92 NM 158 1.1 7,366,629.07
45.0001- 50.0000 330 2.1 14,939,089.65 ME 168 1.0 6,916,572.28
50.0001- 55.0000 385 2.7 18,990,612.73 WI 127 0.8 5,864,435.12
55.0001- 60.0000 594 4.6 31,878,405.71 TX 102 0.8 5,533,222.79
60.0001- 65.0000 932 7.2 50,246,552.48 DE 91 0.7 4,771,415.99
65.0001- 70.0000 1,258 10.5 72,934,433.36 VA 82 0.7 4,567,472.10
70.0001- 75.0000 1,734 14.8 103,302,550.17 RI 62 0.6 4,151,155.10
75.0001- 80.0000 4,073 34.8 242,201,659.76 KS 109 0.6 3,889,588.67
80.0001- 85.0000 932 7.9 55,139,629.63 NH 70 0.5 3,402,779.11
85.0001- 90.0000 874 8.3 57,810,265.86 DC 36 0.4 2,599,342.22
90.0001- 95.0000 101 0.6 4,346,726.31 MS 35 0.2 1,607,358.35
95.0001-100.0000 55 0.6 3,866,281.58 VT 19 0.1 980,882.40
IA 17 0.1 848,286.93
Total: 12,446 100.0 696,807,565.24 MT 7 0.1 391,015.40
SD 7 0.0 311,944.15
NZ Min: 4.6 Max: 100.0 NZ WA: 72.31 OK 8 0.0 308,686.41
NE 10 0.0 302,375.96
AL 2 0.0 209,812.19
WY 2 0.0 183,956.72
ND 6 0.0 172,486.01
WV 2 0.0 91,420.86
VI 1 0.0 18,053.02
Total: 12,446 100.0 696,807,565.24
</TABLE>
CERTAIN CHARACTERISTICS OF POOL II
Set forth below is a description of certain characteristics of Pool II and
the Initial Pool II Mortgage Loans. Certain of the percentage columns may not
sum to 100.00% due to rounding.
<TABLE>
<CAPTION>
No. of Cutoff Date
Cutoff Date Balance Loans % Balance
<S> <C> <C> <C>
0.01- 25,000.00 26 0.4 577,997.03
25,000.01- 50,000.00 429 11.1 17,075,534.64
50,000.01- 75,000.00 557 22.8 34,926,440.94
75,000.01- 100,000.00 379 21.7 33,216,414.85
100,000.01- 125,000.00 202 14.6 22,329,374.26
125,000.01- 150,000.00 92 8.2 12,576,186.05
150,000.01- 175,000.00 63 6.7 10,212,554.45
175,000.01- 200,000.00 36 4.4 6,700,172.22
200,000.01- 225,000.00 28 3.9 5,916,097.02
225,000.01- 250,000.00 14 2.2 3,338,062.58
250,000.01- 275,000.00 3 0.5 784,839.48
275,000.01- 300,000.00 3 0.6 875,102.44
300,000.01- 325,000.00 2 0.4 612,295.35
325,000.01- 350,000.00 3 0.7 998,125.00
350,000.01- 375,000.00 3 0.7 1,110,101.49
375,000.01- 400,000.00 2 0.5 768,000.00
400,000.01- 425,000.00 2 0.5 826,879.00
425,000.01- 450,000.00 1 0.3 449,741.09
Total: 1,845 100.0 153,293,917.89
NZ Min: 13,995.25 Max: 449,741.09 Avg: 83,086.13
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
Original Balance Loans % Balance
<S> <C> <C> <C>
0.01- 25,000.00 26 0.4 577,997.03
25,000.01- 50,000.00 425 11.0 16,876,404.74
50,000.01- 75,000.00 559 22.8 34,985,175.70
75,000.01- 100,000.00 379 21.6 33,168,532.11
100,000.01- 125,000.00 204 14.7 22,517,652.14
125,000.01- 150,000.00 92 8.2 12,576,186.05
150,000.01- 175,000.00 63 6.7 10,212,554.45
175,000.01- 200,000.00 36 4.4 6,700,172.22
200,000.01- 225,000.00 28 3.9 5,916,097.02
225,000.01- 250,000.00 14 2.2 3,338,062.58
250,000.01- 275,000.00 3 0.5 784,839.48
275,000.01- 300,000.00 3 0.6 875,102.44
300,000.01- 325,000.00 2 0.4 612,295.35
325,000.01- 350,000.00 3 0.7 998,125.00
350,000.01- 375,000.00 3 0.7 1,110,101.49
375,000.01- 400,000.00 2 0.5 768,000.00
400,000.01- 425,000.00 2 0.5 826,879.00
425,000.01- 450,000.00 1 0.3 449,741.09
Total: 1,845 100.0 153,293,917.89
NZ Min: 14,000.00 Max: 450,000.00 Avg: 83,225.61
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
Coupon Loans % Balance
<S> <C> <C> <C>
Less than 7.000 25 1.5 2,291,942.13
7.001- 7.500 64 3.8 5,900,479.71
7.501- 8.000 202 12.1 18,485,076.24
8.001- 8.500 238 13.5 20,722,316.92
8.501- 9.000 426 23.6 36,191,211.77
9.001- 9.500 271 14.2 21,826,076.99
9.501-10.000 327 15.7 24,055,802.59
10.001-10.500 86 5.0 7,656,968.86
10.501-11.000 69 3.9 5,952,151.96
11.001-11.500 49 2.6 4,022,979.11
11.501-12.000 48 2.2 3,357,503.01
12.001-12.500 23 0.9 1,438,256.59
12.501-13.000 10 0.5 775,803.00
13.001-13.500 7 0.4 617,349.01
Total: 1,845 100.0 153,293,917.89
NZ Min: 6.000 Max: 13.500 WAC: 9.116
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
Stated Remaining Term Loan % Balance
<S> <C> <C> <C>
169-180 5 0.2 253,444.56
229-240 1 0.0 38,962.14
325-336 1 0.0 57,749.96
337-348 24 1.4 2,213,846.01
349-360 1,814 98.3 150,729,915.22
Total: 1,845 100.0 153,293,917.89
Min: 178 Max : 360 NZ WA: 359
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
Seasoning Loans % Balance
<S> <C> <C> <C>
Less than 0 1,134 60.1 92,093,519.26
1-6 639 36.3 55,667,989.37
7-12 54 2.5 3,890,044.45
13-18 17 1.0 1,584,614.85
25-30 1 0.0 57,749.96
Total: 1,845 100.0 153,293,917.89
Min: 0 Max: 28 WA: 1.114
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
CLTV Loans % Balance
<S> <C> <C> <C>
10.0001- 15.0000 2 0.0 51,000.00
15.0001- 20.0000 3 0.1 125,000.00
20.0001- 25.0000 7 0.2 312,480.28
25.0001- 30.0000 12 0.3 487,414.39
30.0001- 35.0000 18 0.6 881,004.22
35.0001- 40.0000 20 0.7 1,074,357.30
40.0001- 45.0000 27 1.0 1,577,583.05
45.0001- 50.0000 47 2.1 3,206,253.81
50.0001- 55.0000 47 2.0 3,042,676.50
55.0001- 60.0000 82 3.8 5,759,107.34
60.0001- 65.0000 256 11.8 18,110,148.60
65.0001- 70.0000 211 10.8 16,544,401.84
70.0001- 75.0000 343 20.3 31,177,789.21
75.0001- 80.0000 580 35.3 54,107,508.52
80.0001- 85.0000 132 7.6 11,607,073.48
85.0001- 90.0000 28 1.6 2,431,271.30
90.0001- 95.0000 11 0.5 733,060.71
95.0001-100.0000 19 1.3 2,065,787.34
Total: 1,845 100.0 153,293,917.89
NZ Min: 12.7 Max: 100. 0 NZ WA: 72.4
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
States Loans % Balance
<S> <C> <C> <C>
IL 150 9.6 14,720,763.70
CA 115 9.2 14,058,315.78
OH 174 7.9 12,072,469.54
MI 168 7.3 11,160,107.01
WA 110 6.5 10,039,423.55
NJ 82 5.5 8,379,683.24
NY 99 5.4 8,322,995.72
PA 89 4.4 6,731,076.97
OR 72 3.6 5,473,748.75
UT 55 3.5 5,306,857.09
WI 64 3.4 5,198,468.05
MA 51 3.0 4,650,868.60
MO 51 2.5 3,790,160.97
FL 52 2.3 3,535,563.83
MD 36 2.3 3,518,045.73
CT 31 2.0 3,137,043.76
MN 37 2.0 3,017,468.14
CO 31 1.8 2,786,837.08
IN 47 1.7 2,542,584.62
AZ 24 1.6 2,391,439.00
ME 34 1.4 2,182,552.43
GA 33 1.4 2,135,031.66
NV 20 1.3 2,065,538.93
NC 22 1.2 1,872,071.22
NM 16 1.1 1,733,994.73
VA 19 1.0 1,578,599.02
ID 25 1.0 1,519,952.97
KY 18 0.8 1,168,830.00
NH 14 0.7 1,105,942.27
RI 10 0.7 1,083,238.85
KS 18 0.6 978,176.45
DC 11 0.6 901,779.91
VT 12 0.6 877,478.14
TN 12 0.5 718,342.70
DE 8 0.4 645,669.45
TX 10 0.4 540,449.09
SC 5 0.2 277,945.70
MS 3 0.2 256,570.85
SD 4 0.1 171,728.93
NE 3 0.1 155,350.00
AR 2 0.1 131,688.35
IA 3 0.1 124,782.26
ND 2 0.1 98,920.00
AL 1 0.0 66,975.16
MT 1 0.0 41,987.69
OK 1 0.0 26,400.00
Total: 1,845 100.0 153,293,917.89
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Margin Loans % Balance Lifetime Cap Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
1.751- 2.000 1 0.0 53,048.31 10.001-10.250 1 0.0 55,964.29
2.751- 3.000 3 0.2 243,053.80 10.751-11.000 1 0.0 41,200.00
3.001- 3.250 2 0.2 259,603.61 11.001-11.250 4 0.2 323,706.63
3.251- 3.500 1 0.3 403,340.11 11.251-11.500 1 0.1 96,000.00
3.751- 4.000 1 0.1 162,000.00 11.751-12.000 1 0.1 151,956.46
4.001- 4.250 1 0.0 57,749.96 12.501-12.750 1 0.0 65,300.00
4.251- 4.500 6 0.4 607,206.63 12.751-13.000 5 0.4 599,895.69
4.501- 4.750 8 0.6 856,777.04 13.001-13.250 9 0.6 989,894.06
4.751- 5.000 85 5.5 8,401,286.40 13.251-13.500 14 1.1 1,631,722.67
5.001- 5.250 197 12.2 18,667,219.24 13.501-13.750 63 4.1 6,318,937.56
5.251- 5.500 434 24.4 37,422,380.44 13.751-14.000 82 4.9 7,500,146.04
5.501- 5.750 276 14.5 22,182,303.75 14.001-14.250 154 8.3 12,763,892.13
5.751- 6.000 391 19.5 29,884,517.38 14.251-14.500 87 5.4 8,224,956.44
6.001- 6.250 21 1.5 2,306,481.79 14.501-14.750 350 19.6 30,111,361.37
6.251- 6.500 165 7.8 11,978,587.16 14.751-15.000 126 6.7 10,265,824.47
6.501- 6.750 26 1.9 2,984,732.40 15.001-15.250 213 10.8 16,507,734.29
6.751- 7.000 92 4.2 6,461,472.53 15.251-15.500 77 4.1 6,323,818.34
7.001- 7.250 26 1.2 1,897,008.25 15.501-15.750 237 11.0 16,796,098.33
7.251- 7.500 29 1.8 2,795,691.36 15.751-16.000 113 5.6 8,623,223.08
7.501- 7.750 26 1.2 1,822,867.52 16.001-16.250 38 2.1 3,169,472.91
7.751- 8.000 21 1.2 1,839,239.71 16.251-16.500 46 2.7 4,115,904.03
8.001- 8.250 5 0.3 393,715.65 16.501-16.750 39 2.5 3,869,070.64
8.251- 8.500 11 0.4 559,446.26 16.751-17.000 45 2.6 4,060,387.89
8.501- 8.750 9 0.4 563,712.21 17.001-17.250 19 1.1 1,638,853.66
8.751- 9.000 4 0.1 189,849.06 17.251-17.500 31 1.8 2,730,449.89
9.001- 9.250 1 0.1 78,714.59 17.501-17.750 18 0.8 1,226,080.50
9.251- 9.500 1 0.1 93,350.00 17.751-18.000 26 1.3 1,994,510.52
9.751-10.000 1 0.1 78,650.00 18.001-18.250 11 0.4 639,722.27
10.001-10.250 1 0.0 49,912.73 18.251-18.500 12 0.5 752,283.29
18.501-18.750 4 0.3 419,981.52
Total: 1,845 100.0 153,293,917.89 18.751-19.000 6 0.2 379,412.83
19.001-19.250 2 0.1 172,064.59
NZ Min: 2.000 Max: 10.125 NZWA: 5.859 19.251-19.500 2 0.1 91,600.37
19.501-19.750 1 0.0 64,936.10
20.001+ 6 0.4 577,555.03
Total: 1,845 100.0 153,293,917.89
NZ Min: 10.250 Max: 30.500 NZWA: 15.247
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Lifetime Floor Loans % Balance Mos to Next Rate Change Loan % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
2.751- 3.000 1 0.1 151,956.46 2.00 143 7.2 10,969,638.72
3.001- 3.250 1 0.1 89,913.91 3.00 151 7.8 11,986,757.21
4.001- 4.250 1 0.0 57,749.96 4.00 246 13.6 20,853,591.41
4.751- 5.000 2 0.3 492,625.00 5.00 295 16.0 24,518,649.33
5.001- 5.250 17 1.0 1,499,595.61 6.00 470 26.2 40,221,925.14
5.251- 5.500 15 1.0 1,596,330.68 7.00 477 25.4 39,012,063.14
5.501- 5.750 14 0.9 1,321,261.66 8.00 28 1.5 2,359,971.85
5.751- 6.000 10 0.7 1,071,167.86 9.00 2 0.2 334,522.19
6.001- 6.250 1 0.0 57,374.33 10.00 6 0.4 661,557.67
6.251- 6.500 11 0.7 1,030,245.31 11.00 9 0.5 792,994.07
6.501- 6.750 9 0.7 1,037,378.23 12.00 10 0.6 937,436.93
6.751- 7.000 35 1.9 2,898,053.54 13.00 3 0.2 279,689.70
7.001- 7.250 52 3.1 4,767,106.80 15.00 1 0.0 55,440.00
7.251- 7.500 34 2.2 3,407,352.56 21.00 1 0.0 61,760.03
7.501- 7.750 165 9.5 14,621,865.62 35.00 2 0.1 185,920.50
7.751- 8.000 77 4.4 6,677,970.79 36.00 1 0.0 62,000.00
8.001- 8.250 166 8.7 13,395,916.99
8.251- 8.500 81 5.0 7,609,745.91 Total: 1,845 100.0 153,293,917.89
8.501- 8.750 297 16.2 24,909,582.84
8.751- 9.000 113 6.1 9,369,418.88 NZWA: 5
9.001- 9.250 166 8.1 12,491,766.35
9.251- 9.500 81 4.3 6,625,532.84
9.501- 9.750 184 8.4 12,868,856.72
9.751-10.000 95 4.7 7,201,235.85
10.001-10.250 27 1.5 2,362,805.40
10.251-10.500 29 1.6 2,521,649.31
10.501-10.750 24 1.7 2,548,239.95
10.751-11.000 31 1.9 2,862,830.75
11.001-11.250 14 0.7 1,092,701.05
11.251-11.500 25 1.5 2,229,031.91
11.501-11.750 13 0.4 657,813.60
11.751-12.000 22 1.0 1,502,543.35
12.001-12.250 10 0.4 584,436.34
12.251-12.500 7 0.3 535,527.73
12.501-12.750 4 0.3 419,981.52
12.751-13.000 6 0.2 378,976.77
13.001-13.250 2 0.1 172,064.59
13.251-13.500 2 0.1 110,374.82
13.501-13.750 1 0.0 64,936.10
Total: 1,845 100.0 153,293,917.89
NZ Min: 2.875 Max: 13. 750 NZWA: 8.779
</TABLE>
CERTAIN CHARACTERISTICS OF POOL III
Set forth below is a description of certain characteristics of Pool III and
the Initial Pool III Mortgage Loans. Certain of the percentage columns may not
sum to 100.00% due to rounding.
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Cutoff Date Balance Loans % Balance Stated Remaining Term Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 25,000.00 4,478 78.6 61,934,637.79 13- 24 4 0.0 15,470.37
25,000.01- 50,000.00 519 21.0 16,580,051.83 25- 36 30 0.2 120,861.66
50,000.01- 75,000.00 6 0.4 308,820.54 37- 48 28 0.2 145,196.27
49- 60 271 2.3 1,808,905.60
Total: 5,003 100.0 78,823,510.16 61- 72 37 0.3 236,508.18
73- 84 167 1.7 1,325,326.63
NZ Min: 1,570.00 Max: 53,782.41 Avg: 15,755.25 85- 96 71 0.8 592,892.96
97-108 7 0.1 64,265.54
109-120 990 12.8 10,094,533.50
121-132 5 0.1 51,080.17
No. of Cutoff Date 133-144 36 0.5 425,814.66
Original Balance Loans % Balance 145-156 4 0.1 45,050.71
157-168 1 0.0 13,484.00
0.01- 25,000.00 4,475 78.5 61,859,764.69 169-180 1,516 29.4 23,198,004.23
25,000.01- 50,000.00 522 21.1 16,654,924.93 181-192 2 0.0 24,877.24
50,000.01- 75,000.00 6 0.4 308,820.54 205-216 1 0.0 18,599.10
217-228 1 0.0 14,810.10
Total: 5,003 100.0 78,823,510.16 229-240 1,732 48.3 38,106,760.04
289-300 100 3.2 2,521,069.20
NZ Min: 1,570.00 Max: 54,147.00 Avg: 15,815.57
Total: 5,003 100.0 78,823,510.16
Min: 23 Max: 300 NZ WA: 198
No. of Cutoff Date
Coupon Loans % Balance
Less than 7.000 1 0.0 13,182.62 No. of Cutoff Date
7.501- 8.000 1 0.0 15,410.42 Seasoning Loans % Balance
8.001- 8.500 1 0.0 17,975.00
8.501- 9.000 3 0.1 39,801.70 Less than 0 984 19.5 15,393,729.07
9.501-10.000 146 3.1 2,429,031.42 1 - 6 4,009 80.3 63,290,758.03
10.001-10.500 26 0.7 567,895.54 7 - 12 9 0.2 124,212.96
10.501-11.000 464 11.7 9,232,946.65 13- 18 1 0.0 14,810.10
11.001-11.500 277 5.6 4,443,010.28
11.501-12.000 1,044 21.7 17,100,464.09 Total: 5,003 100.0 78,823,510.16
12.001-12.500 296 5.6 4,417,686.61
12.501-13.000 1,663 30.3 23,886,633.23 Min: 0 Max: 14 WA: 1.398
13.001-13.500 201 3.9 3,078,017.11
13.501-14.000 574 11.6 9,157,588.99
14.001-14.500 57 1.3 999,083.63
14.501-15.000 184 3.1 2,448,747.78
15.001-15.500 35 0.8 620,588.64
15.501-16.000 17 0.3 240,498.10
16.001-16.500 1 0.0 5,128.00
16.501-17.000 7 0.1 52,073.56
17.001-17.500 1 0.0 9,876.35
17.501-18.000 2 0.0 13,088.86
18.001+ 2 0.0 34,781.58
Total: 5,003 100.0 78,823,510.16
NZ Min: 5.650 Max: 18.990 WAC: 12.537
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
States Loans % Balance
<S> <C> <C> <C>
CA 1,277 30.4 23,963,666.52
TX 495 8.3 6,557,847.10
AZ 291 6.2 4,897,150.40
NJ 231 5.0 3,915,147.19
GA 258 4.8 3,815,319.96
NV 199 4.7 3,712,910.66
FL 230 4.2 3,296,152.65
NY 168 4.1 3,250,585.09
IL 199 3.9 3,101,504.52
WA 178 3.3 2,637,733.47
MS 178 3.0 2,400,182.34
PA 173 2.6 2,086,329.33
OH 143 2.2 1,701,117.44
CO 129 2.1 1,666,460.59
TN 93 1.9 1,464,844.13
AR 80 1.2 952,266.96
NC 62 1.2 913,260.80
MN 61 1.1 900,540.68
OR 52 1.0 764,756.78
MO 59 1.0 763,146.32
MD 58 0.9 740,844.06
NM 42 0.9 687,469.97
MI 54 0.8 606,457.15
UT 35 0.7 523,427.72
ID 35 0.6 503,499.55
IN 34 0.6 454,545.29
SC 30 0.5 405,961.30
VA 19 0.4 329,900.70
MA 13 0.3 245,339.32
KS 17 0.3 241,057.21
CT 14 0.3 225,126.46
WI 13 0.3 219,814.26
IA 21 0.3 198,654.58
DE 14 0.2 130,335.42
ME 9 0.2 129,244.99
WV 10 0.1 115,391.84
OK 7 0.1 83,723.05
KY 10 0.1 78,309.46
NH 4 0.1 43,662.37
AK 1 0.0 24,957.11
VT 1 0.0 21,404.00
MT 1 0.0 16,584.04
RI 1 0.0 10,927.11
WY 2 0.0 10,918.99
SD 1 0.0 7,731.28
NE 1 0.0 7,300.00
Total: 5,003 100.0 78,823,510.16
</TABLE>
CERTAIN CHARACTERISTICS OF POOL IV
Set forth below is a description of certain characteristics of
Pool IV and the Initial Pool IV Mortgage Loans. Certain of the percentage
columns may not sum to 100.00% due to rounding.
<TABLE>
<CAPTION>
No. of Cutoff Date No. of Cutoff Date
Cutoff Date Balance Loans % Balance Coupon Loans % Balance
<S> <C> <C> <C> <C> <C> <C> <C>
50,000.01- 75,000.00 5 2.2 334,120.50 9.501-10.000 1 0.9 135,200.00
75,000.01- 100,000.00 19 10.7 1,641,721.61 10.001-10.500 3 4.2 640,244.72
100,000.01- 125,000.00 4 2.9 451,944.72 10.501-11.000 21 36.3 5,585,050.99
125,000.01- 150,000.00 10 9.0 1,381,363.98 11.001-11.500 28 36.4 5,604,671.14
150,000.01- 175,000.00 7 7.4 1,142,799.49 11.501-12.000 14 14.2 2,182,328.66
175,000.01- 200,000.00 5 6.2 958,378.80 12.001-12.500 9 7.1 1,089,974.38
200,000.01- 225,000.00 5 7.2 1,104,405.74 13.001-13.500 1 0.9 143,000.00
225,000.01- 250,000.00 8 12.3 1,884,295.91
250,000.01- 275,000.00 1 1.7 260,000.00 Total: 77 100.0 15,380,469.89
275,000.01- 300,000.00 3 5.6 867,700.00
300,000.01- 325,000.00 1 2.0 305,000.00 NZ Min: 9.990 Max: 13.250 WAC: 11.274
325,000.01- 350,000.00 1 2.2 344,127.43
350,000.01- 375,000.00 1 2.4 373,750.00
375,000.01- 400,000.00 1 2.5 382,920.21
425,000.01- 450,000.00 1 2.9 444,000.00 No.of End Of Month
475,000.01- 500,000.00 1 3.2 498,606.63 Stated Remaining Term Loans % Balance
650,000.01- 675,000.00 1 4.3 655,617.81
725,000.01- 750,000.00 1 4.7 727,911.79 169-180 8 12.6 1,940,567.94
750,000.01- 775,000.00 1 5.0 775,000.00 277-288 1 1.0 148,511.65
825,000.01- 850,000.00 1 5.5 846,805.27 349-360 68 86.4 13,291,390.30
Total: 77 100.0 15,380,469.89 Total: 77 100.0 15,380,469.89
NZ Min: 58,500.00 Max: 846,805.27 Avg: 199,746.36 Min: 176 Max: 360 NZ WA: 335
No. of Cutoff Date No.of Cutoff Date
Original Balance Loans % Balance Seasoning Loans % Balance
50,000.01- 75,000.00 5 2.2 334,120.50 Less than 0 8 4.9 756,379.52
75,000.01- 100,000.00 19 10.7 1,641,721.61 1- 6 68 94.1 14,475,578.72
100,000.01- 125,000.00 4 2.9 451,944.72 13- 18 1 1.0 148,511.65
125,000.01- 150,000.00 10 9.0 1,381,363.98
150,000.01- 175,000.00 7 7.4 1,142,799.49 Total: 77 100.0 15,380,469.89
175,000.01- 200,000.00 5 6.2 958,378.80
200,000.01- 225,000.00 5 7.2 1,104,405.74 Min: 0 Max: 15 WA: 2.144
225,000.01- 250,000.00 8 12.3 1,884,295.91
250,000.01- 275,000.00 1 1.7 260,000.00
275,000.01- 300,000.00 3 5.6 867,700.00
300,000.01- 325,000.00 1 2.0 305,000.00 No.of Cutoff Date
325,000.01- 350,000.00 1 2.2 344,127.43 CLTV Loans % Balance
350,000.01- 375,000.00 1 2.4 373,750.00
375,000.01- 400,000.00 1 2.5 382,920.21 35.0001- 40.0000 1 0.8 120,000.00
425,000.01- 450,000.00 1 2.9 444,000.00 40.0001- 45.0000 3 2.7 409,344.89
475,000.01- 500,000.00 1 3.2 498,606.63 45.0001- 50.0000 7 8.2 1,261,238.70
650,000.01- 675,000.00 1 4.3 655,617.81 50.0001- 55.0000 8 8.7 1,339,793.38
725,000.01- 750,000.00 1 4.7 727,911.79 55.0001- 60.0000 17 27.7 4,263,524.35
750,000.01- 775,000.00 1 5.0 775,000.00 60.0001- 65.0000 37 45.6 7,018,068.57
825,000.01- 850,000.00 1 5.5 846,805.27 65.0001- 70.0000 4 6.3 968,500.00
Total: 77 100.0 15,380,469.89 Total: 77 100.0 15,380,469.89
NZ Min: 58,500.00 Max: 850,000.00 Avg: 200,115.58 NZ Min: 37.5 Max: 68.3 NZWA: 58.92
</TABLE>
<TABLE>
<CAPTION>
No. of Cutoff Date
States Loans % Balance
<S> <C> <C> <C>
CA 15 22.9 3,527,064.63
FL 9 14.5 2,227,964.60
NY 17 14.2 2,186,218.74
NJ 9 10.6 1,634,659.98
TX 4 7.0 1,083,564.93
AZ 5 6.0 928,713.47
GA 1 4.7 727,911.79
OK 1 4.3 655,617.81
OH 3 3.9 599,721.95
MA 2 2.7 419,468.08
RI 2 1.8 274,359.99
IL 3 1.6 253,347.12
TN 1 1.6 243,750.00
NV 1 1.6 239,844.70
CT 2 1.3 207,571.62
PA 2 1.1 170,690.48
Total: 77 100.0 15,380,469.89
</TABLE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
1.1 Underwriting Agreement, dated June 21, 1996, among The
Money Store Inc., the Originators and Lehman Brothers Inc., as
representative of the underwriters.
1.2 Pricing Agreement, dated June 21, 1996, between The Money
Store Inc. and Lehman Brothers Inc., as representative of
the underwriters.
1.3 Pooling and Servicing Agreement, dated May 31, 1996, among
The Money Store Inc., the Originators and The Bank of New
York, as Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MONEY STORE INC. AND THE
ORIGINATORS LISTED ON SCHEDULE A
By: /S/ MORTON DEAR
Name: Morton Dear
Title: Executive Vice President
Dated: July 9, 1996
<PAGE>
SCHEDULE A
LIST OF ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store/Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
1.1 Underwriting Agreement, dated June 21, 1996,
among The Money Store Inc., the Originators and Lehman
Brothers Inc., as representative of the
underwriters.
1.2 Pricing Agreement, dated June 21, 1996, between
The Money Store Inc. and Lehman Brothers Inc., as
representative of the underwriters.
1.3 Pooling and Servicing Agreement, dated May 31,
1996, among The Money Store Inc., the Originators
and The Bank of New York, as Trustee.
EXHIBIT 1.1
$1,250,000,000
THE MONEY STORE INC.
The Money Store Asset Backed Certificates
Series 1996-B
UNDERWRITING AGREEMENT
June 21, 1996
Lehman Brothers Inc.
as representative of the Underwriters
3 World Financial Center
New York, New York 10285-1200
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), and each of
the Originators listed on Annex A hereto (each an "Originator" and collectively,
the "Originators") hereby confirm their agreement with Lehman Brothers Inc.
("Lehman Brothers" or the "Representative") of the several Underwriters listed
on Annex B hereto (the "Underwriters), with respect to the delivery by the
Company, on behalf of the Originators, of certificates entitled "The Money Store
Asset Backed Certificates, Series 1996-B, Class A-1, Class A-2, Class A-3, Class
A-4, Class A- 5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A- 11, Class A-12, Class A-13, Class A-14, Class A-15 and Class A-16 (the "Class
A Certificates") to be issued pursuant to a Pooling and Servicing Agreement, to
be dated as of May 31, 1996 (the "Pooling and Servicing Agreement"), among the
Company, as Representative, Servicer and Claims Administrator, the Originators
and The Bank of New York, as trustee ("Bank of New York" or, in its capacity as
trustee under the Pooling and Servicing Agreement, the "Trustee"). The initial
principal amount of each Class of Class A Certificates will be as set forth on
Annex B hereto. The Class A Certificates represent the senior beneficial
interests in a trust fund (the "Trust Fund") that will consist at the Closing
Time (as defined in Section 2 hereof) primarily of four sub-trusts, consisting
of one pool of fixed rate first and second lien home equity mortgage loans (the
"Pool I Home Equity Loans"), one pool of adjustable rate first lien home equity
mortgage loans (the "Pool II Home Equity Loans"), one pool of home improvement
mortgage loans (the "Pool III Home Improvement Loans") and one pool of
multifamily mortgage loans (the "Pool IV Multifamily Loans"), amounts to be
deposited in the Pre- Funding Account and certain related properties. The Pool I
Home Equity Loans, Pool II Home Equity Loans, Pool III Home Improvement Loans
and Pool IV Multifamily Loans are referred to herein collectively as the
"Loans". Simultaneously with the issuance and delivery of the Class A
Certificates as contemplated herein, the Company, on behalf of the Originators,
will cause to be issued under the Pooling and Servicing Agreement certificates
entitled "The Money Store Asset Backed Certificates, Series 1996-B, Class R"
(the "Class R Certificates," and, together with the Class A Certificates, the
"Certificates"). The Certificates will evidence fractional interests in the
Trust Fund. The Class R Certificates will be retained by the Company and TMS
Special Holdings, Inc. and are not being delivered to the Underwriters
hereunder.
On or prior to the date of issuance of the Certificates, the Company will
obtain from MBIA Insurance Corporation ("MBIA") certificate guaranty insurance
policies (the "MBIA Policies") on behalf of the Trustee for the benefit of the
holders of the Class A Certificates. An election will be made to treat certain
assets of the Trust Fund as a real estate mortgage investment conduit ("REMIC")
within the meaning of Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code").
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement.
Prior to the delivery of the Class A Certificates by the Company, on behalf
of the Originators, and the public offering thereof by the Underwriters, the
Company and the Representative, as representative of the Underwriters, shall
enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement shall be between the Company and the
Representative, as representative of the Underwriters, and shall specify such
applicable information as is indicated in, and be in substantially the form of,
Exhibit A hereto. The offering of the Class A Certificates will be governed by
this Agreement, as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Company and the Originators understand that the Underwriters propose to
make a public offering of the Class A Certificates as soon as the Underwriters
deem advisable after the Pricing Agreement has been executed and delivered.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
ORIGINATORS.
(a) The Company and the Originators represent and warrant to each of the
Underwriters as of the date hereof and, if the Pricing Agreement is executed on
a date other than the date hereof, as of the date of the Pricing Agreement (such
latter date being hereinafter referred to as the "Representation Date") as
follows:
(i) The Company, on behalf of the Originators, has
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (No. 33-98734) including a
prospectus, and such amendments thereto as may have been required to
the date hereof, relating to the Class A Certificates and the offering
thereof from time to time in accordance with Rule 415 under the
Securities Act of 1933, as amended (the "1933 Act"), and such
registration statement, as amended, has become effective. Such
registration statement, as amended, and the prospectus relating to the
sale of the Class A Certificates constituting a part thereof as from
time to time amended or supplemented (including any prospectus
supplement (the "Prospectus Supplement") filed with the Commission
pursuant to Rule 424 of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations") and any information
incorporated therein by reference) are respectively referred to herein
as the "Registration Statement" and the "Prospectus." The conditions of
Rule 415 under the 1933 Act have been satisfied with respect to the
Company and the Registration Statement.
(ii) At the time the Registration Statement became
effective and at the Representation Date, the Registration Statement
complied and will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Representative, as
representative of the Underwriters, by the Company for use in
connection with the offering of the Class A Certificates which differs
from the Prospectus on file at the Commission at the time the
Registration Statement became effective, in which case at the time it
is first provided to the Representative, as representative of the
Underwriters, for such use) and at Closing Time referred to in Section
2 hereof, will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through the Representative
expressly for use in the Registration Statement or Prospectus; and
provided further, that neither the Company nor the Originators make any
representations or warranties as to any information in any
Computational Materials (as defined in Section 11 below) provided by
any Underwriter to the Company pursuant to Section 11, except to the
extent of any errors in the Computational Materials that are caused by
errors in the pool information provided by the Company to the
applicable Underwriter. The conditions to the use by the Company of a
registration statement on Form S-3 under the 1933 Act, as set forth in
the General Instructions to Form S-3, have been satisfied with respect
to the Registration Statement and the Prospectus.
(iii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, the Originators and their
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, which would have a material adverse
effect on the ability of the Company and the Originators to perform
their obligations under the Basic Documents (as defined below) and, in
the case of the Company, the Indemnification Agreement (as defined
below) and (B) there have been no transactions entered into by the
Company or the Originators or any of their subsidiaries, other than
those in the ordinary course of business, which would have a material
adverse effect on the ability of the Company and the Originators to
perform their obligations under this Agreement, the Pricing Agreement,
the Pooling and Servicing Agreement and the Insurance Agreement dated
as of June 27, 1996 among the Company, the Originators, the Trustee and
MBIA (the "Insurance Agreement") (this Agreement, the Pricing
Agreement, the Pooling and Servicing Agreement, and the Insurance
Agreement being herein referred to, collectively, as the "Basic
Documents") and the Indemnification Agreement dated as of June 27, 1996
(the "Indemnification Agreement") among the Company, MBIA and the
Representative, as representative of the Underwriters.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of New Jersey with all requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Basic Documents and the Indemnification Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify would
not have a material adverse effect on, (A) the Company's ability to
perform its obligations under the Basic Documents and the
Indemnification Agreement, or (B) the business, properties, financial
position, operations or results of operations of the Company.
(v) Each Originator has been duly organized and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation with all requisite power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under the Basic Documents; and each Originator is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not
have a material adverse effect on, (A) the Originator's ability to
perform its obligations under the Basic Documents, or (B) the business,
properties, financial position, operations or results of operations of
the Originator.
(vi) Any person who signed this Agreement on behalf of the
Company or the Originators, was, as of the time of such signing and
delivery, and is now duly elected or appointed, qualified and acting,
and the Agreement, as so executed, is duly and validly authorized,
executed, and constitutes the valid, legal and binding agreement of the
Company and each Originator, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
(vii) Any person who signs the Indemnification Agreement on
behalf of the Company, will be, as of the time of such signing and
delivery, duly elected or appointed, qualified and acting, and the
Indemnification Agreement, as so executed, will have been duly and
validly authorized, and, when executed, will constitute the valid,
legal and binding agreement of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(viii) The Pooling and Servicing Agreement and the Insurance
Agreement have been duly and validly authorized by the Company and the
Originators and, when executed and delivered by the Company and the
Originators and duly and validly authorized, executed and delivered by
the other parties thereto, will constitute, the valid and binding
agreement of the Company and the Originators, enforceable in accordance
with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law; and the Pooling and
Servicing Agreement and the MBIA Policies conform in all material
respects to the statements relating thereto contained in the
Prospectus.
(ix) The Certificates have been duly and validly
authorized by the Company and, when executed and delivered by the
Company and authenticated by the Trustee as specified in the Pooling
and Servicing Agreement and, in the case of the Class A Certificates,
delivered to the Underwriters pursuant to this Agreement, the
Certificates will be duly and validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement; and
the Certificates conform in all material respects to all statements
relating thereto contained in the Prospectus.
(x) Neither the issuance or delivery of the
Certificates, nor the consummation of any other of the transactions
herein contemplated or in any other Basic Document and, in the case of
the Company, the Indemnification Agreement, nor the execution and
delivery by the Company and the Originators of the Basic Documents and,
in the case of the Company, the Indemnification Agreement nor the
fulfillment of the terms of the Certificates or each Basic Document
and, in the case of the Company, the Indemnification Agreement will
result in the breach of any term or provision of the charter or by-laws
of the Company and the Originators, and the Company and the Originators
are not in breach or violation of or in default (nor has an event
occurred which with notice or lapse of time or both would constitute a
default) under the terms of (A) any material obligation, agreement,
covenant or condition contained in any material contract, indenture,
loan agreement, note, lease or other material instrument to which the
Company or the Originators are a party or by which it may be bound, or
to which any of the property or assets of the Company or the
Originators are subject, or (B) any law, decree, order, rule or
regulation applicable to the Company and the Originators of any court
or supervisory, regulatory, administrative or governmental agency, body
or authority, or arbitrator having jurisdiction over the Company or the
Originators or their properties, the default in or the breach or
violation of which would have a material adverse effect on the Company
or the Originators or the ability of the Company and the Originators to
perform their obligations under the Basic Documents and, in the case of
the Company, the Indemnification Agreement; and neither the issuance or
delivery of the Certificates, nor the consummation of any other of the
transactions herein contemplated, nor the fulfillment of the terms of
the Certificates or the Basic Documents and, in the case of the
Company, the Indemnification Agreement will result in such a breach,
violation or default which would have such a material adverse effect.
(xi) Except as described in the Prospectus, there is no
action, suit or proceeding against or investigation of the Company or
any Originator, now pending, or, to the knowledge of the Company and
the Originators, threatened against the Company or any Originator,
before any court, governmental agency or body (A) which is required to
be disclosed in the Prospectus (other than as disclosed therein) or (B)
(1) asserting the invalidity of any Basic Document, the Indemnification
Agreement or the Certificates, (2) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by the Basic Documents, (3) which would materially and
adversely affect the performance by the Company or any Originator of
its obligations under the Basic Documents, or the validity or
enforceability of any Basic Document or the Certificates and, in the
case of the Company, the Indemnification Agreement or (4) seeking to
adversely affect the federal income tax attributes of the Class A
Certificates described in the Prospectus; all pending legal or
governmental proceedings to which the Company or any Originator is a
party or of which any of its property or assets is the subject which
are not described in the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material to the Company's or any Originator's ability to
perform its obligations under the Basic Documents and, in the case of
the Company, the Indemnification Agreement.
(xii) The Company and each of the Originators possess such
licenses, certificates, authorities or permits issued by the
appropriate state or federal regulatory agencies or governmental bodies
necessary to conduct the businesses now conducted by them (except where
the failure to possess any such license, certificate, authority or
permit would not materially and adversely affect the holders of the
Class A Certificates) and neither the Company nor any of the
Originators has received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or finding, would materially and adversely
affect the ability of the Company to perform its obligations under the
Basic Documents and the Indemnification Agreement.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the Class A Certificates hereunder, except such as
have been obtained or will be obtained prior to the Closing Date and
except as may be required under state securities laws.
(xiv) At the time of execution and delivery of the Pooling
and Servicing Agreement by the Company, the Originators and the
Trustee, the Trustee (or, with respect to the Pool III Home Improvement
Loans, the Co-Trustee) will have acquired good title on behalf of the
Trust Fund to the related Loans, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, and,
upon delivery to the Underwriters of the Class A Certificates
which they purchase, the Underwriters will have good and
marketable title to such Class A Certificates free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(xv) The transfer of the Loans to the Trust Fund at
Closing Time will be treated by the Company and the Originators for
financial accounting and reporting purposes as a sale of assets and not
as a pledge of assets to secure debt.
(xvi) Each assignment of Mortgage required to be prepared
pursuant to the Pooling and Servicing Agreement is based on forms
recently utilized by the applicable Originator with respect to
mortgaged properties located in the appropriate jurisdiction and used
in the regular course of the applicable Originator's business. Upon
execution each such assignment will be in recordable form, and it is
reasonable to believe that it will be sufficient to effect the
assignment of the Mortgage to which it relates as provided in the
Pooling and Servicing Agreement.
(xvii) Any taxes, fees and other governmental charges that
are assessed and due in connection with the execution, delivery and
issuance of the Basic Documents, the Indemnification Agreement and the
Class A Certificates which have become due or will become due on or
prior to Closing Time shall have been paid at or prior to Closing Time.
(xviii) The Trust Fund is not required to be registered as an
"investment company" under the Investment Company Act of 1940 (the
"1940 Act").
(b) Any certificate signed by any officer of the Company or any Originator
and delivered to the Representative, as representative of the Underwriters, or
counsel for the Underwriters shall be deemed a representation and warranty by
the Company and such Originator as to the matters covered thereby.
Section 2. DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company, on behalf of
the Originators, agrees to sell to each Underwriter, severally and not jointly,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company, the Class A Certificates set forth opposite its name in Annex B
hereto at the price per Class of Class A Certificate set forth below. In the
event that the pass-through rates for each Class of Class A Certificates have
not been agreed upon and the Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the fourth business
day following the date of this Agreement, this Agreement shall terminate
forthwith, without liability of any party to any other party, unless otherwise
agreed upon by the Representative, as representative of the Underwriters, and
the Company.
(b) Delivery of the Class A Certificates shall be made at the offices of
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004, or at
such other place as shall be agreed upon by the Underwriter and the Company, at
11:00 A.M., New York City time, on June 27, 1996, or such other time not later
than ten business days after such date as shall be agreed upon by The
Representative, as representative of the Underwriters, and the Company (such
time and date of payment and delivery being herein called "Closing Time").
Each Class of Class A Certificates will initially be represented by one
certificate registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC") (the "DTC Certificates"). The interests of beneficial
owners of the DTC Certificates will be represented by book entries on the
records of DTC and participating members thereof. Definitive certificates
evidencing the Class A Certificates will be available only under the limited
circumstances specified in the Pooling and Servicing Agreement. The interest in
the DTC Certificates to be purchased by the applicable Underwriter will be
delivered by the Company to the applicable Underwriter (which delivery shall be
made through the facilities of DTC) against payment of the purchase price
therefor by a same day federal funds wire payable to the order of the Company,
equal to the sum of (i) 99.9000% of the aggregate principal amount of the Class
A-1 Certificates being purchased by such Underwriter, plus interest accrued at
the Class A-1 Pass-Through Rate, (ii) 99.9000% of the aggregate principal amount
of the Class A-2 Certificates being purchased by such Underwriter, plus interest
accrued at the Class A-2 Pass-Through Rate, (iii) 99.8750% of the aggregate
principal amount of the Class A-3 Certificates being purchased by such
Underwriter, plus interest accrued at the Class A-3 Pass-Through Rate, (iv)
99.8500% of the aggregate principal amount of the Class A-4 Certificates being
purchased by such Underwriter, plus interest accrued at the Class A-4
Pass-Through Rate, (v) 99.784375% of the aggregate principal amount of the Class
A-5 Certificates being purchased by such Underwriter, plus interest accrued at
the Class A-5 Pass-Through Rate, (vi) 99.759375% of the aggregate principal
amount of the Class A-6 Certificates being purchased by such Underwriter, plus
interest accrued at the Class A-6 Pass-Through Rate, (vii) 99.684375% of the
aggregate principal amount of the Class A-7 Certificates being purchased by such
Underwriter, plus interest accrued at the Class A-7 Pass-Through Rate, (viii)
99.528125% of the aggregate principal amount of the Class A-8 Certificates being
purchased by such Underwriter, plus interest accrued at the Class A-8
Pass-Through Rate, (ix) 99.434375% of the aggregate principal amount of the
Class A-9 Certificates being purchased by such Underwriter, plus interest
accrued at the Class A-9 Pass-Through Rate, (x) 99.7750% of the aggregate
principal amount of the Class A-10 Certificates being purchased by such
Underwriter, plus interest accrued at the Class A-10 Pass-Through Rate, (xi)
99.7750% of the aggregate principal amount of the Class A-11 Certificates being
purchased by such Underwriter, (xii) 99.9000% of the aggregate principal amount
of the Class A-12 Certificates being purchased by such Underwriter, plus
interest accrued at the Class A-12 Pass-Through Rate, (xiii) 99.801875% of the
aggregate principal amount of the Class A-13 Certificates being purchased by
such Underwriter, plus interest accrued at the Class A-13 Pass- Through Rate,
(xiv) 99.653125% of the aggregate principal amount of the Class A-14
Certificates being purchased by such Underwriter, plus interest accrued at the
Class A-14 Pass-Through Rate, (xv) 99.56875% of the aggregate principal amount
of the Class A-15 Certificates being purchased by such Underwriter, plus
interest accrued at the Class A-15 Pass-Through Rate and (xvi) 99.7750% of the
aggregate principal amount of the Class A-16 Certificates being purchased by
such Underwriter, plus interest accrued at the Class A-16 Pass-Through Rate.
With respect to the Class A-1 through Class A-9 Certificates, inclusive, and the
Class A-12 through Class A-16 Certificates, inclusive, interest shall accrue at
the applicable Pass-Through Rate in each case from June 1, 1996 to, but not
including, the Closing Time. With respect to the Class A-10 Certificates,
interest shall accrue at the applicable Pass-Through Rate from June 15, 1996 to,
but not including, the Closing Time. With respect to the Class A-11
Certificates, interest shall accrue at the applicable Pass-Through Rate from the
Closing Time. The purchase price set forth above reflects the deduction of the
underwriter's fee with respect to the principal amount of each Class of Class A
Certificates. The certificates evidencing the Class A Certificates will be made
available for examination and packaging by the Representative, as representative
of the Underwriters, not later than 10:00 A.M. on the last business day prior to
Closing Time.
Section 3. COVENANTS OF THE COMPANY AND THE ORIGINATORS. The Company and
the Originators covenant with each of the Underwriters as follows:
(a) The Company will promptly notify the
Representative, as representative of the Underwriters, and confirm the
notice in writing, (i) of any amendment to the Registration Statement;
(ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus
or for additional information; (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or the initiation or threatening of any proceedings for that
purpose; and (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Class A
Certificates for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company will give the Representative, as
representative of the Underwriters, notice of its intention to file or
prepare any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with the
offering of the Class A Certificates which differs from the prospectus
on file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), will
furnish the Representative, as representative of the Underwriters, with
copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and, unless
required by law to do so, will not file any such amendment or
supplement or use any such prospectus to which The Representative, as
representative of the Underwriters, or counsel for the Underwriters
shall reasonably object.
(c) The Company will deliver to the Representative,
as representative of the Underwriters, as many signed and as many
conformed copies of the Registration Statement as originally filed and
of each amendment thereto (in each case including exhibits filed
therewith) as the Representative may reasonably request.
(d) The Company will furnish to the Representative,
as representative of the Underwriters, from time to time during the
period when the Prospectus is required to be delivered under the 1933
Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), such number of copies of the Prospectus (as amended or
supplemented) as the Representative may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the
Underwriters, to amend or supplement the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Company will
forthwith amend or supplement the Prospectus (in form and substance
satisfactory to counsel for the Underwriters) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing
at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Representative, as representative of the
Underwriters, a reasonable number of copies of such amendment or
supplement.
(f) The Company and the Originators will endeavor, in
cooperation with the Representative, as representative of the
Underwriters, to qualify the Class A Certificates for offering and sale
under the applicable securities laws of such states and other
jurisdictions of the United States as the Representative, as
representative of the Underwriters, may designate; provided, however,
that neither the Company nor any Originator shall be obligated to
qualify as a foreign corporation in any jurisdiction in which it is not
so qualified. In each jurisdiction in which the Class A Certificates
have been so qualified, the Company and the Originators will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of
not less than one year from the date hereof.
(g) The Company and the Originators will file with
the Commission such reports on Form SR as may be required pursuant to
Rule 463 under the 1933 Act.
(h) So long as any Certificates shall be outstanding,
the Company and the Originators will deliver to the Representative, as
representative of the Underwriters, as promptly as practicable, such
information concerning the Company, the Originators or the Certificates
as the Representative may reasonably request from time to time.
Section 4. PAYMENT OF EXPENSES. The Company and the Originators will pay
all expenses incident to the performance of their obligations under this
Agreement, including (i) the printing (or other reproducing) and filing of the
Registration Statement as originally filed and of each amendment thereto (other
than amendments relating to the filing of Computational Materials pursuant to
Section 11); (ii) the reproducing of the Basic Documents and the Indemnification
Agreement; (iii) the preparation, printing, issuance and delivery of the
certificates for the DTC Certificates to the Underwriters; (iv) the fees and
disbursements of (A) the Company's counsel, (B) the Underwriters' counsel, (C)
KPMG Peat Marwick, accountants for the Company and issuer of the comfort letter,
(D) the Trustee and the Co-Trustee and their respective counsel and (E) DTC in
connection with the book-entry registration of the DTC Certificates; (v) the
qualification of the Class A Certificates under state securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey; (vi)
the printing (or other reproducing) and delivery to the Underwriters of copies
of the Registration Statement as originally filed and of each amendment thereto,
of each preliminary prospectus and of the Prospectus and any amendments or
supplements thereto; (vii) the fees charged by each of Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Corporation ("Standard &
Poor's") for rating the Class A Certificates; and (viii) the reproducing and
delivery to the Underwriters of copies of the Blue Sky Survey.
If this Agreement is terminated by the Representative, as representative of
the Underwriters, in accordance with the provisions of Section 5 or Section
9(a)(i) (unless, in the case of Section 9(a)(i), such termination arises from a
change or development involving a prospective change in or affecting the
business or properties of MBIA), the Company and the Originators shall reimburse
the Underwriters severally for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
Section 5. CONDITIONS OF THE UNDERWRITERS' Obligations. The obligations of
the Underwriters hereunder are subject, in the Representative's sole discretion,
to the accuracy of the representations and warranties of the Company and the
Originators herein contained, to the performance by the Company and the
Originators of their respective obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become
effective and, at Closing Time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission. As of the Closing Time, the Prospectus shall have been
filed with the Commission in accordance with Rule 424 of the 1933 Act
Regulations.
(b) At Closing Time, the Representative, as
representative of the Underwriters, shall have received:
(i) The favorable opinion, dated as of
Closing Time, of Stroock & Stroock & Lavan, counsel for the
Underwriters, to the effect that:
(A) To the best of their knowledge
and information, the Registration Statement is
effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(B) At the time the Registration
Statement became effective and at the Representation
Date, the Registration Statement (other than the
financial, numerical, statistical and quantitative
information included or incorporated therein, as to
which no opinion need be rendered) complied as to
form in all material respects with the requirements
of the 1933 Act and the Rules and Regulations
thereunder.
(C) The information in the
Prospectus under "Description of the Certificates"
and "The Agreements" and the information in the
Prospectus Supplement under "Description of the
Agreement" and "Description of The Certificates,"
insofar as they constitute summaries of certain
provisions of the Certificates, the Pooling and
Servicing Agreement, the Insurance Agreement and the
MBIA Policies, summarizes fairly such provisions.
(D) The information in the
Prospectus under "Summary of Terms -- Federal Income
Tax Consequences," "Summary of Terms -- ERISA
Considerations," "Certain Legal Aspects of the
Mortgage Loans," "Federal Income Tax Consequences,"
"ERISA Considerations" and "Risk Factors -- The
Status of the Mortgage Loans in the Event of
Bankruptcy of The Representative or an Originator"
and in the Prospectus Supplement under "Summary of
Terms -- REMIC Election and Tax Status," "Summary of
Terms -- ERISA Considerations," "Federal Income Tax
Consequences," and "ERISA Considerations," to the
extent that they constitute matters of federal, New
York or California law, summaries of legal matters,
documents or proceedings or legal conclusions, has
been reviewed by them and is correct in all material
respects.
(E) TMS Special Holdings, Inc. has
been duly incorporated and is validly existing and in
good standing under the laws of the State of
Delaware. TMS Mortgage Inc. is qualified to
transact business as a foreign corporation in,
and is in good standing under the laws of, the
States of California, Florida and New York.
(F) Assuming due authorization,
execution and delivery by the other parties thereto
(including but not limited to the Originators), the
Pooling and Servicing Agreement, the Certificates,
the Insurance Agreement, the Indemnification
Agreement, the Pricing Agreement and this Agreement
are legal, valid and binding agreements enforceable
in accordance with their respective terms against the
Company, subject (a) to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights
generally and court decisions with respect thereto,
(b) to the understanding that no opinion is expressed
as to the application of equitable principles in any
proceeding, whether at law or in equity, and (c) to
limitations of public policy under applicable
securities laws as to rights of indemnity and
contribution thereunder.
(G) No consent, approval,
authorization or order of any court or governmental
agency or body is required for the execution,
delivery and performance by the Company of, or
compliance by the Company with, this Agreement, the
Pooling and Servicing Agreement, the Insurance
Agreement, the Pricing Agreement and the
Indemnification Agreement or the offer, issuance,
sale or delivery of the Certificates, or the
consummation of any other transactions by the Company
contemplated by this Agreement, the Insurance
Agreement, the Pooling and Servicing Agreement, the
Pricing Agreement and the Indemnification Agreement,
except as may be required under the blue sky laws of
any jurisdiction (as to which such counsel need not
opine) and such other approvals as have been
obtained.
(H) Neither the consummation of the
transactions contemplated by, nor the fulfillment of
the terms of, this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement, the
Pricing Agreement, the Indemnification Agreement and
the Certificates, conflicts or will conflict with or
results or will result in a breach of or constitutes
or will constitute a default under (a) the terms of
any material indenture or other material agreement or
instrument of which counsel has knowledge to which
the Company is a party or by which it is bound or to
which it is subject or (b) any statute or order,
rule, regulation, writ, injunction or decree of which
counsel has knowledge of any court, governmental
authority or regulatory body to which the Company is
subject or by which it is bound.
(I) The delivery of each Mortgage
Note and Mortgage by an Originator as and in the
manner contemplated by the Underwriting Agreement and
the Pooling and Servicing Agreement is sufficient
fully to transfer to the Trustee (or, with respect to
the Pool III Home Improvement Loans, the Co-Trustee)
for the benefit of the Certificateholders all right,
title and interest of the applicable Originator in
and to each such Loan including, without limitation,
the right to enforce each such Loan in accordance
with its terms to the extent enforceable by the
related Originator at the time of such delivery. With
respect to the transfer of the Loans by the
Originators, such counsel shall express no opinion as
to (i) whether the laws of the State of New York
would apply to the transfer of the related Mortgages
or (ii) the effectiveness of the transfer of the
Mortgages under the laws of the jurisdictions in
which such Originators are located (other than
Mortgages relating to Mortgaged Properties situated
in California, Florida or New York) or in which the
Mortgaged Properties are situated (other than
Mortgaged Properties situated in California, Florida
or New York) or the right of the Trustee and the
Co-Trustee to enforce such Mortgages.
(J) The Certificates, assuming due
execution by the Company, due authorization by the
Trustee and delivery and payment therefore pursuant
to the Underwriting Agreement, will be validly issued
and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement.
(K) Assuming compliance with all
provisions of the Pooling and Servicing Agreement,
for federal income tax purposes, the REMIC Trust Fund
will qualify as a REMIC and the Class A Certificates
and Class R Certificates offered with respect thereto
will be considered to evidence ownership of "regular
interests" or "residual interests," respectively, in
the REMIC Trust Fund within the meaning of the REMIC
Provisions. Assuming compliance with all provisions
of the Pooling and Servicing Agreement, for New York
State and City tax purposes, the REMIC Trust Fund
will be classified as a REMIC and not as a
corporation, partnership or trust, in conformity with
the federal income tax treatment of such assets.
Accordingly, the REMIC will be exempt from all New
York State and City taxation imposed upon its income,
franchise or capital stock. Additionally, the REMIC
will be exempt from all State of California taxation
imposed upon its income, franchise or capital stock,
other than the application of the annual minimum tax
under Section 23153 of the California Revenue and
Taxation Code.
(L) A Class A Certificate owned by a
financial institution described in Section 593(a) of
the Internal Revenue Code of 1986, as amended (the
"Code"), will be considered in its entirety to
represent an interest in "qualifying real property
loans" within the meaning of Section 593(d) of the
Code so long as at least 95% of the REMIC Trust
Fund's assets are "qualifying real property loans" as
defined in Section 593(d)(1) of the Code and subject
to the Certificateholder satisfying either the
applicable holding period or bona fide business
requirements of Section 593(d)(1)(D) of the Code. If
less than 95% of the REMIC Trust Fund's assets are
"qualifying real property loans," a Class A
Certificate will be considered to represent an
interest in "qualifying real property loans" in the
same proportion as the REMIC Trust Fund's assets are
"qualifying real property loans." A Class A
Certificate owned by a "domestic building and loan
association" within the meaning of Section
7701(a)(19) of the Code will be considered in its
entirety to represent an interest in qualified assets
within the meaning of Section 7701(a)(19)(C)(xi) of
the Code so long as at least 95% of the REMIC Trust
Fund's assets consist of assets described in Section
7701(a)(19)(C)(i) through (x) of the Code. If less
than 95% of the REMIC Trust Fund's assets consist of
such items, a Class A Certificate will be considered
qualified assets in the same proportion as the REMIC
Trust Fund's assets which are such items. A Class A
Certificate owned by a real estate investment trust
will be considered in its entirety an interest in
"real estate assets" within the meaning of Section
856(c)(5)(A) of the Code and interest thereon will be
considered in its entirety "interest on obligations
secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code in both
cases so long as at least 95% of the REMIC Trust
Fund's assets are "real estate assets" as defined in
Section 856(c)(3)(B) of the Code. If less than 95% of
the REMIC Trust Fund's assets are "real estate
assets," a Class A Certificate will be considered
"real estate assets" and the interest thereon will be
considered "interest on obligations secured by
mortgages on real property" in the same proportion as
the REMIC Trust Fund's assets which are "real estate
assets." A Class A Certificate held by another REMIC
will be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, assuming it is
transferred to the REMIC on its startup day in
exchange for regular or residual interests in such
REMIC.
(M) The Pooling and Servicing
Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended. The Trust
Fund created by the Pooling and Servicing Agreement
is not required to be registered under the Investment
Company Act of 1940, as amended.
In rendering such opinion, Stroock & Stroock
& Lavan may rely on certificates of responsible officers of
the Company, the Trustee, the Co-Trustee, and public officials
or, as to matters of law other than New York, Florida,
California, District of Columbia or Federal law, on opinions
of other counsel (copies of which opinions shall be delivered
to you and upon which you may rely).
(ii) The favorable opinion, dated as of Closing
Time, of counsel for the Company and the Originators, in form
and substance satisfactory to counsel for the Underwriters, to
the effect that:
(A) The Company has been duly
organized and is validly existing and is in good
standing under the laws of the State of New Jersey.
Each Originator has been duly organized under the
laws of its jurisdiction of incorporation and is
qualified to transact business in the laws of the
states in which the Mortgaged Properties underlying
the Loans originated by each such Originator are
located or is otherwise exempt under applicable law
from such qualification. TMS Special Holdings, Inc.
has been duly organized and is validly existing and
in good standing under the laws of the State of
Delaware.
(B) The Company and each of the
Originators have the power to engage in the
transactions contemplated by this Agreement, the
Pooling and Servicing Agreement, the Insurance
Agreement and, in the case of the Company, the
Pricing Agreement, the Indemnification Agreement and
the Certificates, and have all requisite power,
authority and legal right to execute and deliver this
Agreement, the Pooling and Servicing Agreement, the
Insurance Agreement, and, in the case of the Company,
the Pricing Agreement, the Indemnification Agreement
and the Certificates (and any other documents
delivered in connection therewith) and to perform and
observe the terms and conditions of such instruments.
(C) This Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement, the
Pricing Agreement, the Indemnification Agreement and
the Certificates each have been duly authorized,
executed and delivered by the Company; this
Agreement, the Pooling and Servicing Agreement and
the Insurance Agreement each have been duly
authorized, executed and delivered by each Originator
and, assuming due authorization, execution and
delivery by the other parties thereto, are legal,
valid and binding agreements of the Company and each
Originator, as the case may be, and assuming such
agreements were governed by the laws of the State of
New Jersey, would be enforceable in accordance with
their respective terms against the Company and each
Originator, as the case may be, subject (a) to the
effect of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting
creditors' rights generally and court decisions with
respect thereto, (b) to the understanding that no
opinion is expressed as to the application of
equitable principles in any proceeding, whether at
law or in equity, and (c) to limitations of public
policy under applicable securities laws as to rights
of indemnity and contribution thereunder.
(D) Neither the transfer of the
Loans to the Trust Fund, the consummation of the
transactions contemplated by, nor the fulfillment of
the terms of, this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement, or in
the case of the Company, the Pricing Agreement, the
Indemnification Agreement and the Certificates, (A)
conflicts or will conflict with or results or will
result in a breach of or constitutes or will
constitute a default under the Certificates of
Incorporation or Bylaws of the Company or any
Originator, or the terms of any material indenture or
other material agreement or instrument of which such
counsel has knowledge to which the Company or any
Originator are a party or by which it is bound or to
which it is subject, or (B) results in, or will
result in the creation or imposition of any lien or
encumbrance upon the Trust Fund or upon the related
Certificates, except as otherwise contemplated by the
Pooling and Servicing Agreement, or (C) any statute
or order, rule, regulations, writ, injunction or
decree of any court, governmental authority or
regulatory body to which the Company or any
Originator is subject or to which it is bound.
(E) Except as set forth in the
Prospectus Supplement, there is no action, suit,
proceeding or investigation pending or, to the best
of such counsel's knowledge, threatened against the
Company or any Originator which, in such counsel's
judgment, either in any one instance or in the
aggregate, may result in any material adverse change
in the business, operation, financial condition,
properties or assets of the Company or an Originator
or in any material impairment of the right or ability
of the Company or any Originator to carry on its
business substantially as now conducted or result in
any material liability on the part of the Company or
any Originator or which would draw into question the
validity of this Agreement, the Pricing Agreement,
the Certificates, the Insurance Agreement, the
Indemnification Agreement or the Pooling and
Servicing Agreement or of any action taken or to be
taken in connection with the transactions
contemplated thereby, or which would be likely to
impair materially the ability of the Company or any
Originator to perform under the terms of this
Agreement, the Insurance Agreement or the Pooling and
Servicing Agreement, or in the case of the Company,
the Pricing Agreement, the Indemnification Agreement
or the Certificates.
(F) No consent, approval,
authorization or order of any court or governmental
agency or body is required for the execution,
delivery and performance by the Company and each
Originator of, or compliance by the Company and each
Originator with, this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement or, in
the case of the Company, the Pricing Agreement, the
Indemnification Agreement or the Certificates, or the
consummation of the transactions contemplated
therein, except such as may be required under the
blue sky laws of any jurisdiction and such other
approvals as have been obtained.
(G) The delivery by TMS Mortgage
Inc. ("TMS") of each Mortgage Note and Mortgage
secured by real property located in New Jersey as and
in the manner contemplated by the Pooling and
Servicing Agreement is sufficient fully to transfer
to the Trustee (or, with respect to the Pool III Home
Improvement Loans, the Co-Trustee) for the benefit of
the Certificateholders all right, title and interest
of TMS in and to each such Loan including, without
limitation, the right to enforce each such Loan in
accordance with its terms to the extent enforceable
by TMS at the time of such delivery.
(iii) The favorable opinion, dated as of Closing
Time, of Kutak Rock, counsel for MBIA, in form and substance
satisfactory to counsel for the Underwriters, to the effect
that:
(A) MBIA is a stock insurance
corporation, duly incorporated and validly existing
under the laws of the State of New York. MBIA is
validly licensed and authorized to issue the MBIA
Policies and perform its obligations under the MBIA
Policies in accordance with the terms thereof, under
the laws of the State of New York.
(B) The execution and delivery by
MBIA of the MBIA Policies, the Insurance Agreement
and the Indemnification Agreement are within the
corporate power of MBIA and have been authorized by
all necessary corporate action on the part of MBIA;
the MBIA Policies have been duly executed and is the
valid and binding obligation of MBIA enforceable in
accordance with its terms except that the enforcement
of the MBIA Policies may be limited by laws relating
to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws
affecting creditors' rights generally and by general
principles of equity.
(C) MBIA is authorized to deliver
the Insurance Agreement and the Indemnification
Agreement, and the Insurance Agreement and the
Indemnification Agreement have been duly executed and
are the valid and binding obligations of MBIA
enforceable in accordance with their respective terms
except that the enforcement of the Insurance
Agreement and the Indemnification Agreement may be
limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally
and by general principles of equity and by public
policy considerations relating to indemnification for
securities law violations.
(D) No consent, approval,
authorization or order of any state or federal court
or governmental agency or body is required on the
part of MBIA, the lack of which would adversely
affect the validity or enforceability of the MBIA
Policies; to the extent required by applicable legal
requirements that would adversely affect the validity
or enforceability of the MBIA Policies, the form of
the MBIA Policies has been filed with, and approved
by, all governmental authorities having jurisdiction
over MBIA in connection with such MBIA Policies.
(E) To the extent the MBIA Policies
constitute securities within the meaning of Section
2(l) of the Securities Act of 1933, as amended (the
"Act"), it is a security that is exempt from the
registration requirements of the Act.
(F) The information set forth under
the caption "MBIA Policies AND MBIA" in the
Prospectus Supplement, relating to the offer and sale
of the Class A Certificates, to the Prospectus
forming a part of the Registration Statement on Form
S-3 (No. 33-98734) filed by the Company with the
Commission and declared effective on March 19, 1996,
insofar as such statements constitute a description
of the MBIA Policies, accurately summarizes the MBIA
Policies.
In rendering this opinion, such counsel may
rely, as to matters of fact, on certificates of responsible
officers of the Company, the Trustee, the Co- Trustee, MBIA
and public officials. Such opinion may assume the due
authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other
than the MBIA.
(iv) The favorable opinion, dated as of Closing
Time, of Emmitt, Marvin & Marvin, counsel for the Trustee, in
form and substance satisfactory to counsel for the
Underwriters.
(v) The favorable opinion, dated as of Closing
Time, of Dorsey & Whitney, counsel for the Co-Trustee and the
Custodian, in form and substance satisfactory to counsel for
the Underwriters.
(vi) In giving its opinion required by subsection
(b)(i) of this Section, Stroock & Stroock & Lavan shall
additionally state that nothing has come to its attention that
has caused it to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Representative, as
representative of the Underwriters, by the Company for use in
connection with the offering of the Class A Certificates which
differs from the Prospectus on file at the Commission at the
Representation Date, in which case at the time it is first
provided to the Representative, as representative of the
Underwriters, for such use) or at Closing Time, included an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading (other than the financial,
numerical, statistical and quantitative information contained
therein, the information under the heading "The MBIA Policies
and MBIA" therein, and the information in the Exhibits
thereto, as to which such counsel need express no view).
(c) At Closing Time, the Representative, as
representative of the Underwriters, shall have received from Stroock &
Stroock & Lavan, counsel for the Underwriters, a letter, dated as of
Closing Time, authorizing the Representative, as representative of the
Underwriters, to rely upon each opinion delivered by Stroock & Stroock
& Lavan to each of Moody's and Standard & Poor's in connection with the
issuance of the Certificates as though each such opinion was addressed
to the Representative, as representative of the Underwriters, and
attaching a copy of each such opinion.
(d) At Closing Time there shall not have been, since
the date hereof or since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and the
Originators and their subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Underwriter shall have received a certificate signed by one or more
duly authorized officers of the Company and the Originators, dated as
of Closing Time, to the effect that (i) there has been no such material
adverse change; (ii) the representations and warranties in Section 1(a)
hereof are true and correct in all material respects with the same
force and effect as though expressly made at and as of Closing Time;
(iii) the Company and the Originators have complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time; and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened by the
Commission.
(e) At or before the time of printing of the
Prospectus Supplement, the Representative, as representative of the
Underwriters, shall have received from KPMG Peat Marwick a letter dated
as of Closing Time and in form and substance satisfactory to the
Representative, as representative of the Underwriters, to the effect
that they have carried out certain specified procedures, not
constituting an audit, with respect to (i) certain amounts, percentages
and financial information relating to the Company's servicing portfolio
which are included in the Prospectus and which are specified by the
Representative, as representative of the Underwriters, and have found
such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of the
Company and the Originators identified in such letter, (ii) the
information contained in the weighted average life tables contained in
the Prospectus under the caption "Maturity, Prepayment and Yield
Considerations" and have found such information to be in agreement with
the corresponding information as computed by KPMG Peat Marwick and
(iii) certain information regarding the Loans and the Files which are
specified by the Representative, as representative of the Underwriters,
and contained in the Current Report on Form 8-K described in Section
5(l) hereof and setting forth the results of such specified procedures.
Notwithstanding the foregoing, if the letter delivered by KPMG Peat Marwick
at Closing Time does not cover the information set forth in subclause (iii), the
Company shall cause KPMG Peat Marwick to deliver to the Representative, as
representative of the Underwriters, an additional letter covering such
information within 5 business days of the Closing Time.
(f) At Closing Time, the Representative, as
representative of the Underwriters, shall have received from each of
the Trustee and the Co-Trustee a certificate signed by one or more duly
authorized officers of the Trustee and the Co-Trustee, respectively,
dated as of Closing Time, as to the due acceptance of the Pooling and
Servicing Agreement by the Trustee and the Co-Trustee, respectively and
the due authentication of the Certificates by the Trustee and the Co-
Trustee, respectively and such other matters as the Representative, as
representative of the Underwriters, shall request.
(g) At Closing Time, the Representative, as
representative of the Underwriters, shall have received a certificate
signed by one or more duly authorized officers of MBIA, dated as of
Closing Time, to the effect that the information contained under the
caption "The MBIA Policies and MBIA" in the Prospectus and in the
Exhibits A and B to the Prospectus is true and accurate in all material
respects and such other matters as the Representative, as
representative of the Underwriters, shall request.
(h) At Closing Time, the Representative, as
representative of the Underwriters, shall have received a certificate
signed by one or more duly authorized officers of the Company and the
Originators, dated as of Closing Time to the effect that:
(i) the representations and warranties of
the Company and the Originators in the Pooling and Servicing
Agreement are true and correct in all material respects at and
on the Closing Date, with the same effect as if made on the
Closing Date;
(ii) the Company and the Originators have
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied in
connection with the sale and delivery of the Certificates;
(iii) all statements and information contained in
the Prospectus Supplement under the captions "The
Representative and the Originators" and "The Loans" and in the
Prospectus under the captions "The Representative and the
Originators" and "Lending Programs" are true and accurate in
all material respects and nothing has come to such officer's
attention that would lead him to believe that any of the
specified sections contains any untrue statement of a material
fact or omits to state any material fact necessary in order to
make the statements and information therein, in the light of
the circumstances under which they were made, not misleading;
(iv) the information set forth in the Schedule of
Loans required to be furnished pursuant to the Pooling and
Servicing Agreement is true and correct in all material
respects and the Loans actually being delivered to the Trustee
and the Co-Trustee at Closing Time conform in all material
respects to the Pool information set forth in the Prospectus
Supplement;
(v) the copies of the Charter and By-laws of
the Company and the Originators attached to such certificate
are true and correct and, are in full force and effect on the
date thereof;
(vi) except as may otherwise be disclosed in the
Prospectus, there are no actions, suits or proceedings pending
(nor, to the best knowledge of such officers, are any actions,
suits or proceedings threatened), against or affecting the
Company or any Originator which if adversely determined,
individually or in the aggregate, would adversely affect the
Company's or such Originator's obligations under the Pooling
and Servicing Agreement, the Indemnification Agreement, the
Insurance Agreement, the Pricing Agreement or this Agreement;
(vii) each person who, as an officer or
representative of the Company or of any Originator, signed (a)
this Agreement, (b) the Pooling and Servicing Agreement, (c)
the Certificates issued thereunder, (d) the Insurance
Agreement (e) the Indemnification Agreement or (f) any other
document delivered prior hereto or on the date hereof in
connection with the purchase described in this Agreement and
the Pooling and Servicing Agreement, was, at the respective
times of such signing and delivery, and is now duly elected or
appointed, qualified and acting as such officer or
representative;
(viii) a certified true copy of the resolutions
of the board of directors of the Company and the Originators
with respect to the sale of the Class A Certificates subject
to this Agreement and the Pooling and Servicing Agreement,
which resolutions have not been amended and remain in full
force and effect;
(ix) all payments received with respect to
the Loans after the Cut-Off Date have been deposited in the
Principal and Interest Account, and are, as of the Closing
Date, in the Principal and Interest Account;
(x) the Company has complied, and has ensured
that the Originators have complied, with all the agreements
and satisfied, and has ensured that the Originators have
satisfied, all the conditions on its, and the Originators',
part to be performed or satisfied in connection with the
issuance, sale and delivery of the Loans and the Certificates;
(xi) all statements contained in the Prospectus
with respect to the Company and the Originators are true and
accurate in all material respects and nothing has come to such
officer's attention that would lead such officer to believe
that the Prospectus contains any untrue statement of a
material fact or omits to state any material fact;
(xii) each Mortgage assignment will be prepared
based on forms recently utilized by the Company with respect
to mortgaged properties located in the appropriate
jurisdiction and used in the regular course of the Company's
business. Based on the Company's experience with such matters,
the Company reasonably believes that upon execution each such
assignment will be in recordable form and will be sufficient
to effect the assignment of the Mortgage to which it relates
as provided in the Pooling and Servicing Agreement; and
(xiii) the weighted average lives of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A- 6,
Class A-7, Class A-8, Class A-9, Class A-10, Class A- 11,
Class A-12, Class A-13, Class A-14, Class A-15 and Class A-16
Certificates, in each case using the applicable pricing speed
and a weighted average coupon (or, in the case of the Pool II
Home Equity Loans, the weighted average margin) and weighted
average maturity based upon the Loans actually delivered to
the Trustee and the Co-Trustee, will not vary by more than
1/10th of one year from 1.0 years, 0.6 years, 1.4 years, 2.1
years, 3.0 years, 4.1 years, 5.2 years, 7.4 years, 11.8 years,
3.8 years, 3.8 years, 0.6 years, 2.3 years, 5.2 years, 9.7
years, and 9.0 years, respectively.
(i) At Closing Time, each Class of the Class A
Certificates shall have been rated "Aaa" by Moody's and "AAA" by
Standard & Poor's.
(j) At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and delivery of the Class A Certificates as herein
contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Class A Certificates as herein contemplated shall be
satisfactory in form and substance to the Representative, as
representative to the Underwriters, and counsel for the Underwriters.
(k) On or before the Closing Time the Company and the
Originators shall have delivered to the Trustee (or, with respect to
the Pool III Home Improvement Loans, the Co- Trustee), to hold in trust
for the benefit of the holders of the Certificates, Pool I and Pool II
Home Equity Loans, Pool III Home Improvement Loans and Pool IV
Multifamily Loans (as defined in the Prospectus) with aggregate
outstanding principal balances as of the Cut-Off Date of at least
$696,800,000, $153,300,000, $78,800,000 and $15,300,000, respectively.
The Company and the Originators shall, immediately following the sale
of the Class A Certificates, cause to be deposited with the Trustee,
for deposit in the Pre-Funding Account (as defined in the Prospectus
Supplement), cash in an amount equal to the sum of (A) the excess of
(i) the aggregate initial principal balance of the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8
and Class A-9 Certificates (I.E., $930,000,000) over (ii) the aggregate
discounted outstanding principal balances as of the Cut-Off Date of the
Pool I Home Equity Loans actually delivered to the Trustee, (B) the
excess of (i) the aggregate initial principal balance of the Class A-10
and Class A-11 Certificates (I.E., $200,000,000) over (ii) the
aggregate outstanding principal balances as of the Cut-Off Date of the
Pool II Home Equity Loans actually delivered to the Trustee, (C) the
excess of (i) the aggregate initial principal balance of the Class
A-12, Class A-13, Class A-14 and Class A-15 Certificates (I.E.,
$100,000,000) over (ii) the aggregate discounted outstanding principal
balances as of the Cut-Off Date of the Pool III Home Improvement Loans
actually delivered to the Trustee and the Co-Trustee, and (D) the
excess of (i) the aggregate initial principal balance of the Class A-16
Certificates (I.E., $20,000,000) over (ii) the aggregate outstanding
principal balances as of the Cut-Off Date of the Pool IV Multifamily
Loans actually delivered to the Trustee.
(l) On or before the Closing Time the Company shall
have delivered to the Representative a Current Report on Form 8-K
containing a detailed description of the Loans actually being delivered
to the Trustee and the Co-Trustee at Closing Time, in form and
substance satisfactory to the Representative.
(m) On or before the Closing Time the Company shall
have delivered to the Representative confirmation from the Federal
Housing Administration (the "FHA") that the FHA insurance reserves
relating to the FHA Loans have been or will be transferred to the
Co-Trustee.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative, as representative to the
Underwriters, by notice to the Company at any time at or prior to
Closing time, and such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
Section 6. INDEMNIFICATION.
(a) The Company and the Originators jointly and severally
agree to indemnify and hold harmless each of the Underwriters and each person,
if any, who controls each of the Underwriters within the meaning of Section 15
of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any untrue statement or omission
described in clause (i) above, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of counsel chosen by such Underwriter), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any untrue statement or omission described in clause (i) above, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with the information referred to in clauses (x), (y) and
(z) of the immediately following paragraph; provided, further, such indemnity
with respect to the Prospectus or any preliminary prospectus shall not inure to
the benefit of any Underwriter (or person controlling such Underwriter) from
whom the person suffering any such loss, claim, damage or liability purchased
the Class A Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus at or prior to the confirmation of the sale of
such Class A Certificates to such person in any case where such delivery is
required by the 1933 Act and the untrue statement or omission of a material fact
contained in any preliminary prospectus was corrected in the Prospectus.
(b) Each Underwriter agrees to indemnify and hold harmless the Company and
the Originators, their directors, each of the Company's and Originator's
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, contained in (x) the second sentence of the third paragraph on the
third page which is located on the inside cover (discussing the risk of a lack
of secondary trading) of the Prospectus, (y) the second and third paragraphs
under the heading "Underwriting" in the Prospectus (or any amendment or
supplement thereto) and (z) any Computational Materials prepared by such
Underwriter, except to the extent of any errors in the Computational Materials
that are caused by errors in the pool information provided by the Company to the
applicable Underwriter. The parties hereto agree that no Underwriter shall be
under any liability to the Company, the Originators or any other person
identified in this paragraph (b) for Computational Materials prepared by any
other Underwriter.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have otherwise than under this Section
6. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them and/or other indemnified parties that are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses other than the reasonable costs of investigation subsequently
incurred in connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Originators jointly and severally, on the one hand, and the Underwriters, on the
other hand, shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Originators jointly and severally, on the one
hand, and the Underwriters, on the other hand, as incurred, in such proportions
that each Underwriter is responsible for that portion represented by the
underwriting discount allocated to the principal amount of Class A Certificates
set forth next to each Underwriter's name on Annex B hereto (or, with respect to
Computational Materials furnished by an Underwriter (except to the extent of any
errors in the Computational Materials that are caused by errors in the pool
information provided by the Company to the applicable Underwriter), the excess
of the principal amount of Class A Certificates set forth next to such
Underwriter's name on Annex B hereto over the underwriting discount allocated to
such principal amount of Class A Certificates), and the Company and the
Originators shall be responsible for the balance; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the provisions
of this Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Class A Certificates
set forth next to the name of such Underwriter on Annex B hereto were offered to
the public exceeds the amount of any damages such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section 7, each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Underwriter and each respective director of the
Company and the Originators, each officer of the Company and the Originators who
signed the Registration Statement, and each respective person, if any, who
controls the Company and the Originators within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Company and the
Originators.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Company
and the Originators submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any of the Underwriters or any controlling person thereof, or by or on behalf of
the Company and the Originators, and shall survive delivery of the Class A
Certificates to the Underwriter.
Section 9. TERMINATION OF AGREEMENT.
(a) The Representative, as representative of the Underwriters, may
terminate this Agreement, by notice to the Company and the Originators, at any
time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Registration Statement or Prospectus, any change, or
any development involving a prospective change, in or affecting particularly the
business or properties of the Company and the Originators considered as one
entity or MBIA which, in the reasonable judgment of the Representative, as
representative of the Underwriters, materially impairs the investment quality of
the Class A Certificates; (ii) if there has occurred any downgrading in the
rating of the debt securities of MBIA by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the 1933 Act)
which, in the reasonable judgment of the Representative, as representative of
the Underwriters, materially impairs the investment quality or marketability of
the Class A Certificates or if any debt security of MBIA has been put on the
"watch list" of any such rating organization with negative implications; (iii)
if there has occurred any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange or by any governmental authority; (iv) if any banking
moratorium has been declared by Federal or New York authorities; or (v) if there
has occurred any outbreak or escalation of major hostilities in which the United
States of America is involved, any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the judgment
of the Representative, as representative of the Underwriter, the effects of any
such outbreak, escalation, declaration, calamity, or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and payment
for the Class A Certificates.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 10. Default by One of the Underwriters. If any of the Underwriters
shall fail at Closing Time to purchase the Class A Certificates which it is
obligated to purchase hereunder (the "Defaulted Certificates"), the remaining
Underwriters (the "Non-Defaulting Underwriters") shall have the right, but not
the obligation, within one (1) Business Day thereafter, to make arrangements to
purchase all, but not less than all, of the Defaulted Certificates upon the
terms herein set forth; if, however, the Non-Defaulting Underwriters shall have
not completed such arrangements within such one (1) Business Day period, then
this Agreement shall terminate without liability on the part of the
Non-Defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Non-Defaulting Underwriters or the Company shall have
the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
Section 11. Computational Materials. (a) It is understood that any
Underwriter may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Class A Certificates, subject to the following conditions:
(i) Each Underwriter shall comply with all applicable laws and regulations
in connection with the use of Computational Materials including the No-Action
Letter of May 20, 1994 issued by the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation, as made applicable to other issuers and underwriters by the
Commission in response to the request of the Public Securities Association dated
May 24, 1994, and the No-Action Letter of February 17, 1995 issued by the
Commission to the Public Securities Association (collectively, the "Kidder/PSA
Letters").
(ii) As used herein, "Computational Materials" and the term "ABS Term
Sheets" shall have the meanings given such terms in the Kidder/PSA Letters, but
shall include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of an Underwriter.
(iii) Each Underwriter shall provide the Company with representative forms
of all Computational Materials prior to their first use, to the extent such
forms have not previously been approved by the Company for use by such
Underwriter. The Underwriter shall provide to the Company, for filing on Form
8-K as provided in Section 11(b), copies of all Computational Materials that are
to be filed with the Commission pursuant to the Kidder/PSA Letters. The
Underwriter may provide copies of the foregoing in a consolidated or aggregated
form. All Computational Materials described in this subsection (a)(iii) must be
provided to the Company not later than 10:00 a.m. New York time one business day
before filing thereof is required pursuant to the terms of this Agreement.
(iv) If an Underwriter does not provide any Computational Materials to the
Company pursuant to subsection (a)(iii) above, such Underwriter shall be deemed
to have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Certificates that is required to be filed
with the Commission in accordance with the Kidder/PSA Letters.
(v) In the event of any delay in the delivery by any Underwriter to the
Company of all Computational Materials required to be delivered in accordance
with subsection (a)(iii) above, the Company shall have the right to delay the
release of the Prospectus to investors or to any Underwriter, to delay the
Closing Date and to take other appropriate actions in each case as necessary in
order to allow the Company to comply with its agreement set forth in Section
11(b) to file the Computational Materials by the time specified therein.
(b) The Company shall file the Computational Materials (if any) provided to
it by each Underwriter under Section 11(a)(iii) with the Commission pursuant to
a Current Report on Form 8-K no later than 10:00 a.m. on the date required
pursuant to the Kidder/PSA Letters.
Section 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Lehman Brothers Inc., as representative of the
Underwriters, 3 World Financial Center, New York, New York 10285-1200,
Attention: Syndicate Department (Fax: 212-528-8822); and notices to the Company
or any Originator shall be directed to it at 2840 Morris Avenue, Union, New
Jersey 07083, Attention: Executive Vice President.
Section 13. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters, the Company, the
Originators and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, the Company,
the Originators and their respective successors and the controlling persons and
officers and directors referred to in Section 6 and 7 hereof and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company, the Originators and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Class A Certificates from the
Underwriter shall be deemed to be a successor by reason merely of such purchase.
The Company and the Originators shall be jointly and severally liable for all
obligations incurred under this Agreement and the Pricing Agreement.
Section 14. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Unless otherwise set forth herein, specified times of day refer to New
York time.
Section 15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
each of the Underwriters and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By:/s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By:/s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of the date
first above written:
LEHMAN BROTHERS INC.
By: /s/ Martin P. Harding
----------------------------
Name: Martin P. Harding
Title: Senior Vice President
Acting on behalf of itself
and as the representative of
the Underwriters.
<PAGE>
ANNEX A
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
<TABLE>
<CAPTION>
ANNEX B
Prudential
Lehman Securities Bear, Stearns CS First
Brothers Inc. Incorporated & Co. Inc. Boston Corporation Total
------------- ------------ ---------- ------------------- ------
<S> <C> <C> <C> <C> <C>
Class A-1 $ 109,807,000 $ 29,563,000 $ 17,737,000 $ 11,825,000 $ 168,932,000
Class A-2 $ 54,769,000 $ 14,746,000 $ 8,847,000 $ 5,898,000 $ 84,260,000
Class A-3 $ 55,037,000 $ 14,819,000 $ 8,890,000 $ 5,927,000 $ 84,673,000
Class A-4 $ 61,862,000 $ 16,655,000 $ 9,992,000 $ 6,661,000 $ 95,170,000
Class A-5 $ 102,077,000 $ 27,481,000 $ 16,488,000 $ 10,992,000 $ 157,038,000
Class A-6 $ 19,628,000 $ 19,623,000 $ 19,526,000 $ 7,190,000 $ 65,967,000
Class A-7 $ 29,415,000 $ 29,413,000 $ 29,263,000 $ 10,776,000 $ 98,867,000
Class A-8 $ 31,910,000 $ 31,908,000 $ 31,746,000 $ 11,690,000 $ 107,254,000
Class A-9 $ 20,183,000 $ 20,182,000 $ 20,080,000 $ 7,394,000 $ 67,839,000
Class A-10 $ 75,000,000 $ 32,625,000 $ 10,000,000 $ 7,375,000 $ 125,000,000
Class A-11 $ 75,000,000 $ 0 $ 0 $ 0 $ 75,000,000
Class A-12 $ 5,422,000 $ 5,422,000 $ 5,384,000 $ 2,730,000 $ 18,958,000
Class A-13 $ 13,254,000 $ 13,253,000 $ 13,160,000 $ 6,674,000 $ 46,341,000
Class A-14 $ 4,101,000 $ 4,100,000 $ 4,071,000 $ 2,065,000 $ 14,337,000
Class A-15 $ 5,825,000 $ 5,823,000 $ 5,783,000 $ 2,933,000 $ 20,364,000
Class A-16 $ 10,000,000 $ 10,000,000 $ 0 $ 0 $ 20,000,000
------------------------------------------------------------------------------------------------
Total $ 673,290,000 $ 275,613,000 $ 200,967,000 $ 100,130,000 $ 1,250,000,000
================================================================================================
</TABLE>
EXHIBIT 1.2
$1,250,000,000
THE MONEY STORE INC.
The Money Store Asset Backed Certificates,
Series 1996-B
PRICING AGREEMENT
June 21, 1996
Lehman Brothers Inc.,
as representative of the Underwriters
3 World Financial Plaza
New York, New York 10285-1200
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated June 21, 1996 (the
"Underwriting Agreement"), relating to $1,250,000,000 aggregate principal amount
of The Money Store Asset Backed Certificates, Series 1996-B, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class
A-9, Class A-10, Class A-11, Class A-12, Class A-13, Class A-14, Class A-15 and
Class A-16 (collectively, the "Class A Certificates"). Pursuant to the
Underwriting Agreement, The Money Store Inc. (the "Company") agrees with Lehman
Brothers, as representative of the Underwriters, that the Initial Class
Certificate Balance, the Pass-Through Rates, the price to public and the
Underwriter's discount shall be as follows:
<TABLE>
<CAPTION>
Initial Class Pass- Proceeds to
Certificate Through Price to Underwriting Originators
CLASS Balance Rate Public (1) Discount (1)(2)
- ----- ------------- -------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
Class A-1 $ 168,932,000 6.72% 100.000000% 0.1000% 99.900000%
Class A-2 84,260,000 6.61% 100.000000% 0.1000% 99.900000%
Class A-3 84,673,000 6.82% 100.000000% 0.1250% 99.875000%
Class A-4 95,170,000 6.97% 100.000000% 0.1500% 99.850000%
Class A-5 157,038,000 7.18% 99.984375% 0.2000% 99.784375%
Class A-6 65,967,000 7.38% 99.984375% 0.2250% 99.759375%
Class A-7 98,867,000 7.55% 99.984375% 0.3000% 99.684375%
Class A-8 107,254,000 7.91% 99.953125% 0.4250% 99.528125%
Class A-9 67,839,000 8.14% 99.984375% 0.5500% 99.434375%
Class A-10 125,000,000 (3) 100.000000% 0.2250% 99.775000%
Class A-11 75,000,000 (4) 100.000000% 0.2250% 99.775000%
Class A-12 18,958,000 6.54% 100.000000% 0.1000% 99.900000%
Class A-13 46,341,000 6.90% 99.984375% 0.1825% 99.801875%
Class A-14 14,337,000 7.35% 99.953125% 0.3000% 99.653125%
Class A-15 20,364,000 7.90% 99.968750% 0.4000% 99.568750%
Class A-16 20,000,000 8.01% 100.000000% 0.2250% 99.775000%
-------------- ----------- ------- ----------
Total $1,250,000,000
</TABLE>
(1) Plus accrued interest from June 1, 1996 to, but not including,
the Closing Time (other than the Class A-10 Certificates,
which shall accrue interest from June 15, 1996, and the Class
A-11 Certificates, which shall accrue interest from the
Closing Time).
(2) Before deducting expenses payable by the Company.
(3) The Pass-Through Rate for the Class A-10 Certificates will
equal LIBOR plus 0.32% (or 0.64% for Remittance Dates
occurring after the Optional Servicer Termination Date),
subject to the Net Funds Cap, but in no event exceed 14.50%
per annum. For the first Remittance Date, the Pass-Through
Rate for the Class A-10 Certificates shall be 5.78%.
(4) The Pass-Through Rate for the Class A-11 Certificates will be
determined pursuant to the Auction Procedures described in
Annex I to the Prospectus Supplement, subject to the Net Funds
Cap, but in no event exceeding 14.50% per annum. For the first
Remittance Date, the Pass-Through Rate for the Class A-11
Certificates shall be 5.46%.
The Class A Certificates will be offered by the Underwriters to the public
subject to the concessions and discounts set forth in the Prospectus.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriter and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By: /s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.
By: /s/ Martin P. Harding
-----------------------------
Name: Martin P. Harding
Title: Senior Vice President
Acting on behalf of itself
and as the representative
of the Underwriters.
EXHIBIT 1.3
<PAGE>
POOLING AND SERVICING AGREEMENT
Dated as of May 31, 1996
THE BANK OF NEW YORK
(Trustee)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Asset Backed Certificates, Series 1996-B
Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class A-10, Class A-11, Class A-12,
Class A-13, Class A-14, Class A-15, Class A-16 and Class R
<PAGE>
TABLE OF CONTENTS
--------------------
SECTION PAGE
ARTICLE I
DEFINITIONS..........................................................I-1
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
2.01 Sale and Conveyance of Trust Fund;
Priority and Subordination of Ownership
Interests...........................................II-1
2.02 Possession of Mortgage Files..........................II-2
2.03 Books and Records.....................................II-2
2.04 Delivery of Mortgage
Loan Documents......................................II-2
2.05 Acceptance by Trustee and Custodian of the
Trust Fund; Certain Substitutions;
Certification by Trustee and Custodian .............II-5
2.06 Designations under REMIC Provisions;
Designation of Startup Day..........................II-8
2.07 Authentication of Certificates........................II-8
2.08 Fees and Expenses of the Trustee and Co-Trustee.......II-9
2.09 Sale and Conveyance of the Subsequent
Mortgage Loans......................................II-9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations of Representative,
Servicer, Claims Administrator
and Originators.....................................III-1
3.02 Individual Mortgage Loans.............................III-9
3.03 Purchase and Substitution.............................III-20
ARTICLE IV
THE CERTIFICATES
4.01 The Certificates......................................IV-1
4.02 Registration of Transfer and Exchange of
Certificates........................................IV-1
4.03 Mutilated, Destroyed, Lost or Stolen
Certificates........................................IV-7
4.04 Persons Deemed Owners.................................IV-7
ARTICLE V
ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS
5.01 Duties of the Servicer................................V-1
5.02 Liquidation of Mortgage Loans.........................V-6
5.03 Establishment of Principal and Interest
Accounts; Deposits in Principal and
Interest Accounts...................................V-6
5.04 Permitted Withdrawals From the Principal
and Interest Accounts...............................V-8
5.05 Payment of Taxes, Insurance and Other
Charges.............................................V-10
5.06 Transfer of Accounts..................................V-11
5.07 Maintenance of Hazard Insurance.......................V-11
5.08 Maintenance of Mortgage Impairment
Insurance Policy....................................V-12
5.09 Fidelity Bond.........................................V-12
5.10 Title, Management and Disposition of REO
Property............................................V-13
5.11 Certain Tax Information...............................V-14
5.12 Collection of Certain Mortgage
Loan Payments.......................................V-14
5.13 Access to Certain Documentation and
Information Regarding the
Mortgage Loans......................................V-15
5.14 Superior Liens........................................V-15
5.15 Duties of the Claims Administrator....................V-16
5.16 Co-Trustee Not to Hold Other FHA Insured
Title I Loans.......................................V-17
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
6.01 Establishment of Certificate Accounts; Deposits in
Certificate Accounts; Permitted Withdrawals from
Certificate Accounts................................VI-1
6.02 Establishment of Pre-Funding Account and
Capitalized Interest Account, Deposits in
Pre-Funding Account and Capitalized
Interest Account; Withdrawals from
Pre-Funding Account and Capitalized
Interest Account....................................VI-2
6.03 Establishment of Expense Accounts;
Deposits in Expense Accounts;
Permitted Withdrawals from Expense Accounts.........VI-5
6.04 Establishment of Insurance Accounts;
Deposits in Insurance Accounts;
Permitted Withdrawals from
Insurance Accounts..................................VI-6
6.05 Establishment of Spread Account; Deposits
in Spread Account; Permitted Withdrawals
from Spread Account.................................VI-8
6.06 Establishment of FHA Premium Account;
Deposits in FHA Premium Account;
Permitted Withdrawals from FHA
Premium Account.....................................VI-10
6.07 Investment of Accounts................................VI-12
6.08 Priority and Subordination of Distributions...........VI-12
6.09 Allocation of Realized Losses.........................VI-19
6.10 Statements............................................VI-20
6.11 Advances by the Servicer..............................VI-26
6.12 Compensating Interest.................................VI-27
6.13 Reports of Foreclosure and Abandonment
of Mortgaged Property...............................VI-27
6.14 Allocation of Total Monthly Excess Cashflow...........VI-28
6.15 Establishment of Servicing Accounts;
Collection of Taxes, Assessments and
Similar Items.......................................VI-30
ARTICLE VII
GENERAL SERVICING PROCEDURE
7.01 Assumption Agreements.................................VII-1
7.02 Satisfaction of Mortgages and Release
of Mortgage Files...................................VII-2
7.03 Servicing Compensation and Contingency Fee............VII-4
7.04 Annual Statement as to Compliance.....................VII-4
7.05 Annual Independent Public Accountants'
Servicing Report....................................VII-5
7.06 Certificateholder's, Trustee's
and Certificate Insurer's
Right to Examine Servicer Records
and Audit Operations................................VII-5
7.07 Reports to the Trustee and the Certificate
Insurer; Principal and Interest Account
Statements..........................................VII-5
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
8.01 Financial Statements..................................VIII-1
ARTICLE IX
THE SERVICER
9.01 Indemnification; Third Party Claims...................IX-1
9.02 Merger or Consolidation of the
Representative, the Servicer and
the Claims Administrator............................IX-2
9.03 Limitation on Liability of the Servicer
and Others..........................................IX-2
9.04 Servicer and Claims Administrator
Not to Resign.......................................IX-3
9.05 Appointment of Assistant Claims
Administrator.......................................IX-3
9.06 Right of Certificate Insurer to Replace
Servicer and Claims Administrator. . . . . . ...... IX-3
ARTICLE X
DEFAULT
10.01 Events of Default.....................................X-1
10.02 Trustee and Co-Trustee to Act;
Appointment of Successor............................X-3
10.03 Waiver of Defaults....................................X-5
10.04 Transfer of Tax Matters Person
Residual Interest...................................X-6
10.05 Control by Majority Certificateholders................X-6
ARTICLE XI
TERMINATION
11.01 Termination...........................................XI-1
11.02 Termination Upon Loss of REMIC Status.................XI-3
11.03 Additional Termination Requirements...................XI-4
11.04 [Omitted].............................................XI-6
11.05 Accounting Upon Termination of Servicer
and Claims Administrator............................XI-6
ARTICLE XII
THE TRUSTEE
12.01 Duties of Trustee.....................................XII-1
12.02 Certain Matters Affecting the Trustee.................XII-2
12.03 Trustee Not Liable for Certificates or
Mortgage Loans......................................XII-4
12.04 Trustee May Own Certificates..........................XII-4
12.05 Servicer to Pay Trustee's Fees and Expenses...........XII-5
12.06 Eligibility Requirements for Trustee..................XII-5
12.07 Resignation and Removal of the Trustee................XII-6
12.08 Successor Trustee.....................................XII-7
12.09 Merger or Consolidation of Trustee....................XII-7
12.10 Appointment of Co-Trustee or Separate Trustee.........XII-8
12.11 Authenticating Agent..................................XII-10
12.12 Tax Returns and Reports...............................XII-10
12.13 Appointment of Custodians.............................XII-12
12.14 Protection of Trust Fund..............................XII-12
12.15 Calculation of LIBOR..................................XII-13
12.16 Luxembourg Reports and Notices........................XII-14
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 Acts of Certificateholders............................XIII-1
13.02 Amendment.............................................XIII-1
13.03 Recordation of Agreement..............................XIII-2
13.04 Duration of Agreement.................................XIII-2
13.05 Governing Law.........................................XIII-2
13.06 Notices...............................................XIII-2
13.07 Severability of Provisions............................XIII-3
13.08 No Partnership........................................XIII-3
13.09 Counterparts..........................................XIII-3
13.10 Successors and Assigns................................XIII-3
13.11 Headings..............................................XIII-3
13.12 The Certificate Insurer...............................XIII-3
13.13 Paying Agent..........................................XIII-4
13.14 Notification to Rating Agencies.......................XIII-5
13.15 Third Party Rights....................................XIII-5
SCHEDULE I Description of Certain Litigation
SCHEDULE II Auction Procedures
EXHIBIT A Contents of Mortgage File
EXHIBIT B Forms of Certificates
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D Resale Certification
EXHIBIT E Assignment
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F Form of Trustee/Co-Trustee Initial Certification
EXHIBIT F-1 Form of Trustee/Co-Trustee Interim Certification
EXHIBIT G Form of Trustee/Co-Trustee Final Certification
EXHIBIT H Pool I Mortgage Loan Schedule
EXHIBIT H-1 Pool II Mortgage Loan Schedule
EXHIBIT H-2 Pool III Mortgage Loan Schedule
EXHIBIT H-3 Pool IV Mortgage Loan Schedule
EXHIBIT I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT J-1 Request for Release Documents of 90 Day
Delinquent Pool III Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L Form of Notice
EXHIBIT M Custodial Agreement
EXHIBIT M-1 Pool III Custodial Agreement
EXHIBIT N Form of Liquidation Report
EXHIBIT O Form of Delinquency Report
EXHIBIT P [Omitted]
EXHIBIT Q [Omitted]
EXHIBIT R Servicer's Monthly Computer Tape Format
EXHIBIT S Subservicing Agreement
EXHIBIT T Prices for Low Interest Mortgage Loans
<PAGE>
Agreement dated as of May 31, 1996, among The Bank of New York, as trustee
(the "Trustee"), the entities listed on Exhibit I hereto (collectively, the
"Originators") and The Money Store Inc., as Representative (the
"Representative"), Servicer (the "Servicer") and Claims Administrator (the
"Claims Administrator"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Mortgage Loans by the
Servicer, the Representative, the Servicer, the Originators and the Claims
Administrator are entering into this Agreement with the Trustee. The Originators
are selling the Mortgage Loans and amounts on deposit in the Pre-Funding Account
to the Trustee for the benefit of the Certificateholders, pursuant to which 17
classes of Certificates are being issued, denominated on the face thereof as The
Money Store Asset Backed Certificates, 1996-B, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-11, Class A-12, Class A-13, Class A-14, Class A-15, Class A-16 and Class
R, respectively, representing in the aggregate a 100% undivided ownership
interest in the Mortgage Loans and amounts on deposit in the Pre-Funding
Account. The Initial Pool I, Initial Pool II, Initial Pool III and Initial Pool
IV Mortgage Loans have an aggregate outstanding principal balance of
$696,807,565.24, $153,293,917.89, $78,823,510.16 and $15,380,469.89,
respectively (and an aggregate outstanding Principal Balance of $944,103,586.24,
which gives effect to the discounts on the Low Interest Mortgage Loans), as of
May 31, 1996, except for those Initial Mortgage Loans originated after May 31,
1996 and delivered to the Trustee on the Closing Date as to which the aggregate
outstanding principal balance shall be as of the date of the related Mortgage
Note (the "Cut-Off Date"), after application of payments received by the
Originators on or before such date, and the original Pre-Funded Amount equals
$305,896,413.76. Except for the Low Interest Mortgage Loans in the related Pool,
if any, each Initial Mortgage Loan in such Pool has, and each Subsequent
Mortgage Loan in such Pool will have, a Mortgage Interest Rate in excess of the
Class Adjusted Mortgage Loan Remittance Rate of each Class of Certificates in
the related Pool. The Class R Certificates are subordinated to the Class A
Certificates, in each case to the extent described herein. As provided herein, a
real estate mortgage investment conduit ("REMIC") election will be made in
connection with the REMIC Trust Fund for federal income tax purposes. On the
Startup Day, the Class A Certificates will be designated "regular interests" in
the REMIC Trust Fund and the Class R Certificates will be designated the single
class of "residual interests" in the REMIC Trust Fund for purposes of the REMIC
Provisions (as defined herein).
The parties hereto agree as follows:
[Intentionally Left Blank]
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings. This Agreement relates to
a Trust Fund evidenced by The Money Store Asset Backed Certificates, Series
1996-B, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class A-12, Class A- 13,
Class A-14, Class A-15, Class A-16 and Class R. Unless otherwise provided, all
calculations of interest pursuant to this Agreement are based on a 360-day year
and twelve 30-day months.
ACCOUNT: The Certificate Accounts, Pre-Funding Account, Expense Accounts,
Capitalized Interest Account, Spread Account, Servicing Account or Insurance
Accounts (including any sub-accounts of any of the foregoing) established and
held in trust by the Trustee for the Certificateholders and the FHA Premium
Account established and held in trust by the Trustee for the benefit of the
Certificateholders of the Pool III Certificates to reimburse the Servicer and
the Certificate Insurer for payments with respect to FHA Insurance Premiums or
to make payments with respect to FHA Insurance Premiums. The obligation to
establish and maintain the Accounts is not delegable.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than five Business Days prior to the related Subsequent Transfer Date,
of the Representative's designation of Subsequent Mortgage Loans of the related
Pool to be sold to the Trust Fund and the aggregate Principal Balance of such
Subsequent Mortgage Loans.
ADJUSTABLE RATE CERTIFICATES: The Class A-10 Certificates.
ADJUSTED MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, a
percentage per annum, equal to the related Mortgage Interest Rate less the per
annum rate used in calculating (i) the Annual Expense Escrow Amount, (ii) the
premiums payable to the Certificate Insurer as set forth in the Insurance
Agreement, (iii) the FHA Insurance Premium in connection with FHA Loans for
which the related Mortgagor pays the FHA Insurance Premium as part of the
Mortgage Interest Rate, (iv) the Servicing Fee, (v) the Contingency Fee, and
(vi) with respect to a Pool II Mortgage Loan, the Auction Agent Fee.
AGGREGATE INITIAL SPREAD ACCOUNT DEPOSIT: With respect to any Remittance
Date, the sum of the Initial Pool Spread Account Deposits for each of the Pools.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i) .05%
per annum and (ii) the aggregate Class Principal Balances of the Class A
Certificates, which is computed and payable on a monthly basis and represents
the estimated annual Trustee's and Co-Trustee's fees and expenses of the Trust
Fund.
APPROVED LUXEMBOURG NEWSPAPER: With respect to any notice or other
information required hereunder to be published in Luxembourg, the Luxembourger
Wort or another daily publication of comparable circulation in Luxembourg that
meets the requirements of the Luxembourg Stock Exchange for the publication of
such notice or other information.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee (or, with respect to Mortgages relating to Pool III
Mortgage Loans, the Co-Trustee) for the benefit of the Certificateholders.
AUTHENTICATING AGENT: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 12.11.
AUCTION AGENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT AGREEMENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT FEE: The meaning set forth in the Auction Agent Agreement.
The Auction Agent Fee includes the Broker-Dealer Fee payable to the
Broker-Dealer (each as defined in the Auction Procedures).
AUCTION PROCEDURES: The procedures set forth in Schedule II hereof by which
the Auction Rate is determined.
AUCTION RATE: The rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.1.1(c)(ii) thereof.
AUCTION RATE CERTIFICATES: The Class A-11 Certificates.
AUCTION REPORTING DATE: That day of each month which is the fifth Business
Day prior to the Remittance Date occurring in such month.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of New York, New Jersey, Minnesota or
Wisconsin are authorized or obligated by law or executive order to be closed.
When used with respect to an Interest Determination Date, "Business Day" shall
also mean a day on which banks are open for dealing in foreign currency and
exchange in London and New York City.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to each Pool and the
Remittance Dates in July, August and September 1996, the excess, if any, of (i)
for Pool I, Pool III and Pool IV, 30 days' interest calculated at the weighted
average Class Remittance Rates of the Classes of Certificates of such Pool, and
for Pool II, interest calculated on the actual number of days since the last
Remittance Date (or with respect to the Remittance Date in July 1996, the actual
number of days from June 15, 1996 to but not including such Remittance Date with
respect to the Adjustable Rate Certificates and the actual number of days from
the Closing Date to but not including such Remittance Date with respect to the
Auction Rate Certificates) to but not including the related Remittance Date at
the weighted average Class Remittance Rates of the Pool II Certificates of such
Pool, on the excess of (a) the Pool Principal Balance of such Pool for such
Remittance Date over (b) the aggregate Principal Balances of the Mortgage Loans
of such Pool for such Remittance Date over (ii) any Pool Pre-Funding Earnings
for such Pool to be transferred to the applicable Certificate Account on such
Remittance Date pursuant to Section 6.02(d). With respect to the Special
Remittance Date, 25 days' interest (or, in the case of Pool II, 11 days'
interest) calculated at the weighted average Class Remittance Rates of the
Classes of Certificates of such Pool on the amount to be transferred on the
Special Remittance Date from the Pre-Funding Account to the Certificate Account
relating to the Certificates of such Pool pursuant to Section 6.02(c).
CERTIFICATE: Any Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class A-12,
Class A-13, Class A-14, Class A-15, Class A-16 or Class R Certificate executed
by the Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the form annexed hereto as Exhibit B-1, B-2 or B- 3.
CERTIFICATE ACCOUNTS: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Representative, the Servicer, the
Claims Administrator, any Subservicer or any Originator, or any affiliate of any
of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. When used with respect to
any Class or Pool of Certificates, a Certificateholder or Holder of such Class
or Pool of Certificates, as the case may be.
CERTIFICATEHOLDERS' INTEREST CARRYOVER: For any Remittance Date on which
the Class A-10 or Class A-11 Remittance Rate is based upon the applicable Net
Funds Cap, the excess of (i) the amount of interest the Class A-10 or Class A-11
Certificates would be entitled to receive on such Remittance Date had interest
been calculated at a rate equal to LIBOR plus the applicable Margin or the
applicable Auction Rate, as the case may be (but in no event exceeding 14.50%
per annum), over (ii) the amount of interest such Class will receive on such
Remittance Date at the applicable Net Funds Cap, together with the unpaid
portion of any such excess from prior Remittance Dates (and interest thereon at
the then applicable Class A-10 or Class A-11 Remittance Rate, as the case may
be, without giving effect to the Net Funds Cap, but in no event exceeding 14.50%
per annum). No Certificateholders' Interest Carryover shall be paid on the Class
A-10 or Class A-11 Certificates after the Class Principal Balance of the
respective Class is reduced to zero.
CERTIFICATE INSURANCE POLICIES: Collectively, the certificate guaranty
insurance policies relating to the Certificates of each Pool, each dated the
Closing Date, and each issued by the Certificate Insurer for the benefit of the
Holders of the Certificates of the related Pool, pursuant to which the
Certificate Insurer guarantees Insured Payments.
CERTIFICATE INSURER: MBIA Insurance Corporation, a New York stock insurance
corporation, or any successor thereof, as issuer of the Certificate Insurance
Policies.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 4.02.
CHANGE DATE: The date on which the Mortgage Interest Rate of each Pool II
Mortgage Loan is subject to adjustment, which date is the Due Date set forth in
the related Mortgage Note and each first, third, sixth or twelfth Due Date
thereafter, as set forth in the related Mortgage Note.
CLAIM: An insurance claim submitted to the FHA by the Claims Administrator
with respect to a 90 Day Delinquent FHA Loan pursuant to the FHA Regulations.
CLAIMS ADMINISTRATOR: The Servicer, acting in the capacity of Claims
Administrator appointed as herein provided.
CLASS: Collectively, Certificates having the same priority of payment and
bearing the same designation.
CLASS A CERTIFICATE: A Certificate denominated as a Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10, Class A-11, Class A- 12, Class A-13, Class A-14, Class A-15 or Class
A-16 Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A PRINCIPAL BALANCE: The sum of the Class Principal Balances of each
Class of Class A Certificates.
CLASS ADJUSTED MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage
Loan, a percentage per annum, being the sum of (i) (a) the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 or Class A-9
Remittance Rate, as the case may be, with respect to a Pool I Mortgage Loan, (b)
the then current Class A-10 or Class A-11 Remittance Rate, as the case may be,
with respect to a Pool II Mortgage Loan, (c) the Class A-12, Class A-13, Class
A-14 or Class A-15 Remittance Rate, as the case may be, with respect to a Pool
III Mortgage Loan or (d) the Class A-16 Remittance Rate with respect to a Pool
IV Mortgage Loan, (ii) .05% per annum, relating to the Annual Expense Escrow
Amount, (iii) the applicable per annum rate relating to premiums payable to the
Certificate Insurer as set forth in the Insurance Agreement, (iv) with respect
to FHA Loans for which the FHA Insurance Premium is paid by the related
Mortgagor, the applicable Insurance Rate and (v) with respect to the Pool II
Mortgage Loans, for purposes of determining the Class Adjusted Mortgage Loan
Remittance Rate with respect to Class A-11, the Auction Agent Fee as set forth
in the Auction Agent Agreement.
CLASS CURRENT INTEREST REQUIREMENT: For each Class of Class A Certificates
and with respect to each Remittance Date, the amount equal to 30 days interest
(or, in the case of the Pool II Certificates, the actual number of days since
the last Remittance Date for such Classes to but not including the related
Remittance Date) at the related Class Remittance Rate on the Class Principal
Balance for such Class outstanding immediately prior to such Remittance Date;
provided, however, that with respect to the July 1996 Remittance Date, interest
on the Class A-10 Certificates shall accrue at the applicable Class Remittance
Rate from and including June 15, 1996 to but not including the July 1996
Remittance Date and interest on the Class A-11 Certificates shall accrue at the
applicable Class Remittance Rate from and including the Closing Date to but not
including the July 1996 Remittance Date. If a principal prepayment is made to a
Class of Class A Certificates on the Special Remittance Date, the Current
Interest Requirement for each such Class for the October 1996 Remittance Date
will be based on 30 days' interest (or, in the case of the Pool II Certificates,
the actual number of days since the September 1996 Remittance Date) on the Class
Principal Balance for such Class on the Special Remittance Date, after giving
effect to such principal prepayment. The Class A-10 and Class A-11 Current
Interest Requirements shall not include any Certificateholders' Interest
Carryover.
CLASS POOL FACTOR: With respect to a Class of Class A Certificates, as of
any date of determination, the then Class Principal Balance for such Class
divided by the Original Principal Balance for such Class.
CLASS PRINCIPAL BALANCE: With respect to each Class of Class A
Certificates, as of any date of determination, the Original Principal Balance of
such Class less (i) the sum of all amounts (including that portion of Insured
Payments, if any, made in respect of principal and, with respect to the Pool III
Certificates, any FHA Payments made in respect of principal) previously
distributed to the Certificateholders of such Class in respect of principal
pursuant to Section 6.08(d) and (ii) the amount, if any, of Realized Losses
previously allocated to such Class pursuant to Section 6.09 other than a loss
described in the last two sentences of the definition of Realized Loss. For
purposes of determining the Class Principal Balance of each Class of Class A
Certificates with respect to any Remittance Date, no effect shall be given to
any principal to be distributed, or Realized Losses to be allocated, to each
such Class on such Remittance Date.
CLASS A-1 CERTIFICATE: A Certificate denominated as a Class A-1
Certificate.
CLASS A-1 REMITTANCE RATE: The annual rate of interest payable to the Class
A-1 Certificateholders, which shall be equal to 6.72%.
CLASS A-2 CERTIFICATE: A Certificate denominated as a Class A-2
Certificate.
CLASS A-2 REMITTANCE RATE: The annual rate of interest payable to the Class
A-2 Certificateholders, which shall be equal to 6.61%.
CLASS A-3 CERTIFICATE: A Certificate denominated as a Class A-3
Certificate.
CLASS A-3 REMITTANCE RATE: The annual rate of interest payable to the Class
A-3 Certificateholders, which shall be equal to 6.82%.
CLASS A-4 CERTIFICATE: A Certificate denominated as a Class A-4
Certificate.
CLASS A-4 REMITTANCE RATE: The annual rate of interest payable to the Class
A-4 Certificateholders, which shall be equal to 6.97%.
CLASS A-5 CERTIFICATE: A Certificate denominated as a Class A-5
Certificate.
CLASS A-5 REMITTANCE RATE: The annual rate of interest payable to the Class
A-5 Certificateholders, which shall be equal to 7.18%.
CLASS A-6 CERTIFICATE: A Certificate denominated as a Class A-6
Certificate.
CLASS A-6 REMITTANCE RATE: The annual rate of interest payable to the Class
A-6 Certificateholders, which shall be equal to 7.38%
CLASS A-7 CERTIFICATE: A Certificate denominated as a Class A-7
Certificate.
CLASS A-7 REMITTANCE RATE: The annual rate of interest payable to the Class
A-7 Certificateholders, which shall be equal to 7.55%.
CLASS A-8 CERTIFICATE: A Certificate denominated as a Class A-8
Certificate.
CLASS A-8 REMITTANCE RATE: The annual rate of interest payable to the Class
A-8 Certificateholders, which shall be equal to 7.91%
CLASS A-9 CERTIFICATE: A Certificate denominated as a Class A-9
Certificate.
CLASS A-9 REMITTANCE RATE: The annual rate of interest payable to the Class
A-9 Certificateholders, which shall be equal to 8.14%.
CLASS A-10 CERTIFICATE: A Certificate denominated as a Class A-10
Certificate.
CLASS A-10 REMITTANCE RATE: The annual rate of interest payable to the
Class A-10 Certificateholders, which shall be equal to 5.78% for the first
Remittance Date. Thereafter, the Class A-10 Remittance Rate shall be equal to
the lesser of (i) LIBOR plus 0.32% (or plus 0.64% for each Remittance Date
occurring after the Optional Servicer Termination Date) and (ii) the applicable
Net Funds Cap (but in no event exceeding 14.5% per annum).
CLASS A-11 CERTIFICATE: A Certificate denominated as a Class A-11
Certificate.
CLASS A-11 REMITTANCE RATE: The annual rate of interest payable to the
Class A-11 Certificateholders, which shall be equal to 5.46% for the first
Remittance Date. Thereafter, the Class A-11 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II, subject to the applicable Net Funds Cap (but in no event
exceeding 14.5% per annum)
CLASS A-12 CERTIFICATE: A Certificate denominated as a Class A-12
Certificate.
CLASS A-12 REMITTANCE RATE: The annual rate of interest payable to the
Class A-12 Certificateholders, which shall be equal to 6.54%.
CLASS A-13 CERTIFICATE: A Certificate denominated as a Class A-13
Certificate.
CLASS A-13 REMITTANCE RATE: The annual rate of interest payable to the
Class A-13 Certificateholders, which shall be equal to 6.90%.
CLASS A-14 CERTIFICATE: A Certificate denominated as a Class A-14
Certificate.
CLASS A-14 REMITTANCE RATE: The annual rate of interest payable to the
Class A-14 Certificateholders, which shall be equal to 7.35%.
CLASS A-15 CERTIFICATE: A Certificate denominated as a Class A-15
Certificate.
CLASS A-15 REMITTANCE RATE: The annual rate of interest payable to the
Class A-15 Certificateholders, which shall be equal to 7.90%.
CLASS A-16 CERTIFICATE: A Certificate denominated as a Class A-16
Certificate.
CLASS A-16 REMITTANCE RATE: The annual rate of interest payable to the
Class A-16 Certificateholders, which shall be equal to 8.01%.
CLASS R CERTIFICATE: A Certificate denominated as a Class R Certificate.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS REMITTANCE RATE: With respect to a Class of Class A Certificates, the
annual rate of interest payable to the Certificateholders of such Class, which
rate is set forth, or determined as provided, under the definitions of the Class
A-1 through Class A-16 Remittance Rates.
CLASS R REMITTANCE AMOUNT: As of any Remittance Date, an amount equal to
the sum of (i) the Pool Remaining Amount Available for each Pool, and (ii) the
Remainder Excess Spread Amount, net of reimbursements to the Servicer or the
Representative of Reimbursable Amounts pursuant to Section 5.04(f).
CLOSING DATE: June 27, 1996.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 6.12.
CONTINGENCY FEE: As to each Mortgage Loan, the annual fee which is, in
addition to the Servicing Fee, payable to the Servicer pursuant to Section 7.03
of this Agreement. Such fee shall be calculated and payable monthly only from
the amounts received in respect of interest on such Mortgage Loan, shall accrue
at the rate of .25% per annum and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Contingency Fee is payable solely
from the interest portion of related (i) Monthly Payments, (ii) Liquidation
Proceeds or (iii) Released Mortgaged Property Proceeds collected by the
Servicer, or as otherwise provided in Section 5.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CONVENTIONAL HOME IMPROVEMENT LOANS: Pool III Mortgage Loans that are not
FHA Loans.
CO-TRUSTEE: First Bank (N.A.), a national banking association headquartered
in Milwaukee, Wisconsin.
CROSS-OVER DATE: The date on which the Maximum Subordinated Amount is
reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the aggregate
amount of Realized Losses with respect to the applicable Pool of Mortgage Loans
since the Startup Day.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
CUSTODIAL AGREEMENT: Any agreement to be entered into pursuant to Section
12.13 for the retention of each Trustee's Mortgage File, substantially in the
form attached as Exhibit M hereto.
CUSTODIAN: Any custodian appointed pursuant to Section 12.13 herein,
provided that such custodian shall be independent of the Servicer, the
Representative and the Claims Administrator, except in the event the Trustee or
the Co-Trustee shall be the Servicer or the Claims Administrator. The initial
Custodian for the Pool III Loans shall be First Trust National Association, a
national banking association headquartered in Minneapolis, Minnesota.
CUT-OFF DATE: May 31, 1996; provided, however, that for purposes of
determining characteristics of the Initial Mortgage Loans as of the Cut-Off
Date, the Cut-Off Date for those Initial Mortgage Loans originated after May 31,
1996 shall be deemed to be the date of the applicable Mortgage Note.
DEALER LOANS: Pool III Mortgage Loans in which a dealer- contractor
participates in the financing.
DEFICIENCY AMOUNT: means with respect to any Remittance Date and any Pool
of Certificates, (i) the excess, if any, of (a) the Pool Current Interest
Requirement for the related Pool over (b) the sum of the Pool Available
Remittance Amount for such Pool (minus amounts withdrawn to pay required
premiums to the Certificate Insurer), and the Monthly Excess Spread and the
Subordination Reduction Amount applicable to such Pool, plus (ii) the
Subordination Deficit, if any, for such Pool with respect to such Remittance
Date.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the United States Bankruptcy Code, as
amended from time to time (11 U.S.C.).
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by a Qualified Substitute
Mortgage Loan.
DEPOSITORY: The Depository Trust Company, 7 Hanover Square, New York, New
York 10004 and any successor Depository hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short term rating by Moody's, and which is either
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i) the
third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial institution
for which the Depository holds Class A Certificates from time to time as a
securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due from the
Mortgagor on a Mortgage Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
EVENT OF DEFAULT: As described in Section 10.01.
EVENT OF EXCESSIVE POOL LOSS: means, with respect to Pool I, Pool II or
Pool IV, (a) until the 36th Remittance Date, any event that causes Cumulative
Realized Losses with respect to such Pool to equal or exceed 1.25% of the Pool
Principal Balance of such Pool as of the Closing Date, (b) from the 36th until
the 42nd Remittance Dates, any event that causes Cumulative Realized Losses with
respect to such Pool to equal or exceed 1.75% of the Pool Principal Balance of
such Pool as of the Closing Date, (c) from the 42nd until the 48th Remittance
Dates, any event that causes Cumulative Realized Losses with respect to such
Pool to equal or exceed 2.25% of the Pool Principal Balance of such Pool as of
the Closing Date and (d) thereafter, any event that causes Cumulative Realized
Losses with respect to such Pool to equal or exceed 2.75% of the Pool Principal
Balance of such Pool as of the Closing Date.
EVENT OF NONPAYMENT: An event of nonpayment shall occur with respect to any
Remittance Date if the amounts remitted by the Servicer to the Trustee pursuant
to Sections 5.04(a), 6.07(e), 6.11 and 6.12 for deposit in the Certificate
Accounts (minus the amount to be withdrawn from the applicable Certificate
Account for deposit in (i) the FHA Premium Account pursuant to Section
6.01(b)(ii) and (ii) the applicable Insurance Account pursuant to Section
6.01(b)(i)), plus any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.05(b)(ii) will not, taken together, be
sufficient to pay all of the Pool Remittance Amounts for each Pool (exclusive of
any Certificateholders' Interest Carryover and any Pool Carry-Forward Amounts
representing amounts previously paid to the Certificateholders of the applicable
Pool as Insured Payments and exclusive of any amount described in clause (X)(iv)
of the definition of Pool Principal Distribution Amounts which have not been
paid by the Originators) in respect of such Remittance Date.
EXCESS CLAIM AMOUNT: As defined in Section 6.05(c).
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on a
Mortgage Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any Liquidated
Mortgage Loan, the excess, if any, of (a) the total Net Liquidation Proceeds,
over (b) the Principal Balance of such Mortgage Loan as of the date such
Mortgage Loan became a Liquidated Mortgage Loan plus 30 days interest thereon at
the weighted average Class Adjusted Mortgage Loan Remittance Rates for Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8
and Class A-9 with respect to a Pool I Mortgage Loan, the weighted average Class
Adjusted Mortgage Loan Remittance Rates for Class A-10 and Class A-11 with
respect to a Pool II Mortgage Loan, the weighted average Class Adjusted Mortgage
Loan Remittance Rates for Class A-12, Class A-13, Class A-14 and Class A-15 with
respect to a Pool III Mortgage Loan or the Class Adjusted Mortgage Loan
Remittance Rate for Class A-16 with respect to a Pool IV Mortgage Loan;
provided, however, that such excess shall be reduced by the amount by which
interest accrued on the advance, if any, made by the Servicer pursuant to
Section 5.14 at the related Mortgage Interest Rate exceeds interest accrued on
such advance at the applicable Class Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date and Pool of Mortgage
Loans, an amount equal to the excess of (A) the product of (i) the aggregate
Principal Balances of the applicable Pool of Mortgage Loans as of the first day
of the immediately preceding Due Period and (ii) one-twelfth of the weighted
average Mortgage Interest Rate for the applicable Pool of Mortgage Loans, as the
case may be, as of the first day of the related Due Period over (B) the sum of
(i) the Pool Current Interest Requirement for the applicable Pool of
Certificates for such Remittance Date, (ii) amounts to be deposited into the
applicable Expense Account and Insurance Account on such Remittance Date
pursuant to Sections 6.03(a)(i) and 6.04(a)(i), respectively, (iii) the
Servicing Fee and Contingency Fee for the applicable Pool of Mortgage Loans with
respect to such Remittance Date, (iv) with respect to those FHA Loans in Pool
III for which the FHA Insurance Premium is paid by the related Mortgagor as part
of the interest payment, the applicable FHA Insurance Premium and (v) with
respect to the Pool II Mortgage Loans, the Auction Agent Fee for such Remittance
Date. With respect to the Remittance Dates in July, August and September 1996,
the Excess Spread for each Pool of Mortgage Loans also will include the sum of
(i) all funds to be transferred to the applicable Certificate Account from the
Capitalized Interest Account for such Remittance Date pursuant to Section
6.02(g) and (ii) the Pool Pre-Funding Earnings for such Pool for the applicable
Remittance Date.
EXCESS SUBORDINATED AMOUNT: With respect to any Pool of Mortgage Loans and
Remittance Date, the excess, if any, of (x) the Subordinated Amount that would
apply to such Pool on such Remittance Date after taking into account the payment
of the Pool Remittance Amount for such Pool on such Remittance Date (except for
any distributions of related Subordination Reduction Amounts on such Remittance
Date) over (y) the related Specified Subordinated Amount for such Remittance
Date.
EXPENSE ACCOUNTS: The expense accounts established and maintained by the
Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHA: The Federal Housing Administration, and its succes- sors in interest.
FHA CUSTODIAL AGREEMENT: The Agreement dated as of May 31, 1996 by and
between the Co-Trustee and the Custodian for the retention of each Trustee's
Mortgage Loan File in connection with the Pool III Loans, substantially in the
form attached as Exhibit M-1 hereto.
FHA INSURANCE PREMIUM: The premium charged by the FHA pursuant to 24 C.F.R.
ss. 201.31, or any successor regulation, as payment for Title I insurance
coverage for an FHA Loan, which premium shall be the responsibility of the
Servicer, who will be reimbursed from the FHA Premium Account in accordance with
Section 6.06(b)(i) hereof; provided that the Certificate Insurer shall have the
option to pay the FHA Insurance Premium with respect to any FHA Loan to the
extent funds are not otherwise available and to be reimbursed from the FHA
Premium Account in accordance with Section 6.06(b)(i) hereof.
FHA LOAN: A Mortgage Loan that is partially insured by the FHA under Title
I.
FHA PAYMENT: The amount received from the FHA for a Claim filed with
respect to a 90 Day Delinquent FHA Loan.
FHA PREMIUM ACCOUNT: The account established and main- tained by the
Trustee in accordance with Section 6.06 hereof.
FHA PREMIUM AMOUNT: With respect to any FHA Loan for any Remittance Date,
(i) if the FHA Insurance Premium is paid by the related Mortgagor as part of the
Mortgage Interest Rate on an FHA Loan, an amount equal to 1/12 of the product of
the Insurance Rate times the Principal Balance as of the first day of the
immediately preceding Due Period and (ii) if the related Mortgagor pays the FHA
Insurance Premium as a separate amount in addition to Monthly Payments, any such
amount received by the Servicer during the related Due Period.
FHA REGULATIONS: The regulations of the FHA with respect to Title I home
improvement loans set forth in 24 C.F.R. ss. 201, as the same may be amended
during the term of this Agreement.
FHA RESERVE ACCOUNT: The account of the Co-Trustee maintained by the FHA
with respect to the FHA Loans and certain other mortgage loans in accordance
with Section 5.16 hereof, registered in the name of the Co-Trustee and insured
by the FHA under Title I in accordance with the FHA Regulations.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending on the
earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $100,000, (ii) the date on which an Event of
Default occurs and (iii) at the close of business on September 25, 1996.
GLOBAL CERTIFICATES: Each Class of Class A Certificates other than the
Auction Rate Certificates.
GROSS MARGIN: With respect to each Pool II Mortgage Loan, the number of
basis points set forth in the related Mortgage Note which is added to the LIBOR
Index or the Treasury Index, as the case may be, to determine the Mortgage
Interest Rate on the related Change Date, subject to the applicable Periodic
Rate Cap and the applicable Lifetime Cap and Lifetime Floor.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or more in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
HUD: The United States Department of Housing and Urban Development, and its
successor in interest.
INDEX: Either the LIBOR Index or the Treasury Index, as the case may be.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Class A Certificate.
INITIAL MORTGAGE LOANS: The Initial Pool I, Initial Pool II, Initial Pool
III and Initial Pool IV Mortgage Loans.
INITIAL POOL SPREAD ACCOUNT DEPOSIT: As of any Remittance Date, (A) with
respect to Pool I, the amount deposited into the Spread Account and allocated to
Pool I pursuant to Section 6.05(a)(i) and (ii); (B) with respect to Pool II, the
amount deposited into the Spread Account and allocated to Pool II pursuant to
Section 6.05(a)(ii); (C) with respect to Pool III, the amount deposited into the
Spread Account and allocated to Pool III pursuant to Section 6.05(a)(i) and
(ii), minus the aggregate Reallocated Pool III Spread Account Portion for all
Remittance Dates up to, but not including, such Remittance Date; and (D) with
respect to Pool IV, the amount deposited into the Spread Account and allocated
to Pool IV pursuant to Section 6.05(a)(i) and (ii).
INITIAL POOL I MORTGAGE LOANS: The Pool I Mortgage Loans listed on Exhibit
H delivered to the Trustee on the Closing Date.
INITIAL POOL II MORTGAGE LOANS: The Pool II Mortgage Loans listed on
Exhibit H-1 delivered to the Trustee on the Closing Date.
INITIAL POOL III MORTGAGE LOANS: The Pool III Mortgage Loans listed on
Exhibit H-2 delivered to the Co-Trustee on the Closing Date.
INITIAL POOL IV MORTGAGE LOANS: The Pool IV Mortgage Loans listed on
Exhibit H-3 delivered to the Trustee on the Closing Date.
INSURANCE ACCOUNTS: The insurance accounts established and maintained by
the Trustee in accordance with Section 6.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of May 31, 1996 by and among
the Certificate Insurer, The Money Store Inc., the Originators listed in
Schedule I thereto and the Trustee, as amended from time to time by the parties
thereto.
INSURANCE PAYING AGENT: The Bank of New York or any successor as appointed
herein.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Trustee or the Servicer by any insurer (other than the Certificate Insurer)
pursuant to any insurance policy covering a Mortgage Loan, Mortgaged Property,
or REO Property, including but not limited to title, hazard, life, health and/or
accident insurance policies, and/or (ii) by the Servicer pursuant to Section
5.08, in either case, net of any expenses which are incurred by the Servicer in
connection with the collection of such proceeds and not otherwise reimbursed to
the Servicer.
INSURANCE RATE: As to any FHA Loan with respect to which the FHA Insurance
Premium is paid by the related Mortgagor as part of the Mortgage Interest Rate,
the rate of 1.0% per annum, which is used to calculate the amount to be applied
to the payment of the related FHA Insurance Premium.
INSURED PAYMENT: means (i) as of any Remittance Date, any Deficiency Amount
and (ii) any Preference Amount.
INSURER REIMBURSABLE AMOUNTS: As described in Section 6.14(a)(iii).
INTEREST DETERMINATION DATE: With respect to the Class A-10 Certificates,
the second LIBOR Determination Date prior to any Remittance Date while the Class
A-10 Certificates are outstanding.
INTEREST PERIOD: (A) With respect to the Adjustable Rate Certificates (i)
initially, the period commencing June 15, 1996 and ending on the day immediately
preceding the Remittance Date in July 1996 and (ii) thereafter, the period
commencing on a Remittance Date and ending on the day immediately preceding the
next Remittance Date and (B) with respect to the Auction Rate Certificates, the
meaning set forth in the Auction Procedures attached hereto as Schedule II.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.15 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a London
Banking Day prior to the commencement of each related Interest Period.
LIBOR INDEX: The London interbank offered rate for one-month, six-month or
one year U.S. dollar deposits, either, as specified in the related Note, as
announced by the Federal National Mortgage Association as most recently
available as of the date 45 days prior to each Change Date, or as published in
THE WALL STREET JOURNAL generally on a day of the month preceding the month of
the Change Date.
LIFETIME CAP: The provision in the Mortgage Note for each Pool II Mortgage
Loan which limits the maximum Mortgage Interest Rate over the life of such Pool
II Mortgage Loan to the rate set forth in the applicable Mortgage Note.
LIFETIME FLOOR: The provision in the Mortgage Note for each Pool II
Mortgage Loan which limits the minimum Mortgage Interest Rate over the life of
such Pool II Mortgage Loan to the rate set forth in the applicable Mortgage
Note.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan or REO Property as to
which the Servicer has determined that all amounts which it reasonably and in
good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of any
REO Disposition, amounts required to be deposited in the applicable Principal
and Interest Account pursuant to Section 5.10 hereof, and any other amounts
other than FHA Payments and Related Payments received in connection with the
liquidation of defaulted Mortgage Loans, whether through trustee's sale,
foreclosure sale or otherwise.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, (i) the sum
of (a) the original principal balance of such Mortgage Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Mortgage Loan, less (c) that portion of the principal balance equal to the
amount of the premium for credit life insurance collected by the Originators,
divided by (ii) the value of the related Mortgaged Property, based upon the
appraisal (or, in the case of certain Mortgage Loans with original principal
balances of less than $15,000, such other method of valuation acceptable to the
related Originator) made at the time of origination of the Mortgage Loan.
LONDON BANKING DAY: Any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
LOW INTEREST MORTGAGE LOAN: A Low Interest Pool I Mortgage Loan, a Low
Interest Pool III Mortgage Loan or a Low Interest Pool IV Mortgage Loan.
LOW INTEREST POOL I MORTGAGE LOAN: A Pool I Mortgage Loan having a Mortgage
Interest Rate below the sum of the Class Remittance Rate for the Class A-9
Certificates plus 0.65%.
LOW INTEREST POOL III MORTGAGE LOAN: A Pool III Mortgage Loan having a
Mortgage Interest Rate below the sum of the Class Remittance Rate for the Class
A-15 Certificates plus 0.85%.
LOW INTEREST POOL IV MORTGAGE LOAN: [RESERVED]
LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or less in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A Certificates
evidencing in excess of 50% of the aggregate Class Principal Balances of the
Class A Certificates; provided, however, that with respect to any action or
event affecting fewer than all Classes of Class A Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of such Classes of
Class A Certificates.
MARGIN: With respect to the Class A-10 Certificates, the rate per annum of
0.32% (or 0.64% for each Remittance Date occurring after the Optional Servicer
Termination Date), that is added to LIBOR to determine the Class A-10 Remittance
Rate for each Remittance Date.
MAXIMUM SUBORDINATED AMOUNT: The initial Maximum Subordinated Amount shall
be $150,000,000 which amount equals 12% of the sum of the original Pool
Principal Balances of each Pool. On any Remittance Date, the Maximum
Subordinated Amount shall equal the initial Maximum Subordinated Amount less
Cumulative Realized Losses through the last day of the month preceding such
Remittance Date. The Maximum Subordinated Amount on any date other than a
Remittance Date shall be equal to the Maximum Subordinated Amount as of the
immediately preceding Remittance Date (or, prior to the first Remittance Date,
the initial Maximum Subordinated Amount), provided, however, that the Maximum
Subordinated Amount shall never be less than zero.
MIXED USE BUILDING: A building containing both residential dwelling units
and commercial use units, E.G., retail stores or office space.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section 6.11
hereof.
MONTHLY EXCESS SPREAD: As of any Remittance Date and for any Pool of
Mortgage Loans, an amount equal to the sum of (A) the product of (i) the amount
calculated pursuant to the first sentence of the definition of Excess Spread
with respect to such Remittance Date for such Pool of Mortgage Loans and (ii)
the then applicable Monthly Excess Spread Percentage and (B) with respect to the
Remittance Dates in July, August and September 1996, the amount calculated
pursuant to the second sentence of the definition of Excess Spread with respect
to such Remittance Date.
MONTHLY EXCESS SPREAD PERCENTAGE: As to any Remittance Date, 100%.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Mortgage Loan, as set forth in
the related Mortgage Note.
MONTHLY PREMIUM: With respect to each Pool, the monthly premium payable to
the Certificate Insurer equal to the product of (i) the applicable percentage
set forth in the Insurance Agreement and (ii) the applicable then outstanding
Pool Principal Balance, rounded to the nearest thousand dollars.
MOODY'S: Moody's Investors Service, or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
on the Mortgaged Property.
MORTGAGE FILE: As described in Exhibit A.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 5.08.
MORTGAGE INTEREST RATE: The fixed or adjustable rate of interest borne by a
Mortgage Note, as shown on the applicable Mortgage Loan Schedule.
MORTGAGE LOAN: An individual mortgage loan which is transferred to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee)
pursuant to this Agreement, including any Subsequent Mortgage Loan, together
with the rights and obligations of a holder thereof and payments thereon and
proceeds therefrom, the Mortgage Loans originally subject to this Agreement
being identified on the Pool I, Pool II, Pool III and Pool IV Mortgage Loan
Schedules delivered to the Trustee (or, with respect to the Pool III Mortgage
Loans, the Co-Trustee) as Exhibits H, H-1, H-2 and H-3, respectively. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, sold to the Trust Fund by the applicable Originator (as
indicated by Exhibits H, H-1, H-2 and H-3), in fact was not sold or otherwise
transferred and assigned to the Trust Fund for any reason whatsoever, including,
without limitation, the incorrectness of the statement set forth in Section
3.02(i) hereof with respect to such mortgage loan, shall nevertheless be
considered a "Mortgage Loan" for all purposes of this Agreement.
MORTGAGE LOAN SCHEDULE: The separate schedules of Pool I, Pool II, Pool III
and Pool IV Mortgage Loans delivered to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Co-Trustee) as Exhibits H, H-1, H-2 and H-3,
respectively, such schedules identifying each Mortgage Loan by address of the
Mortgaged Property and the name of the Mortgagor and setting forth as to each
Mortgage Loan the following information: (i) the Principal Balance as of the
close of business on the Cut-Off Date, (ii) the account number, (iii) the
original principal amount, (iv) except with respect to the Pool III Loans, the
LTV as of the date of the origination of the related Mortgage Loan, (v) the Due
Date, (vi) the Mortgage Interest Rate, (vii) the first Due Date, (viii) the
Monthly Payment, (ix) the maturity date of the Mortgage Note, (x) the remaining
number of months to maturity as of the Cut-Off Date and additionally, (xi) with
respect to Exhibit H-1, the Periodic Rate Cap, Lifetime Cap and Lifetime Floor.
Also, the Mortgage Loan Schedule for the Pool III Mortgage Loans will indicate,
based upon loan number, whether the related Pool III Mortgage Loan is an FHA
Loan or a Conventional Home Improvement Loan.
MORTGAGE NOTE: The note or other evidence of indebted- ness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MORTGAGED PROPERTY STATES: The States of Alabama, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware, Florida, Georgia, Iowa, Idaho,
Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming
and the District of Columbia, where the Mortgaged Properties are located.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as rental
apartment buildings or projects containing five or more units.
NET FUNDS CAP: As to any Remittance Date, a percentage equal to the
difference between (A) the weighted average Mortgage Interest Rate on the Pool
II Mortgage Loans, minus (B) the sum of (i) the percentages used in determining
the Servicing Fee, the Contingency Fee, the fee due the Trustee and the premium
due the Certificate Insurer, (ii) commencing with the Remittance Date in July
1997, 0.50% and, (iii) with respect to the Auction Rate Certificates, the
percentage used in determining the Auction Agent Fee.
NET FUNDS CAP SHORTFALL: With respect to the Class A-10 and Class A-11
Certificates, as to any Remittance Date, the excess, if any, of (i) the amount
of interest accrued on such Class of Certificates for such Remittance Date
calculated at the Class Remittance Rate for such Class, without giving effect to
the applicable Net Funds Cap (but in no event exceeding 14.5% per annum), over
(ii) the amount of interest accrued on such Class of Certificates for such
Remittance Date calculated at the Class Remittance Rate for such Class, after
giving effect to, and limited by, the applicable Net Funds Cap for such
Remittance Date (but in no event exceeding 14.5% per annum).
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.
NET MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(b) hereof.
1933 ACT: The Securities Act of 1993, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Pool III Loan that is an
FHA Loan.
90 DAY DELINQUENT POOL III LOAN: With respect to any Remittance Date, a
Pool III Mortgage Loan with respect to which four consecutive Monthly Payments
have not been received by the Servicer as of the last day of the related Due
Period unless, on or prior to the last day of the Due Period in which the fourth
Monthly Payment is due, the Servicer has received from the related Mortgagor an
amount at least equal to one unpaid Monthly Payment.
NON-ACKNOWLEDGED FHA LOANS: As defined in Section 3.02(lll) hereof.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee or
Co-Trustee, as the case may be, signed by the Chairman of the Board, the
President, a Vice President or Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Secretaries of the Representative, an
Originator, the Servicer or the Claims Administrator, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative, the Servicer or the Claims
Administrator, reasonably acceptable to the Trustee and the Certificate Insurer
and experienced in matters relating thereto; except that any opinion of counsel
relating to (a) the qualification of the Trust Fund as a REMIC or (b) compliance
with the REMIC Provisions, must be an opinion of counsel who (i) is in fact
independent of the Representative, the Servicer or the Claims Administrator,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Representative, the Servicer or the Claims
Administrator or in an affiliate thereof and (iii) is not connected with the
Representative, the Servicer or the Claims Administrator as an officer,
employee, director or person performing similar functions.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01 hereof.
ORIGINAL CLASS A-1 PRINCIPAL BALANCE: $ 168,932,000.
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $ 84,260,000.
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $ 84,673,000.
ORIGINAL CLASS A-4 PRINCIPAL BALANCE: $ 95,170,000.
ORIGINAL CLASS A-5 PRINCIPAL BALANCE: $ 157,038,000.
ORIGINAL CLASS A-6 PRINCIPAL BALANCE: $ 65,967,000.
ORIGINAL CLASS A-7 PRINCIPAL BALANCE: $ 98,867,000.
ORIGINAL CLASS A-8 PRINCIPAL BALANCE: $ 170,254,000.
ORIGINAL CLASS A-9 PRINCIPAL BALANCE: $ 67,839,000.
ORIGINAL CLASS A-10 PRINCIPAL BALANCE: $ 125,000,000.
ORIGINAL CLASS A-11 PRINCIPAL BALANCE: $ 75,000,000.
ORIGINAL CLASS A-12 PRINCIPAL BALANCE: $ 18,958,000.
ORIGINAL CLASS A-13 PRINCIPAL BALANCE: $ 46,341,000.
ORIGINAL CLASS A-14 PRINCIPAL BALANCE: $ 14,337,000.
ORIGINAL CLASS A-15 PRINCIPAL BALANCE: $ 20,364,000.
ORIGINAL CLASS A-16 PRINCIPAL BALANCE: $ 20,000,000.
ORIGINAL PRE-FUNDED AMOUNT: $305,896,413.76, representing the amount
deposited in the Pre-Funding Account on the Closing Date, $233,390,831.49 of
which relates to Pool I, $46,706,082.11 of which relates to Pool II,
$21,179,970.05 of which relates to Pool III and $4,619,530.11 of which related
to Pool IV.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A
Certificates, the amount set forth for such Class under the definitions of
Original Class A-1 through Original Class A-16 Principal Balances.
ORIGINATOR: Any of the entities listed on Exhibit I hereto, each of which
is a direct or indirect wholly-owned subsidiary of the Representative, and each
of which is a Subservicer as of the date hereof.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer Date
occurring in July 1996, the sum, if any, of (w), with respect to Pool I, the
difference between (i) three- months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the weighted average Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
Class A-9 Remittance Rates and (ii) three- months' interest on the aggregate
Principal Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust
Fund on such Subsequent Transfer Date, calculated at the rate at which Pre-
Funding Account moneys are invested as of such Subsequent Transfer Date; (x)
with respect to Pool II, the difference between (i) three months' interest on
the aggregate Principal Balances of the Subsequent Pool II Mortgage Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
weighted average Class A-10 and Class A-11 Remittance Rates and (ii)
three-months' interest on the aggregate Principal Balances of the Subsequent
Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date; (y), with respect to Pool III, the difference
between (i) three-months' interest on the aggregate Principal Balances of the
Subsequent Pool III Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class A-12, Class A-13, Class
A-14 and Class A-15 Remittance Rates and (ii) three- months' interest on the
aggregate Principal Balances of the Subsequent Pool III Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the rate at
which Pre- Funding Account moneys are invested as of such Subsequent Transfer
Date; and (z), with respect to Pool IV, the difference between (i) three-months'
interest on the aggregate Principal Balances of the Subsequent Pool IV Mortgage
Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated at
the Class A-16 Remittance Rate and (ii) three-months' interest on the aggregate
Principal Balances of the Subsequent Pool IV Mortgage Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in August 1996, the
sum, if any, of (w), with respect to Pool I, the difference between (i)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the weighted average Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Remittance Rates and
(ii) two-months' interest on the aggregate Principal Balances of the Subsequent
Pool I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date; (x) with respect to Pool II, the difference
between (i) two-months' interest on the aggregate Principal Balances of the
Subsequent Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class A-10 and Class A-11
Remittance Rates and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent Pool II Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; (y) with
respect to Pool III, the difference between (i) two-months' interest on the
aggregate Principal Balances of the Subsequent Pool III Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the weighted average
Class A-12, Class A-13, Class A- 14 and Class A-15 Remittance Rates and (ii)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
III Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funding Account moneys are invested as of
such Subsequent Transfer Date; and (z) with respect to Pool IV, the difference
between (i) two-months' interest on the aggregate Principal Balances of the
Subsequent Pool III Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the Class A-16 Remittance Rate and (ii) two-months' interest
on the aggregate Principal Balances of the Subsequent Pool IV Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in September 1996,
the sum, if any, of (w), with respect to Pool I, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
I Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7, Class A-8 and Class A-9 Remittance Rates and (ii)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
I Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the rate at which Pre- Funding Account moneys are invested as of such
Subsequent Transfer Date; (x) with respect to Pool II, the difference between
(i) one- month's interest on the aggregate Principal Balances of the Subsequent
Pool II Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the weighted average Class A-10 and Class A-11 Remittance Rates
and (ii) one-month's interest on the aggregate Principal Balances of the
Subsequent Pool II Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date; (y), with respect to Pool III, the difference
between (i) one-month's interest on the aggregate Principal Balances of the
Subsequent Pool III Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the weighted average Class A-12, Class A-13, Class A- 14 and
Class A-15 Remittance Rates and (ii) one-month's interest on the aggregate
Principal Balances of the Subsequent Pool III Loans acquired by the Trust Fund
on such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; and (z), with
respect to Pool IV, the difference between (i) one-month's interest on the
aggregate Principal Balances of the Subsequent Pool IV Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the Class A-16
Remittance Rate and (ii) one-month's interest on the aggregate Principal
Balances of the Subsequent Pool IV Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which the
related Mortgagor represented at the time of the origination of the Mortgage
Loan an intent to occupy as such Mortgagor's primary, secondary or vacation
residence.
PAYING AGENT: Initially, the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in Section 13.14 hereof and
is authorized by the Trustee to make payments on the Certificates on behalf of
the Trustee.
PERCENTAGE INTEREST: With respect to a Class A Certificate, the portion of
the respective Class evidenced by such Certificate, expressed as a percentage,
the numerator of which is the denomination represented by such Certificate and
the denominator of which is the Original Principal Balance of such Class. With
respect to the Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, which
shall be either 99.99% or, but only with respect to the Class R Certificates
held by the Tax Matters Person, 0.01%. The Class A Certificates (other than the
Auction Rate Certificates) are issuable only in the minimum Percentage Interest
corresponding to a minimum denomination of $1,000 and integral multiples of
$1,000 in excess thereof, except that one Class A Certificate of each Class may
be issued in a different denomination. The Auction Rate Certificates are
issuable only in the minimum Percentage Interest corresponding to a minimum
denomination of $25,000 and integral multiples of $25,000 in excess thereof.
PERIODIC RATE CAP: The provision in the Mortgage Note for each Pool II Loan
which limits increases or decreases in the Mortgage Interest Rate on each Change
Date to the rate set forth in the applicable Mortgage Note.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall include
the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States, FHA debentures, FHLMC senior debt
obligations, Federal Home Loan Bank consolidated senior debt
obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated "A-1" or better by S&P and Prime-1 or better
by Moody's;
(iii) deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by
the BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan
association have been rated "BBB" or better by S&P and Baa3 or better
by Moody's;
(iv) commercial paper (having original maturities of not more
than 365 days) rated "A-1" or better by S&P and Prime-1 or better by
Moody's;
(v) debt obligations rated "AAA" by S&P and Aaa by Moody's (other
than any such obligations that do not have a fixed par value and/or
whose terms do not promise a fixed dollar amount at maturity or call
date);
(vi) investments in money market funds rated "AAAm" or better by
S&P or "Aaa" or better by Moody's the assets of which are invested
solely in instruments described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds issued by
or reasonably acceptable to the Certificate Insurer providing for the
investment of funds in an account or insuring a minimum rate of return
on investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial
strength or claims paying ability are rated "AAA" by S&P and
"Aaa" by Moody's; and
(b) provide that the Trustee may exercise all of the rights
of the Representative under such contract or surety bond without
the necessity of the taking of any action by the Representative;
(viii) A repurchase agreement that satisfies the following
criteria and is acceptable to the Certificate Insurer:
(a) Must be between the Trustee and a dealer bank or
securities firm described in a. or b. below:
1. Primary dealers on the Federal Reserve reporting dealer
list which are rated "A" or better by S&P and Moody's, or
2. Banks rated "A" or above by S&P and Moody's
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for the transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the full faith and credit
of the U.S. government (and FNMA & FHLMC)
2. the term of the repurchase agreement may be up to 60 days
3. the collateral must be delivered to the Trustee or third
party custodian acting as agent for the Trustee by appropriate
book entries and confirmation statements, with a copy to the
Certificate Insurer, must have been delivered before or
simultaneous with payment (perfection by possession of
certificated securities)
4. Valuation of collateral
A. The securities must be valued weekly,
marked-to-market at current market price plus accrued
interest
i. The value of the collateral must be equal to at
least 104% of the amount of cash transferred by the Trustee
or custodian for the Trustee to the dealer bank or security
firm under the repurchase agreement plus accrued interest.
If the value of securities held as collateral slips below
104% of the value of the cash transferred by the Trustee
plus accrued interest, then additional cash and/or
acceptable securities must be transferred. If, however, the
securities used as collateral are FNMA or FHLMC, then the
value of collateral must equal at least 105%.
(ix) any other investment acceptable to the Certificate Insurer
and the Rating Agencies, written confirmation of which shall be furnished
by the Certificate Insurer to the Trustee.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rur- al electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) a Person other than a "United States Person" as
defined in Code Section 7701(a)(30), unless the Servicer consents in writing to
the Transfer to such Person and (vi) any other Person so designated by the
Servicer based upon an Opinion of Counsel that the transfer of a Percentage
Interest in a Class R Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that the Class A Certificates are
outstanding. The terms "United States," "State" and "International Organization"
shall have the meanings set forth in Code Section 7701 or successor provisions.
A corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL: With respect to the Class A Certificates, the Pool I, Pool II, Pool
III or Pool IV Certificates, as the case may be, and with respect to the
Mortgage Loans, the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the
case may be.
POOL AMORTIZED SUBORDINATED AMOUNT REQUIREMENT: With respect to Pool I,
Pool II, Pool III and Pool IV and as of any date of determination, the product
of (x) 6.6%, 5.6%, 19.0% and 50.0%, respectively, and (y) the aggregate
Principal Balances of all Mortgage Loans in the related Pool as of the close of
business on the last day of the Due Period immediately preceding such date;
provided, however, that for any period during which an Event of Excessive Loss
relating to Pool I, Pool II or Pool IV exists, the Pool Amortized Subordinated
Amount Requirement for such Pool shall equal the product of 6.6%, 5.6% or 50.0%,
respectively, and the Pool Principal Balance of the respective Pool as of the
date such Event of Excessive Pool Loss for such Pool first existed.
POOL AVAILABLE AMOUNT: With respect to any Pool and each Remittance Date,
an amount equal to the sum of (i) the Pool Available Remittance Amount for such
Pool (minus the amounts withdrawn from the applicable Certificate Account
pursuant to Section 6.01(b)(i) to deposit amounts related to required premiums
in the applicable Insurance Account and, for Pool III, Section 6.01(b)(ii) to
make deposits in the FHA Premium Account and, for Pool II, Section 6.01(b)(iii)
to pay the Auction Agent Fee to the Auction Agent), (ii) any amount of Total
Monthly Excess Cashflow to be applied to the Certificates of such Pool on such
Remittance Date, and (iii) amounts transferred from the Spread Account, if any,
pursuant to Section 6.05(b)(ii) and Insured Payments, if any, made by the
Certificate Insurer with respect to such Pool.
POOL AVAILABLE REMITTANCE AMOUNT: With respect to any Pool and Remittance
Date, (i) the sum of all amounts relating to the Mortgage Loans of such Pool
described in clauses (i) through (viii), inclusive, of Section 5.03(b) received
by the Servicer or any Subservicer (including any amounts paid by the Servicer
and the Representative and excluding any Excess Spread and Subordination
Reduction Amounts relating to the Mortgage Loans of such Pool, any amounts
withdrawn by the Servicer with respect to the Mortgage Loans in such Pool
pursuant to Section 5.04(b), (c), (e) and (f)(i) as of the related Determination
Date and any amounts deposited into the Servicing Account with respect to the
Mortgage Loans in such Pool pursuant to Section 5.04(g) as of the related
Determination Date) during the related Due Period or, with respect to Section
5.03(b)(vi), on the related Determination Date, and deposited into the
applicable Certificate Account as of the Determination Date, plus (ii) the
amount of any Monthly Advances and Compensating Interest payments relating to
the Mortgage Loans of such Pool, remitted by the Servicer for such Remittance
Date, plus (iii) amounts to be transferred to the applicable Certificate Account
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in July, August and September 1996, less (iv) those
amounts withdrawable from the applicable Certificate Account pursuant to Section
6.01(b)(vi). The "Pool Available Remittance Amount" does not include (i) funds
in the applicable Principal and Interest Account and available to be withdrawn
pursuant to Section 5.04(d)(ii), (ii) funds in the applicable Certificate
Account and available to be withdrawn pursuant to Section 6.01(b)(v) and (iii)
funds in the applicable Certificate Account that cannot be distributed by the
Trustee on such Remittance Date as a result of a proceeding initiated under the
United States Bankruptcy Code, as amended from time to time (11 U.S.C.).
POOL AVAILABLE REMITTANCE AMOUNT SHORTFALL: With respect to any Pool and
Remittance Date, the excess, if any, of (i) the Pool Remittance Amount for such
Pool (net of amounts included in clauses (X) (vi) and (viii) and (Y) of the
definition of Pool Principal Distribution Amount) over (ii) the Pool Available
Remittance Amount for such Pool (net of the amount to be withdrawn from the
applicable Certificate Account pursuant to Section 6.01(b)(i) and one-twelfth of
the Annual Expense Escrow Amount with respect to such Pool and, with respect to
Pool II, the amount to be withdrawn from the applicable Certificate Account
pursuant to Section 6.01(b)(iii)).
POOL AVAILABLE REMITTANCE AMOUNT SURPLUS: With respect to any Pool and
Remittance Date, the excess, if any, of (i) the Pool Available Remittance Amount
for such Pool (net of the amount to be withdrawn from the applicable Certificate
Account pursuant to Section 6.01(b)(i) and one-twelfth of the Annual Expense
Escrow Amount with respect to such Pool and, with respect to Pool II, the amount
to be withdrawn from the applicable Certificate Account pursuant to Section
6.01(b)(iii)) over (ii) the Pool Remittance Amount for such Pool (net of amounts
included in clauses (X)(vi) and (viii) and (Y) of the definition of Pool
Principal Distribution Amount).
POOL CARRY-FORWARD AMOUNT: With respect to any Pool and Remittance Date,
the sum of (i) the amounts, if any, by which (x) the Pool Remittance Amount for
such Pool as of the immediately preceding Remittance Date exceeded (y) the
amount of the actual distribution to the Holders of the Certificates of such
Pool (including to the Certificate Insurer, as provided in Section 6.08),
pursuant to Section 6.08 on the immediately preceding Remittance Date, exclusive
of any Insured Payment to the Holders of the Certificates of such Pool made
pursuant to Section 6.08 hereof on such immediately preceding Remittance Date,
and (ii) interest on the amounts, if any, described in clause (i) above, at
one-twelfth of the weighted average Remittance Rates of the Certificates of such
Pool from such immediately preceding Remittance Date; provided, however, that
only the Certificate Insurer shall be entitled to interest on the principal
portion of the Pool Carry- Forward Amount.
POOL CURRENT INTEREST REQUIREMENT: For each Pool, the sum of the Class
Current Interest Requirements of the Certificates of such Pool.
POOL MAXIMUM COLLATERAL AMOUNT: For each Pool, the sum of (i) the aggregate
Principal Balances as of the Cut-Off Date of all Initial Mortgage Loans in such
Pool and (ii) the aggregate Principal Balances as of the related Subsequent
Cut-Off Dates of all Subsequent Mortgage Loans transferred to the Trust Fund and
assigned to such Pool.
POOL PRE-FUNDING EARNINGS: With respect to each Pool and the Remittance
Dates in July, August and September 1996, the actual investment earnings earned
during the period from the Closing Date through the Business Day immediately
preceding the Determination Date in July, August and September 1996 (inclusive)
on that portion of the Pre-Funding Account allocated to such Pool during such
period as calculated by the Representative pursuant to Section 2.09(f) hereof.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Certificates of such Pool. Notwithstanding the
foregoing, for purposes of determining the following definitions amounts on
deposit in the Certificate Account for Pool II allocated to the Holders of the
Auction Rate Certificates for a Remittance Date but not being distributed on
such Remittance Date pursuant to Section 6.08(f) shall be deemed to have been so
distributed on such Remittance Date and reduce the Pool Principal Balance of
Pool II accordingly: (i) Excess Subordinated Amount, (ii) Pool Amortized
Subordinated Amount Requirement, (iii) Pool Subordinated Amount, (iv)
Subordinated Deficiency Amount, (v) Subordination Deficit, (vi) Subordination
Increase Amount and (vii) Subordination Reduction Amount.
POOL PRINCIPAL DISTRIBUTION AMOUNT: For each Pool, on any Remittance Date,
the excess of:
(X) the sum, without duplication, of the following:
(i) each payment of principal received by the Servicer or any
Subservicer (exclusive of Curtailments, Principal Prepayments and
amounts described in clause (iii) hereof) during the related Due
Period with respect to the Mortgage Loans of the related Pool,
(ii) all Curtailments and all Principal Prepayments received by
the Servicer or any Subservicer during the related Due Period with
respect to the Mortgage Loans of the related Pool,
(iii) the principal portion of all Insurance Proceeds, Released
Mortgaged Property Proceeds and Net Liquidation Proceeds received by
the Servicer or any Subservicer during the related Due Period with
respect to the Mortgage Loans of the related Pool (and, with respect
to the Pool III Loans, the principal portion of all FHA Payments
received by the Claims Administrator with respect to a 90 Day
Delinquent FHA Loan during the related Due Period),
(iv) that portion of the purchase price (as indicated in Section
2.05(b)) for any repurchased Mortgage Loan from the related Pool which
represents principal and any Substitution Adjustments deposited in the
applicable Principal and Interest Account with respect to such
Mortgage Loans of the related Pool and transferred to the applicable
Certificate Account as of the related Determination Date,
(v) any proceeds representing principal on the Mortgage Loans of
the related Pool received by the Trustee in connection with the
liquidation of the Mortgage Loans of the related Pool or the
termination of the Trust,
(vi) the amount of any Subordination Deficit with respect to such
Pool for such Remittance Date,
(vii) any moneys released from the Pre-Funding Account on the
July, August and September 1996 Remittance Date as a prepayment of the
Certificates of the related Pool for such Remittance Date,
(viii) the amount of any Subordination Increase Amount with
respect to the related Pool for such Remittance Date, OVER
(Y) the amount of any Subordination Reduction Amount with respect
to the related Pool for such Remittance Date.
POOL PROJECTED NET MONTHLY EXCESS CASHFLOW: As of any date of calculation,
with respect to Pool I and Pool IV, five times (or with respect to Pool II,
three times) Net Monthly Excess Cashflow relating to such Pool, as calculated
pursuant to Section 6.14(b) hereof on the Remittance Date immediately preceding
such date of calculation. Pool Projected Net Monthly Excess Cash Flow shall not
apply to Pool III.
POOL REMAINING AMOUNT AVAILABLE: With respect to any Pool and as of any
Remittance Date the greater of (x) zero dollars and (y)(i) the Pool Available
Amount for the related Pool minus (ii) payments made with respect thereto
pursuant to Sections 6.08(d)(i) through (iv) (and, in the case of Pool II,
amounts on deposit in the Certificate Account for Pool II allocated to the
Holders of the Auction Rate Certificates but not being distributed on such
Remittance Date pursuant to Section 6.08(f)).
POOL REMITTANCE AMOUNT: As to each Pool and any Remittance Date, the amount
required to be distributed on such Remittance Date to the Holders of the
Certificates of such Pool, such amount being equal to the sum of (i) the Pool
Current Interest Requirement for the related Pool, (ii) the Pool Principal
Distribution Amount for the related Pool, (iii) the Pool Carry- Forward Amount
for the related Pool and (iv) any amount received by the Trustee from the
Servicer or the Originator and paid to the Holders of the Certificates of the
related Pool that constitutes a Monthly Advance and that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code, as amended from time to time (11
U.S.C.), in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above constitute
Insured Payments or any portion thereof, payment of such amounts shall be
disbursed to the trustee in bankruptcy named in the final order of the court
exercising jurisdiction and not directly to any Certificateholder of the
Certificates of such Pool unless such Certificateholder has returned principal
or interest paid on the Certificates of such Pool to such trustee in bankruptcy,
in which case payment shall be disbursed to such Certificateholder.
POOL SUBORDINATED AMOUNT: For each Pool, as of any Remittance Date, the
excess, if any, of (x) the sum of (i) the aggregate Principal Balances of the
Mortgage Loans of the related Pool as of the close of business on the last day
of the Due Period relating to such Remittance Date, (ii) any amount on deposit
in the Pre-Funding Account at such time and allocated to the related Pool and
(iii) the Spread Account Portion for the related Pool, over (y) the Pool
Principal Balance of the related Pool as of such Remittance Date (after taking
into account the payment of the Pool Remittance Amount of the related Pool on
such Remittance Date, net of amounts included in clauses (X)(vi) and (viii) and
(Y) of the definition of Pool Principal Distribution Amount). Notwithstanding
the foregoing, for purposes of Section 6.14(b) hereof, the calculation of the
Pool Subordinated Amount for Pool III shall not include the Pool III Spread
Account Portion.
POOL I CERTIFICATE: A Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 or Class A-9 Certificate.
POOL I INITIAL SPECIFIED SUBORDINATED AMOUNT: $30,690,000.
POOL I MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H delivered to the
Trustee, as such Exhibit may be amended from time to time.
POOL I SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be changed
in accordance with the provisions of Section 2.09(f) hereof) the greater of (i)
the Pool I Initial Specified Subordinated Amount or (ii) the difference between
(x) one-half of the aggregate Principal Balances of all Pool I Mortgage Loans
that are 90 or more days delinquent (including REO Properties) minus (y) the
Pool Projected Net Monthly Excess Cashflow for Pool I as of such date, until the
later of the date upon which principal in the amount of one-half of the Pool
Maximum Collateral Amount for Pool I has been received in respect of the Pool I
Mortgage Loans and the 30th Remittance Date following the Closing Date, and with
respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool I Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool I or (iii) two
times the Pool I Initial Specified Subordinated Amount stated as a percentage of
the Pool Maximum Collateral Amount for Pool I times the then current outstanding
Pool Principal Balance for Pool I plus the then current outstanding Principal
Balance of the Pool I Mortgage Loans with an original term to stated maturity of
five years and a "balloon" payment due at such stated maturity;
(b) the difference between (i) one-half of the aggregate Principal Balances
of all Pool I Mortgage Loans that are 90 or more days delinquent (including REO
Properties) minus (ii) the Pool Projected Net Monthly Excess Cashflow for Pool I
as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
I plus 15.0% of the then current outstanding Principal Balance of the Pool I
Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance of Pool I for such Remittance Date and the denominator of which is the
sum of the aggregate Pool Principal Balances of each Pool for such Remittance
Date.
POOL II CERTIFICATE: A Class A-10 or Class A-11 Certificate.
POOL II INITIAL SPECIFIED SUBORDINATED AMOUNT: $5,600,000.
POOL II MORTGAGE LOAN: A Mortgage Loan, if any, listed on Exhibit H-1
delivered to the Trustee, as such Exhibit may be amended from time to time,
which Mortgage Loan has a Mortgage Interest Rate which adjusts on each Change
Date by reference to the LIBOR Index or the Treasury Index, as the case may be,
subject to the applicable Periodic Rate Cap and the applicable Lifetime Floor
and Lifetime Cap.
POOL II SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be changed
in accordance with the provisions of Section 2.09(f) hereof) the greater of (i)
the Pool II Initial Specified Subordinated Amount or (ii) two times the
difference between (x) one-half of the aggregate Principal Balances of all Pool
II Mortgage Loans that are 90 or more days delinquent (including REO Properties)
minus (y) the Pool Projected Net Monthly Excess Cashflow for Pool II as of such
date, until the later of the date upon which principal in the amount of one-half
of the Pool Maximum Collateral Amount for Pool II has been received in respect
of the Pool II Mortgage Loans and the 30th Remittance Date following the Closing
Date, and with respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool II Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool II or (iii) two
times the Pool II Initial Specified Subordinated Amount stated as a percentage
of the Pool Maximum Collateral Amount for Pool II times the then current
outstanding Pool Principal Balance for Pool II plus the then current outstanding
Principal Balance of the Pool II Mortgage Loans with an original term to stated
maturity of five years and a "balloon" payment due at such stated maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool II Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool II as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
II plus 15.0% of the then current outstanding Principal Balance of the Pool II
Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance of Pool II for such Remittance Date and the denominator of which is the
sum of the aggregate Pool Principal Balances of each Pool for such Remittance
Date.
POOL III CERTIFICATE: A Class A-12, Class A-13, Class A- 14 or Class A-15
Certificate.
POOL III DELINQUENCY PERIOD: As defined in Section 6.14(b).
POOL III INITIAL SPECIFIED SUBORDINATED AMOUNT: $9,500,000.
POOL III MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-2 delivered to
the Co-Trustee, as such Exhibit may be amended from time to time.
POOL III SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be
changed in accordance with the provisions of Section 2.09(f) hereof) the Pool
III Initial Specified Subordinated Amount until the later of the date upon which
principal in the amount of one-half of the Pool Maximum Collateral Amount for
Pool III has been received in respect of the Pool III Mortgage Loans and the
30th Remittance Date following the Closing Date, and with respect to each
Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool III Initial Specified
Subordinated Amount and (ii) the Pool Amortized Subordinated Amount Requirement
for Pool III; and
(b) the lesser of (i) $300,000 and (ii) the aggregate
Principal Balances of all Pool III Mortgage Loans as of the close of business on
the last day of the Due Period immediately preceding such date.
Provided, however, that (notwithstanding the capture of Total Monthly Excess
Cashflow pursuant to Section 6.14(b) hereof) the Pool III Specified Subordinated
Amount shall equal the Pool III Initial Specified Subordinated Amount during any
Pool III Delinquency Period.
POOL IV CERTIFICATE: A Class A-16 Certificate.
POOL IV INITIAL SPECIFIED SUBORDINATED AMOUNT: $5,000,000.
POOL IV MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-3 delivered to
the Trustee, as such Exhibit may be amended from time to time.
POOL IV SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be reduced
in accordance with the provisions of Section 2.09(f) hereof) the Pool IV Initial
Specified Subordinated Amount until the later of the date upon which principal
in the amount of one-half of the Pool Maximum Collateral Amount for Pool IV has
been received in respect of the Pool IV Mortgage Loans and the 30th Remittance
Date following the Closing Date, and with respect to each Remittance Date
thereafter, the greatest of:
(a) the lesser of (i) the Pool IV Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool IV or (iii) two
times the Pool IV Initial Specified Subordinated Amount stated as a percentage
of the Pool Maximum Collateral Amount for Pool IV times the then current
outstanding Pool Principal Balance for Pool IV plus the then current outstanding
Principal Balance of the Pool IV Mortgage Loans with an original term to stated
maturity of five years and a "balloon" payment due at such stated maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool IV Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool IV as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
IV plus 15% of the then current outstanding Principal Balance of the Pool IV
Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity;
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance for Pool IV for such Remittance Date and the denominator of which is the
sum of the aggregate Pool Principal Balances of each Pool for such Remittance
Date; or
(e) the sum of the Principal Balances of the three largest Pool IV Mortgage
Loans.
PREFERENCE AMOUNT: means any amount previously distributed to a holder of
the Certificates (other than the Trust Fund) that is recoverable and sought to
be recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
PRE-FUNDED AMOUNT: With respect to any date of determination, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
PREMIUM DEPOSIT AMOUNT: As of any Remittance Date, an amount equal to the
Monthly Premium for such Remittance Date.
PRIME RATE: The lowest prime lending rate as published in THE WALL STREET
JOURNAL on any date of determination or, if such rate is not published in THE
WALL STREET JOURNAL on any date of determination, the lowest prime lending rate
as published in the most recently available edition of THE WALL STREET JOURNAL,
preceding such date of determination.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or related REO
Property, at any date of determination, (i) the principal balance of the
Mortgage Loan (or, with respect to a Low Interest Pool I Mortgage Loan, the
product of such principal balance and the percentage set forth on Exhibit T
attached hereto) outstanding as of the Cut-Off Date or as of the applicable
Subsequent Cut-Off Date relative to Subsequent Mortgage Loans or as of the
applicable substitution date relative to Qualified Substitute Mortgage Loans,
after application of principal payments received on or before such date, minus
(ii) the sum of (a) the principal portion of the Monthly Payments received
during each Due Period ending prior to the most recent Remittance Date, which
were distributed pursuant to Section 6.08 on any previous Remittance Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, all Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property (but not including the proceeds of any Insured
Payment) to the extent applied by the Servicer as recoveries of principal in
accordance with the provisions hereof, which were distributed pursuant to
Section 6.08 on any previous Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
PRIOR LIEN: With respect to any Mortgage Loan which is not a first priority
lien, each mortgage loan relating to the corresponding Mortgaged Property having
a higher priority lien.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the meaning set
forth from time to time in the definition thereof at Section 860F(a)(2) of the
Code (or any successor statute thereto).
PROJECTED EXCESS SPREAD: As of any date of determina- tion, the amount
calculated as such in accordance with the Insurance Agreement.
PUD AND DE MINIMIS PUD: A planned unit development in which individual fee
title is held to the interior and exterior of the units and underlying land and
common areas, recreational facilities and streets are held in undivided common
ownership.
QUALIFIED MORTGAGE: "Qualified mortgage" shall have the meaning set forth
from time to time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.05 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates (or, in the case of a
Pool II Mortgage Loan, a Gross Margin and Index) of not less than (and not more
than two percentage points more than) the Mortgage Interest Rate (or Gross
Margin and Index) for the Deleted Mortgage Loan, (ii) relates or relate to the
same type of Residential Dwelling or Multifamily Property, as the case may be,
as the Deleted Mortgage Loan, (iii) matures or mature no later than (and not
more than one year earlier than) the Deleted Mortgage Loan, (iv) has or have a
Loan- to-Value Ratio or Loan-to-Value Ratios at the time of such substitution no
higher than the Loan-to Value Ratio of the Deleted Mortgage Loan at such time,
(v) has or have a principal balance or principal balances (after application of
all payments received on or prior to the date of substitution) equal to or less
than the Principal Balance (prior to the occurrence of Realized Losses) of the
Deleted Mortgage Loan as of such date, (vi) with respect to each Deleted
Mortgage Loan that is a first mortgage loan, is a first mortgage loan, (vii)
satisfies or satisfy the criteria set forth from time to time in the definition
of a "qualified replacement mortgage" at Section 860G(a)(4) of the Code (or any
successor statute thereto), (viii) with respect to Pool III, is an FHA Loan if
the Deleted Mortgage Loan was an FHA Loan or a Conventional Home Improvement
Loan if the Deleted Mortgage Loan was a Conventional Home Improvement Loan and
(ix) complies or comply as of the date of substitution with each representation
and warranty set forth in Sections 3.01(b) and 3.02.
RATING AGENCIES: Moody's and S&P.
REALIZED LOSS: With respect to each Liquidated Mortgage Loan (including a
90 Day Delinquent FHA Loan as to which no Claim is eligible to be filed with the
FHA), an amount (not less than zero or greater than the related outstanding
principal balance as of the date of the final liquidation) equal to the
outstanding principal balance of the Mortgage Loan as of the date of such
liquidation, minus the Net Liquidation Proceeds relating to such Liquidated
Mortgage Loan (such Net Liquidation Proceeds to be applied first to the
principal balance of the Liquidated Mortgage Loan and then to interest thereon).
With respect to each 90 Day Delinquent FHA Loan for which a Claim is eligible to
be filed with the FHA, the Realized Loss, if any, shall be determined as of the
Determination Date following the date the related FHA Payment is received by the
Co-Trustee, and shall be an amount (not less than zero or greater than the
related outstanding principal balance as of the date the Claim relating to such
FHA Loan is filed with the FHA) equal to the outstanding principal balance of
the FHA Loan as of the date of such filing, minus amounts paid from the
Certificate Account relating to such 90 Day Delinquent FHA Loan (such amounts to
be applied first to the principal balance of such FHA Loan and then to interest
thereon). With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the Realized Loss shall be calculated as the difference
between the principal balance of the Mortgage Loan immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to any Mortgage Loan made to a Mortgagor
who has filed a petition in bankruptcy under the United States Bankruptcy Code,
as amended from time to time (11 U.S.C.), a Realized Loss shall be deemed to
have occurred whenever a withdrawal is made from the Principal and Interest
Account in respect of such Mortgage Loan pursuant to Section 5.04(c), and shall
be equal to the amount of such withdrawal.
REALLOCATED POOL III SPREAD ACCOUNT PORTION: For any Remittance Date, the
excess, if any, of the Pool III Subordinated Amount after giving effect to all
payments to be made on the Pool III Certificates on such Remittance Date over
the Pool III Specified Subordinated Amount for such Remittance Date.
RECORD DATE: With respect to any Remittance Date, the close of business on
the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, August 31, 1996.
REFERENCE BANKS: Leading banks selected by the Trustee (or, with respect to
the Auction Rate Certificates, the Auction Agent) and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) which have been designated by the
Trustee (or, with respect to the Auction Rate Certificates, the Auction Agent)
to the Representative, the Servicer, the Claims Administrator and the
Certificate Insurer and (iii) which are not affiliates of the Representative.
REGISTRATION STATEMENT: The registration statement (File No. 33-98734)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Class A Certificates, including the
Prospectus dated March 19, 1996 and the Prospectus Supplement dated June 21,
1996.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable to
the Servicer and/or Representative with respect to (i) the payment of any tax
reimbursable pursuant to Section 5.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (iii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iv) any other amounts reimbursable to the Servicer or
the Representative prior to a distribution to the Class R Certificateholders
pursuant to this Agreement.
RELATED PAYMENTS: As described in Section 5.15(c).
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law, the Servicer's customary second
mortgage servicing procedures and this Agreement.
REMAINDER EXCESS SPREAD AMOUNT: As of any Remittance Date, the amount equal
to the excess of the related Excess Spread over the related Monthly Excess
Spread.
REMIC: A "real estate mortgage investment conduit" with- in the meaning of
Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to the REMIC and the REMIC Provisions issued after the Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Section 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMIC TRUST FUND: The assets constituting the Trust Fund other than the
Pre-Funding Account and the Capitalized Interest Account.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing July
1996; provided, however, that in no event shall the Remittance Date occur less
than three Business Days following the Determination Date.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of FHA
insurance available with respect to all FHA Loans. The Reserve Amount initially
will equal at least 10% of the Pool III Principal Balance as of the Cut-Off Date
and will decline as set forth in 24 C.F.R. ss. 201.32(b).
RESERVE INTEREST RATE: As described in Section 12.15.
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single Family
Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller-Servicers' Guide) to the extent that it constitutes
real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Department, and when used with respect to the
Co-Trustee, any officer assigned to the Corporate Trust Department, in each case
including any Vice President, Assistant Vice President, any Assistant Secretary,
any trust officer or any other officer of the Trustee or Co-Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to the
Representative, an Originator or any other person, any Vice President, Assistant
Vice President, the Treasurer, or any Secretary or Assistant Secretary.
ROW HOUSE: A single family dwelling unit attached to another dwelling unit
by common walls.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SCHEDULE OF MORTGAGE LOANS: The schedule of Mortgage Loans attached to the
related Subsequent Transfer Agreement.
SERIES: 1996-B.
SERVICER: The Money Store Inc., a New Jersey corpora- tion, and its
successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.10.
SERVICING ACCOUNT: The Servicing Account established and maintained by the
Servicer in accordance with Section 6.15 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Fund and
Certificateholders shall have no rights thereto.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Mortgage Interest Rate, except that any amount of such interest accrued
at a rate in excess of the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 or Class A-9 Remittance Rate, as the case
may be, for a Pool I Mortgage Loan, the Class A-10 or Class A-11 Remittance Rate
for a Pool II Mortgage Loan, the Class A-12, Class A-13, Class A-14 or Class
A-15 Remittance Rate, as the case may be, for a Pool III Mortgage Loan or the
Class A-16 Remittance Rate for a Pool IV Mortgage Loan, with respect to the
Remittance Date on which the Net Liquidation Proceeds will be distributed shall
be reimbursable only from Excess Proceeds.
SERVICING DELINQUENCY TRIGGER: Will be deemed to have occurred on any date
of determination (i) on or prior to May 31, 2000, if the Total Expected Losses
(as defined below) of the Pool I, Pool II, Pool III and Pool IV Mortgage Loans
exceed 9.0% of the aggregate Principal Balances of the Pool I, Pool II, Pool III
and Pool IV Mortgage Loans as of the end of the first Due Period immediately
following the Funding Period and (ii) after May 31, 2000, but on or prior to May
31, 2005, if the Total Expected Losses of the Pool I, Pool II, Pool III and Pool
IV Mortgage Loans exceed 13.5% of the aggregate Principal Balances of the Pool
I, Pool II, Pool III and Pool IV Mortgage Loans as of the end of the first Due
Period immediately following the Funding Period.
For purposes of the foregoing definition, the "Total Expected Losses" of
the Pool I, Pool II, Pool III and Pool IV Mortgage Loans on any date of
determination shall equal the sum of (i) the cumulative Realized Losses on the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans from the Closing Date
through and including such date of determination and (ii) the Delinquency
Calculation (as defined below).
For purposes of the foregoing definition, the "Delinquency Calculation" on
any date of determination shall equal the sum of:
(i) the Principal Balance of all Mortgage Loans
30-59 days delinquent multiplied by 10.75%;
(ii) the Principal Balance of all Mortgage Loans
60-89 days delinquent multiplied by 21.50%; and
(iii) the Principal Balance of all Mortgage Loans 90 days
or more delinquent multiplied by 43.00%.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly only from the amounts
received in respect of interest on such Mortgage Loan, shall accrue at the rate
of .25% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer or Claims Administrator
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and signature appears on a list of servicing officers
furnished to the Trustee or Co-Trustee by the Servicer or Claims Administrator,
as such list may from time to time be amended.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not attached in
any way to any other unit.
SINGLE FAMILY LOANS: Mortgage Loans secured by Mortgaged Property
consisting of one-to-four family units.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, or any successor thereto.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIAL REMITTANCE DATE: September 26, 1996.
SPECIFIED SUBORDINATED AMOUNT: As applicable, the Pool I Specified
Subordinated Amount, the Pool II Specified Subordinated Amount, the Pool III
Specified Subordinated Amount or the Pool IV Specified Subordinated Amount.
SPREAD ACCOUNT: The Spread Account that may be established and maintained
with the Trustee in accordance with Section 6.05 hereof.
SPREAD ACCOUNT PORTION: With respect to each Pool and any Remittance Date,
an amount equal to the product of (i) the amount on deposit in the Spread
Account immediately prior to such Remittance Date (other than amounts deposited
therein pursuant to Section 6.14(b)(iii)) and (ii) a fraction, the numerator of
which is the Initial Pool Spread Account Deposit for such Pool and the
denominator of which is the Aggregate Initial Spread Account Deposit.
STARTUP DAY: The day designated as such pursuant to Section 2.06 hereof.
SUBORDINATED AMOUNT: For each Pool, the Pool Subordinated Amount for such
Pool.
SUBORDINATED DEFICIENCY AMOUNT: With respect to any Pool and Remittance
Date, the difference, if any, between (i) the Specified Subordinated Amount
applicable to such Pool and Remittance Date and (ii) the Subordinated Amount
applicable to such Pool and Remittance Date prior to taking into account the
payment of any amounts calculated pursuant to clauses (X)(vi) and (viii) and (Y)
of the definition of Pool Principal Distribution Amount with respect to such
Remittance Date.
SUBORDINATION DEFICIT: With respect to any Pool and any Remittance Date,
the amount, if any, by which (x) the Pool Principal Balance with respect to such
Pool after taking into account the payment of the Pool Remittance Amount for
such Pool on such Remittance Date in the manner described herein (other than
amounts payable with respect to clause (X)(vi) of the definition of Pool
Principal Distribution Amount) exceeds (y) the sum of (i) the aggregate
Principal Balances of the Mortgage Loans of the related Pool as of the close of
business on the last day of the Due Period relating to such Remittance Date and
(ii) any Pre-Funding Account moneys allocable to the Mortgage Loans of such Pool
as of the close of business on the last day of the related Due Period.
SUBORDINATION INCREASE AMOUNT: With respect to any Pool and any Remittance
Date, the lesser of (i) the Subordinated Deficiency Amount as of such Payment
Date (after taking into account the payment of the Pool Remittance Amount for
such Pool on such Remittance Date (except for any Subordination Increase
Amount)) and (ii) the aggregate amount of Net Monthly Excess Cashflow to be
allocated to such Pool pursuant to Section 6.14(b)(i) on such Remittance Date.
SUBORDINATION REDUCTION AMOUNT: With respect to any Pool and any Remittance
Date, an amount equal to the lesser of (x) the Excess Subordinated Amount for
such Pool and Remittance Date and (y) the sum of the amounts calculated pursuant
to clauses (X)(i) through (v), inclusive, and (vii) of the definition of Pool
Principal Distribution Amount with respect to such Pool and Remittance Date.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Mortgage
Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
pursuant to Section 2.09, which shall be listed on the Schedule of Mortgage
Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT POOL I MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool I.
SUBSEQUENT POOL II MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool II.
SUBSEQUENT POOL III MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool III.
SUBSEQUENT POOL IV MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool IV.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated as
of a Subsequent Transfer Date executed by the Trustee (and, with respect to Pool
III Mortgage Loans, the Co- Trustee) and the Representative, by which Subsequent
Mortgage Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 5.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Certificate Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Mortgage Loans, and (ii) the interest portion of any unreimbursed
Insured Payments made by the Certificate Insurer related to such Mortgage Loan.
TAX MATTERS PERSON: The Person or Persons designated from time to time to
act as the "tax matters person" (within the meaning of the REMIC Provisions) of
the Trust Fund.
TAX MATTERS PERSON RESIDUAL INTEREST: The interest in the Class R
Certificates acquired by the Tax Matters Person pursuant to Section 2.06(d)
hereof.
TAX RETURN: The federal income tax return on Internal Revenue Service Form
1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TELERATE PAGE 3750: The display page currently so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one roof.
TITLE I: Section 2 of Title I of the National Housing Act and the rules and
regulations promulgated thereunder.
TOTAL MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(a) hereof.
TREASURY INDEX: The One-Year Constant Maturity Treasury Index as published
by the Federal Reserve Board in the most recent edition of Federal Reserve Board
Statistical Release No. H.15 (519) that is available 45 days before the related
Change Date.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto and all proceeds thereof, (ii) such assets
(including any Permitted Instruments) as from time to time are identified as REO
Property relating to Mortgage Loans or are deposited in or constitute the
Certificate Accounts, Principal and Interest Account, Expense Account,
Pre-Funding Account, Capitalized Interest Account, Spread Account, FHA Premium
Account and Insurance Accounts, (iii) the Trustee's and Co-Trustee's rights
under all insurance policies with respect to the Mortgage Loans required to be
maintained pursuant to this Agreement and any related Insurance Proceeds, (iv)
the Certificate Insurance Policies, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds, including all earnings thereon and proceeds
thereof. The Mortgage Loans included from time to time in the Trust Fund shall
be divided into four separate sub-trusts, one for the Pool I Mortgage Loans, one
for the Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for
the Pool IV Mortgage Loans.
TRUSTEE: The Bank of New York, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee or the
Custodian pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND;
PRIORITY AND SUBORDINATION OF OWNERSHIP
INTERESTS.
(a) The Originators do hereby sell, transfer, assign, set over and convey
to the Trustee (or, with respect to the Pool III Mortgage Loans and the Reserve
Amount, the Co-Trustee) without recourse and for the benefit of the
Certificateholders of the related Pool, subject to the terms of this Agreement,
all of the right, title and interest of the Originators in and to the Initial
Pool I, Initial Pool II, Initial Pool III and Initial Pool IV Mortgage Loans,
all rights under the Reserve Amount relating to the Pool III Mortgage Loans and
all other assets included or to be included in the Trust Fund. The Mortgage
Loans that from time to time constitute part of the Trust Fund shall be divided
into four separate sub-trusts, one for the Pool I Mortgage Loans, one for the
Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for the Pool
IV Mortgage Loans.
(b) The rights of the Certificateholders to receive payments with respect
to the Mortgage Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. In this regard, all rights of the Class R Certificateholders to
receive payments in respect of the Class R Certificates and all ownership
interests of the Class R Certificateholders in and to such payments, are subject
and subordinate to the preferential rights of the Class A Certificateholders, to
receive payments in respect of the Class A Certificates and the ownership
interests of the Class A Certificateholders in such payments, to the extent set
forth herein. In accordance with the foregoing, the ownership interest of the
Class R Certificateholders in amounts deposited in the Principal and Interest
Account and any Account from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement.
Section 2.02 POSSESSION OF MORTGAGE FILES.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File relating to the
Initial Mortgage Loans is, and upon each Subsequent Transfer Date the ownership
of each Mortgage Note, the Mortgage and the contents of the related Mortgage
File relating to the applicable Subsequent Mortgage Loans will be, vested in the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co- Trustee) for
the benefit of the Certificateholders of the related Pool.
(b) Pursuant to Section 2.04, the Originators have delivered or caused to
be delivered each Trustee's Mortgage File relating to the Initial Mortgage Loans
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
and on each Subsequent Transfer Date the Originators will deliver or cause to be
delivered each Trustee's Mortgage File relating to the related Subsequent
Mortgage Loans to the Trustee (or, with respect to the Pool III Mortgage Loans,
the Custodian).
Section 2.03 BOOKS AND RECORDS.
The sale of each Mortgage Loan shall be reflected on the Originator's
balance sheets and other financial statements as a sale of assets by each
Originator. Nothing in this Agreement, however, shall be deemed to create a
transfer of an FHA Loan in violation of Title I or the FHA Regulations. The
Originators shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders.
Section 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this Agreement,
has delivered or caused to be delivered to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) the Certificate Insurance Policies and
each of the following documents for each Initial Mortgage Loan and (ii) on each
Subsequent Transfer Date, will deliver or cause to be delivered to the Trustee
(or, with respect to the Pool III Mortgage Loans, the Custodian) each of the
following documents for each Subsequent Mortgage Loan originated by such
Originator:
(a) The original Mortgage Note, endorsed "Pay to the order of holder" or
"Pay to the order of __________________" and signed, by facsimile or manual
signature, in the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of recording thereon,
(ii) a copy of the Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording until such time as the
original is returned by the public recording office or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(c) Either: (i) the original Assignment of Mortgage from the Person
delivering such Assignment to "The Bank of New York, as Trustee under the
Pooling and Servicing Agreement dated as of May 31, 1996, 1996-B" (or, with
respect to the Pool III Mortgage Loans, to "First Bank (N.A.), as Co-Trustee
under the Pooling and Servicing Agreement dated as of May 31, 1996, 1996-B")
with evidence of recording thereon (provided, however, that where permitted
under the laws of the jurisdiction wherein the Mortgaged Property is located,
the Assignment of Mortgage may be effected by one or more blanket assignments
for Mortgage Loans secured by Mortgaged Properties located in the same county),
or (ii) a copy of such Assignment of Mortgage certified as a true copy by a
Responsible Officer where the original has been transmitted for recording
(provided, however, that where the original Assignment of Mortgage is not being
delivered to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee), each such Responsible Officer may complete one or more blanket
certificates attaching copies of one or more Assignments of Mortgage relating to
the Mortgages originated by the related Originator);
(d) (X) Except with respect to the FHA Loans (i) The original policy of
title insurance or, if such policy has not yet been delivered by the insurer,
the commitment or binder to issue same, or if the original principal balance of
the Mortgage Loan was less than or equal to $15,000 or the Mortgage Loan was not
originated by the Originators, other evidence of the status of title, which
shall consist of an attorney's opinion of title or certificate of title, a
preliminary title report, a property search, a title search, a lot book report,
a property information report or a report entitled "prelim" or "PIRT" (property
information report), and (ii) proof of hazard insurance in the form of a hazard
insurance policy or hazard insurance policy endorsement that names the related
Originator, its successors and assigns, as a mortgagee/loss payee, and, if such
endorsement does not show the amount insured by the related hazard insurance
policy, some evidence of such amount and (Y) with respect to the FHA Loans, the
written Mortgage Loan application, title report, credit reconciliation
worksheet, credit investigation receipts and approval sheet;
(e) Either: (i) originals of all intervening assignments, if any, showing a
complete chain of title from the originator to the Person delivering such
assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments certified by the
public recording office in any instances where the original recorded assignments
have been lost;
(f) Originals of all assumption and modification agreements, if any; and
(g) Except with respect to the FHA Loans and certain Mortgage Loans with
original principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Mortgage Loan with photographs of
the subject property and of comparable properties (if available), constituting
evidence sufficient to indicate that the Mortgaged Property relates to a
Residential Dwelling (or, with respect to Multifamily Loans, a Multifamily
Property) and identifying the type thereof.
The Originator shall, within five Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or with respect to the
Subsequent Mortgage Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian): (a) the original recorded Mortgage in
those instances where a copy thereof certified by a Responsible Officer was
delivered to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian); (b) the original recorded Assignment of Mortgage to the Trustee (or,
with respect to the Pool III Mortgage Loans, the Co-Trustee), which, together
with any intervening assignments of Mortgage, evidences a complete chain of
title from the originator to the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) in those instances where copies thereof
certified by a Responsible Officer were delivered to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian); (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer were delivered to the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian); and (d) except with respect to the Pool III
Mortgage Loans, the title insurance policy, or, where no such policy is required
to be provided, the other evidence of title and hazard insurance required in
clause (d) above. Notwithstanding anything to the contrary contained in this
Section 2.04, in those instances where the public recording office retains the
original Mortgage, Assignment of Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Originator shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) of a copy of such
Mortgage, Assignment of Mortgage or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original
thereof. From time to time the Originator may forward or cause to be forwarded
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
additional original documents evidencing an assumption or modification of a
Mortgage Loan. All Mortgage Loan documents held by the Trustee (or, with respect
to the Pool III Mortgage Loans, the Custodian) as to each Mortgage Loan are
referred to herein as the "Trustee's Mortgage File."
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE AND CUSTODIAN OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE AND CUSTODIAN.
(a) The Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian, as agent for the Co-Trustee) agrees to execute and deliver on the
Closing Date with respect to the Initial Mortgage Loans, and on each Subsequent
Transfer Date with respect to the related Subsequent Mortgage Loans, an
acknowledgment of receipt of, for each Mortgage Loan, an Assignment of Mortgage
or certified copy thereof, and a Mortgage Note, in the form attached as Exhibit
F hereto, and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of the Trust Fund and delivered to the Trustee, as Trustee in trust
upon (or, with respect to the Pool III Mortgage Loans, to the Custodian, as
agent for the Co-Trustee) and subject to the conditions set forth herein for the
benefit of the Certificateholders. The Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) agrees, for the benefit of the
Certificateholders, to review each Trustee's Mortgage File relating to the
Initial Mortgage Loans delivered to it within 60 days after the Closing Date and
each Trustee's Mortgage File relating to the Subsequent Mortgage Loans delivered
to it within 60 days after the related Subsequent Transfer Date (or, with
respect to any Qualified Substitute Mortgage Loan, within 45 days after the
assignment thereof) and, on each such date, to deliver to the Representative,
the Servicer and the Certificate Insurer a certification in the form attached
hereto as Exhibit F-1 to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), with such exceptions, if any, as identified therein (i) all
documents required to be delivered to it pursuant to this Agreement are in its
possession (other than items listed in Section 2.04(d)(ii)), (ii) such documents
(other than items listed in Section 2.04(d)(ii)) have been reviewed by it and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Mortgage Loan Schedule
accurately reflects the information set forth in the Trustee's Mortgage File,
and (iv) each Mortgage Note has been endorsed as provided in Section 2.04 of
this Agreement. Further, for each Mortgage Loan (other than the Pool III
Mortgage Loans) with an original principal balance in excess of $15,000 for
which the documents in the possession of the Trustee indicate that the related
Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with originating such Mortgage Loan, the
Trustee shall verify whether the Trustee's Mortgage File shows that such
Mortgage Loan, (A) had an original principal balance not in excess of $35,000,
and (B) has a Loan-to Value Ratio less than 50% (based solely on the LTV
included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form
1004 was performed by the related Originator within one year prior to the
origination of such Mortgage Loan. The Trustee and the Custodian shall be under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Within 375 days after the Closing
Date, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) shall deliver to the Servicer, the Representative, the Certificate
Insurer and any Certificateholder who requests a copy from the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) a final certification in
the form attached hereto as Exhibit G evidencing, if such be the case, the
completeness of the Trustee's Mortgage Files (other than items listed in Section
2.04(d)(ii)).
(b) If the Certificate Insurer or the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian) during the process of reviewing the Trustee's
Mortgage Files finds any document constituting a part of a Trustee's Mortgage
File which is not properly executed, has not been received, is unrelated to a
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform in a
material respect to the requirements of Section 2.04 or the description thereof
as set forth in the Mortgage Loan Schedule, the Certificate Insurer or the
Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian) shall
promptly so notify the Servicer, the Representative and the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) or the Certificate
Insurer, respectively. In performing any such review, the Trustee and the
Custodian may conclusively rely on the related Originator as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's (or, with respect to the Pool III Mortgage
Loans, the Custodian's) review of the Mortgage Files is limited solely to
confirming that the documents listed in Section 2.04 (other than the items
listed in Section 2.04(d)(ii)) appear on their face to have been executed and
received and to relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, and to verify that each Mortgaged Property appears from the
information contained in the Trustee's Mortgage File to be a Residential
Dwelling (or, with respect to the Multifamily Loans, a Multifamily Property).
The Representative agrees to use reasonable efforts to remedy a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Certificate Insurer, the Trustee or the Custodian. If, however, within 60
days after the Trustee's or the Custodian's notice to it respecting such defect
the Representative has not remedied the defect and the defect materially and
adversely affects the interest of the Certificate- holders in the related
Mortgage Loan or the interests of the Certificate Insurer, the Representative
will (i) substitute in lieu of such Mortgage Loan a Qualified Substitute
Mortgage Loan in the manner and subject to the conditions set forth in Section
3.03 or (ii) purchase such Mortgage Loan at a purchase price equal to the
Principal Balance of the Mortgage Loan as of the date of purchase, before the
occurrence of Realized Losses, if any, plus 30 days' interest (or, in the case
of a Pool II Mortgage Loan, the actual number of days during the related
interest period for the Pool II Certificates) on such Principal Balance,
computed at the weighted average Class Adjusted Mortgage Loan Remittance Rates
for the Pool I Certificates with respect to a Pool I Mortgage Loan, the weighted
average Class Adjusted Mortgage Loan Remittance Rates for the Pool II
Certificates, with respect to a Pool II Mortgage Loan, the weighted average
Class Adjusted Mortgage Loan Remittance Rates for the Pool III Certificates,
with respect to a Pool III Mortgage Loan or the Class Adjusted Mortgage Loan
Remittance Rate for the Pool IV Certificates with respect to a Pool IV Mortgage
Loan, as the case may be, as of the next succeeding Determination Date, plus any
accrued unpaid Servicing Fees, Contingency Fees, Monthly Advances and Servicing
Advances reimbursable to the Servicer, plus the interest portion of any
unreimbursed Insured Payments made by the Certificate Insurer related to such
Mortgage Loan, which purchase price shall be deposited in the applicable
Principal and Interest Account on the next succeeding Determination Date except
for the amount described above relating to unreimbursed Insured Payments, which
shall be paid directly by the Representative to the Certificate Insurer.
(c) Upon receipt by the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian) of a certification of a Servicing Officer of the Servicer
of such substitution or purchase and the deposit of the amounts described above
in the applicable Principal and Interest Account (which certification shall be
in the form of Exhibit J hereto), the Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) shall release to the Servicer for release to the
Representative the related Trustee's Mortgage File and the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall execute, without
recourse, and deliver such instruments of transfer necessary to transfer such
Mortgage Loan to the Representative including, without limitation, for each FHA
Loan, an FHA Transfer of Note Report to be filed with the FHA. All costs of any
such transfer shall be borne by the Servicer.
If requested by either the Representative, the Servicer or the Certificate
Insurer, on the Remittance Date in June of each year, commencing 1997, the
Trustee (and, with respect to the Pool III Mortgage Loans, the Custodian) shall
deliver to the Representative, the Servicer and the Certificate Insurer a
certification detailing all transactions with respect to the Mortgage Loans for
which the Trustee or the Custodian holds a Trustee's Mortgage File pursuant to
this Agreement during the prior calendar year. Such certification shall list all
Trustee's Mortgage Files which were released by or returned to the Trustee or
the Custodian during the prior calendar year, the date of such release or
return, the reason for such release or return, and the person to whom the
Trustee's Mortgage File was released or the person who returned the Trustee's
Mortgage File.
Section 2.06 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF STARTUP
DAY.
(a) As of the Startup Day, the Class A Certificates are hereby designated
as the "regular interests" in the REMIC Trust Fund. The Class R Certificates are
designated the single class of "residual interests" in the REMIC Trust Fund for
the purposes of the REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of the REMIC
within the meaning of Section 860G(a)(9) of the Code.
(c) The latest possible maturity dates of the Class A Certificates are as
follows:
CLASS LATEST POSSIBLE MATURITY DATE
Class A-1 February 15, 2010
Class A-2 November 15, 2004
Class A-3 February 15, 2010
Class A-4 March 15, 2011
Class A-5 December 15, 2014
Class A-6 March 15, 2017
Class A-7 February 15, 2020
Class A-8 May 15, 2024
Class A-9 October 15, 2027
Class A-10 October 15, 2027
Class A-11 October 15, 2027
Class A-12 January 15, 2002
Class A-13 April 15, 2010
Class A-14 April 15, 2012
Class A-15 October 15, 2022
Class A-16 July 15, 2027
(d) The Servicer, at the direction of the Originators, shall acquire and
retain a .01% Percentage Interest in the Class R Certificates so long as it
shall act as Tax Matters Person of the Trust Fund, except that, when the Trustee
is acting as successor Servicer, the Representative will hold the Tax Matters
Person Residual Interest until an entity is appointed to succeed the Trustee as
Servicer.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust Fund shall be resolved in a manner that preserves
the validity of the election that the REMIC Trust Fund be treated as a REMIC.
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans (other
than the Pool III Mortgage Loans) and the delivery to it of the Trustee's
Mortgage Files relating to the Initial Mortgage Loans (other than the Pool III
Mortgage Loans), the Co-Trustee acknowledges the assignment to it of the Pool
III Mortgage Loans and the delivery to the Custodian of the Trustee's Mortgage
Files relating to the Initial Pool III Mortgage Loans and, concurrently with
such delivery, the Trustee has authenticated or caused to be authenticated and
delivered to or upon the order of the Representative on behalf of the
Originators, in exchange for the Initial Mortgage Loans, the Certificate
Insurance Policies, the Trustee's Mortgage Files and the other assets included
in the definition of the Trust Fund, Certificates duly authenticated by the
Trustee in authorized denominations evidencing the entire ownership of the Trust
Fund.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE AND CO-TRUSTEE.
The fees and expenses of the Trustee and Co-Trustee including (i) the
annual fees of the Trustee and Co-Trustee, payable annually in advance, and
subject to rebate to the Servicer as additional servicing compensation hereunder
for any fraction of a year in which this Agreement terminates, (ii) any other
fees and expenses to which the Trustee or Co-Trustee is entitled, and (iii)
reimbursements to the Servicer for any advances made by the Servicer to the
applicable Expense Accounts pursuant to Section 6.03 hereof, shall be paid from
the Expense Accounts in the manner set forth in Section 6.03 hereof; PROVIDED,
HOWEVER, that the Representative shall be liable for any expenses of the Trust
Fund incurred prior to the Closing Date. The Servicer, the Trustee and the
Co-Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee, the Co-Trustee
or the Servicer, acting as attorney-in- fact for the Trustee or the Co-Trustee,
on behalf of the Trust Fund shall expressly state therein that no
Certificateholder shall be personally liable in its capacity as such in
connection with such contract or agreement.
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee) all right, title and interest of the applicable
Originators in and to each Subsequent Mortgage Loan listed on the Mortgage Loan
Schedule delivered by the Representative on such Subsequent Transfer Date, all
their right, title and interest in and to principal collected and interest
accruing on each such Subsequent Mortgage Loan on and after the related
Subsequent Cut-Off Date and all their right, title and interest in and to all
Insurance Policies; PROVIDED, HOWEVER, that the Originators reserve and retain
all their right, title and interest in and to principal (including Principal
Prepayments) collected and interest accruing on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. The transfer by the
Originators of the Subsequent Mortgage Loans set forth on the Mortgage Loan
Schedule to the Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co- Trustee) shall be absolute and shall be intended by all parties
hereto to be treated as a sale by the Originators.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate principal balances as of the related Subsequent
Cut-Off Dates of the Subsequent Mortgage Loans so transferred; provided,
however, that the amount released from the Pre-Funding Account for a Low
Interest Mortgage Loan shall be the percentage set forth on Exhibit T attached
hereto of the aggregate principal balance thereof as of the related Subsequent
Cut-Off Date.
(b) The Originators shall transfer to the Trustee (or, with respect to the
Subsequent Pool III Mortgage Loans, the Co- Trustee) the Subsequent Mortgage
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) the Representative shall have provided the
Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Trustee, the Co-Trustee and the Custodian) and the
Certificate Insurer with a timely Addition Notice and shall
have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Originators shall have delivered to the Trustee
(or, with respect to the Subsequent Pool III Mortgage Loans,
the Co-Trustee and the Custodian) a duly executed written
assignment (including an acceptance by the Trustee (or, with
respect to the Subsequent Pool III Mortgage Loans, the
Co-Trustee and the Custodian)) that shall indicate whether
such Subsequent Mortgage Loan is a Subsequent Pool I Mortgage
Loan, a Subsequent Pool II Mortgage Loan, a Subsequent Pool
III or a Subsequent Pool IV Mortgage Loan and which shall
include Mortgage Loan Schedules, listing the Subsequent
Mortgage Loans and any other exhibits listed thereon;
(iii) the Originators shall have deposited in the Principal
and Interest Account all collections in respect of the
Subsequent Mortgage Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the
related Originator, the Servicer or the Representative was
insolvent nor will any of them have been made insolvent by
such transfer nor is any of them aware of any pending
insolvency;
(v) such addition will not result in a material
adverse tax consequence to the Trust Fund or the Holders
of the Certificates;
(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Representative shall have delivered to the
Trustee and, if Subsequent Pool III Mortgage Loans are being
transferred on such Subsequent Transfer Date, the Co-Trustee,
an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the
related Subsequent Transfer Agreement;
(viii) the Representative shall have delivered to the
Certificate Insurer, the Rating Agencies and the Trustee and,
if Subsequent Pool III Mortgage Loans are being transferred on
such Subsequent Transfer Date, the Co- Trustee, Opinions of
Counsel with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the Opinions of
Counsel delivered to the Certificate Insurer, the Trustee and
the Co-Trustee on the Startup Day (bankruptcy, corporate and
tax opinions); and
(ix) the Representative shall have deposited into the
Spread Account the amount, if any, required by the Certificate
Insurer.
(c) The obligation of the Trust Fund to purchase a Subsequent Pool I
Mortgage Loan, a Subsequent Pool II Mortgage Loan, a Subsequent Pool III
Mortgage Loan or a Subsequent Pool IV Mortgage Loan, as the case may be, on any
Subsequent Transfer Date is subject to the requirement, as evidenced by a
certificate from a Responsible Officer of the Representative, that such
Subsequent Pool I Mortgage Loan, Subsequent Pool II Mortgage Loan, Subsequent
Pool III Mortgage Loan or Subsequent Pool IV Mortgage Loan, as the case may be,
conforms in all material respects to the representations and warranties
concerning the individual Initial Pool I Mortgage Loans, Initial Pool II
Mortgage Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage
Loans, as the case may be (including, if such Subsequent Pool III Mortgage Loan
is an FHA Loan, the representations and warranties concerning the FHA Loans),
set forth in Sections 3.01 and 3.02 (except that any reference therein to the
Cut-Off Date shall be deemed a reference to the applicable Subsequent Cut-Off
Date) and that the inclusion of all Subsequent Pool I Mortgage Loans, Subsequent
Pool II Mortgage Loans, Subsequent Pool III Mortgage Loans or Subsequent Pool IV
Mortgage Loans, as the case may be, being transferred to the Trust Fund on such
Subsequent Transfer Date will not change, in any material respect, the
characteristics of the Initial Pool I Mortgage Loans, Initial Pool II Mortgage
Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage Loans, as the
case may be, in the aggregate, set forth in Sections 3.01 and 3.02 or in the
Prospectus Supplement dated June 21, 1996 forming a part of the Registration
Statement under the headings "Summary of Terms -- The Pools -- Pool I and Pool
II," "-- Pool III," "-- Pool IV" and "The Loan Pools -- Home Equity Loans," "--
Home Improvement Loans" and "-- Multifamily Loans."
(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the Remittance
Dates in July, August and September 1996 and the Special Remittance Date, the
Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirement for each Pool, the Overfunded Interest Amounts
for each Pool, the Pool Pre-Funding Earnings for each Pool, the amounts of
Pre-Funding Account moneys allocated to each Pool and (ii) any other necessary
matters in connection with the administration of the Pre-Funding Account and of
the Capitalized Interest Account. If any amounts are incorrectly released to the
Holders of the Class R Certificates from the Pre-Funding Account or from the
Capitalized Interest Account, such Holders or the Representative shall
immediately repay such amounts to the Trustee.
(f) In connection with the transfer of any Subsequent Mortgage Loans to the
Trust Fund, the Representative, the Servicer and the Trustee may, with the prior
written consent of the Certificate Insurer, amend the definition of "Specified
Subordinated Amount" (or any component of the definition thereof) with respect
to the related Pool for the purpose of changing the related Specified
Subordinated Amount (or any component of the definition thereof); PROVIDED,
HOWEVER, that any such amendment, other than an amendment increasing the Pool I,
Pool II, Pool III or Pool IV Initial Specified Subordinated Amount (or any
component of the definition thereof), as the case may be, and accompanied by a
cash deposit into the Spread Account pursuant to Section 6.05, must comply with
the provisions of Section 13.02 hereof.
(g) Each Subsequent Mortgage Loan shall have been originated and identified
by the applicable Originator on or prior to the Closing Date; PROVIDED, HOWEVER,
that if a mortgage loan that was identified as a Subsequent Mortgage Loan does
not satisfy the representations and warranties referenced in Subsection (c)
above, the applicable Originator may substitute for such loan another Loan that
satisfies the representations and warranties referenced in Subsection (c) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE, SERVICER, CLAIMS
ADMINISTRATOR AND ORIGINATORS.
(a) The Representative, the Servicer and the Claims
Administrator (for the purposes of this Section 3.01(a), "The Money Store Inc.")
hereby represent and warrant to the Trustee, the Co- Trustee and the
Certificateholders as of the Closing Date:
(i) The Money Store Inc. is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all
licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in
each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct
business of the type conducted by The Money Store Inc. and
perform its obligations hereunder; The Money Store Inc. has
corporate power and authority to execute and deliver this
Agreement and each Subservicing Agreement and to perform in
accordance herewith and therewith; the execution, delivery and
performance of this Agreement and each Subservicing Agreement
(including all instruments of transfer to be delivered
pursuant to this Agreement and each Subservicing Agreement) by
The Money Store Inc. and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement
and each Subservicing Agreement evidences the valid, binding
and enforceable obligation of The Money Store Inc.; The Money
Store Inc. is a Permitted Transferee; and all requisite
corporate action has been taken by The Money Store Inc. to
make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon The Money Store Inc. in
accordance with the respective terms of each, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors'
rights generally or the application of equitable principles in
any proceeding, whether at law or in equity, none of which
will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than
any such actions, approvals, etc., under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to
which The Money Store Inc. makes no such representation or
warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution
and delivery by The Money Store Inc. of the documents to which
it is a party, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by
this Agreement and each Subservicing Agreement and the other
documents on the part of The Money Store Inc. and the
performance by The Money Store Inc. of its obligations under
this Agreement and each Subservicing Agreement and such of the
other documents to which it is a party;
(iii) The consummation of the transactions contemplated by
this Agreement and each Subservicing Agreement will not result
in the breach of any terms or provisions of the certificate of
incorporation or by-laws of The Money Store Inc. or result in
the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of
any obligation under, any material agreement, indenture or
loan or credit agreement or other material instrument to which
The Money Store Inc. or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or
decree to which The Money Store Inc.
or its property is subject;
(iv) Neither this Agreement or any Subservicing Agreement
nor any statement, report or other document furnished or to be
furnished pursuant to this Agreement and each Subservicing
Agreement or in connection with the transactions contemplated
hereby and thereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(v) The Money Store Inc. does not believe, nor
does it have any reason or cause to believe, that it cannot
perform each and every covenant contained in this Agree-
ment;
(vi) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the
best of The Money Store Inc.'s knowledge, threatened against
The Money Store Inc. which, either in any one instance or in
the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or
assets of The Money Store Inc. or in any material impairment
of the right or ability of The Money Store Inc. to carry on
its business substantially as now conducted, or in any
material liability on the part of The Money Store Inc. or
which would draw into question the validity of this Agreement
and each Subservicing Agreement or the Mortgage Loans or of
any action taken or to be taken in connection with the
obligations of The Money Store Inc. contemplated herein, or
which would be likely to impair materially the ability of The
Money Store Inc. to perform under the terms of this Agreement
and each Subservicing Agreement;
(vii) The Trust Fund will not constitute an "investment
company" within the meaning of the Investment Company Act of
1940, as amended;
(viii) The Money Store Inc. is not in default with respect
to any order or decree of any court or any order, regulation
or demand of any federal, state, municipal or governmental
agency, which default might have consequences that would
materially and adversely affect the condition (financial or
other) or operations of The Money Store Inc. or its properties
or might have consequences that would materially and adversely
affect its performance hereunder or under any Subservicing
Agreement;
(ix) The statements contained in the Registration
Statement which describe The Money Store Inc. or matters or
activities for which The Money Store Inc. is responsible in
accordance with the Registration Statement, this Agreement and
all documents referred to therein or delivered in connection
therewith, or which are attributable to The Money Store Inc.
therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement
of a material fact with respect to The Money Store Inc. and
does not omit to state a material fact necessary to make the
statements contained therein with respect to The Money Store
Inc. not misleading. The Money Store Inc. is not aware that
the Registration Statement contains any untrue statement of a
material fact or omits to state any material fact necessary to
make the statements contained therein not misleading. There is
no fact peculiar to The Money Store Inc. or the Mortgage Loans
and known to The Money Store Inc. that materially adversely
affects or in the future may (so far as The Money Store Inc.
can now reasonably foresee) materially adversely affect The
Money Store Inc. or the Mortgage Loans or the ownership
interests therein represented by the Certificates that has not
been set forth in the Registration Statement;
(x) Each Originator received fair consideration and
reasonably equivalent value in exchange for the sale of the
interest in the Initial Mortgage Loans, and will receive fair
consideration and reasonably equivalent value in exchange for
the sale of the interest in the Subsequent Mortgage Loans,
evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial
Mortgage Loan, and no Originator will sell any interest in any
Subsequent Mortgage Loan, evidenced by the Certificates, as
provided in the Agreements, with any intent to hinder, delay
or defraud any of its respective creditors;
(xii) The Originators are solvent and the Originators
ors will not be rendered insolvent as a result of the sale
of the Mortgage Loans to the Trust Fund or the sale of
the Certificates; and
(xiii) No Certificateholder is subject to state
licensing requirements solely by virtue of holding the
Certificates.
(b) Each Originator hereby represents and warrants to the
Certificateholders, the Trustee and the Co-Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and, except as set forth
below, has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good
standing in each Mortgaged Property State if the laws of such
state require licensing or qualification in order to conduct
business of the type conducted by such Originator and perform
its obligations hereunder; such Originator has corporate power
and authority to execute and deliver this Agreement and the
Subservicing Agreement to which it is a party and to perform
in accordance herewith and therewith; the execution, delivery
and performance of this Agreement and the Subservicing
Agreement to which it is a party (including all instruments of
transfer to be delivered pursuant to this Agreement and the
Subservicing Agreement to which it is a party) by such
Originator and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement
and the Subservicing Agreement to which it is a party
evidences the valid, binding and enforceable obligation of
such Originator; such Originator is a Permitted Transferee;
and all requisite corporate action has been taken by such
Originator to make this Agreement and the Subservicing
Agreement to which it is a party valid, binding and
enforceable upon such Originator in accordance with the
respective terms of each such agreement, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any
proceeding, whether at law or in equity, none of which will
affect the ownership of the Mortgage Loans by the Trustee, as
trustee, or the Co- Trustee, as the case may be.
(ii) No approval of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a
party from any state or federal regulatory authority having
jurisdiction over such Originator is required or, if required,
such approval has been or will, prior to the Closing Date, be
obtained;
(iii) The consummation of the transactions contemplated by
this Agreement and the Subservicing Agreement to which it is a
party will not result in the breach of any terms or provisions
of the certificate of incorporation or by-laws of such
Originator or result in the breach of any term or provision
of, or conflict with or constitute a default under or result
in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other
material instrument to which such Originator or its property
is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which such Originator
or its property is subject;
(iv) Such Originator is not in default with respect to any
order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental
agency, which default might have consequences that would
materially and adversely affect the condition (financial or
other) or operations of such Originator or its properties or
might have consequences that would materially and adversely
affect its performance hereunder or under the Subservicing
Agreement to which it is a party;
(v) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the
best of such Originator's knowledge, threatened against such
Originator which, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, condition (financial or other),
properties or assets of such Originator or in any material
impairment of the right or properties or assets of such
Originator to carry on its business substantially as now
conducted, or in any material liability on the part of such
Originator or which would draw into question the validity of
this Agreement or the Subservicing Agreement to which it is a
party or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of such Originator
contemplated herein, or which would be likely to impair
materially the ability of such Originator to perform under the
terms of this Agreement or the Subservicing Agreement to which
it is a party;
(vi) Neither this Agreement or the Subservicing Agreement
to which it is a party nor any statement, report or other
document furnished or to be furnished pursuant to this
Agreement or the Subservicing Agreement to which it is a party
or in connection with the transactions contemplated hereby or
thereby contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
statements contained herein or therein not misleading;
(vii) The statements contained in the Registration
Statement which describe such Originator or matters or
activities for which such Originator is responsible in
accordance with the Registration Statement, this Agreement and
all documents referred to therein or delivered in connection
therewith, or which are attributable to such Originator
therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement
of a material fact with respect to such Originator or the
Mortgage Loans and does not omit to state a material fact
necessary to make the statements contained therein with
respect to such Originator or the Mortgage Loans not
misleading. Such Originator is not aware that the Registration
Statement contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
statements contained therein not misleading. There is no fact
peculiar to such Originator or the Mortgage Loans and known to
such Originator that materially and adversely affects or in
the future may (so far as such Originator can now reasonably
foresee) materially and adversely affect such Originator or
the Mortgage Loans or the ownership interests therein
represented by the Certificates that has not been set forth in
the Registration Statement;
(viii) Upon the receipt of each Trustee's Mortgage File by
the Trustee (or, with respect to the Pool III Mortgage Loans,
the Custodian on behalf of the Co- Trustee) under this
Agreement, the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) will have good and marketable
title on behalf of the related Trust Fund to each Mortgage
Loan and such other items comprising the corpus of the related
Trust Fund free and clear of any lien (other than liens which
will be simultaneously released);
(ix) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than
any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to
which such Originator makes no such representation or
warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution
and delivery by such Originator of the documents to which it
is a party, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by
this Agreement and the Subservicing Agreement to which it is a
party and the other documents on the part of such Originator
and the performance by such Originator of its obligations
under this Agreement and the Subservicing Agreement to which
it is a party and such of the other documents to which it is a
party;
(x) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Originators pursuant
to this Agreement are not or, with respect to the Subsequent
Mortgage Loans, will not be, subject to the bulk transfer laws
or any similar statutory provisions in effect in any
applicable jurisdiction;
(xi) The origination and collection practices used by each
Originator and the primary servicer with respect to each
Mortgage Note and Mortgage relating to the Initial Mortgage
Loans have been, and the origination and collection practices
to be used by each Originator and the primary servicer with
respect to each Mortgage Note and Mortgage relating to the
Subsequent Mortgage Loans will be, in all material respects
legal, proper, prudent and customary in the mortgage
origination and servicing business;
(xii) Each Initial Mortgage Loan was selected, and each
Subsequent Mortgage Loan will be selected, from among the
existing Mortgage Loans in the respective Originator's
portfolio at the date hereof or, in the case of the Subsequent
Mortgage Loans, at the related Subsequent Cut-off Date, in a
manner not designed to adversely affect the
Certificateholders;
(xiii) Such Originator does not believe, nor does it have
any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement and the
Subservicing Agreement to which it is a party;
(xiv) Such Originator received fair consideration and
reasonably equivalent value or, in the case of the Subsequent
Mortgage Loans, will receive fair consideration and reasonably
equivalent value, in exchange for the sale of the interest in
the Mortgage Loans evidenced by the Certificates;
(xv) Such Originator did not sell or, in the case of the
Subsequent Mortgage Loans, will not sell, any interest in any
Mortgage Loan evidenced by the Certificates with any intent to
hinder, delay or defraud any of its respective creditors;
(xvi) Such Originator is solvent, and such Originator will
not be rendered insolvent as a result of the sale of the
Mortgage Loans to the Trust Fund or the sale of the
Certificates;
(xvii) No Certificateholder is subject to state
licensing requirements solely by virtue of holding the
Certificates;
(xviii) The Subservicing Agreement to which the Originator is
a party conforms to the requirements for a Subservicing
Agreement contained in this Agreement;
(xix) Each FHA Loan was selected from among the existing
FHA-insured Title I loans in such Originator's portfolio at
the date hereof in a manner not designed to adversely affect
the Certificateholders; and
(xx) Each Originator of an FHA Loan is authorized and
approved by the FHA for participation in the FHA Title I loan
program and holds a valid Contract of Insurance from the FHA
for such purpose.
Section 3.02 INDIVIDUAL MORTGAGE LOANS.
Each Originator hereby represents and warrants to the Trustee, the
Co-Trustee and the Certificateholders, with respect to each Initial Mortgage
Loan, as of the Closing Date and, with respect to each Subsequent Mortgage Loan,
as of the related Subsequent Transfer Date:
(a) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee or to the Custodian on the Closing Date or, with
respect to the Subsequent Mortgage Loans, on the related Subsequent Transfer
Date, or as otherwise provided in Section 2.04;
(c) Each Initial Mortgage Loan being transferred to the Trust Fund is, and
each Subsequent Mortgage Loan to be transferred will be, a Qualified Mortgage;
(d) Each Mortgaged Property (other than the Multifamily Properties) is
improved by a Residential Dwelling, which, to the best of the Originator's
knowledge, does not include cooperatives or mobile homes attached to a
foundation or otherwise and does not constitute other than real property under
state law; provided, however, that up to $2,000,000 aggregate principal balance
of Mortgage Loans in each of Pool I and Pool II may be secured by Mortgaged
Properties that are cooperatives or mobile homes.
(e) Each Initial Mortgage Loan has been, and each Subsequent Mortgage Loan
will be, originated and underwritten, or purchased and re-underwritten, by an
Originator in accordance with the Representative's underwriting criteria set
forth in the Registration Statement and is being, or with respect to the
Subsequent Mortgage Loans, will be, serviced by the Servicer or one or more
Subservicers and, with respect to each Initial Mortgage Loan originated by an
Originator, there is, and with respect to each Subsequent Mortgage Loan, there
will be, only one originally executed Mortgage Note not stamped as a duplicate
copy with respect to each such Mortgage Loan;
(f) The Mortgage Note with respect to each Initial Mortgage Loan bears, and
with respect to each Subsequent Mortgage Loan will bear, a fixed Mortgage
Interest Rate with respect to the Initial Pool I Mortgage Loans, Initial Pool
III Mortgage Loans and Initial Pool IV Mortgage Loans and an adjustable rate
with respect to the Initial Pool II Mortgage Loans, which rate shall at least
equal the sum of (i) the Class Adjusted Mortgage Loan Remittance Rate for Class
A-9 in the case of the Initial Pool I Mortgage Loans, the initial Class Adjusted
Mortgage Loan Remittance Rate for Class A-10 in the case of the Initial Pool II
Mortgage Loans, the Class Adjusted Mortgage Loan Remittance Rate for Class A-15
in the case of the Initial Pool III Mortgage Loans, and the Class Adjusted
Mortgage Loan Remittance Rate for Class A-16 in the case of the Initial Pool IV
Mortgage Loans, (ii) the rate used in calculating the Servicing Fee and (iii)
the rate used in calculating the Contingency Fee; provided, however, that (A) up
to $15,547,236.91 aggregate principal amount of the Initial Pool I Mortgage
Loans may be Low Interest Pool I Mortgage Loans, (B) up to $46,568.04 aggregate
principal amount of the Initial Pool III Mortgage Loans may be Low Interest Pool
III Mortgage Loans, (C) up to $0 aggregate principal amount of the Initial Pool
IV Mortgage Loans may be Low Interest Pool IV Mortgage Loans and (D) in
connection with FHA Loans, if the related Mortgagor pays the FHA Insurance
Premium as a separate amount in addition to the Monthly Payment, such extra
amount shall be sufficient to pay the related FHA Insurance Premium;
(g) (i) Except with respect to 16.5% of the Initial Pool I Mortgage Loans
and approximately 16.5% of the Subsequent Pool I Mortgage Loans, each Mortgage
Note relating to the Pool I Mortgage Loans will provide for a schedule of
substantially level and equal Monthly Payments which are, if timely paid,
sufficient to fully amortize the principal balance of such Mortgage Note on or
before its maturity date, (ii) except with respect to 0% of the Initial Pool II
Mortgage Loans and approximately 0% of the Subsequent Pool II Mortgage Loans,
each Mortgage Note relating to the Pool II Mortgage Loans will provide for a
schedule of Monthly Payments which are, if timely paid as adjusted, sufficient
to fully amortize the principal balance of such Mortgage Note on or before its
maturity date, (iii) each Mortgage Note relating to the Pool III Mortgage Loans
will provide for a schedule of substantially level and equal Monthly Payments
which are, if timely paid, sufficient to fully amortize the principal balance of
such Mortgage Note on or before its maturity date and (iv) each Mortgage Note
relating to the Pool IV Mortgage Loans will provide for a schedule of
substantially level and equal Monthly Payments which are, if timely paid,
sufficient to fully amortize the principal balance of such Mortgage Note on or
before its maturity date.
(h) Each Mortgage is, with respect to the Initial Mortgage Loans, and will
be with respect to the Subsequent Mortgage Loans, a valid and subsisting first
or second lien of record on the Mortgaged Property (except that the Mortgages
relating to no more than approximately 0.5% of the Mortgage Loans in Pool III
measured by Pool Principal Balances as of the Cut-Off Date may be more junior
liens) subject, in the case of any second or more junior Mortgage Loan, only to
any applicable Prior Liens on such Mortgaged Property and subject in all cases
to the exceptions to title set forth in the title insurance policy or the other
evidence of title enumerated in Section 2.04(d), with respect to the related
Mortgage Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage;
(i) Immediately prior to the transfer and assignment herein contemplated,
the Originator held good and indefeasible title to, and was the sole owner of,
each Mortgage Loan conveyed by the Originator subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in Section
3.02(h) or other liens which will be released simultaneously with such transfer
and assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will hold good and indefeasible title, to, and be the sole owner of,
each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or
rights of others except as set forth in Section 3.02(h) or other liens which
will be released simultaneously with such transfer and assignment;
(j) As of the Cut-Off Date, no Initial Mortgage Loan is 59 days or more
delinquent in payment and, except as provided in the next sentence, no Initial
Mortgage Loan has been delinquent 59 days or more as measured at the end of any
month during the 12 months immediately preceding the Cut-Off Date. None of the
Mortgage Loans in Pool I or Pool II were 59 days or more delinquent as measured
at the end of any month preceding the Cut-Off Date. As of the related Subsequent
Cut-Off Date, no Subsequent Mortgage Loan shall be 30 or more days delinquent;
(k) To the best of the Originator's knowledge, there is no delinquent tax
or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(l) The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(m) Except with respect to the Pool III Loans as to which no representation
is made, there is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of such Mortgage except those which are insured against by the
title insurance policy referred to in Section 3.02(o) below;
(n) Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording
laws;
(o) With respect to each Mortgage Loan with an original principal balance
greater than $15,000 other than any Initial Mortgage Loan which was not
originated by an Originator and other than the Pool III Mortgage Loans, a
lender's title insurance policy, issued in standard American Land Title
Association, California Land Title Association, New York Board of Title
Underwriters form, or other form acceptable in a particular jurisdiction, by a
title insurance company authorized to transact business in the state in which
the related Mortgaged Property is situated, together with a condominium
endorsement, if applicable, in an amount at least equal to the original
principal balance of such Mortgage Loan insuring the mortgagee's interest under
the related Mortgage Loan as the holder of a valid first or second mortgage lien
of record on the real property described in the Mortgage, subject only to
exceptions of the character referred to in Section 3.02(h) above, or, with
respect to any Mortgage Loan with an original principal balance less than or
equal to $15,000 or any Mortgage Loan which was not originated by an Originator
(other than the FHA Loans), some other evidence of the status of title, or other
evidence of title as enumerated in Section 2.04(d), was effective on the date of
the origination of such Mortgage Loan, and, as of the Closing Date, such policy
will be valid and thereafter such policy shall continue in full force and
effect;
(p) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Mortgage Loan had full legal capacity to execute all
Mortgage Loan documents and convey the estate therein purported to be conveyed;
(s) The Servicer, at the direction of the related Originator, has caused
and will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Trustee and the Co-Trustee in any
insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Trustee and the Co- Trustee, and the Originator
of any FHA Loan has the authority and power to transfer to the Co-Trustee the
FHA Reserve Amount relating to the Mortgage Loans;
(t) No more than approximately 1.0%, 1.0%, 1.0% and 7.0% of the Principal
Balances of the Initial Pool I, Pool II, Pool III or Pool IV Mortgage Loans,
respectively, are secured by Mortgaged Properties located within any single zip
code area;
(u) Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Originator (or, subject to Section 2.04 hereof, are in the
process of being recorded);
(v) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform, to the description thereof set forth in the Registration
Statement;
(w) [Reserved]
(x) Approximately 34.0% and 66.0% of the Initial Pool III Mortgage Loans
(measured by outstanding principal balance as of the Closing Date) were FHA
Loans and Conventional Home Improvement Loans, respectively;
(y) All of the Initial Pool I, Initial Pool II and Initial Pool III
Mortgage Loans are Single-Family Loans (provided, however, that no more than
approximately 1.0% of the Initial Pool III Mortgage Loans, measured by Pool
Principal Balances of the CutOff Date, may be Multifamily Loans); and, when
measured by outstanding principal balance as of the Closing Date, no more than
approximately 6.0%, 4.0% and 3.0% of the Initial Pool I, Initial Pool II and
Initial Pool III Mortgage Loans, respectively, are secured by vacation homes,
secondary residences, or investment properties, less than approximately 1.0%,
1.0% and 1.0% of the Initial Pool I, Initial Pool II and Initial Pool III
Mortgage Loans, respectively, are secured by individual units in Low-Rise
Condominiums, no more than approximately 8.0%, 5.0% and 1.0% of the Initial Pool
I, Initial Pool II and Initial Pool III Mortgage Loans, respectively, are
secured by Two-, Three- or Four-Family Houses, and none of the Initial Pool I,
Initial Pool II and Initial Pool III Mortgage Loans are secured by individual
units of other types including High-Rise Condominiums and Mixed-Use Buildings.
No Initial Mortgage Loan is secured by a mobile home or co-op;
(z) Each Pool IV Mortgage Loan is a Multifamily Loan with respect to which
no less than approximately 90% of the related Mortgaged Property, measured by
square footage, number of units and projected rent, being allocated to
residential units;
(aa) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Certificateholders and which has been delivered to the Trustee or, with respect
to the Pool III Mortgage Loans, the Custodian. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule and has
been approved by the primary mortgage guaranty insurer, if any;
(bb) No instrument of release or waiver has been executed in connection
with the Mortgage Loan, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
primary mortgage guaranty insurer, if any, and which has been delivered to the
Trustee or, with respect to the Pool III Mortgage Loans, the Custodian;
(cc) There are no defaults in complying with the terms of the Mortgage, and
all taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously became
due and owing have been paid, or an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. The Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(dd) There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
(ee) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, all of the improvements which were included for the
purpose of determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged Property unless
any such improvements are (except with respect to those Mortgage Loans with
original principal balances which were less than $15,000 or not originated by a
Originator) stated in the title insurance policy and affirmatively insured;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can be
reasonably expected to cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent or adversely affect the value or marketability of the Mortgage Loan;
(gg) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, no improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(hh) The proceeds of the Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(ii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(jj) No Initial Mortgage Loan was, and no Subsequent Mortgage Loan will be,
originated under a buydown plan;
(kk) Except for the related FHA Premium Account in connection with any FHA
Loan, there is no obligation on the part of the Originator or any other party to
make payments in addition to those made by the Mortgagor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Mortgage File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(mm) The origination and collection practices used by the Originator with
respect to the Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing business
and, in the case of FHA Loans, legal, proper, prudent and customary in the Title
I mortgage lending and servicing business;
(nn) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(oo) No Initial Mortgage Loan has, and no Subsequent Mortgage Loan will
have, a shared appreciation feature, or other contingent interest feature;
(pp) With respect to each Mortgage Loan that is not a first mortgage loan,
the related Prior Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related Prior Lien may be
adjusted no more frequently than monthly; at the time of the origination of the
Mortgage Loan, the related Prior Lien was not 30 or more days delinquent;
(qq) With respect to each Mortgage Loan that is not a first mortgage loan,
either (i) no consent for the Mortgage Loan is required by the holder of the
related Prior Lien or (ii) such consent has been obtained and is contained in
the Mortgage File;
(rr) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, with respect to each Mortgage Loan that is not a first
mortgage loan, to the best of the Originator's knowledge, the related Prior Lien
does not provide for negative amortization;
(ss) With respect to each Mortgage Loan that is not a first mortgage loan,
the maturity date of the Mortgage Loan is prior to the maturity date of the
related Prior Lien if such Prior Lien provides for a balloon payment;
(tt) The Mortgaged Property is located in the State identified in the
Mortgage Loan Schedule and consists of a single parcel of real property with a
Residential Dwelling erected thereon (or, with respect to any Multifamily Loans,
a Multifamily Property erected thereon);
(uu) All parties which have had any interest in the Mortgage Loan, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(vv) The Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(ww) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note does not permit or obligate the Servicer to make future
advances to the Mortgagor at the option of the Mortgagor;
(xx) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would materially
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(yy) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and neither the Servicer nor the Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage have been duly and properly executed by such parties;
(aaa) The Initial Mortgage Loan was not, and the Subsequent Mortgage Loan
will not be, selected for inclusion under this Agreement from its portfolio of
comparable loans, including, in the case of FHA Loans, comparable Title I loans,
on any basis which would have a material adverse effect on a Certificateholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Mortgage Loans have been deposited and all amounts received after the
Subsequent Cut-off Date with respect to the Subsequent Mortgage Loans will be
deposited into the applicable Principal and Interest Account and are, as of the
Closing Date with respect to the Initial Mortgage Loans, in the applicable
Principal and Interest Account;
(ccc) With respect to each Mortgage Loan (other than the Pool III Mortgage
Loans) originated by an Originator with an original principal balance in excess
of $15,000 for which the Originator conducted a drive-by appraisal pursuant to
FHLMC Form 704 or alternative FNMA Form in connection with the origination
thereof, such deposited Mortgage Loan (i) had an original principal balance not
in excess of $35,000, and (ii) has a Loan-to-Value Ratio less than 50% and/or an
appraisal on FNMA/FHLMC Form 1004 was performed by the related Originator within
one year prior to the origination of such Mortgage Loan; and
(ddd) At the applicable dates of origination of the Mortgage Loans, (i)
none of the Pool I, Pool II or Pool IV Mortgage Loans, had a Loan-to-Value Ratio
which exceeded 100.0%, 100.0% and 69.0%, respectively, and (ii) for each Pool
III Mortgage Loan, after giving effect to all improvements to be made on the
related Mortgaged Property with the proceeds of such Pool III Mortgage Loan, and
based upon representations of the related Mortgagor, the value of the related
Mortgaged Property will at least be equal to the amount of such Pool III
Mortgage Loan and the outstanding amount of all other loans secured by Prior
Liens on such Mortgaged Property;
(eee) No more than approximately 22.0% and 20.0% of the Initial Pool I and
Initial Pool II Mortgage Loans, respectively (measured by outstanding principal
balance as of the Closing Date), had a Debt-to-Income Ratio exceeding 44.0%.
"Debt-to-Income Ratio" is that ratio, stated as a percentage, which results from
dividing a Mortgagor's monthly debt by his gross monthly income. "Monthly debt"
includes (i) the monthly payment under the Prior Liens (which generally includes
an escrow for real estate taxes), (ii) the related Mortgage Loan Monthly Payment
(which, with respect to the Initial Pool II Mortgage Loans, is calculated with
interest based on a rate equal to the Lifetime Cap), (iii) other installment
debt service payments, including, in respect of revolving credit debt, the
required monthly payment thereon, or, if no such payment is specified, 5.0% of
the balance as of the date of calculation. "Monthly debt" does not include any
of the debt (other than revolving credit debt) described above that matures
within less than 10 months from the date of the calculation;
(fff) At the applicable dates of origination, each Mortgage Loan had an
original term to maturity of no greater than 30 years;
(ggg) Each Subsequent Mortgage Loan will comply with the representations
and warranties respecting Subsequent Mortgage Loans set forth in Section 3.01(d)
of the Insurance Agreement, which representations and warranties are
incorporated herein;
(hhh) Each Initial Pool I, Initial Pool III and Initial Pool IV Mortgage
Loan bears, and each Subsequent Pool I, Subsequent Pool III and Subsequent Pool
IV Mortgage Loan will bear, a fixed rate of interest and each Initial Pool II
Mortgage Loan bears, and each Subsequent Pool II Mortgage Loan will bear, an
adjustable rate of interest;
(iii) As of the Cut-off Date, for each Pool II Mortgage Loan, the Lifetime
Cap is not lower than approximately 10.25% per annum, the Lifetime Floor is not
lower than approximately 1.00% per annum, the Gross Margin is not less than
approximately 1.00%, the related Mortgage Note does not provide for negative
amortization, limits in the amount of monthly payments or a conversion feature,
the Mortgage Interest Rate is subject to adjustment on each Change Date to equal
the sum of the LIBOR Index, or Treasury Index, as the case may be, plus the
applicable Gross Margin, subject to rounding, the Periodic Rate Cap, the
applicable Lifetime Floor and the applicable Lifetime Cap on each Change Date,
the Mortgagor's new monthly payment will be adjusted to an amount equal to the
payment which, when paid in substantially equal installments during the then
remaining term of the Pool II Mortgage Loan, would amortize fully the unpaid
principal balance of such Pool II Mortgage Loan at the then applicable Mortgage
Interest Rate without extension of the original maturity date which maturity
date is not more than 360 months after the original Due Date therefor;
(jjj) With respect to each Initial Pool II Mortgage Loan, all of the terms
of the Mortgage and Mortgage Note pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note;
(kkk) Each Initial FHA Loan is, and each Subsequent FHA Loan will be, an
FHA Title I property improvement loan (as defined in the FHA Regulations)
underwritten in accordance with applicable FHA requirements and submitted to the
FHA for insurance;
(lll) Each Initial FHA Loan has been, and each Subsequent FHA Loan will be,
submitted to the FHA for insurance pursuant to the FHA Title I loan program and,
except for no more than 30% of the Initial FHA Loans (measured by outstanding
principal balance as of the Closing Date) (the "Non-Acknowledged FHA Loans"),
each Initial FHA Loan has been acknowledged by the FHA for the FHA Title I loan
program; each Non-Acknowledged FHA Loan will be acknowledged by the FHA within
180 days of the Closing Date and each Subsequent FHA Loan will be acknowledged
by the FHA within 180 days after the Funding Period; within 165 days of the
Closing Date or, with respect to the Subsequent FHA Loans, within 165 days after
the Funding Period, the Originators will inform the Certificate Insurer, in
writing, which Non-Acknowledged FHA Loans have subsequently been acknowledged by
the FHA and which have not;
(mmm) The Reserve Amount with respect to each Initial FHA Loan will be
transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Closing Date, the Reserve Amount with respect to each Subsequent FHA Loan will
be transferred to the Co- Trustee's FHA Reserve Account within 180 days after
the Funding Period, and the Originators will give the Certificate Insurer, the
Trustee, the Co-Trustee and the Rating Agencies prompt notice of their receipt
of confirmation of such transfers;
(nnn) Assuming sufficient coverage remains available in the Reserve Amount,
each Claim filed by the Claims Administrator with respect to a 90 Day Delinquent
FHA Loan will be honored by the FHA in accordance with the FHA Regulations;
(ooo) Substantially all the proceeds of each Pool III Mortgage Loan
(including each Subsequent Pool III Mortgage Loan) have been or will be used to
acquire or to improve or protect an interest in real property that, at the
origination date of such Pool III Mortgage Loan, was the only security for such
Pool III Mortgage Loan; and
(ppp) Each Subsequent Mortgage Loan will have been identified and
originated on or prior to the Closing Date.
Section 3.03 PURCHASE AND SUBSTITUTION.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates to
the Certificateholders. Upon discovery by the Representative, the Servicer, any
Subservicer, any Custodian, the Trustee, the Co-Trustee or the Certificate
Insurer of a breach of any of such representations and warranties (or, in the
case of any Subsequent Mortgage Loan, any additional representation or warranty
set forth in Section 3.01(d) of the Insurance Agreement) which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Certificateholders, or which materially and adversely affects the interests of
the Certificate Insurer, or the Certificateholders in the related Mortgage Loan
in the case of a representation and warranty relating to a particular Mortgage
Loan (notwithstanding that such representation and warranty was made to the
Representative's or Originators' best knowledge), the party discovering such
breach shall give prompt written notice to the others. Within 60 days of the
earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Representative shall (a) promptly cure such
breach in all material respects, (b) purchase such Mortgage Loan by depositing
in the applicable Principal and Interest Account, on the next succeeding
Determination Date, an amount in the manner specified in Section 2.05(b), or (c)
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans, provided such substitution is effected not later than the date which is
two years after the Startup Day or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel that such substitution would
not constitute a Prohibited Transaction or cause the Trust Fund to fail to
qualify as a REMIC at any time any Certificates are outstanding.
As to any Deleted Mortgage Loan for which the Representative substitutes a
Qualified Substitute Mortgage Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co- Trustee) a certification in the form attached hereto as
Exhibit J, executed by a Servicing Officer and the documents constituting the
Trustee's Mortgage File for such Qualified Substitute Mortgage Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest Account
all payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Representative on behalf of the related
Originator. The Trust Fund will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Representative on
behalf of the Originators shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee, the Representative and the Certificate
Insurer that such substitution has taken place and shall amend the applicable
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan. Upon such substitution, such Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects,
including Sections 2.04 and 2.05, and the Representative and the Originator
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Loan or Loans, as of the date of substitution, the covenants, representations
and warranties set forth in Sections 3.01 and 3.02. On the date of such
substitution, the Representative will remit to the Servicer, and the Servicer
will deposit into the applicable Principal and Interest Account an amount equal
to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in Section
2.05 and this Section 3.03, the Representative shall indemnify and hold harmless
the Trust Fund, the Trustee, the Co-Trustee, the Custodian, the
Certificateholders and the Certificate Insurer against any loss, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand, defense
or assertion based on or grounded upon, or resulting from, a breach of the
Representative's or any Originator's representations and warranties contained in
this Agreement. It is understood and agreed that the obligations of the
Representative or any Originator set forth in Sections 2.05 and 3.03 to cure,
purchase or substitute for a defective Mortgage Loan and to indemnify the
Certificateholders, the Trustee, the Co-Trustee, the Custodian, and the
Certificate Insurer as provided in Sections 2.05 and 3.03 constitute the sole
remedies of the Trustee, the Co-Trustee, the Custodian, the Certificate Insurer
and the Certificateholders respecting a breach of the foregoing representations
and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Representative or notice thereof by the Representative to the Trustee
(and, with respect to the Pool III Mortgage Loans, the Co-Trustee), (ii) failure
by the Representative to cure such breach or purchase or substitute such
Mortgage Loan as specified above, and (iii) demand upon the Representative by
the Trustee (and, with respect to the Pool III Mortgage Loans, the Co-Trustee)
for all amounts payable in respect of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer, the Trustee and
the Co-Trustee shall act in accordance herewith to assure continuing treatment
of the Trust Fund as a REMIC. In particular, the Trustee and the Co-Trustee
shall not (a) sell or permit the sale of all or any portion of the Mortgage
Loans or of any Permitted Instrument unless such sale is as a result of a
repurchase of the Mortgage Loans pursuant to this Agreement or the Trustee (or,
with respect to a Pool III Mortgage Loan, the Trustee and the Co-Trustee) has
received an Opinion of Counsel to the effect that such sale (i) is in accordance
with a qualified liquidation as defined in Section 860F(a)(4) of the Code and as
described in Section 11.01 hereof, or (ii) would not be treated as a prohibited
transaction within the meaning of Section 860F(a)(2) of the Code; and (b) except
for the cash deposits into the Spread Account pursuant to Section 6.05, accept
any contribution to the Trust Fund after the Startup Day without an Opinion of
Counsel that such contribution is included within the exceptions provided in
Section 860G(d)(2) of the Code and therefore will not be subject to the tax
imposed by Section 860G(d)(1) of the Code.
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
The Certificates shall be substantially in the forms annexed hereto as
Exhibits B-1, B-2 and B-3 and shall, upon original issue, be executed and
delivered by the Servicer to the Trustee for authentication and redelivery to or
upon the order of the Representative, on behalf of the Originators, upon receipt
by the Trustee of the documents specified in Section 2.04. All Certificates
shall be executed on behalf of the Servicer by its President, one of its
Executive Vice Presidents or Vice Presidents, or by its Treasurer, in the
denominations specified in the definition of Percentage Interest, and shall be
authenticated on behalf of the Trustee by one of its authorized signatories.
Certificates bearing the signatures of individuals who were at the time of the
execution or authentication of the Certificates the proper officers of the
Servicer or an authorized signatory of the Trustee, as the case may be, shall
bind the Servicer or the Trustee, as the case may be, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates issued hereunder shall be dated the date of their
authentication.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at its office, or at the office of
its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificate- holder. The
Bank of New York is initially appointed Certificate Registrar for the purpose of
registering Certificates and transfer and exchanges of Certificates as herein
provided (the "Certificate Registrar").
(b) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall initially be issued in the form
of a single fully registered Certificate of such Class. The Class A Certificates
shall have an aggregate denomination equal to the following:
CLASS DENOMINATION
----- ------------
Class A-1 $ 168,932,000
Class A-2 $ 84,260,000
Class A-3 $ 84,673,000
Class A-4 $ 95,170,000
Class A-5 $ 157,038,000
Class A-6 $ 65,967,000
Class A-7 $ 98,867,000
Class A-8 $ 107,254,000
Class A-9 $ 67,839,000
Class A-10 $ 125,000,000
Class A-11 $ 75,000,000
Class A-12 $ 18,958,000
Class A-13 $ 46,341,000
Class A-14 $ 14,337,000
Class A-15 $ 20,364,000
Class A-16 $ 20,000,000
Upon initial issuance, the ownership of such Class A Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
(c) With respect to Class A Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Representative and the
Trustee shall have no responsibility or obligation to Direct or Indirect
Participants or beneficial owners for which the Depository holds Class A
Certificates from time to time as a Depository. Without limiting the immediately
preceding sentence, the Representative and the Trustee shall have no
responsibility or obligation with respect to (a) the accuracy of the records of
the Depository, Cede & Co., or any Direct or Indirect Participant with respect
to the ownership interest in the Class A Certificates, (b) the delivery to any
Direct or Indirect Participant or any other Person, other than a registered
Holder of a Class A Certificate or (c) the payment to any Direct or Indirect
Participant or any other Person, other than a registered Holder of a Class A
Certificate as shown in the Register, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a registered Holder of a Class A Certificate as shown in the Register
shall receive a certificate evidencing such Class A Certificate.
(d) Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of distributions by the mailing of checks or drafts to the registered Holders of
Class A Certificates appearing as registered Owners in the Certificate Register
on a Record Date, the name "Cede & Co." in this Agreement shall refer to such
new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Representative is unable to locate a qualified
successor or (ii) the Representative at its sole option elects to terminate the
book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Representative may determine that the Class A Certificates shall be registered
in the name of and deposited with a successor depository operating a global
book-entry system, as may be acceptable to the Representative, or such
depository's agent or designee but, if the Representative does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Holders of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A Certificates are registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal and interest on such
Class A Certificates and all notices with respect to such Class A Certificates
shall be made and given, respectively, in the manner provided in the
Representation Letter.
(g) The Class R Certificates have not been registered or qualified under
the 1933 Act, or any state securities law. No transfer, sale, pledge or other
disposition of any Class R Certificate shall be made unless such disposition is
made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made in reliance upon an
exemption from the 1933 Act, the Trustee or the Certificate Registrar may
require, in order to assure compliance with the 1933 Act, that the Class R
Certifi- cateholder desiring to effect such disposition and such Class R
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Percentage Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Representative of any change or impending change in its
status as a Permitted Transferee.
(ii) No Percentage Interest in a Class R Certificate may be
transferred (including the sale to the initial holder) and the Trustee
shall not register the transfer of a Class R Certificate unless the
Trustee and the Representative shall have been furnished with (A) an
affidavit (a "Transfer Affidavit") of the proposed transferee in the
form attached as Exhibit K (and if required by the Transfer Affidavit,
the opinion of counsel, as therein referenced) and (B) a certificate
(a "Transfer Certificate") of the transferor to the effect that such
transferor has no actual knowledge that the proposed transferee is not
a Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage Interest in
a Class R Certificate shall agree (A) to require a Transfer Affidavit
from any other Person to whom such Person attempts to transfer its
Percentage Interest in a Class R Certificate, (B) to require a
Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any transfer of a Class R
Certificate, (C) to deliver a Transfer Certificate to the Trustee and
the Representative in connection with any such attempted transfer and
(D) not to transfer its Percentage Interest in a Class R or to cause
the transfer of a Percentage Interest in a Class R Certificate to any
other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported transfer of any Percentage
Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the
provisions of this Section 4.02, then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall notify the Representative upon
knowledge of a Responsible Officer that the registration of transfer
of a Class R Certificate was not in fact permitted by this Section
4.02. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the transfer was registered after receipt of the related Transfer
Affidavit and Transfer Certificate. The Trustee shall be entitled but
not obligated to recover from any Holder of a Class R Certificate that
was in fact not a Permitted Transferee at the time it became a Holder
or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and after
either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of
such Certificate.
(v) If any purported transferee shall become a Holder of a Class
R Certificate in violation of the restrictions in this Section 4.02,
then the Representative or its designee shall, without notice to the
Holder or any prior Holder of such Class R Certificate, sell such
Class R Certificate to a purchaser selected by the Representative or
its designee on such reasonable terms as the Representative or its
designee may choose. Such purchaser may be the Representative itself
or any affiliate of the Representative. The proceeds of such sale, net
of commissions, expenses and taxes due, if any, will be remitted by
the Representative to the last preceding purported transferee of such
Class R Certificate, except that in the event that the Representative
determines that the Holder or any prior Holder of such Class R
Certificate may be liable for any amount due under this Section 4.02
or any other provision of this Agreement, the Representative may
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (v)
shall be determined in the sole discretion of the Representative or
its designee, and it shall not be liable to any Person having a
Percentage Interest in a Class R Certificate as a result of its
exercise of such discretion.
(vi) Upon the occurrence of an Early Termination Event and the
related required purchase of the Mortgage Loans and liquidation of the
Trust Fund pursuant to Article XI, each Person holding or acquiring
any Percentage Interest in a Class R Certificate shall be required to
remit to the Trustee for deposit in the applicable Certificate
Account, no later than the Remittance Date immediately following such
Early Termination Event, an amount equal to the product of (X) such
Percentage Interest and (Y) the then applicable Termination Price.
No Class R Certificate or Certificates or any interest therein shall be
acquired by or on behalf of a "benefit plan investor" described in or subject to
the plan asset regulations set forth at 29 C.F.R. 2510.3-101, unless an Opinion
of Counsel is provided to the Representative and the Trustee which establishes
to their satisfaction that the transfer and/or the holding of such Class R
Certificates will not result in the assets of the Trust Fund being deemed to be
"plan assets" within the meaning of Department of Labor Regulations ss.
2510.3-101; subject the Trustee, the Representative or the underwriter of the
Class A Certificates, or any of their affiliates, to the prohibited transaction
rules under ERISA or excise taxes under Section 4975 of the Code; or cause the
fiduciary investment standards of ERISA to apply to the assets of the Trust
Fund.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at such office, the Representative shall execute in
the name of the designated transferee or transferees, a new Certificate of the
same Class and Percentage Interest and dated the date of authentication by the
Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which may include a letter of indemnity delivered by
an insurance company) as may be required by each of them to save each of them
harmless, then, in the absence of notice to the Servicer, the Trustee and the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the applicable Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Representative, the Trustee, the Certificate Insurer and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.07 and for all other purposes whatsoever, and
the Representative, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar shall not be affected by notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) It is intended that the REMIC Trust Fund formed hereunder shall
constitute, and that the affairs of the REMIC Trust Fund shall be conducted so
as to qualify as a "real estate mortgage investment conduit" as defined in and
in accordance with the REMIC Provisions. In furtherance of such intention, the
Servicer covenants and agrees that it shall act as agent (and the Servicer is
hereby appointed to act as agent) on behalf of the REMIC Trust Fund and as Tax
Matters Person on behalf of the REMIC Trust Fund, and that in such capacities it
shall: (i) prepare and file, or cause to be prepared and filed, in a timely
manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form
1066) and any other Tax Return required to be filed by the REMIC Trust Fund,
using a calendar year as the taxable year for the REMIC Trust Fund and using the
accrual method of accounting, including, without limitation, information reports
relating to "original issue discount," as defined in the Code, based upon the
Prepayment Assumption and calculated by using the issue price of the
Certificates; (ii) make, or cause to be made, an election, on behalf of the
REMIC Trust Fund, to be treated as a REMIC on the federal tax return of the
REMIC Trust Fund for its first taxable year; (iii) prepare and forward, or cause
to be prepared and forwarded, to the Trustee, the Certificateholders and to the
Internal Revenue Service and any other relevant governmental taxing authority
all information returns or reports as and when required to be provided to them
in accordance with the REMIC Provisions and any other provision of federal,
state or local income tax laws; (iv) to the extent that the affairs of the REMIC
Trust Fund are within its control, conduct such affairs at all times that any
Certificates are outstanding so as to maintain the status of the REMIC Trust
Fund as a REMIC under the REMIC Provisions and any other applicable federal,
state and local laws; (v) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of the
REMIC Trust Fund or that would cause the imposition of a prohibited transaction
tax or a tax on contributions to the REMIC Trust Fund; (vi) pay the amount of
any and all federal, state, and local taxes, including, without limitation,
prohibited transaction taxes as defined in Section 860F of the Code imposed on
the REMIC Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Servicer or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Servicer from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); (vii) ensure that any such returns or reports
filed on behalf of the REMIC Trust Fund are properly executed by the appropriate
person; (viii) represent the REMIC Trust Fund in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of the
REMIC Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any item of the REMIC
Trust Fund and otherwise act on behalf of the REMIC Trust Fund in relation to
any tax matter involving the REMIC Trust Fund; (ix) as provided in Section 5.11
hereof, make available information necessary for the computation of any tax
imposed (1) on transferors of residual interests to transferees that are not
Permitted Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee; and (x) in connection
with any FHA Loan, timely pay to the FHA the FHA Insurance Premium required to
be paid for each FHA Loan. The Trustee will cooperate with the Servicer in the
foregoing matters and will sign, as Trustee, any and all Tax Returns required to
be filed by the REMIC Trust Fund. Notwithstanding the foregoing, at such time as
the Trustee becomes the successor Servicer, the Representative shall serve as
Tax Matters Person and as such shall perform the duties described in this
Section 5.01(a) until such time as an entity is appointed to succeed the Trustee
as Servicer. The Servicer shall indemnify the Trustee and the REMIC Trust Fund
for any liability it may incur in connection with this Section 5.01(a) including
reimbursement to the Certificate Insurer for any Insured Payments made by the
Certificate Insurer in connection with such liability, if any, which
indemnification shall survive the termination of the REMIC Trust Fund; provided,
however, that the Servicer shall not indemnify the Trustee for its negligence or
wilful misconduct.
With respect to any Mortgage Note (other than a Mortgage Note relating to a
Pool III Mortgage Loan) released by the Trustee to the Servicer or to any
Subservicer in accordance with the terms of this Agreement, other than a release
or satisfaction pursuant to Section 7.02, prior to such release, the Trustee
shall (a) complete all endorsements in blank so that the endorsement reads "Pay
to the order of The Bank of New York, as Trustee under the Pooling and Servicing
Agreement dated as of May 31, 1996, 1996-B" and (b) complete a restrictive
endorsement that reads "The Bank of New York is the holder of the mortgage note
for the benefit of the Certificateholders under the Pooling and Servicing
Agreement dated as of May 31, 1996, 1996-B" with respect to those Mortgage Notes
(other than a Mortgage Note relating to a Pool III Mortgage Loan) currently
endorsed "Pay to the order of holder."
With respect to any Mortgage Note relating to a Pool III Mortgage Loan
released by the Co-Trustee to the Servicer or any Subservicer in accordance with
the terms of this Agreement, other than a release or satisfaction pursuant to
Section 7.02 or a release to the Claims Administrator pursuant to Section
5.15(b), prior to such release, the Co-Trustee shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of First
Bank (N.A.), as Co-Trustee under the Pooling and Servicing Agreement dated as of
May 31, 1996, 1996-B" and (b) complete a restrictive endorsement that reads
"First Bank (N.A.) is the holder of the mortgage note for the benefit of the
Certificateholders under the Pooling and Servicing Agreement dated as of May 31,
1996, 1996-B" with respect to those Mortgage Notes relating to Pool III Mortgage
Loans currently endorsed "Pay to the order of Holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (x)
has (i) been designated an approved Seller-Servicer by FHLMC or FNMA for first
and second mortgage loans and (ii) has a net worth of at least $5,000,000 or (y)
is an Originator or another affiliate of the Servicer. The Servicer shall give
notice to the Certificate Insurer of the appointment of any Subservicer. Any
such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Mortgage Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificateholders and the Certificate Insurer for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when any Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee is then permitted and
elects to terminate any Subservicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements. The Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Class A Certificateholders or the Certificate Insurer, provided, however, that
(unless (x) the Mortgagor is in default with respect to the Mortgage Loan, or
such default is, in the judgment of the Servicer, imminent and the Servicer
obtains written consent of the Certificate Insurer and (y) the Servicer
determines that any modification would not be considered a new mortgage loan for
federal income tax purposes) the Servicer may not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate, defer
(subject to Section 5.12), or forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Mortgage Loan), or
extend the final maturity date on such Mortgage Loan. No costs incurred by the
Servicer or any Subservicer in respect of Servicing Advances shall for the
purposes of distributions to Certificateholders be added to the amount owing
under the related Mortgage Loan. Without limiting the generality of the
foregoing, and subject to the consent of the Certificate Insurer, the Servicer
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer, the
Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
The Servicer, in servicing and administering the Mortgage Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
REO Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, in accordance with accepted second mortgage servicing
practices (or, in the case of FHA Loans, in accordance with accepted Title I
servicing practices or, in the case of Multifamily Loans, in accordance with
accepted multifamily loan servicing practices) of prudent lending institutions
and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Servicer.
(g) On and after such time as the Trustee and the Co- Trustee receive the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 9.04, after receipt of the Opinion of Counsel required pursuant to
Section 9.04, the Trustee or its designee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee or its designee) shall assume all of the rights
and obligations of the Servicer, subject to Section 10.02 hereof. The Servicer
shall, upon request of the Trustee but at the expense of the Servicer, deliver
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
all documents and records (including computer tapes and diskettes) relating to
the Mortgage Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(h) In the event that any tax is imposed on the Trust Fund, such tax shall
be charged against amounts otherwise distributable to the Holders of the Class R
Certificates. Notwithstanding anything to the contrary contained herein, the
Servicer is hereby authorized to retain from the Pool Remaining Amount Available
for the respective Pool sufficient funds to reimburse the Servicer for the
payment of such tax (to the extent that the Servicer has paid any such tax and
has not been previously reimbursed or indemnified therefor). The Servicer agrees
to first seek indemnification for any such tax payment from any indemnifying
parties before reimbursing itself from amounts otherwise distributable to the
Holders of the Class R Certificates.
(i) After the Closing Date, the Servicer shall confirm, or cause to be
confirmed, whether all on-site or off-site improvements on the Mortgaged
Properties relating to FHA Loans have been completed and, if such improvements
have not been completed, to submit the appropriate filings to the FHA.
Section 5.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 5.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem to be in the best
interests of the Certificate Insurer and the Certificateholders, as the case may
be. The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee for the benefit of the Certificateholders,
as the case may be, of Mortgaged Properties relating to defaulted Mortgage Loans
as to which no satisfactory arrangements can be made for collection of
delinquent payments in accordance with the provisions of Section 5.10 and, in
the case of FHA Loans, for which a Claim is not required to be submitted to the
FHA pursuant to Section 5.15. In connection with such foreclosure or other
conversion, the Servicer shall exercise collection and foreclosure procedures
with the same degree of care and skill in its exercise or use as it would
exercise or use under the circumstances in the conduct of its own affairs. The
Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Mortgaged Property in determining whether to foreclose upon or
otherwise comparably convert the ownership of a Mortgaged Property. Any amounts
advanced in connection with such foreclosure or other action shall constitute
"Servicing Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the Servicer
shall promptly prepare and forward to the Trustee, the Certificate Insurer and,
upon request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit N, detailing the Liquidation Proceeds received from the
Liquidated Mortgage Loan, expenses incurred with respect thereto, and any
Realized Loss incurred in connection therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS; DEPOSITS IN
PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts for the Trust Fund, in one or more Designated
Depository Institutions, in the form of time deposit or demand accounts, which
may be interest-bearing or such accounts may be trust accounts wherein the
moneys therein are invested in Permitted Instruments, titled "The Money Store
Inc., in trust for the registered holders of The Money Store Asset Backed
Certificates, 1996-B, Class A, Class R and various Mortgagors." Each such
Principal and Interest Account shall be insured by the BIF or SAIF administered
by the FDIC to the maximum extent provided by law. The creation of any Principal
and Interest Account shall be evidenced by a letter agreement in the form of
Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee, the
Certificate Insurer and, upon request, any Certifi- cateholder.
(b) The Servicer and each Subservicer shall deposit without duplication
(within 24 hours of receipt thereof) in the applicable Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date on account of
principal on the Pool I, Pool II, Pool III or Pool IV Mortgage Loans,
as the case may be, including all Excess Payments, Principal
Prepayments and Curtailments received after the Cut-Off Date and all
payments in respect of the applicable FHA Insurance Premium;
(ii) all payments received after the Cut-Off Date on account of
interest on the Pool I, Pool II, Pool III or Pool IV Mortgage Loans,
as the case may be;
(iii) all Net Liquidation Proceeds received with respect to the
Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be;
(iv) all Insurance Proceeds received with respect to the Pool I,
Pool II, Pool III or Pool IV Mortgage Loans, as the case may be (other
than amounts to be applied to the restoration or repair of the related
Mortgaged Property, or to be released to the Mortgagor in accordance
with customary second mortgage servicing procedures);
(v) all Released Mortgaged Property Proceeds received with
respect to the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as
the case may be;
(vi) any amounts paid in connection with the purchase of any Pool
I, Pool II, Pool III or Pool IV Mortgage Loan, as the case may be, and
the amount of any Substitution Adjustment received with respect to the
Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be, paid pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the applicable
Principal and Interest Account pursuant to Section 5.04, 5.08, 5.10 or
5.15(c); and
(viii) the amount of any credit life insurance premium refund
which is not due to the related Mortgagor.
Also, for each Mortgage Loan delivered to the Trustee or Co-Trustee on the
Closing Date that was originated on or after June 1, 1996, the Servicer shall
deposit in the applicable Principal and Interest Account 30 days' interest on
the original principal balance of each such Mortgage Loan calculated at the
applicable Mortgage Interest Rate.
(c) The foregoing requirements for deposit in the Principal and Interest
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, the Servicing Fee and the Contingency
Fee with respect to each Mortgage Loan, and payments in the nature of prepayment
penalties or premiums, late payment charges and assumption fees, to the extent
received and permitted by Sections 7.01 and 7.03, together with the difference
between any Liquidation Proceeds and the related Net Liquidation Proceeds, need
not be deposited by the Servicer in the Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the applicable Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Pool Available Remittance Amounts for the related Pool to the Trustee. Any
reference herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNTS.
The Servicer shall withdraw funds from the Principal and Interest Accounts
for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date as
follows: the portion of the Excess Spread relating to the Mortgage Loans of the
related Pool and the portion of the Pool Available Remittance Amounts of the
related Pool, that are net of Compensating Interest and Monthly Advances for the
related Remittance Date to the Trustee for deposit in the Certificate Account.
For the purposes of this Section 5.04(a), the calculation of the Pool Available
Remittance Amounts shall be made without reference to the actual deposit of
funds in the respective Certificate Accounts;
(b) to reimburse itself for any accrued unpaid Servicing Fees, unpaid
Contingency Fees, unreimbursed Monthly Advances and for unreimbursed Servicing
Advances to the extent that funds relating to such amount have been deposited in
the applicable Principal and Interest Account (and not netted from Monthly
Payments received). The Servicer's right to reimbursement for unpaid Servicing
Fees, unpaid Contingency Fees and, except as provided in the following sentence,
Servicing Advances and Monthly Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such unreimbursed
amounts are owed. The Servicer's right to reimbursement for Servicing Advances
and Monthly Advances in excess of such amounts shall be limited to any late
collections of interest received on the related Pool of Mortgage Loans,
generally, including Liquidation Proceeds, Released Mortgaged Property Proceeds
and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class R Certificateholders; PROVIDED, however, that the
Servicer's right to such reimbursement pursuant hereto shall be subordinate to
the rights of the applicable Class A Certificateholders and the right of the
Certificate Insurer to receive the Pool Carry-Forward Amount of the related
Pool;
(c) to withdraw any amount received from a Mortgagor that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay to
itself, as permitted by Section 5.03(d), interest paid in respect of Permitted
Instruments or by a Designated Depository Institution on funds deposited in the
applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) (i) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds or (ii)
to pay the Remainder Excess Spread Amount with respect to any Remittance Date to
itself and/or the Representative for any Reimbursable Amounts and the remainder
to the Trustee for remittance to the Class R Certificateholders, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing Account
pursuant to Section 6.15(b).
(h) to clear and terminate each Principal and Interest Account upon the
termination of the related Trust Fund.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained as an interest-bearing accounts
meeting the requirements set forth in Section 5.03(a), or the funds held therein
may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store Inc.
in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1996-B." All interest or other earnings from funds on
deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from either Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
applicable Principal and Interest Account in Permitted Instruments shall be
deposited in the applicable Principal and Interest Account by the Servicer from
its own funds immediately as realized without reimbursement therefor.
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan which is a first Mortgage Loan, or as to
which the Servicer has advanced the outstanding principal balance of any Prior
Lien pursuant to Section 5.14 or as to which the Servicer maintains escrow
accounts, the Servicer shall maintain accurate records reflecting the status of
ground rents, taxes, assessments, water rates and other charges which are or may
become a lien upon the Mortgaged Property and the status of primary mortgage
guaranty insurance premiums, if any, and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage (provided, however, that to the extent the Servicer
advances its own funds, such advances shall constitute "Servicing Advances"). To
the extent that a Mortgage does not provide for escrow payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Mortgage Loan that are
required to be remitted to the Trust Fund would not be reduced, as a result of
such failure to timely pay, from the amount that would otherwise be remitted to
the Trust Fund; provided further, however, that this provision shall not have
the effect of permitting the Servicer to take, or fail to take, any action in
respect of the payments described herein that would adversely affect the
interest of the Trust Fund in any Mortgaged Property.
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written prior notice to the Trustee and the
Certificate Insurer, transfer the Principal and Interest Account to a different
Designated Depository Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall cause to be maintained, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Mortgage Loan and any Prior Lien, (b) the full insurable value of the premises
securing the Mortgage Loan and (c) the minimum amount required to compensate for
damage or loss on a replacement cost basis. If the Mortgaged Property is in an
area identified in the Federal Register by the Flood Emergency Management Agency
as having special flood hazards (and such flood insurance has been made
available) the Servicer will cause to be purchased a flood insurance policy with
a generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (i) the outstanding principal balance of the Mortgage
Loan and any Prior Lien, (ii) the full insurable value of the Mortgaged
Property, or (iii) the maximum amount of insurance available under the National
Flood Insurance Act of 1968, as amended. The Servicer shall also maintain, to
the extent such insurance is available, on REO Property, fire and hazard
insurance in the amounts described above, liability insurance and, to the extent
required and available under the National Flood Insurance Act of 1968, as
amended, flood insurance in an amount equal to that required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Mortgagor in accordance with customary second mortgage servicing
procedures) shall be deposited in the applicable Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Mortgagor or maintained on REO Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against fire and hazards of extended coverage on all of the Mortgage
Loans, then, to the extent such policy names the Trustee or the Co-Trustee on
behalf of the Cer- tificateholders as loss payee and provides coverage in an
amount equal to the aggregate unpaid principal balance on the Mortgage Loans
without co-insurance, and otherwise complies with the requirements of Section
5.07, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
5.07, it being understood and agreed that such blanket policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.07, and there shall have been a loss which would have
been covered by such policy, deposit in the applicable Principal and Interest
Account from the Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with Section 5.07 and the
amount paid under such blanket policy. Upon the request of the Certificate
Insurer, the Trustee, the Co-Trustee or any Certificateholder, the Servicer
shall cause to be delivered to the Trustee, the Co-Trustee or such
Certificateholder, as the case may be, a certified true copy of such policy. The
current issuer of such policy is Lloyds of London.
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the
Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, the Co-Trustee and their respective officers, and employees, against
losses resulting from forgery, theft, embezzlement or fraud, by such Servicer
Employees. The errors and omissions policy shall insure against losses resulting
from the errors, omissions and negligent acts of such Servicer Employees. No
provision of this Section 5.09 requiring such fidelity bond and errors and
omissions insurance shall relieve the Servicer from its duties as set forth in
this Agreement. Upon the request of the Trustee, the Co-Trustee, the Certificate
Insurer or any Certificateholder, the Servicer shall cause to be delivered to
the Trustee, the Co-Trustee, the Certificate Insurer or such Cer- tificateholder
a certified true copy of such fidelity bond and insurance policy. The current
issuer of such fidelity bond and insurance policy is National Union Fire
Insurance Company of Pittsburgh, Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee (or, with respect
to the Pool III Mortgage Loans, the Co-Trustee) for the benefit of the Class A
Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Certificate Insurer solely for the purpose of
its prudent and prompt disposition and sale. The Servicer shall, either itself
or through an agent selected by the Servicer, manage, conserve, protect and
operate the REO Property in the same manner that it manages, conserves, protects
and operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as the REO Property is
managed. The Servicer shall attempt to sell the same (and may temporarily rent
the same) on such terms and conditions as the Servicer deems to be in the best
interest of the Certificate Insurer and the Pool I, Pool II, Pool III or Pool IV
Certificateholders, as the case may be.
The Servicer shall cause to be deposited in the applicable Principal and
Interest Account, no later than five Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related REO Property net of funds necessary for the proper operation, management
and maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Pool I, Pool II, Pool III or Pool IV
Certificateholders, as the case may be and the Certificate Insurer. The proceeds
of sale of the REO Property shall be promptly deposited in the Principal and
Interest Account as received from time to time and, as soon as practicable
thereafter, the expenses of such sale shall be paid, the Servicer shall, subject
to Section 5.04, reimburse itself for any related unreimbursed Servicing
Advances, unpaid Servicing Fees, unpaid Contingency Fees and unreimbursed
Monthly Advances, and the Servicer shall deposit in the Principal and Interest
Account the net cash proceeds of such sale to be distributed to the Pool I, Pool
II, Pool III or Pool IV Certificateholders, as the case may be, in accordance
with Section 6.08 hereof.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel also
addressed to the Certificate Insurer to the effect that the holding of such
Mortgaged Property subsequent to two years after its acquisition will not result
in the imposition of taxes on "prohibited transactions" as defined in section
860F of the Code or cause the Trust Fund to fail to qualify as a REMIC at any
time that any Class A Certificates are outstanding. Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Servicer
pursuant to this Section shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust
Fund, and no construction shall take place on such Mortgaged Property, in such a
manner or pursuant to any terms that would cause such Mortgaged Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Trust Fund of any "income from
non-permitted assets" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than two
years is permitted under this Agreement and is necessary to sell any REO
Property, the Servicer shall give appropriate notice to the Trustee and the
Certificate Insurer (and, with respect to a Pool III Mortgage Loan, the
Co-Trustee) and shall report monthly to the Trustee (and, with respect to a Pool
III Mortgage Loan, the Co- Trustee) as to the progress being made in selling
such REO Property.
Section 5.11 CERTAIN TAX INFORMATION.
The Servicer shall furnish (a) any information which may be required under
the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, comply with the
terms and provisions of any applicable hazard insurance policy. Consistent with
the foregoing, the Servicer may in its discretion waive or permit to be waived
any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as servicing
compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment
provided that the Servicer determines such extension would not be considered a
new mortgage loan for federal income tax purposes. In the event the Servicer
shall consent to the deferment of the due dates for payments due on a Mortgage
Note, the Servicer shall nonetheless make payment of any required Monthly
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 5.04(b) hereof.
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS.
The Servicer shall provide to the Trustee, the Co- Trustee, the
Certificateholders, the Certificate Insurer, the FDIC, the Office of Thrift
Supervision and the supervisory agents and examiners of each of the foregoing
access to the documentation regarding the Mortgage Loans required by applicable
local, state and federal regulations, such access being afforded without charge
but only upon reasonable request and during normal business hours at the offices
of the Servicer designated by it.
Section 5.14 SUPERIOR LIENS.
The Servicer shall file of record a request for notice of any action by a
superior lienholder under a Prior Lien for the protection of the Trustee's
interest (or, with respect to a Pool III Mortgage Loan, the Co-Trustee), where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. The Servicer
must also notify any superior lienholder in writing of the existence of the
Mortgage Loan and request notification of any action (as described below) to be
taken against the Mortgagor or the Mortgaged Property by the superior
lienholder.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by any Prior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and the Certificate Insurer, and/or to preserve the
security of the related Mortgage Loan, subject to the application of the REMIC
Provisions. The Servicer shall immediately notify the Trustee and the
Certificate Insurer (and, with respect to a Pool III Mortgage Loan, the
Co-Trustee) of any such action or circumstances. The Servicer will advance the
necessary funds to cure the default or reinstate the superior lien, if such
advance is in the best interests of the Certificate Insurer and the related
Certificateholders. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 5.15 DUTIES OF THE CLAIMS ADMINISTRATOR.
(a) In connection with each FHA Loan, the Representative, the Servicer, the
Claims Administrator and the Originators will comply at all times with the
provisions of Title I and the rules and regulations promulgated thereunder in
servicing each FHA Loan and making claims for reimbursement with respect to each
FHA Loan, and will at all times hold a valid Contract of Insurance from the FHA
for such purposes (unless such Contract of Insurance is terminated so as not to
affect the obligation of FHA to provide insurance coverage with respect to the
FHA Loans).
(b) If any FHA Loan becomes a 90 Day Delinquent Pool III Loan, and if
sufficient coverage is available in the Reserve Amount to make an FHA Payment
with respect to such FHA Loan, the Claims Administrator may, in its sole
discretion, during any subsequent Due Period, determine to file a Claim with the
FHA with respect to such 90 Day Delinquent Pool III Loan. If the Claims
Administrator determines to file such a Claim, the Claims Administrator will
notify the Co-Trustee and the Custodian no later than the Determination Date
following such determination by an Officer's Certificate in the form of Exhibit
J-1 hereto and shall request delivery of the related Trustee's Mortgage File.
Upon receipt of such certification and request, the Custodian shall, no later
than the related Remittance Date, release to the Claims Administrator the
related Trustee's Mortgage File and the Co-Trustee and the Custodian shall
execute and deliver such instruments necessary to enable the Claims
Administrator to file a Claim with the FHA on behalf of the Co-Trustee. Within
120 days of its receipt of the related Trustee's Mortgage File, the Claims
Administrator shall, in its sole discretion, either file a Claim with the FHA
for an FHA Payment with respect to such 90 Day Delinquent Pool III Loan or, if
the Claims Administrator determines not to file such a Claim, return to the
Custodian on behalf of the Co-Trustee the related Trustee's Mortgage File.
(c) With respect to any 90 Day Delinquent Pool III Loan transferred to the
Claims Administrator pursuant to clause (b) above, the Claims Administrator
shall deposit (or, if the Claims Administrator is not also the Servicer, the
Claims Administrator shall instruct the Servicer to deposit) in the Principal
and Interest Account within 24 hours of receipt the following amounts (such
amounts to be net of any amounts that would be reimbursable to the Servicer
under Section 5.04(b) with respect to amounts in the Principal and Interest
Account): (i) any FHA Payments; (ii) the amount, if any, by which the FHA
Payment was reduced in accordance with FHA Regulations due to the Claims
Administrator enforcing a lien on the Mortgaged Property prior to the lien of
the related 90 Day Delinquent Pool III Loan; and (iii) any principal and
interest payments received with respect to a 90 Day Delinquent Pool III Loan
after the Due Period in which the FHA Loan is transferred to the Claims
Administrator and before either the related FHA Payment is paid or the related
Trustee's Mortgage File is returned to the Co-Trustee on behalf of the Trustee,
as the case may be (the amounts referred to in (ii) and (iii) above are
referenced to herein as "Related Payments").
(d) If an FHA Loan becomes a 90 Day Delinquent Pool III Loan when there is
insufficient coverage in the Reserve Amount, or if the Claims Administrator
determines not to file a Claim with the FHA with respect to such 90 Day
Delinquent Pool III Loan, the Co- Trustee will not transfer such FHA Loan to the
Claims Administrator, no Claim will be made to the FHA and the Servicer may take
other action, including the commencement of foreclosure proceedings, on the
related Mortgaged Property.
(e) If a Claim is rejected by the FHA and if the Claims Administrator is no
longer The Money Store Inc., the Claims Administrator shall promptly notify the
Servicer and the Representative of such rejection. Further, if a Claim is
rejected by the FHA, other than as a result of depletion of the Reserve Amount,
the related Originator shall be deemed to have breached its representation and
warranty contained in Section 3.02 (nnn) and the Representative shall be
required to repurchase the related 90 Day Delinquent Pool III Loan by depositing
in the Principal and Interest Account, on the next succeeding Determination
Date, an amount and in the manner specified in Section 2.05(b).
Section 5.16 CO-TRUSTEE NOT TO HOLD OTHER FHA INSURED TITLE I LOANS.
For so long as any Certificates remain outstanding under this Agreement,
the Co-Trustee shall not own, whether as a result of its origination or by
purchase, in its own name or in any trust capacity, any other loans insured by
the FHA under the Title I program other than the FHA Loans; PROVIDED, HOWEVER,
that the Co- Trustee may own other loans insured by the FHA under the Title I
program if such loans (i) were originated or purchased by the Originators or
their affiliates, (ii) are part of a pool formed for the purpose of issuing
certificates and (iii) such certificates are insured by the Certificate Insurer
and receive from each Rating Agency the same rating assigned to the
Certificates.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS IN CERTIFICATE
ACCOUNTS; PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself in its trust department four separate trust accounts, which shall
not be interest-bearing, titled "TMS Certificate Account 1996-B-I," "TMS
Certificate Account 1996-B-II," "TMS Certificate Account 1996-B-III" and "TMS
Certificate Account 1996-B-IV (each a "Certificate Account" and together, the
"Certificate Accounts"). The Trustee shall, promptly upon receipt, deposit in
the applicable Certificate Account and retain therein:
(i) the Pool Available Remittance Amount of the related Pool (net
of the amount of Monthly Advances and Compensating Interest deposited
pursuant to subclause (ii), below, but including the Excess Spread and
any Subordination Reduction Amounts with respect to the Mortgage Loans
of the related Pool) remitted by the Servicer;
(ii) the Compensating Interest and the portion of the Monthly
Advance allocable to the Class Adjusted Mortgage Loan Remittance Rates
for Class A-1 through Class A-9, in the case of Pool I, the Class
Adjusted Mortgage Loan Remittance Rates for Class A-10 and Class A-11,
in the case of Pool II, the Class Adjusted Mortgage Loan Remittance
Rates for Class A-12 through Class A-15, in the case of Pool III, and
the Class Adjusted Mortgage Loan Remittance Rate for Class A-16, in
the case of Pool IV, remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account pursuant to
Section 6.05(b)(ii) and Insured Payments received by the Trustee after
a claim pursuant to Section 6.08(c);
(iv) amounts required to be paid by the Servicer pursuant to
Section 6.07(e) in connection with losses on investments of amounts in
the applicable Certificate Account;
(v) amounts transferred from the Pre-Funding Account and the
Capitalized Interest Account on the Special Remittance Date pursuant
to Sections 6.02(c) and (h), respectively; and
(vi) amounts required to be deposited pursuant to Section
3.01(d)(ii) of the Insurance Agreement.
(b) Amounts on deposit in each Certificate Account shall be withdrawn on
each Remittance Date by the following parties in the following order of priority
(provided that only amounts on deposit in the Certificate Account relating to
Pool III shall be withdrawn pursuant to subclause (ii) below and only amounts on
deposit in the Certificate Account relating to Pool II shall be withdrawn
pursuant to subclause (iii) below):
(i) by the Trustee, to make deposits in the applicable Insurance
Account pursuant to Section 6.04(a)(i);
(ii) by the Trustee, to make deposits in the FHA Premium Account
pursuant to Section 6.06(a)(i);
(iii) by the Trustee, to pay the Auction Agent the required
Auction Agent Fee pursuant to the terms of the Auction Agent
Agreement;
(iv) by the Trustee, or the Paying Agent on its behalf, to effect
the applicable distributions described in Section 6.08(d);
and also, in no particular order of priority:
(v) by the Trustee, to invest amounts on deposit in the
applicable Certificate Account in Permitted Instruments pursuant to
Section 6.07;
(vi) by the Trustee, to pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings realized
on Permitted Instruments;
(vii) by the Trustee, to withdraw any amount not required to be
deposited in the applicable Certificate Account or deposited therein
in error; and
(viii) by the Trustee, to clear and terminate the applicable
Certificate Account upon the termination of the related Trust Fund in
accordance with the terms of Section 11.01 hereof.
Section 6.02 ESTABLISHMENT OF PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT; DEPOSITS IN PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT;
PERMITTED WITHDRAWALS FROM PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Pre-Funding Account 1996-B" (the
"Pre-Funding Account"). The Pre-Funding Account shall constitute part of the
Trust Fund but not be asset of the REMIC Trust Fund. It is an outside reserve
fund, the owners of which are the Class R Certificateholders and for Federal tax
purposes, amounts, if any, transferred by the REMIC Trust Fund to the
Pre-Funding Account are treated as distributed by the REMIC Trust Fund to the
Class R Certificateholders. The Trustee shall, promptly upon receipt, deposit
into the Pre-Funding Account and retain therein the Original Pre-Funded Amount
in an amount equal to the sum of (i) $233,390,831.49 from the proceeds of the
sale of the Pool I Certificates, (ii) $46,706,082.11 from the proceeds of the
sale of the Pool II Certificates, (iii) $21,179,970.05 from the proceeds of the
sale of the Pool III Certificates and (iv) $4,619,530.11 from the proceeds of
the sale of the Pool IV Certificates.
(b) On each Subsequent Transfer Date, the Representative shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans (or, with respect
to the Low Interest Mortgage Loans, an amount equal to the product of the
percentage set forth on Exhibit T attached hereto determined by referring to the
columns entitled "Coupon" and "Remaining Term" and the aggregate Principal
Balances of such Subsequent Mortgage Loans) sold to the Trust Fund on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Representative with respect to such transfer; in connection with such
instruction, the Representative shall additionally inform the Trustee whether
such Subsequent Mortgage Loans are being transferred in respect of Pool I, Pool
II, Pool III or Pool IV. In no event shall the Representative be permitted to
instruct the Trustee to release from the Pre-Funding Account with respect to
subsequent Mortgage Loans to be transferred to Pool I, Pool II, Pool III or Pool
IV an amount in excess of $233,390,831.49, $46,706,082.11, $21,179,970.05 or
$4,619,530.11, respectively.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
in the appropriate Certificate Account any Pre-Funded Amount relating to the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans, as the case may be, then
remaining in the Pre-Funding Account. However, if at the close of business on
September 25, 1996, amounts still remain in the Pre-Funding Account, the
Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account on
the Special Remittance Date and deposit in the applicable Certificate Account
any Pre- Funded Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in July, August and September 1996,
the Trustee shall transfer from the Pre-Funding Account to the appropriate
Certificate Account the Pool Pre-Funding Earnings for the related Pool, if any,
applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Capitalized Interest Account 1996-B" (the
"Capitalized Interest Account"). The Capitalized Interest Account shall
constitute part of the Trust Fund but not a part of the REMIC Trust Fund. It is
an outside reserve fund, the owners of which are the Class R Certificateholders
and for Federal tax purposes amounts, if any, transferred by the REMIC Trust
Fund to the Capitalized Interest Account are treated as distributed by the REMIC
Trust Fund to the Class R Certificateholders. The Trustee shall, promptly upon
receipt, deposit into the Capitalized Interest Account $3,712,961.00. If prior
to the end of the Funding Period the funds on deposit in the Pre-Funding Account
are invested in a guaranteed investment contract, repurchase agreement or other
arrangement acceptable to the Certificate Insurer, that constitutes a Permitted
Instrument, the Trustee shall, within one Business Day of its receipt of written
notification from the Certificate Insurer, withdraw from the Capitalized
Interest Account and pay to the Owners of the Class R Certificates the amount
set forth in such written notification.
(f) On each Subsequent Transfer Date the Representative may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Representative pursuant to Section 2.09(h) hereof.
(g) On the Remittance Dates occurring in July, August and September 1996,
the Trustee shall transfer from the Capitalized Interest Account to the
appropriate Certificate Account the Pool Capitalized Interest Requirement for
the related Pool, if any, for such Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Special Remittance Date. Any amounts remaining in
the Capitalized Interest Account after taking into account such transfer shall
be paid on such Special Remittance Date to the Holders of the Class R
Certificates, and the Capitalized Interest Account shall be closed.
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department four separate trust accounts, which shall not be
interest-bearing, titled "TMS Expense Account 1996-B-I," "TMS Expense Account
1996-B-II," "TMS Expense Account 1996-B-III" and "TMS Expense Account 1996-B-IV"
(each, an "Expense Account" and together the "Expense Accounts"). The Trustee
shall deposit into the applicable Expense Account:
(i) on each Remittance Date from the amounts on deposit in the
applicable Certificate Account an amount equal to one-twelfth of that
portion of the Annual Expense Escrow Amount relating to the Pool I,
Pool II, Pool III or Pool IV Mortgage Loans, as the case may be,
subject to the provisions of Section 6.08(d); and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments
of amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Accounts
shall be insufficient to pay in full the fees and expenses of the Trustee and
the Co-Trustee then due with respect to the Trust Fund, the Trustee shall make
demand on the Servicer to advance the amount of such insufficiency, and the
Servicer shall promptly advance such amount to the Trustee for deposit in the
Expense Accounts, pro rata in accordance with the amounts then on deposit in
each such Expense Account. Thereafter, the Servicer shall be entitled to
reimbursement from the applicable Expense Account for the amount of any such
advance from any excess funds available pursuant to subclause (c)(ii) below.
Without limiting the obligation of the Servicer to advance such insufficiency,
in the event the Servicer does not advance the full amount of such insufficiency
by the Business Day immediately preceding the Determination Date, the amount of
such insufficiency shall be deposited into the applicable Expense Account for
payment to the Trustee or the Co-Trustee, as the case may be, pursuant to
Section 6.08(d)(ii), to the extent of available funds in the applicable
Certificate Account.
(b) The Trustee may invest amounts on deposit in each Expense Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the applicable Expense Account to:
(i) pay the Trustee's and Co-Trustee's fees and expenses with
respect to the Trust Fund as described in Section 2.08 hereof (amounts
shall be withdrawn from each Expense Account pro rata in accordance
with the then aggregate Principal Balances of the Pool I, Pool II,
Pool III and Pool IV Mortgage Loans);
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on
Permitted Instruments;
(iii) to withdraw any amounts not required to be deposited in the
applicable Expense Account or deposited therein in error; and
(iv) to clear and terminate the applicable Expense Account upon
the termination of the Trust Fund in accordance with Section 11.01
hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on each
twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the applicable Expense
Account, the Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Represent- ative, for
reimbursable advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it pursuant to
the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing compensation
any amounts remaining in either Expense Account after payments made
pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i) and (c)(ii),
above.
Section 6.04 ESTABLISHMENT OF INSURANCE ACCOUNTS; DEPOSITS IN INSURANCE
ACCOUNTS; PERMITTED WITHDRAWALS FROM INSURANCE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department four separate trust accounts for the benefit of the
Certificate Insurer, titled "TMS MBIA Insurance Account 1996-B-I," "TMS MBIA
Insurance Account 1996- B-II," "TMS MBIA Insurance Account 1996-B-III" and "TMS
MBIA Insurance Account 1996-B-IV" (each an "Insurance Account, and together, the
"Insurance Accounts"). The Trustee shall deposit into the applicable Insurance
Account:
(i) on each Remittance Date, prior to making the remittances
required pursuant to Section 6.08(d), from the applicable Certificate
Account an amount equal to the Premium Deposit Amount relating to the
Pool I, Pool II, Pool III or Pool IV Certificates, as the case may be;
and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments
of amounts in the applicable Insurance Account.
If at any time that a Monthly Premium is due, the aggregate amount then on
deposit in the Insurance Accounts is insufficient to pay in full the Monthly
Premium then due with respect to the Pool I, Pool II, Pool III and Pool IV
Certificates pursuant to the terms of the Insurance Agreement, the Certificate
Insurer shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount to the
Trustee for deposit in the Insurance Accounts, pro rata in accordance with the
amounts then on deposit in each such Insurance Account. Thereafter, the Servicer
shall be entitled to reimbursement from the applicable Insurance Account for the
amount of any such advance from moneys on deposit therein not related to the
Premium Deposit Amount necessary to make timely payment of the next Monthly
Premium.
(b) The Trustee may invest amounts on deposit in each Insurance Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the applicable Insurance Account to:
(i) remit on a monthly basis sufficient funds to the Insurance
Paying Agent to pay the Certificate Insurer the Monthly Premium with
respect to the Pool I, Pool II, Pool III or Pool IV Certificates, as
the case may be, on each Remittance Date commencing in July 1996 as
required by the Insurance Agreement;
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on
Permitted Instruments;
(iii) withdraw amounts not required to be deposited in the
applicable Insurance Account or deposited therein in error; and
(iv) reimburse the Servicer for advances made by it pursuant to
the last paragraph of subclause (a) above to the extent such funds are
not needed to pay the Monthly Premium.
If sufficient funds are available in the Insurance Account to timely pay
the Monthly Premium, the Trustee has received from the Servicer any information
necessary to determine the amount of the Monthly Premium and the Trustee and the
Insurance Paying Agent (if the Insurance Paying Agent and the Trustee are the
same party) fail to timely remit the Monthly Premium to the Certificate Insurer
from funds on deposit in the Insurance Account in accordance with subsections
(a) and (b) above, the Trustee shall, contemporaneous with the payment of the
Monthly Premium, pay to the Certificate Insurer from its own funds, for which
reimbursement shall not be available, interest on the Monthly Premium at the
Prime Rate published in the most recent Wall Street Journal plus 3.0% for each
day that the Monthly Premium is not paid to the Certificate Insurer.
Section 6.05 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD ACCOUNT;
PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) The Representative shall, no later than the Closing Date, establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Spread Account 1996-B" (the "Spread
Account"). If during or after the Funding Period the Certificate Insurer
determines to increase the Pool I, Pool II, Pool III or Pool IV Initial
Specified Subordinated Amount pursuant to the terms of the Insurance Agreement,
the Representative shall give the Trustee written notice thereof, which notice
shall include the new Pool I, Pool II, Pool III or Pool IV Initial Specified
Subordinated Amount for the related Pool. The Trustee shall, promptly upon
receipt, deposit into the Spread Account:
(i) on the Closing Date, an amount equal to $14,175,000
($6,975,000 of which will be allocated to Pool I, $6,000,000 of which
will be allocated to Pool III and $1,200,000 of which will be
allocated to Pool IV);
(ii) up to the difference, if any, between the revised Pool I,
Pool II, Pool III or Pool IV Initial Specified Subordinated Amount and
the original Pool I, Pool II, Pool III or Pool IV Initial Specified
Subordinated Amount, as the case may be;
(iii) amounts, if any, received pursuant to the last paragraph of
Section 6.14(b) upon the occurrence of a Pool III Delinquency Period;
(iv) amounts, if any, received pursuant to Section 6.05(d);
(v) amounts, if any, received pursuant to Section 2.09(b)(ix);
and
(vi) amounts, if any, received pursuant to Section 6.14(b)(iii).
(b) The Trustee may invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the Spread Account to:
(i) deposit in the FHA Premium Account the lesser of (a) the
amount on deposit in the Spread Account and (b) the amount of any
insufficiency in the FHA Premium Account which the Servicer failed to
advance pursuant to Section 6.06(a);
(ii) deposit in the applicable Certificate Account on any
Remittance Date an amount equal to (x) the amount of any Insured
Payment otherwise required with respect to such Remittance Date and
(y) the lesser of the Reallocated Pool III Spread Account Portion for
such Remittance Date and the aggregate Subordinated Deficiency Amounts
for Pool I, Pool II and Pool IV for such Remittance Date (to be
allocated pro rata based upon such amounts);
(iii) on any Remittance Date for which the Pool Subordinated
Amount for each Pool exceeds its respective Specified Subordinated
Amount, including any increases thereto during or after the Funding
Period, and the amount deposited into the Spread Account pursuant to
Section 6.14(b)(iii) equals the full amount required to be deposited
pursuant thereto, distribute to the Holders of the Class R
Certificates the excess, if any, of the aggregate Pool Subordinated
Amounts for each Pool for such Remittance Date over the aggregate Pool
I, Pool II, Pool III and Pool IV Specified Subordinated Amounts,
including any increases thereto after the Funding Period, for such
Remittance Date (provided, however, that any such excess attributable
to a Pool II Mortgage Loan shall be applied first to the payment of
any Certificateholders' Interest Carryover, pro rata based upon the
amount of Certificateholders' Interest Carryover allocable to each
Class of Pool II Certificates);
(iv) distribute to the Holders of the Class R Certificates such
amounts then on deposit in the Spread Account as the Certificate
Insurer may consent to in writing;
(v) withdraw any amounts not required to be deposited in the
Spread Account or deposited therein in error; and
(vi) subject to subsection (c) below, distribute to the Holders
of the Class R Certificates any amounts remaining in the Spread
Account upon the termination of this Agreement in accordance with
Section 11.01 hereof.
Notwithstanding the foregoing, during any Pool III Delinquency Period
amounts may be released from the Spread Account pursuant to clause (iii) above
only if, after giving effect to such release, the amount on deposit in the
Spread Account (less the amount deposited therein pursuant to Section 6.05(a)(i)
and (ii)), is at least equal to the then current Pool Principal Balance for Pool
III.
(c) If Claims filed by the Claims Administrator with respect to the FHA
Loans exceed 10% of the aggregate Principal Balances of the FHA Loans measured
as of the Cut-Off Date or related Subsequent Cut-Off Date, as the case may be,
at the termination of the Trust, the Trustee shall withdraw from the Spread
Account the lesser of (x) the Excess Claim Amount and (y) the amount remaining
in the Spread Account and deposit such amount on behalf of the Class R
Certificateholders as directed by the Certificate Insurer into the spread
account(s) for the remaining outstanding TMS Title I transactions which are
insured by the Certificate Insurer. The "Excess Claim Amount" will equal 90% of
the excess of (x) the total Claims filed with respect to the FHA Loans over (y)
10% of the aggregate Principal Balances of the FHA Loans measured as of the
Cut-Off Date or related Subsequent Cut-Off Date, as the case may be.
(d) At the direction of the Class R Certificateholders, the Trustee shall
immediately deposit into the Spread Account any Excess Claim Amounts received
from any other TMS Title I transaction which is insured by the Certificate
Insurer, provided that the Trustee receives an Opinion of Counsel at the expense
of the Class R Certificateholders that such deposit will not adversely affect
the REMIC status of the REMIC Trust.
(e) The Class R Certificateholders hereby consent to funds being withdrawn
from or deposited in the Spread Account at the direction of the Certificate
Insurer pursuant to subsections (c) and (d) above.
(f) The Class R Certificateholders are deemed to have directed the Trustee
to withdraw funds from the Spread Account pursuant to subsection (c) above and
to deposit such funds into the Spread Account pursuant to subsection (d) above.
Section 6.06 ESTABLISHMENT OF FHA PREMIUM ACCOUNT; DEPOSITS IN FHA PREMIUM
ACCOUNT; PERMITTED WITHDRAWALS FROM FHA PREMIUM ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department a trust account, which shall not be interest bearing,
titled "TMS FHA Premium Account 1996-B" (the "FHA Premium Account"). The FHA
Premium Account shall not be available for payment of Certificates. The Trustee
shall deposit into the FHA Premium Account:
(i) on each Remittance Date, prior to making the remittances
required pursuant to Section 6.08(c), upon receipt an amount equal to
the FHA Premium Amount; and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments
of amounts in the FHA Premium Account.
If the Servicer fails to pay the FHA Insurance Premium with respect to an FHA
Loan in accordance with Section 5.01 hereof, the Trustee shall, upon written
instructions from the Servicer or the Certificate Insurer, withdraw an amount
from the FHA Premium Account sufficient to pay in full the FHA Insurance Premium
then due. If the amount on deposit in the FHA Premium Account is insufficient to
pay the FHA Insurance Premium then due, the Trustee shall transfer an amount
from the Spread Account to the FHA Premium Account sufficient to pay in full the
FHA Insurance Premium then due. In the event that there are insufficient funds
in the Spread Account, the Trustee shall immediately notify the Certificate
Insurer of the amount of the remaining insufficiency. The Certificate Insurer
shall have the option to advance such insufficiency to the Trustee for payment
of the FHA Insurance Premium then due.
(b) The Trustee may invest amounts on deposit in the FHA Premium Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification of payment made to the FHA, funds
requested by the Servicer (including any successor to the Servicer
appointed pursuant to Section 10.02) or the Certificate Insurer as
reimbursement for the FHA Insurance Premiums paid by the Servicer or
the Certificate Insurer, as the case may be, or remit to the FHA
amounts payable in respect of FHA Insurance Premiums pursuant to the
last paragraph of subclause (a) above;
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on
Permitted Instruments;
(iii) withdraw amounts not required to be deposited in the FHA
Premium Account or deposited therein in error;
(iv) deposit in the Spread Account for amounts withdrawn from it
pursuant to the last paragraph of subclause (a) above; and
(v) clear and terminate the FHA Premium Account upon the
termination of this Agreement in accordance with the terms of Section
11.01 hereof.
Section 6.07 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee shall be invested and reinvested by the
Trustee as directed in writing by the Servicer, in one or more Permitted
Instruments bearing interest or sold at a discount. No such investment in the
Certificate Accounts shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Insurance
Accounts, Expense Accounts, Pre-Funding Account, Capitalized Interest Account,
FHA Premium Account or Spread Account shall mature later than the Business Day
immediately preceding the date such funds will be needed to pay fees or premiums
or be transferred to the applicable Certificate Account, as the case may be;
PROVIDED, HOWEVER, the Trustee or any affiliate thereof may be the obligor on
any investment which otherwise qualifies as a Permitted Instrument and any
investment on which the Trustee is the obligor may mature on such Remittance
Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by the
Trustee to the fullest extent practicable, in such manner as the Servicer shall
from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account, immediately on receipt, and the
Trustee shall notify the Servicer of any loss resulting from such investments.
The Servicer shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment by the next Determination Date
following receipt by the Servicer of such notice.
Section 6.08 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Class R Certificateholders to
receive distributions in respect of the Class R Certificates, and all ownership
interests of the Class R Certificateholders in and to such distributions, shall
be subject and subordinate to the preferential rights of the Class A
Certificateholders, to receive distributions in respect of the Class A
Certificates, and the ownership interests of the Class A Certificateholders in
such distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Class R Certificateholders in amounts deposited in
the applicable Principal and Interest Account or in any Accounts from time to
time shall not vest unless and until such amounts are distributed in respect of
the Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Class
R Certificateholders shall not be required to refund any amount properly
distributed on the Class R Certificates pursuant to Section 6.08(d)(v).
(b) [Reserved]
(c) As soon as possible, and in no event later than 10:00 a.m. New York
time on the Business Day immediately preceding each Remittance Date, the Trustee
shall furnish the Certificate Insurer and the Servicer with a completed notice
in the form set forth as Exhibit L (the "Notice") hereto, which will be based
upon the information set forth in the Servicer's Certificate, in the event that
an Event of Nonpayment will occur with respect to such Remittance Date. The
Notice shall specify the total amount of the Insured Payment to be paid on the
applicable Remittance Date, stated separately for each Class of Class A
Certificates, and shall constitute a claim for an Insured Payment pursuant to
the applicable Certificate Insurance Policy. The Certificate Insurer shall remit
or cause to be remitted to the Insurance Paying Agent the amount of the Insured
Payment. Upon receipt of such Insured Payment by the Insurance Paying Agent on
behalf of the Holders of the respective Class of Class A Certificates under the
applicable Certificate Insurance Policy, it shall remit such amounts to the
Trustee who shall deposit such Insured Payment in the applicable Certificate
Account and shall distribute such Insured Payment in accordance with Sections
6.08(d) and (e) hereof.
Notwithstanding the foregoing, if an Event of Nonpayment will occur with
respect to a Remittance Date and funds are on deposit in the Spread Account, the
amount of the Insured Payment shall be reduced up to the amount then on deposit
in the Spread Account. Pursuant to Section 6.05(b)(ii), the Trustee shall, on
such Remittance Date, transfer such amount to the applicable Certificate Account
from the Spread Account.
The Trustee shall serve as Insurance Paying Agent hereunder for so long as
a Certificate Insurance Policy shall remain in effect; PROVIDED, HOWEVER, that
the Insurance Paying Agent may be located in another jurisdiction with the
written consent of the Certificate Insurer. The Insurance Paying Agent shall act
as the agent of the Trustee and shall (i) pay amounts required by Section
6.04(b)(i) hereof to the Certificate Insurer, (ii) pay Insured Payments received
from the Certificate Insurer as the Trustee shall direct and (iii) take such
other actions with respect to the Certificate Insurer and the Certificate
Insurance Policies as the Trustee shall direct. The Trustee shall act initially
as the Insurance Paying Agent.
The Trustee shall receive through the Insurance Paying Agent, as
attorney-in-fact of each Holder of Class A Certificates, any Insured Payment
from the Certificate Insurer and disburse the same to each Holder of Class A
Certificates in accordance with the provisions of this Section 6.08. Insured
Payments disbursed by the Trustee from proceeds of the Certificate Insurance
Policies shall not be considered payment by the Trust Fund nor shall such
payments discharge the obligation of the Trust Fund with respect to such Class A
Certificates, and the Certificate Insurer shall become the owner of such unpaid
amounts due from the Trust Fund in respect of Class A Certificates. The Trustee
hereby agrees on behalf of each Holder of Class A Certificates for the benefit
of the Certificate Insurer that it recognizes that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Insurance Paying Agent), to the Class A Certificateholders, the
Certificate Insurer will be subrogated to the rights of the Class A
Certificateholders with respect to such Insured Payment, shall be deemed to the
extent of the payments so made to be a registered Certificateholder of the
related Class, and shall receive the Pool Carry-Forward Amounts of the related
Pools in accordance with Sections 6.08(d) below until all such Insured Payments
by the Certificate Insurer have been fully reimbursed. To evidence such
subrogation, the Trustee shall, or shall cause the Certificate Registrar to,
note the Certificate Insurer's rights as subrogee on the registration books
maintained by the Trustee or the Certificate Registrar upon receipt from the
Certificate Insurer of proof of payment of any Insured Payment.
Each Class A Certificateholder shall promptly (i) notify the Trustee in
writing upon the receipt of a court order to the effect that any amounts
described in Clause (iv) of the definition of Pool Remittance Amount constitute
a voidable preference pursuant to the United States Bankruptcy Code and (ii)
shall enclose a certified copy of such order with such notice to the Trustee.
(d) On each Remittance Date, and after making the allocations set forth in
Section 6.14, the Trustee shall withdraw from the applicable Certificate Account
the sum of (i) the Pool Available Amount for each Pool and (ii) the Remainder
Excess Spread Amount for each Pool, net of reimbursements to the Servicer or the
Representative for Reimbursable Advances pursuant to Section 5.04(f), and make
distributions thereof in the following order of priority:
(i) to the Certificateholders of each Pool, the lesser of the
Pool Available Amount for the related Pool and the Pool Remittance
Amount for the related Pool;
(ii) then to each Expense Account, an amount equal to one-twelfth
of the Annual Expense Escrow Amount with respect to the Mortgage Loans
of the related Pool, plus any amount required to be paid to the
Trustee or the Co- Trustee pursuant to Section 6.03(a) resulting from
insufficiencies in the applicable Expense Account;
(iii) then to the Servicer and/or the Representative, an amount,
if any, equal to the Reimbursable Amounts with respect to the
applicable Pool to the extent the Servicer has not previously netted
such amounts from Monthly Payments;
(iv) then to the Pool II Certificateholders, any
Certificateholders' Interest Carryover (but only with respect to
distributions relating to Pool II Mortgage Loans), allocated pro rata
among each Class of Pool II Certificates based upon the amount of
Certificateholders' Interest Carryover allocated to each such Class;
and
(v) then to the Class R Certificateholders, an amount equal to
the Class R Remittance Amount.
On each Remittance Date, the amount to be distributed to the Pool I
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool I
Certificates, the applicable Class Current Interest Requirements for such
Remittance Date, pro rata in accordance with such amounts; and
(B) second, concurrently to the Class A-1 and Class A-2 Certificateholders,
in the proportions of 49.999852011% and 50.000147989%, respectively, the excess,
if any, of the amount to be distributed to the Pool I Certificates on such
Remittance Date over the amount distributed pursuant to (A) above, until the
Class Principal Balance of the Class A-2 Certificates is reduced to zero and
such Class A-2 Certificateholders have received an amount equal to the amount
described in clause (iv) of the definition of Pool Remittance Amount that is
recovered from such Certificateholders.
(C) third, concurrently to the Class A-1 and Class A-3 Certificateholders,
in the proportions of 49.999852011% and 50.000147989%, respectively, the excess,
if any, of the amount to be distributed to the Pool I Certificates on such
Remittance Date over the amount distributed pursuant to (A) and (B) above, until
the Class Principal Balances of the Class A-1 and Class A-3 Certificates are
reduced to zero and such Class A-1 and Class A-3 Certificateholders have
received an amount equal to the amount described in clause (iv) of the
definition of Pool Remittance Amount that is recovered from such
Certificateholders; and
(D) fourth, to the Class A-4 through Class A-9 Certificateholders,
sequentially in that order, the excess, if any, of the amount to be distributed
to the Pool I Certificates on such Remittance Date over the amount distributed
pursuant to (A), (B) and (C) above, until the Class Principal Balance of each
Class with a lower numerical designation is reduced to zero and such
Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders.
On each Remittance Date, the amount to be distributed to the Pool II
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool II
Certificates, the applicable Class Current Interest Requirement for such
Remittance Date, pro rata in accordance with such amounts; and
(B) second, concurrently to the Class A-10 and Class A- 11
Certificateholders, pro rata based upon the Class Principal Balance of each such
Class, the excess, if any, of the amount to be distributed to the Pool II
Certificates on such Remittance Date over the amount distributed pursuant to (A)
above, until the Class Principal Balance of each such Class is reduced to zero
and such Certificateholders have recovered an amount equal to the amount
described in clause (iv) of the definition of Pool Remittance Amount that is
recovered from such Certificateholders.
On each Remittance Date, the amount to be distributed to the Pool III
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool III
Certificates, the applicable Class Current Interest Requirement for such
Remittance Date; and
(B) second, to the Class A-12 through Class A-15 Certificateholders,
sequentially in that order, the excess, if any, of the amount to be distributed
to the Pool III Certificates on such Remittance Date over the amount distributed
pursuant to (A) above, until the Class Principal Balance of each Class with a
lower numerical designation is reduced to zero and such Certificateholders have
received an amount equal to the amount described in clause (iv) of the
definition of Pool Remittance Amount that is recovered from such
Certificateholders.
On each Remittance Date, the amount to be distributed to the Pool IV
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, to the Class A-16 Certificateholders, the applicable Class
Current Interest Requirement for such Remittance Date; and
(B) second, to the Class A-16 Certificateholders, the excess, if any, of
the amount to be distributed to the Pool IV Certificates on such Remittance Date
over the amount distributed pursuant to (A) above, until the Class Principal
Balance of such Class is reduced to zero and such Certificateholders have
received an amount equal to the amount described in clause (iv) of the
definition of Pool Remittance Amount that is recovered from such
Certificateholders.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) and make distributions thereof as follows: (i) from amounts
transferred from the Pre-Funding Account, distributions of principal to the
Classes of Class A Certificates then entitled to receive distributions of
principal in the priority and proportions set forth in this Section 6.07(d) and
(ii) from amounts transferred from the Capitalized Interest Account,
distributions of interest to such Classes of Class A Certificates equal to the
applicable Capitalized Interest Requirement. Notwithstanding the foregoing, if
on the Special Remittance Date the amount of principal allocated to a Class of
Auction Rate Certificates is not equal to $25,000 or an integral multiple of
$25,000 in excess thereof, the entire amount (if less than $25,000) or the
amount exceeding an integral multiple of $25,000 will, instead, be distributed
to the Adjustable Rate Certificates.
(e) All distributions made to the Certificateholders on each Remittance
Date and the Special Remittance Date will be made on a pro rata basis (except
with respect to payments of principal to the Auction Rate Certificateholders)
among the Certificateholders of the respective Class of record on the next
preceding Record Date based on the Percentage Interest represented by their
respective Certificates, and shall, except for the final payment on such
Certificates, be made by wire transfer of immediately available funds to the
account of such Certificate- holder as shall appear on the Certificate Register
without the presentation or surrender of the Certificate or the making of any
notation thereon, at a bank or other entity having appropriate facilities
therefor, at the expense of each such Certificateholder unless such
Certificateholder shall own of record Certificates which have original principal
amounts aggregating (i) at least $5,000,000 or (ii) one of the two highest
outstanding amounts less than $5,000,000.
(f) Notwithstanding the foregoing, principal payments will be made to each
Class of Auction Rate Certificates only in amounts equal to $25,000 and integral
multiples in excess thereof. If the amount in the Certificate Account for Pool
II otherwise required to be applied as a payment of principal on the Auction
Rate Certificates either (i) is less than $25,000 or (ii) exceeds an integral
multiple of $25,000, then, in the case of (i), such entire amount or, in the
case of (ii), such excess amount, will not be paid as principal on the upcoming
Remittance Date, but will be retained in the Certificate Account for Pool II
until the amount therein available for payment of principal on the Auction Rate
Certificates equals $25,000 or any integral multiple thereof. In no event,
however, shall amounts remain in the Certificate Account for Pool II more than
13 months after the related payments are deposited into the Trust Fund. The
amount being distributed to a Class of Auction Rate Certificates as principal
will be allocated to the specific Certificates of such Class selected no later
than 5 Business Days prior to the related Remittance Date by lot or such other
manner as may be determined, which allocations will be made only in amounts
equal to $25,000 and integral multiples of $25,000 in excess thereof.
Section 6.09 ALLOCATION OF REALIZED LOSSES.
Prior to each Determination Date, the Servicer shall determine the total
amount of Realized Losses, if any, that occurred in the related Due Period. The
amount of each Realized Loss shall be evidenced by an Officers' Certificate,
stated separately for each Pool of Mortgage Loans, and, to the extent paid by
the Certificate Insurer as an Insured Payment, shall constitute a Pool
Carry-Forward Amount for the related Pool. Any Realized Losses relating to the
Mortgage Loans of a Pool shall be allocated to each outstanding Class of
Certificates of such Pool pro rata in accordance with the respective Class
Principal Balances of each such Class, but only if and to the extent that the
Certificateholders of such Pool did not receive Insured Payments in connection
with the related Unrecovered Pool Portions on the Remittance Date on which a
Subordination Deficit occurs. Further, any allocation of Realized Losses among a
Class of Certificates shall be made on a pro rata basis among the
Certificateholders of record of such Class on the next preceding Record Date
based on the Percentage Interest represented by their respective Certificates by
reducing their respective Principal Balances by the amount so allocated, which
allocation shall be deemed to have occurred on the related Remittance Date.
Section 6.10 STATEMENTS.
Each month for so long as a Class of Auction Rate Certificates is
Outstanding, not later than 12:00 noon New York time on the Auction Reporting
Date, the Servicer shall deliver to the Certificate Insurer and the Trustee, by
telecopy, the receipt and legibility of which shall be confirmed telephonically,
with hard copy thereof to be delivered on the Business Day following the
Determination Date, a certificate signed by a Servicing Officer stating the date
(day, month and year), the Series number of the Certificates, the date of this
Agreement, and the amount to be distributed on the upcoming Remittance Date to
each Class of Auction Rate Certificates as a payment of principal.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Servicer shall deliver to the Certificate Insurer and to the Trustee,
by telecopy, for distribution to the Certificateholders, the receipt and
legibility of which shall be confirmed telephonically, with hard copy thereof
and the Serv- icer's Monthly Computer Tape in the form attached hereto as
Exhibit R (both in hard copy and in computer tape form) to be delivered on the
Business Day following the Determination Date, a certificate signed by a
Servicing Officer (a "Servicer's Certificate") stating the date (day, month and
year), the Series number of the Certificates, the date of this Agreement, and
the following:
(i) the Pool Available Remittance Amounts for each Pool for the
related Remittance Date;
(ii) the Class Principal Balances for each Class of Class A
Certificates as reported in the prior Servicer's Certificate pursuant
to subclause (xv) below, or, in the case of the first Determination
Date, the Original Principal Balance for each Class of Class A
Certificates;
(iii) the Pool Principal Distribution Amounts for each Pool for
the related Remittance Date, in the aggregate and listed separately
for the portions relating to each Class of Class A Certificates;
(iv) the total amount of any Insured Payments included in the
Pool Available Remittance Amount for each Pool for the related
Remittance Date;
(v) the Subordinated Amount and Specified Subordinated Amount for
the related Remittance Date, listed separately for each Pool;
(vi) the number and Principal Balances of all Loans in each Pool
which were the subject of Principal Prepayments during the Due
Period;
(vii) the amount of all Curtailments which were received during
the Due Period, stated separately for each Pool;
(viii) the aggregate amount of all Excess Payments and the
amounts of Monthly Payments in respect of principal received during
the Due Period, stated separately for each Pool;
(ix) the amount of interest received on the Mortgage Loans,
stated separately for each Pool;
(x) the amount of the Monthly Advances to be made on the
Determination Date, the portion of the Monthly Advances to be
deposited in the Certificate Accounts pursuant to Section 6.01(a)(ii),
and the Compensating Interest payment to be made on the Determination
Date, in each case stated separately for each Pool;
(xi) the delinquency and foreclosure information set forth in the
form attached hereto as Exhibit O, stated separately for each Pool;
(xii) the amount of any Realized Losses incurred during the
related Due Period, stated separately for each Pool;
(xiii) the Pool Remittance Amounts for each Pool for the
Remittance Date, in the aggregate and by component and listed
separately for the portions relating to each Class of Class A
Certificates in the related Pool and, with respect to the Auction Rate
Certificates, the amount otherwise required to be distributed thereon
with respect to principal and retained in the Certificate Account for
Pool II pursuant to Section 6.08 (f);
(xiv) the Reimbursable Amounts and the Class R Remittance Amount
payable pursuant to Section 6.08(d)(iii) and (iv) with respect to the
Remittance Date;
(xv) the Class Principal Balance for each Class of Class A
Certificates and the Pool Principal Balance for each Pool after giving
effect to the distribution to be made on the Remittance Date and after
allocation of Realized Losses made on such Remittance Date;
(xvi) the Monthly Excess Spread Percentage, the Excess Spread,
and the Remainder Excess Spread Amount allocable to Reimbursable
Amounts and Class R Certificateholders pursuant to Section 5.04(f) (in
each case, in the aggregate and stated separately for each Pool);
(xvii) the Cumulative Realized Losses, stated separately for each
Pool, with respect to the Remittance Date;
(xviii) the weighted average maturity and weighted average
Interest Rate, stated separately for each Pool;
(xix) the Servicing Fees, the Contingency Fees, the Auction Agent
Fees and amounts to be deposited to the Expense Accounts, the
Insurance Accounts and the FHA Premium Account, in each case, as
applicable, stated separately for each Pool;
(xx) the amount of all payments and reimbursements to the
Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e) and (f)(i),
stated separately with respect to each Pool;
(xxi) the Class Pool Factor for each Class determined using the
balances in subclause (xv) above;
(xxii) the weighted average Mortgage Interest Rate and Adjusted
Mortgage Interest Rate of the Mortgage Loans for each Pool and the
weighted average Class Adjusted Loan Remittance Rates for each Pool,
in each case for the related Remittance Date, and the weighted average
Mortgage Interest Rate for the prior three month period;
(xxiii) the Class A-10 and Class A-11 Remittance Rates with
respect to the Remittance Date and if either the Class A-10 or Class
A-11 Remittance Rate was based on the Net Funds Cap, what it would
have been if based on LIBOR plus the applicable Margin or the Auction
Rate, as the case may be;
(xxiv) the rate of LIBOR and the Auction Rate with respect to the
Remittance Date;
(xxv) the Net Funds Cap applicable to each Class of Pool II
Certificates with respect to the Remittance Date;
(xxvi) if the Remittance Rate for a Class of Pool II Certificates
for such Remittance Date is based on the Net Funds Cap, the amount of
any Certificateholders' Interest Carryover for such Class for such
Remittance Date;
(xxvii) the amount of the distribution, if any, allocable to
Certificateholders' Interest Carryover and the amount of any
Certificateholders' Interest Carryover for all prior Remittance Dates
after giving effect to such distribution (in each case, stated
separately by Class and in the aggregate);
(xxviii) The amount to be deposited into the FHA Premium Account
on the related Remittance Date and the amount reimbursable to the
Servicer and/or the Certificate Insurer from the FHA Premium Account
pursuant to Section 6.06(b)(i);
(xxix) The amount of FHA Payments and Related Payments received
during the related Due Period;
(xxx) The Reserve Amount for the related Remittance Date;
(xxxi) Claims filed during the Due Period;
(xxxii) Claims paid during the Due Period;
(xxxiii) Claims denied by the FHA during the Due Period;
(xxxiv) Claims pending payment by the FHA during the Due Period;
and
(xxxv) Such other information as the Certificate Insurer and the
Certificateholders may reasonably require.
The Trustee shall forward such report to the Certificate- holders and the
Certificate Insurer on the Remittance Date, together with a separate report
indicating the amount of funds deposited in each Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Representative, as appropriate, pursuant to Sections 6.03(c)(i),
6.03(c)(ii), 6.04(b)(iv) and 6.08(d)(iii) (all reports prepared by the Trustee
of such withdrawals and deposits will be based in whole or in part upon the
information provided to the Trustee by the Servicer or the Claims
Administrator).
To the extent that there are inconsistencies between the telecopy of the
Servicer's Certificate and the hard copy thereof, the Trustee shall be entitled
to rely upon the telecopy. In the case of information furnished pursuant to
subclauses (ii), (vi), (vii), (viii), (xiii), (xv) and (xxii), above, the
amounts shall be expressed in a separate section of the report as a dollar
amount for each Class per $1,000 (or, in the case of the Auction Rate
Certificates, per $25,000) original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based upon
information received from the Servicer, forward to the Certificateholders, the
Certificate Insurer and the Rating Agencies, a report setting forth the amount
of principal and interest, if any, being paid to each Class of Class A
Certificates on the Special Remittance Date.
(a) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class A Certificateholder such
information as is reasonably necessary to provide to such Person a statement
containing the information set forth in subclauses (ix), (xiii), (xix) and
(xxxv), above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certifi- cateholder. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) On each Remittance Date and the Special Remittance Date, the Trustee
shall forward to the Class R Certificateholders a copy of the report forwarded
to the Certificateholders of each Pool in respect of such Remittance Date or the
Special Remittance Date, as the case may be, and a statement setting forth the
amounts actually distributed to the Class R Certificateholders, on such
Remittance Date together with such other information as the Servicer provides
and deems necessary or appropriate.
(c) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class R Certificateholder such
information as is reasonably necessary to provide to such Person a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Servicer
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time in force.
(d) Upon reasonable advance notice in writing, the Servicer will provide to
each Class A Certificateholder which is a savings and loan association, bank or
insurance company certain reports and access to information and documentation
regarding the Mortgage Loans sufficient to permit such Class A Certificateholder
to comply with applicable regulations of the Office of Thrift Supervision or
other regulatory authorities with respect to investment in the Class A
Certificates.
(e) The Servicer shall furnish to each Certificateholder and the
Certificate Insurer, during the term of this Agreement, such periodic, special,
or other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Certificateholder or
the Certificate Insurer, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions as the Certificateholder or the
Certificate Insurer may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder or the Certificate Insurer
for the Servicer's actual expenses incurred in providing such reports if such
reports are not producible in the ordinary course of the Servicer's business.
Section 6.11 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the applicable Certificate
Account an amount (as indicated in the Servicer's Certificate prepared pursuant
to Section 6.10), to be distributed on the related Remittance Date pursuant to
Section 6.08, equal to the amount, if any, by which (a) the sum of (i) the
amount equal to 30 days' interest (or, with respect to the Pool II Certificates,
the actual number of days since the last Remittance Date or, in the case of the
July 1996 Remittance Date, from June 15, 1996 with respect to the Adjustable
Rate Certificates and from the Closing Date with respect to the Auction Rate
Certificates) at the weighted average Class Adjusted Mortgage Loan Remittance
Rates for the applicable Pool on the related Pool Principal Balance immediately
prior to the related Remittance Date plus (ii) the Monthly Excess Spread
relating to the Mortgage Loans of the related Pool with respect to such
Remittance Date exceeds (b) the amount received by the Servicer as of the
related Record Date in respect of interest on the Mortgage Loans of the related
Pool (and, with respect to the Remittance Dates in July, August and September
1996, the sum of (i) all funds to be transferred to the applicable Certificate
Account from the Capitalized Interest Account for such Remittance Date pursuant
to Section 6.02(g) and (ii) the related Pool Pre-Funding Earnings for the
applicable Remittance Date). The sum of such excess calculated for each Pool is
defined herein as the "Monthly Advance." The Servicer may reimburse itself for
Monthly Advances made pursuant to Section 5.04.
Section 6.12 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest for
each Mortgage Loan for any month during which a Principal Prepayment or
Curtailment is received on such Mortgage Loan. Not later than the close of
business on each Determination Date, with respect to each Mortgage Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the applicable
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.10) equal to the difference between
(a) 30 days' interest (or, with respect to a Pool II Loan, the actual number of
days since the last Remittance Date to but not including the upcoming Remittance
Date or, with respect to the July 1996 Remittance Date, from June 15, 1996 with
respect to the Adjustable Rate Certificates and from the Closing Date with
respect to the Auction Rate Certificates) at the then weighted average Class
Adjusted Mortgage Loan Remittance Rates for the applicable Pool on the Principal
Balance of each such Mortgage Loan and (b) the amount of interest actually
received on each such Mortgage Loan for such Due Period as of the beginning of
the Due Period applicable to the Remittance Date on which such amount will be
distributed.
Section 6.13 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED PROPERTY.
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Trustee and the Certificate Insurer
reports relating to each instance occurring during the previous calendar year in
which the Servicer (i) on behalf of the Trust Fund acquires an interest in a
Mortgaged Property through foreclosure or other comparable conversion in full or
partial satisfaction of the Mortgage Loan, or (ii) knows or has reason to know
that a Mortgaged Property has been abandoned. The reports from the Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by such Section 6050J. The Servicer will deliver
to the Trustee an aggregate summary of all information needed by the Trustee to
prepare such Section 6050J reports.
Section 6.14. ALLOCATION OF TOTAL MONTHLY EXCESS CASHFLOW.
(a) On each Remittance Date, for each Pool of Mortgage Loans the Trustee
shall, based upon information provided in the related Servicer's Certificate
delivered pursuant to Section 6.10, allocate an amount equal to the sum of (x)
the Monthly Excess Spread with respect to each such Pool and Remittance Date
plus (y) any Subordination Reduction Amount with respect to each such Pool and
Remittance Date plus (z) any Pool Available Remittance Amount Surplus with
respect to each such Pool (such sum being the "Total Monthly Excess Cashflow"
with respect to such Pool and Remittance Date), in the following order of
priority:
(i) first, to the related Pool in an amount up to the Pool
Available Remittance Amount Shortfall for such Pool;
(ii) second, to the other Pools, any Pool Available Remittance
Amount Shortfall remaining after the application described in clause
(i), allocated among Pools pro rata, based upon the applicable Pool
Available Remittance Amount Shortfall remaining after the application
described in clause (i) above;
(iii) third, to the Certificate Insurer in respect of amounts
owed on account of any Insured Payments theretofore made with respect
to the related Pool of Mortgage Loans (any such amount so owed to the
Certificate Insurer and not theretofore paid, together with accrued
interest thereon, the "Insurer Reimbursable Amount" with respect to
the related Pool of Mortgage Loans); and
(iv) fourth, to the Certificate Insurer in respect of any Insurer
Reimbursable Amount with respect to any other Pool, allocated among
Pools, pro rata, based upon the applicable Insurer Reimbursable Amount
remaining after the applications described in clauses (i), (ii) and
(iii) above.
Total Monthly Excess Cashflow allocable pursuant to clauses (ii) and (iv)
above shall be allocated first from Pool I, Pool III and Pool IV, pro rata based
upon the Total Monthly Excess Cashflow available from each such Pool, and second
from Pool II.
(b) The amount, if any, of the Total Monthly Excess Cashflow with respect
to a Pool of Mortgage Loans on a Remittance Date remaining after the allocations
described in (a) above is the "Net Monthly Excess Cashflow" with respect to such
Pool for such Remittance Date; such amount is required to be applied in the
following order of priority:
(i) first, to the related Pool, in an amount up to the
Subordinated Deficiency Amount for such Pool as of such Remittance
Date;
(ii) second, to the other Pools, in an amount up to any
Subordinated Deficiency Amounts with respect to such other Pool
remaining after the allocation described in (i) above, allocated among
Pools, pro rata, based upon the applicable Subordinated Deficiency
Amount after giving effect to all other distributions to be made on
such Remittance Date;
(iii) third, to the Spread Account until the sum of the amount
deposited therein pursuant to this Section 6.14(b)(iii) equals
$1,500,000, or such lesser amount as may be consented to by the
Certificate Insurer;
(iv) fourth, to the Servicer to the extent of any unreimbursed
Servicing Advances and accrued and unpaid Servicing Fees;
(v) fifth, to the Pool II Certificateholders to the extent of any
Certificateholders' Interest Carryover owing for such Remittance Date
and all prior Remittance Dates (to the extent such Net Monthly Excess
Cashflow is attributable to Pool II Mortgage Loans); and
(vi) sixth, any excess to the Holders of the Class R
Certificates.
Net Monthly Excess Cashflow allocable pursuant to clauses (ii), (iii) and
(iv) above shall be allocated first from Pool I, Pool III and Pool IV, pro rata
based upon the Net Monthly Excess Cashflow available from each such Pool, and
second from Pool II.
Notwithstanding the foregoing, for any period commencing on a Remittance
Date for which the sum of (i) the three-month moving average of 75% of the
Principal Balance of all 90 Day Delinquent Pool III Loans and (ii) the amount of
all Claims filed in the Due Period immediately preceding the then current
Remittance Date is greater than the current Excess Spread for the Pool III Loans
for such Remittance Date, and ending on the first Remittance Date thereafter for
which the six-month moving average of the sum of (a) 75% of the Principal
Balance of all 90 Day Delinquent Pool III Loans and (b) the amount of all Claims
filed in the Due Period immediately preceding the then current Remittance Date
is less than the Excess Spread for the Pool III Mortgage Loans for three
consecutive Remittance Dates (such period, the "Pool III Delinquency Period"),
all Total Monthly Excess Cashflow with respect to the Pool III Mortgage Loans
for each Remittance Date remaining after the application described in clause (i)
above shall be deposited into the Spread Account pursuant to Section
6.05(a)(iii) until the amount on deposit in the Spread Account (less the amounts
deposited therein with respect to Pools I, II and IV and Section 6.05(a)(vi))
equals the then current Pool Principal Balance for Pool III.
Section 6.15 ESTABLISHMENT OF SERVICING ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.
(a) The Servicer shall establish and maintain, or cause to be established
and maintained, one or more Servicing Accounts. The Servicer will deposit and
retain, or cause to be deposited and retained, therein all collections from the
Mortgagors for the payment of taxes, assessments, insurance premiums, or
comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a Designated
Depository Institution in an account designated as a "Mortgage Loan Servicing
Account," held in trust by the Servicer or a Subservicer acting on its own
behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Mortgagors any sums as may be determined to be overages,
to pay interest, if required, to Mortgagors on balances in the Servicing
Accounts, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 ASSUMPTION AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law or if such enforcement
would materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. In such event, the Servicer shall
enter into an assumption and modification agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Mortgagor remains liable thereon. The Servicer is also
authorized with the prior approval of the Certificate Insurer to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Trustee (and, with respect to Pool III Mortgage Loans, the Co-Trustee and
the Custodian) and the Certificate Insurer that any such substitution or
assumption agreement has been completed by forwarding to the Trustee (and, with
respect to the Pool III Mortgage Loans, the Custodian) the original of such
substitution or assumption agreement and a duplicate thereof to the Certificate
Insurer, which original shall be added by the Trustee (and, with respect to the
Pool III Mortgage Loans, the Custodian) to the related Trustee's Mortgage File
and shall, for all purposes, be considered a part of such Trustee's Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any assumption or substitution agreement
entered into pursuant to this Section 7.01, the Servicer shall not change the
Mortgage Interest Rate or the Monthly Payment, defer or forgive the payment of
principal or interest, reduce the outstanding principal amount or extend the
final maturity date on such Mortgage Loan. Any fee collected by the Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, (i) the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever; and (ii) the
Servicer shall not take any action which would adversely affect the coverage of
an FHA Loan for insurance by the FHA under Title I.
Section 7.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments, subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian), by an
Officers' Certificate in the form of Exhibit J attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the applicable Principal and Interest Account pursuant to Section
5.03 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Trustee's Mortgage File. Upon receipt of such
certification and request, the Trustee (and, with respect to the Pool III
Mortgage Loans, the Custodian) shall promptly release the related Trustee's
Mortgage File to the Servicer. Expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be payable only from
and to the extent of servicing compensation and shall not be chargeable to the
Principal and Interest Account or the Certificate Accounts.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee (and, with respect to the Pool
III Mortgage Loans, the Custodian) shall, upon request of the Servicer and
delivery to the Trustee (and, with respect to the Pool III Mortgage Loans, the
Custodian) of a certification in the form of Exhibit J attached hereto signed by
a Servicing Officer, release the related Trustee's Mortgage File to the
Servicer, and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian and the Co-Trustee) shall execute such documents as shall be necessary
to the prosecution of any such proceedings. Such servicing receipt shall
obligate the Servicer to return the Mortgage File to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the applicable Principal and Interest Account and remitted to the Trustee for
deposit in the applicable Certificate Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non- judicially, and the Servicer has delivered to the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian) a certificate
of a Servicing Officer certifying as to the name and address of the Person to
which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated, the servicing receipt shall be
released by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) to the Servicer.
The Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings, the Servicer shall deliver to
the Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale. The Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) by the
Servicer or take any other action requested in such request, that is, in the
opinion of the Servicer as evidenced by such request, required by any state or
other jurisdiction to discharge the lien of a Mortgage upon the satisfaction
thereof and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will sign and post, but will not guarantee receipt of, any such
documents to the Servicer, or such other party as the Servicer may direct,
within five Business Days of the Trustee's (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee's) receipt of such certificate or documents. Such
certificate or documents shall establish to the Trustee's (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee's) satisfaction that the related
Mortgage Loan has been paid in full by or on behalf of the Mortgagor and that
such payment has been deposited in the applicable Principal and Interest
Account.
Section 7.03 SERVICING COMPENSATION AND CONTINGENCY FEE.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the applicable Principal and Interest Account or to
retain from interest payments on the Mortgage Loans the Servicer's Servicing
Fee. Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Sections
6.03(c)(iii) and 6.04(b)(ii) and late payment charges shall be retained by or
remitted to the Servicer to the extent not required to be remitted to the
Trustee for deposit in the applicable Certificate Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) The Servicer shall be entitled to withdraw from the applicable
Principal and Interest Account or to retain from interest payments on the
Mortgage Loans the Contingency Fee. In the event that The Money Store Inc. is
terminated as Servicer pursuant to this Agreement, any duly appointed successor
to the Servicer shall also be entitled to withdraw from the applicable Principal
and Interest Account or to retain from interest payments on the Mortgage Loans
the successor Servicer's Contingency Fee.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Certificate Insurer, the Trustee, the
Co-Trustee and each of the Rating Agencies, on or before March 31 of each year
beginning March 31, 1997, an Officers' Certificate stating that (i) the Servicer
has fully complied with the provisions of Articles V and VII and the Claims
Administrator has fully complied with Section 5.15, (ii) a review of the
activities of the Servicer and the Claim Administrator during the preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (iii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof and the action being taken by the
Servicer and the Claims Administrator, as applicable, to cure such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year beginning March 31, 1997, the Servicer,
at its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Trustee and the Certificate Insurer to furnish a letter or
letters to the Certificate Insurer, the Trustee, the Co-Trustee and the Rating
Agencies to the effect that such firm has with respect to the Servicer's overall
servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 7.06 TRUSTEE'S, CO-TRUSTEE'S AND CERTIFICATE INSURER'S RIGHT TO
EXAMINE SERVICER RECORDS AND AUDIT OPERATIONS.
The Trustee, the Co-Trustee and the Certificate Insurer shall have the
right upon reasonable prior notice, during normal business hours and as often as
reasonably required, to examine and audit any and all of the books, records or
other information of the Servicer and the Claims Administrator, whether held by
the Servicer or by another on behalf of the Servicer and the Claims
Administrator, which may be relevant to the performance or observance by the
Servicer and the Claims Administrator of the terms, covenants or conditions of
this Agreement. The Certificate Insurer shall have the right upon reasonable
prior notice, during normal business hours and as often as reasonably required
to perform ongoing diligence of the Servicer's operations through loans reviews,
re-appraisals or other reasonable review of Servicer operations. No amounts
payable in respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE AND THE CERTIFICATE INSURER; PRINCIPAL
AND INTEREST ACCOUNT STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Trustee and the Certificate Insurer a statement, certified by a Servicing
Officer, setting forth the status of each Principal and Interest Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into each Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from each Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount of
permitted withdrawals not made in the related Due Period, and the amount of any
Monthly Advances or payments of Compensating Interest, in each case, for the
related Due Period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied.
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the Co-Trustee,
the Certificate Insurer and each Certificateholder harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Co-Trustee, the Certificate Insurer and any Certificateholder may sustain in any
way related to the failure of the Servicer and the Claims Administrator to
perform its duties and service the Mortgage Loans in compliance with the terms
of this Agreement. The Servicer shall immediately notify the Trustee, the
Co-Trustee, the Certificate Insurer and each Certificateholder if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Claims Administrator, the Trustee, the Certificate
Insurer and/or Certificateholder in respect of such claim. The Trustee may
reimburse the Servicer from the related Expense Account pursuant to Section
6.03(c)(i), and, if necessary, from amounts otherwise payable to the Holders of
the Class R Certificates from the Pool Remaining Amount Available with respect
to each Pool for all amounts advanced by it pursuant to the preceding sentence
with respect to the Trust Fund except when the Claim relates directly to the
failure of the Servicer or the Claims Administrator to service and administer
the Mortgages in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Co-Trustee, the Certificate Insurer and each Certificateholder harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Co-Trustee, the Certificate Insurer and any Certificateholder may
sustain in any way related to the failure of the Servicer, if it is an affiliate
thereof, or the failure of the Representative to perform their respective duties
in compliance with the terms of this Agreement and in the best interests of the
Certificate Insurer and the Certificateholders. The Representative shall
immediately notify the Trustee, the Certificate Insurer and each Certificate-
holder if a claim is made by a third party with respect to this Agreement, and
the Representative shall assume (with the consent of the Trustee) the defense of
any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Servicer, the Representative, the
Trustee, the Co-Trustee, the Certificate Insurer and/or Certificateholder in
respect of such claim. The Trustee may reimburse the Representative from the
related Expense Account pursuant to Section 6.03(c)(i), and, if necessary, from
amounts otherwise payable to the Holders of the Class R Certificates from the
Pool Remaining Amount Available with respect to each Pool for all amounts
advanced by it pursuant to the preceding sentence with respect to the Trust Fund
except when the claim relates directly to the Representative's indemnification
pursuant to Section 2.05 and Section 3.03 or to the failure of the Servicer, if
it is an affiliate of the Representative to perform its obligations to service
and administer the Mortgages in compliance with the terms of this Agreement, or
the failure of the Representative to perform its duties in compliance with the
terms of this Agreement and in the best interests of the Certificate Insurer and
the Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE, THE SERVICER
AND THE CLAIMS ADMINISTRATOR.
The Servicer, the Representative and the Claims Administrator will each
keep in full effect its existence, rights and franchises as a corporation, and
will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer, the Representative may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer, the Representative or the Claims
Administrator shall be a party, or any Person succeeding to the business of the
Servicer, the Representative or the Claims Administrator, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and a valid Contract of Insurance and shall be the successor of the
Servicer, the Representative or the Claims Administrator, as applicable,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer, the Representative or the Claims Administrator
shall send notice of any such merger or consolidation to the Trustee, the
Co-Trustee and the Certificate Insurer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and the Claims Administrator and any director, officer,
employee or agent of the Servicer and the Claims Administrator may rely on any
document of any kind which it in good faith reasonably believes to be genuine
and to have been adopted or signed by the proper authorities respecting any
matters arising hereunder. Subject to the terms of Section 9.01 herein, the
Servicer and the Claims Administrator shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 SERVICER AND CLAIMS ADMINISTRATOR NOT TO RESIGN.
The Servicer and the Claims Administrator shall not assign this Agreement
nor resign from the obligations and duties hereby imposed on it except by mutual
consent of the Servicer, the Claims Administrator, the Certificate Insurer, the
Trustee and the Majority Certificateholders, or upon the determination that the
Servicer's or Claims Administrator's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer or the
Claims Administrator. Any such determination permitting the resignation of the
Servicer and the Claims Administrator shall be evidenced by a written Opinion of
Counsel (who may be counsel for the Servicer and the Claims Administrator) to
such effect delivered to the Trustee, the Co-Trustee, the Certificate Insurer
and to each Certificateholder, which Opinion of Counsel shall be in form and
substance acceptable to the Trustee and the Certificate Insurer. No such
resignation shall become effective until a successor has assumed the Servicer's
or the Claims Administrator's responsibilities and obligations hereunder in
accordance with Section 10.02.
Section 9.05 APPOINTMENT OF ASSISTANT CLAIMS ADMINISTRATOR.
The Claims Administrator hereby appoints TMS Mortgage Inc., a New Jersey
corporation, as Assistant Claims Administrator and, in such capacity, the
Assistant Claims Administrator shall have all the rights, powers, obligations
and duties of the Claims Administrator in acting in such capacity.
Notwithstanding such appointment, the Claims Administrator shall remain
obligated to the Trustee, the Co-Trustee and the Certificateholders in
accordance with the provisions of this Agreement.
Section 9.06 RIGHT OF CERTIFICATE INSURER TO REPLACE SERVICER AND CLAIMS
ADMINISTRATOR.
From and after the occurrence of a Servicing Delinquency Trigger, the
Certificate Insurer may, upon written notice to the Trustee, the Co-Trustee and
the Rating Agencies, replace the Servicer and/or the Claims Administrator with a
successor. No such replacement shall become effective until a successor has
assumed the Servicer's and/or the Claims Administrator's responsibilities and
obligations hereunder in accordance with Section 10.02.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default shall occur and
be continuing, that is to say:
(i) (A) an Event of Nonpayment; (B) the failure by the Servicer
to make any required Servicing Advance, to the extent such failure
materially and adversely affects the interests of the Certificate
Insurer or the Certificateholders; (C) the failure by the Servicer to
make any required Monthly Advance; (D) the failure by the Servicer to
remit any Compensating Interest; (E) the failure by the Servicer to
pay the FHA Insurance Premium relating to any FHA Loan or (F) any
failure by the Servicer or the Claims Administrator to remit to
Certificateholders, or to the Trustee for the benefit of the
Certificateholders, any payment required to be made under the terms of
this Agreement which, except with respect to FHA Payments to which no
grace period shall apply, continues unremedied after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer; or
(ii) failure by the Servicer, the Claims Administrator or the
Representative duly to observe or perform, in any material respect,
any other covenants, obligations or agreements of the Servicer, the
Claims Administrator or the Representative as set forth in this
Agreement, which failure continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer, the Claims
Administrator or the Representative, as the case may be, by the
Trustee or to the Servicer, the Claims Administrator or the
Representative, as the case may be, and the Trustee by any
Certificateholder or the Certificate Insurer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Servicer or the Claims Administrator and such decree or
order shall have remained in force, undischarged or unstayed for a
period of 60 days; or
(iv) the Servicer or the Claims Administrator shall consent to
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or
the Claims Administrator or of or relating to all or substantially all
of the Servicer's or the Claims Administrator's property; or
(v) the Servicer or the Claims Administrator shall admit in
writing its inability to pay its debts as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(C) or, with respect to FHA Payments, clause (i)(F)), if such Event of
Default shall not have been remedied within 30 days after the Servicer or the
Claims Administrator has received notice of such Event of Default, (x) with
respect solely to clause (i)(C) above, if such Monthly Advance is not made
earlier than 4:00 p.m. New York time on the Determination Date, the Trustee
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer or the Claims Administrator, as the case may be, and, unless such
failure is cured, either by receipt of payment or receipt of evidence
satisfactory to the Certificate Insurer (E.G., a wire reference number
communicated by the sending bank) that such funds have been sent, by 12:00 Noon
New York time on the following Business Day, the Trustee (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee) shall immediately assume, pursuant
to Section 10.02 hereof, the duties of a successor Servicer and the Claims
Administrator; and (y) in the case of clauses (i)(A), (i)(B), (i)(D), (i)(E),
(i)(F), (ii), (iii), (iv) and (v), the Certificate Insurer or the Majority
Certificateholders, subject to the prior written consent of the Certificate
Insurer, which consent may not be unreasonably withheld, by notice in writing to
the Servicer and the Claims Administrator, may, in addition to whatever rights
such Certificateholders or the Certificate Insurer may have at law or equity
including damages, injunctive relief and specific performance, in each case
commence termination of all the rights and obligations of the Servicer and the
Claims Administrator under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, as Servicer and the Claims Administrator. Upon receipt by
the Servicer and the Claims Administrator of a second written notice from the
Certificate Insurer or the Majority Certificateholders stating that they or it
intend to terminate the Servicer and the Claims Administrator as a result of
such Event of Default, all authority and power of the Servicer and the Claims
Administrator under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall, subject to Section 10.02, pass to and be vested in the
Trustee or its designee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee or its designee) and the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer and the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Mortgage Loans and related
documents. The Servicer and the Claims Administrator agree to cooperate with the
Trustee and the Co-Trustee in effecting the termination of the Servicer's and
the Claims Administrator's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to each Principal and Interest Account or thereafter received with
respect to the Mortgage Loans.
Section 10.02 TRUSTEE AND CO-TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer or the Claims Administrator receives a
notice of termination pursuant to Section 10.01 or the Trustee receives the
resignation of the Servicer and the Claims Administrator evidenced by an Opinion
of Counsel pursuant to Section 9.04 or the Servicer and the Claims Administrator
are removed as servicer and claims administrator pursuant to this Article X, the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) shall
be the successor in all respects to the Servicer in its capacity as servicer and
the Claims Administrator in its capacity as claims administrator under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer and the Claims Administrator by the terms and provisions
hereof, provided, however, that the Trustee and the Co-Trustee shall not be
liable for any actions of any servicer or claims administrator prior to it, and
that the Trustee and the Co-Trustee shall not be obligated to make advances or
payments pursuant to Sections 6.03, 6.04, 6.11, 6.12, 5.05, 5.10 or 5.14 but
only to the extent the Trustee or the Co-Trustee, as the case may be, determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee or the Co- Trustee, as the
case may be. As compensation therefor, the Trustee (or, with respect to the Pool
III Mortgage Loans, the Co-Trustee) shall be entitled to all funds relating to
the Mortgage Loans which the Servicer and Claims Administrator would have been
entitled to receive from the Principal and Interest Account pursuant to Section
5.04 if the Servicer had continued to act as servicer and claims administrator
hereunder, together with other servicing compensation in the form of assumption
fees, late payment charges, the Contingency Fee or otherwise as provided in
Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee or the Co-Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders or the Certificate Insurer so request in writing to the
Trustee or the Co-Trustee, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Certificate Insurer, which acceptance shall not be
unreasonably withheld, that has a net worth of not less than $15,000,000 and
which is approved as a servicer by FNMA and FHLMC (and, in the case of FHA
Loans, is a Title I approved lender pursuant to FHA Regulations) as the
successor to the Servicer and the Claims Administrator hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer and the Claims Administrator hereunder. Any collections received by
the Servicer and the Claims Administrator after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer and claims administrator (including, without limitation, the
Trustee and Co- Trustee) so appointed shall be the aggregate Servicing Fees,
together with the Contingency Fee and other servicing compensation in the form
of assumption fees, late payment charges or otherwise. In the event the Trustee
or Co-Trustee is required to solicit bids as provided herein, the Trustee or
Co-Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer and claims administrator shall be entitled to, with respect
to the Mortgage Loans each would be servicing, the full amount of the aggregate
Servicing Fees and Contingency Fee relating to such Mortgage Loans as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee or Co- Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee or Co-Trustee shall deduct from any sum received by the Trustee or
Co-Trustee from the successor to the Servicer and Claims Administrator in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Monthly Advances. After such deductions, the remainder of
such sum shall be paid by the Trustee or Co-Trustee to the Servicer and Claims
Administrator at the time of such sale, transfer and assignment to the
Servicer's and Claims Administrator's successor. The Trustee or Co-Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The Servicer and Claims
Administrator agree to cooperate with the Trustee or Co-Trustee and any
successor servicer and claims administrator in effecting the termination of the
Servicer's and Claims Administrator's servicing responsibilities and rights
hereunder and shall promptly provide the Trustee or Co-Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's and Claims Administrator's functions
hereunder and shall promptly also transfer to the Trustee or Co-Trustee or such
successor servicer and claims administrator, as applicable, all amounts which
then have been or should have been deposited in the Principal and Interest
Account or Spread Account by the Servicer and Claims Administrator or which are
thereafter received with respect to the Mortgage Loans. Neither the Trustee, the
Co-Trustee nor any other successor servicer or claims administrator shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer and Claims Administrator to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer and Claims Administrator
hereunder. No appointment of a successor to the Servicer and Claims
Administrator hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the Certificate Insurer, and the Trustee shall have consented thereto.
Neither the Trustee nor the Co-Trustee shall resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed.
Pending appointment of a successor to the Servicer and the Claims
Administrator hereunder, the Trustee and the Co-Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee and the Co- Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer and Claims Administrator pursuant to
Section 7.03 or otherwise as provided in this Agreement. The Servicer, the
Claims Administrator, the Trustee, the Co-Trustee, any Custodian and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
Section 10.03 WAIVER OF DEFAULTS.
The Certificate Insurer or the Majority Certificate- holders may, on behalf
of all Certificateholders, and subject to the consent of the Certificate
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer and the Claims Administrator as servicer
pursuant to this Article X, provided, however, that the Majority
Certificateholders or the Certificate Insurer may not waive a default in making
a required distribution on a Certificate without the consent of the holder of
such Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived.
Section 10.04 TRANSFER OF TAX MATTERS PERSON RESIDUAL INTEREST.
Upon any termination of, or appointment of any successor to, the Servicer
hereunder, the Servicer shall promptly upon the request of the Trustee transfer
all of the Tax Matters Person Residual Interest to the Representative, for such
time as the Trustee shall serve as successor Servicer and thereafter the
Representative shall transfer such Tax Matters Person Residual Interest to the
entity that is appointed to succeed the Trustee as Servicer.
Section 10.05. CONTROL BY MAJORITY CERTIFICATEHOLDERS.
The Certificate Insurer or the Majority Certificate- holders with the
consent of the Certificate Insurer, which consent may not be unreasonably
withheld, may direct the time, method and place of conducting any proceeding
relating to the Trust Fund or the Certificates or for any remedy available to
the Trustee or the Co-Trustee with respect to the Certificates or exercising any
trust or power conferred on the Trustee or the Co-Trustee with respect to the
Certificates or the Trust Fund PROVIDED THAT:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee or the Co-Trustee, as the case may be, shall
have been provided with indemnity satisfactory to it; and
(iii) the Trustee and the Co-Trustee may take any other action
deemed proper by the Trustee and the Co- Trustee which is not
inconsistent with such direction; PROVIDED, HOWEVER, that the Trustee
and the Co-Trustee need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Holders
not so directing.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
Subject to Section 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the latter of the final payment or other liquidation of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder, or (b) mutual consent of the Servicer,
the Certificate Insurer and all Certificateholders in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of Joseph P. Kennedy, late Ambassador of the United States to
the Court of St. James, alive as of the date hereof.
Subject to Section 11.03, the Servicer may, at its option, and in the
absence of the exercise thereof by the Servicer, the Certificate Insurer may, at
its option, on any date on which (i) the aggregate Principal Balance of the
Mortgage Loans is less than ten percent the sum (i) of the aggregate original
Pool Principal Balances of each Pool and (ii) the Original Pre-Funded Amount
(such date, the "Optional Servicer Termination Date"), purchase on the next
succeeding Remittance Date, all of the Mortgage Loans and any related REO
Properties at a price equal to the sum of (x) 100% of the Principal Balances of
the Mortgage Loans before the occurrence of Realized Losses, and any related REO
Property, and including the portion of the principal balance of each 90 Day
Delinquent FHA Loan for which the Certificateholders have not received payment
and for which a Claim was submitted to the FHA (y) 30 days' interest thereon
(or, with respect to the Pool II Mortgage Loans, interest for the actual number
of days since the last Remittance Date to but not including the upcoming
Remittance Date) at the weighted average Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Remittance Rates
in the case of the Pool I Mortgage Loans, the weighted average Class A-10 and
Class A-11 Remittance Rates in the case of the Pool II Mortgage Loans, the
weighted average Class A- 12, Class A-13, Class A-14 and Class A-15 Remittance
Rates in the case of the Pool III Mortgage Loans and the Class A-16 Remittance
Rate in the case of the Pool IV Mortgage Loans, and (z) the interest portion of
any unreimbursed Insured Payments made by the Certificate Insurer (the
"Termination Price").
On any Remittance Date on or after the Cross-Over Date when Mortgage Loans
with aggregate original Principal Balances that equal or exceed 25% of the sum
of (i) the aggregate original Pool Principal Balances of each Pool and (ii) the
Original Pre-Funded Amount have become Liquidated Mortgage Loans, the
Certificate Insurer may determine to purchase and may cause the purchase from
the Trust Fund of all Mortgage Loans and REO Properties at a price equal to the
sum of the Termination Price with respect to the Trust Fund and the outstanding
and unpaid fees and expenses of the Trustee and the Servicer. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the applicable Principal and Interest Account for deposit to the
applicable Certificate Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
In connection with any purchase pursuant to this Section 11.01, the
Certificate Insurer shall provide to the Trustee and the Co-Trustee an opinion
of counsel experienced in federal income tax matters in form and substance
satisfactory to the Trustee and the Co-Trustee to the effect that such purchase
constitutes a "Qualified Liquidation," as such term is defined in the REMIC
Provisions.
Notice of any termination, specifying the Remittance Date upon which the
Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer or the Certificate Insurer
by letter to the Certificateholders mailed during the month of such final
distribution before the Determination Date in such month, specifying (i) the
Remittance Date upon which final payment of the Certificates will be made upon
presentation and surrender of such Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Remittance Date is not applicable,
payments being made only upon presentation and surrender of such Certificates at
the office of the Trustee therein specified. The Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to Certificateholders. The obligations
of the Certificate Insurer hereunder with respect to the Trust Fund shall
terminate upon the deposit by the Servicer or the Certificate Insurer with the
Trustee of the Termination Price with respect to the Trust Fund. Any obligation
of the Servicer to pay amounts due to the Certificate Insurer and the Trustee
shall survive the termination of the Trust Fund.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to such remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the eastern
edition of THE WALL STREET JOURNAL notice that such money remains unclaimed. If
within six months after the second notice all of such Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.
Section 11.02. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service, or by
a court of competent jurisdiction, in either case, from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that the REMIC Trust Fund does not and will no longer qualify as a
REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination, (i) the Majority Certificateholders may direct the Trustee and
the Co- Trustee on behalf of the REMIC Trust Fund to adopt a "plan of complete
liquidation" (within the meaning of Section 860F(a)(4) of the Code) and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the REMIC Trust Fund all Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Mortgage Loan then remaining in the REMIC Trust Fund
at a price equal to the Termination Price for the REMIC Trust Fund. Upon receipt
of such direction by the Majority Certificateholders or of such notice from the
Certificate Insurer, the Trustee shall notify the Class R Certificateholders of
such election to liquidate or such determination to purchase, as the case may be
(the "Termination Notice"). The Holders of a majority of the Percentage Interest
of the Class R Certificates then outstanding may, within 60 days from the date
of receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the REMIC Trust Fund all Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Mortgage Loan then remaining in the REMIC Trust Fund at a
purchase price equal to the Termination Price for the REMIC Trust Fund.
(b) If, during the Purchase Option Period, the Class R Certificateholders
have not exercised the option described in the immediately preceding paragraph,
then upon the expiration of the Purchase Option Period (i) in the event that the
Majority Certificateholders have given the Trustee and the Co-Trustee the
direction described in clause (a)(i) above, the Trustee (or, with respect to the
Pool III Mortgage Loans, the Co-Trustee) shall sell the Mortgage Loans and
distribute the proceeds of the liquidation of the REMIC Trust Fund in accordance
with the plan of complete liquidation, such that, if so directed, the
liquidation of the REMIC Trust Fund, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Class A Certificateholders shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase the REMIC Trust Fund
described in clause (a)(ii) preceding, the Certificate Insurer shall so purchase
the REMIC Trust Fund within 60 days after the expiration of the Purchase Option
Period. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Class R Certificateholders and the Certificate
Insurer of an opinion of nationally recognized tax counsel selected by the
Holders of the Class R Certificates which opinion shall be reasonably
satisfactory in form and substance to the Majority Certificateholders and the
Certificate Insurer to the effect that the effect of the Final Determination is
to increase substantially the probability that the gross income of the REMIC
Trust Fund will be subject to federal taxation, purchase from the REMIC Trust
Fund all Mortgage Loans and all property theretofore acquired by foreclosure,
deed in lieu of foreclosure, or otherwise in respect of any Mortgage Loan then
remaining in the REMIC Trust Fund at a purchase price equal to the Termination
Price for the REMIC Trust Fund. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the applicable Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Majority
Certificateholders give the Holders of a majority of the Percentage Interest of
the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.
Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Servicer or the Certificate Insurer exercises its
purchase option as provided in Section 11.01 or 11.02, the REMIC Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel to the effect
that the failure of the REMIC Trust Fund to comply with the requirements of this
Section 11.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of the REMIC Trust Fund as defined in Section 860F of the Code, or
(ii) cause the REMIC Trust Fund to fail to qualify as a REMIC at any time that
any Class A Certificates are outstanding:
(i) Within 90 days prior to the final Remittance Date the holders
of the Class R Certificates shall adopt a plan of complete liquidation
of the REMIC Trust Fund meeting the requirements of a "Qualified
Liquidation" under Section 860F of the Code and any regulations
thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Remittance Date, the Trustee
(or, with respect to the Pool III Mortgage Loans the Co-Trustee) shall
sell for cash all of the assets of the REMIC Trust Fund to the
Servicer, the Certificate Insurer or the Certificate Insurer's
designee; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall (x) deposit into and withdraw from the
Certificate Accounts the amount of such final payment and shall
distribute or credit, or cause to be distributed or credited, to the
Certificateholders of each Class, the related Class Principal Balance,
plus 30 days' interest thereon (or, with respect to the Pool II
Certificates, interest on the actual number of days since the last
Remittance Date up to but not including the upcoming Remittance Date)
at the related Class Remittance Rate, (y) satisfy, from any remaining
amounts held in any Account and (z) to the Class R Certificateholders,
distribute all cash on hand after such payment to the respective Class
A Certificate- holders and the REMIC Trust Fund shall terminate at
such time.
(b) By their acceptance of the Class R Certificates the holders thereof
hereby (i) agree to adopt such a plan of complete liquidation upon the written
request of the Servicer or Certificate Insurer and to take such other action in
connection therewith as may be reasonably requested by the Servicer and (ii)
appoint the Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation.
Section 11.04 [omitted]
Section 11.05 ACCOUNTING UPON TERMINATION OF SERVICER AND CLAIMS
ADMINISTRATOR.
Upon termination of the Servicer and Claims Administrator under Article X
hereof, the Servicer and Claims Administrator shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian) all
Mortgage Files and related documents and statements held by it hereunder and a
Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Mortgage Loans and administering of the Claims to their successor and to
more fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer and the Claims
Administrator under this Agreement.
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Representative, the Claims Administrator or any
Originator hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Certificate Insurer or the
Class A Certificateholders, relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) In the absence of actual knowledge of an Event of Default
other than an Event of Nonpayment, the Trustee shall not be required
to take notice or be deemed to have notice or knowledge of any default
or Event of Default unless the Trustee shall be specifically notified
in writing by the Servicer or the Certificate Insurer or any of the
Class A Certificateholders. In the absence of actual knowledge or
receipt of such notice, the Trustee may conclusively assume that there
is no default or Event of Default; and
(v) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any opinion of
counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree
of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person's own
affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Certificate Insurer, Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 25% of each Class of
Class A Certificates; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Servicer or, if
paid by the Trustee, shall be repaid by the Servicer upon demand from
the Servicer's own funds;
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or the
powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
(b) Following the Startup Day, except for deposits into the Spread Account
pursuant to Section 6.05, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee shall have received
an Opinion of Counsel to the effect that the inclusion of such assets in the
Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject the Trust Fund to any tax
under the REMIC Provisions or other applicable provisions of federal, New York
State or New York City law or ordinances.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith, provided that the Trustee shall have no lien on the
Trust Fund, other than the Expense Accounts, for the payment of its fees and
expenses. To the extent that actual fees and expenses of the Trustee exceed the
amount available for payment thereof on deposit in the Expense Accounts as of
the date such fees and expenses are due and payable, the Servicer shall
reimburse the Trustee for such shortfall out of its own funds without reimburse-
ment therefor, except as provided in Section 6.03. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Servicer
and held harmless against any loss, liability or expense (i) incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder, and (ii)
resulting from any error in any tax or information return prepared by the
Servicer. The obligations of the Servicer under this Section 12.05 shall survive
payment of the Certificates, and shall extend to any co-trustee appointed
pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a banking association organized
and doing business under the laws of any state or the United States of America,
(i) authorized under such laws to exercise corporate trust powers, (ii) having a
combined capital and surplus of at least $30,000,000, (iii) except in the case
of The Bank of New York, whose unsecured and unguaranteed long-term debt
obligations shall be rated at least "A" by S&P, or such other rating as is
acceptable to the Certificate Insurer, (iv) subject to supervision or
examination by federal or state authority, and (v) is reasonably acceptable to
the Certificate Insurer. If such banking association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section its combined capital and surplus shall be deemed to be as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign, upon the request of the Certificate Insurer
or the Majority Certificateholders, in the manner and with the effect specified
in Section 12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall with the consent of the Certificate Insurer
promptly appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateho-
lders by the Servicer. Unless a successor trustee shall have been so appointed
and have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee. If the resigning
Trustee fails to petition an appropriate court, the Certificate Insurer may,
after such 60 day period, petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 12.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and appoint, subject to the approval of the Certificate Insurer, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders by the Servicer.
The Majority Certificateholders with the consent of the Certificate
Insurer, which consent will not be unreasonably withheld, or the Certificate
Insurer may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
12.08.
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the Servicer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder, and the Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, and the Certificate Insurer pursuant to the procedure set forth below,
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Fund, and to vest
in such Person or Persons, in such capacity, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 12.10,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. Any co- trustee with respect to the FHA
Loans must at all times have a valid FHA Contract of Insurance. The Trustee
shall notify the Certificate Insurer prior to the appointment of any
co-trustee(s) or separate trustee(s) and the Certificate Insurer shall have four
Business Days from its receipt of such notice to notify the Trustee whether it,
in its reasonable judgment, disapproves of such co- trustee(s) or separate
trustee(s). If the Certificate Insurer does not notify the Trustee within such
time frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the Certificate Insurer notifies the Trustee within such time
frame that it, in its reasonable judgment, disapproves of such co- trustee(s) or
separate trustee(s) (which notice shall be accompanied by the name(s) of the
Certificate Insurer's alternative proposed co-trustee(s) or separate
trustee(s)), such appointments shall not be effective.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, all rights, powers, duties and obligations conferred or
imposed upon the trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
The Servicer and the Trustee hereby appoint First Bank (N.A.) as Co-Trustee
with respect to all Pool III Mortgage Loans that constitute, or may in the
future constitute, part of the Trust Fund. Except as otherwise specifically
provided herein, whenever action, consent, approval or delivery to or from the
Trustee is required under this Agreement in connection with a Pool III Mortgage
Loan, such action, consent, approval or delivery to or from shall be taken or
made by the Co-Trustee. Also, any obligations of or benefits, protection and
indemnities provided to, the Trustee with respect to the Mortgage Loans shall be
obligations of, and benefits, protection and indemnities provided to, the Co-
Trustee with respect to the Pool III Mortgage Loans.
Notwithstanding any contrary provision contained herein, the Co-Trustee
shall be responsible hereunder solely for the express duties and functions
specified for it herein with respect to the acceptance, ownership, servicing
compliance oversight, FHA Title I insurance coverage, substitution, sale,
release and discharge of Pool III Mortgage Loans, and shall not be responsible
for, and shall incur no liability in connection with, the actions, duties and
functions of the Trustee, including without limitation the payment of
Certificates or the oversight of servicing compliance for Mortgage Loans not
constituting Pool III Mortgage Loans.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, with power to act on the Trustee's behalf and subject to
its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of the REMIC Trust Fund and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
the REMIC Trust Fund any Tax Return that the Trustee is required to sign
pursuant to applicable federal, state or local tax laws, and (ii) cause such Tax
Return to have been returned to the Servicer for filing.
For Federal income tax purposes, the taxable year of the Trust Fund shall
be a calendar year and the Servicer shall maintain or cause the maintenance of
the books of the REMIC Trust Fund on the accrual method of accounting.
The Servicer shall prepare and file or cause to be filed with the Internal
Revenue Service Federal tax information returns with respect to the REMIC Trust
Fund and the Certificates containing such information and at the times and in
the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. In connection with
the foregoing, the Servicer shall provide the name, address and telephone number
of the person who can be contacted to obtain information required to be reported
to the holders of regular interests in the REMIC Trust Fund (the "REMIC
Reporting Agent") as required by IRS Form 8811. The Servicer shall indicate the
election to treat the REMIC Trust Fund as a REMIC (which election shall apply to
the taxable period ending December 31, 1995 and each calendar year thereafter)
in such manner as the Code or applicable Treasury regulations may prescribe. The
Trustee shall sign all tax information returns filed pursuant to this Section
and any other returns as may be required by the Code, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Servicer. The Representative is hereby designated
as the Tax Matters Person (within the meaning of Section 1.860F-4(d) of the
Regulations) for the REMIC Trust Fund. Any Holder of a Class R Certificate will
by acceptance thereof so appoint the Representative as agent and
attorney-in-fact for the purpose of acting as Tax Matters Person. In the event
that the Code or applicable Treasury Regulations prohibit the Trustee from
signing tax or information returns or other statements, or the Representative
from acting as Tax Matters Person (as an agent or otherwise), the Trustee or the
Representative shall take whatever action that in its sole good faith judgment
is necessary for the proper filing of such information returns or for the
provision of a tax matters person, including designation of the Holder of a
Class R Certificate to sign such returns or act as tax matters person. Each
Holder of a Class R Certificate shall be bound by this Section.
The Trustee shall provide upon request such information as required in
Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any Person
purporting to transfer a Class R Certificate.
Section 12.13 APPOINTMENT OF CUSTODIANS.
The Trustee may (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee may), with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee),
by entering into a Custodial Agreement. Subject to this Article XII, the Trustee
(or, with respect to the Pool III Mortgage Loans, the Co-Trustee) agrees to
comply with the terms of each Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders and the Certificate Insurer. The Trustee (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee) shall be liable for the fees of any
Custodian appointed hereunder. Each Custodian (other than First Trust National
Association) shall be a depository institution subject to supervision by federal
or state authority, shall be qualified to do business in the jurisdiction in
which it holds any Mortgage File.
The Co-Trustee and the Servicer hereby appoint First Trust National
Association as Custodian with respect to the Trustee's Mortgage Files relating
to all Pool III Mortgage Loans that constitute, or may in the future constitute,
part of the Trust Fund. The Custodian shall be responsible hereunder solely for
the express duties and functions specified for it herein with respect to the
custody, review and confirmation, safekeeping, substitution and release of the
Trustee's Mortgage Files relating to the Pool III Mortgage Loans.
Section 12.14. PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Representative, will from time to time execute and deliver all such supplements
and amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the
Trust Fund;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the rights
of the Trustee, and the ownership interests of the Owners represented
thereby, in the Trust Fund against the claims of all Persons and
parties.
The Trustee shall send copies of any request received from the Certificate
Insurer or the Representative to take any action pursuant to this Section 12.14
to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, by action, suit or proceeding at law
or equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Holders; provided, however, that nothing in this Section 12.14 shall require
any action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested to take such action by the Majority Certificateholders, the
Certificate Insurer or the Representative in accordance with the terms of this
Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.15. CALCULATION OF LIBOR.
(a) On each Interest Determination Date, the Trustee will determine LIBOR
based on the rate for one-month U.S. dollar deposits (the "One Month Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date in determining the Class A-10 Remittance Rate for the Remittance Date
in the following month. If such LIBOR rate does not appear on Telerate Page
3750, the LIBOR rate for that day will be determined on the basis of the rates
at which deposits in United States dollars, having the One-Month Index Maturity
and in a principal amount of not less than U.S. $1,000,000, are offered at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market by the Reference Banks. The Trustee 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,
the rate for that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Trustee, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks having a One-Month Index Maturity and in a principal amount equal
to an amount of not less than U.S. $1,000,000; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable Interest Period will be LIBOR in effect for the
previous Interest Period.
(b) If on the July 11, 1996 Interest Determination Date, the Trustee is
required but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (a) above, LIBOR shall be 5.46%.
Neither the Representative, Servicer nor the Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the Class
A-10 Remittance Rate, the Trustee may conclusively rely and shall be protected
in relying upon the rates appearing on Telerate Page 3750 or the offered
quotations (whether written, oral or on Telerate Page 3750) from Reference
Banks, as appropriate, in effect from time to time. Neither of the
Representative, the Servicer, the Certificate Insurer nor the Trustee shall have
liability or responsibility to any Person for (i) the Trustee's selection of
Reference Banks for purposes of determining LIBOR or (ii) the Trustee's or the
Servicer's inability, as applicable, following a good-faith reasonable effort,
to obtain such quotations from Reference Banks or such New York City banks or to
determine such arithmetic mean, all as provided for in this Section 12.15.
The establishment of LIBOR and the Class A-10 Remittance Rate by the
Trustee shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate, the Representative, the Servicer and
the Certificate Insurer.
The Trustee is not responsible for determining (or for the failure of the
Servicer to determine) the Net Funds Cap.
Section 12.16. LUXEMBOURG REPORTS AND NOTICES.
For so long as a Class of Global Certificates is Outstanding, the Trustee
will publish or will cause to be published following each Remittance Date in an
Approved Luxembourg Newspaper a notice to the effect that the information set
forth in the Servicer's Certificate delivered pursuant to Section 6.10 will be
available for review at the main office of the Listing Agent for the Global
Certificates in Luxembourg City, Luxembourg. The Trustee also will send such
statement directly to the Luxembourg Stock Exchange. The main office of the
Listing Agent is Kredietbank S.A. Luxembourgeois, 43 Boulevard Royal, L-2955,
Luxembourg, or such other address as the representative may advise the Trustee
in writing.
In the event that Definitive Global Certificates are issued, notices to
Global Certificateholders will also be given by the Trustee by mail to the
addresses of such holders as they appear in the Certificate Register.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Servicer and the
Trustee by written agreement, upon the prior written consent of the Certificate
Insurer, without the notice to or consent of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement, any Custodial Agreement or the Insurance
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the interests of
any Certificateholder in any material respect or any other party and further
provided that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party.
(b) This Agreement may be amended from time to time by the Originators, the
Representative, the Servicer and the Trustee, with the prior written consent of
the Certificate Insurer, the Majority Certificateholders and the Holders of the
majority of the Percentage Interest in the Class R Certificates for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders; provided, however, that no such amendment shall be made unless the
Trustee receives an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of the REMIC
Trust Fund as a REMIC or cause a tax to be imposed on the REMIC Trust Fund, and
provided further, that no such amendment shall reduce in any manner the amount
of, or delay the timing of, any amounts which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate or reduce
the percentage for each Class the Holders of which are required to consent to
any such amendment without the consent of the Holders of 100% of each Class of
Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, without giving effect to
principles of conflicts of law.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer, the Claims Administrator, and each
Originator, The Money Store Inc., 2840 Morris Avenue, Union, New Jersey 07083,
Attention: Executive Vice President, or such other addresses as may hereafter be
furnished to the Certificateholders in writing by the Representative and the
Servicer, (ii) in the case of the Trustee, The Bank of New York, 101 Barclay
Street, 12th Floor East, New York, New York 10286, Attention: Corporate Trust
MBS Administration, (iii) in the case of the Certificateholders, as set forth in
the Certificate Register, (iv) in the case of Moody's, to Moody's Investors
Service, Home Equity Group, 99 Church Street, 4th Floor, New York, New York
10007, (v) in the case of S&P, to Standard & Poor's Corporation, 25 Broadway,
20th Floor, New York, New York 10004, Attention: Residential Mortgages and, (vi)
in the case of the Co-Trustee, c/o First Trust National Association, 180 East
Fifth Street, St. Paul, Minnesota 55101, Attention: Corporate Trust Department.
Any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Originators, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer shall be suspended during
any period in which the Certificate Insurer is in default in its payment
obligations under a Certificate Insurance Policy. At such time as the
Certificates are no longer outstanding hereunder, and no amounts owed to the
Certificate Insurer hereunder remain unpaid, the Certificate Insurer's rights
hereunder shall terminate. The notice address of the Certificate Insurer is MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Surveillance Department (The Money Store).
Section 13.13 PAYING AGENT.
The Trustee may, subject to the eligibility requirements for the Trustee
set forth in Section 12.06 hereof, other than Section 12.06(iv), appoint one or
more successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.06, that such Paying Agent will:
(1) allocate all sums received for distribution to the Holders of
Certificates of each Class for which it is acting as Paying Agent on
each Remittance Date among such Holders in the proportion specified by
the Trustee; and
(2) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificate Insurer and the Certificateholders by
mailing notice thereof to their addresses appearing on the Certificate Register.
Section 13.14 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any appointment of a
Custodian (other than First Trust National Association), (3) any change of the
Trustee or the Servicer (4) any Event of Default, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Representative shall
give prompt notice to the Rating Agencies if the Representative or any of its
affiliates acquire any Class A Certificates, which notice shall acknowledge that
the Representative, or such affiliate understands that such Class A Certificates
so acquired will not be entitled to the benefits of the Certificate Insurance
Policy and, accordingly, will not be rated by the Rating Agencies so long as
such Class A Certificates are owned by the Representative or any such affiliate.
Section 13.15 THIRD PARTY RIGHTS.
The Trustee, the Representative, the Servicer and each of the Originators
listed herein agree that the Certificate Insurer shall be deemed a third-party
beneficiary of this Agreement entitled to all the rights and benefits set forth
herein as fully as if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the Representative, the Servicer, the Claims
Administrator, the Trustee and each Originator have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
THE MONEY STORE INC., as
Representative, Servicer
and Claims Administrator
By:/s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
THE BANK OF NEW YORK, as Trustee
By:/s/ Doug Badaszewski
-------------------------------
Name: Doug Badaszewski
Title: Assistant Vice President
The Originators
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
By:/s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
<PAGE>
ACCEPTANCE OF ASSISTANT CLAIMS ADMINISTRATOR
TMS Mortgage Inc., a New Jersey corporation, hereby accepts its appointment
pursuant to Section 9.05 of the within instrument to serve as Assistant Claims
Administrator. In connection therewith, TMS Mortgage Inc. agrees to be bound by
all applicable provisions of such instrument.
TMS MORTGAGE INC.,
as Assistant Claims
Administrator
By: /s/ Morton Dear
-------------------------------
Name: Morton Dear
Title: Executive Vice President
<PAGE>
ACCEPTANCE OF CO-TRUSTEE
First Bank (N.A.) hereby accepts its appointment pursuant to Section 12.10
of the within instrument to serve as Co-Trustee with respect to the Pool III
Mortgage Loans. In connection therewith, First Bank (N.A.) agrees to be bound by
all applicable provisions of such instrument.
FIRST BANK (N.A.), as Co-Trustee
By:/s/ Kathi Mohammad Zadah
--------------------------
Name: Kathi Mohammad Zadah
Title: Trust Officer
<PAGE>
ACCEPTANCE OF CUSTODIAN
First Trust National Association hereby accepts its appointment pursuant to
Section 12.13 of the within instrument to serve as Custodian with respect to the
Pool III Mortgage Loans. In connection therewith, First Trust National
Association agrees to be bound by all applicable provisions of such instrument.
FIRST TRUST NATIONAL ASSOCIATION, as
Custodian
By: /s/ Kathi Mohammad Zadah
------------------------------
Name: Kathi Mohammad Zadah
Title: Trust Officer
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 27th day of June 1996 before me, a Notary Public in and for said
State, personally appeared Doug Badaszewski known to me to be an officer of
The Bank of New York, a New York banking corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said New York banking corporation, and acknowledged to me that such New York
banking corporation, executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 27th day of June 1996 before me, a Notary Public in and for the
State of New York, personally appeared Morton Dear known to me to be the
Executive Vice President of The Money Store Inc., one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 27th day of June 1996 before me, a Notary Public in and for the
State of New York, personally appeared Morton Dear known to me to be the
Executive Vice President of each Originator listed on Exhibit I to the within
instrument, and also known to me to be the person who executed it on behalf of
each such corporation, and acknowledged to me that each such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
SCHEDULE II
AUCTION PROCEDURES
ARTICLE I
Except as otherwise specified herein, or as the context may require,
capitalized terms used but not not defined herein are defined in the Pooling and
Servicing Agreement dated as May 31, 1996 (the "Pooling and Servicing
Agreement") among the Bank of New York, as trustee, The Money Store Inc., as
representative, servicer and claims administrator and the Originators listed
therein.
SECTION 1.1 DEFINITIONS.
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"AUCTION DATE" means, initially, July 12, 1996, and thereafter, the
Business Day immediately preceding the first day of each Auction Period for each
Class of Auction Rate Certificates, other than:
a. each Auction Period commencing after the ownership of such
Class of Auction Rate Certificates is no longer maintained
in Book-Entry Form by the Depository;
b. each Auction Period commencing after and during the
continuance of a Certificate Insurer Default; or
c. each Auction Period commencing less than two Business Days
after the cure or waiver of a Certificate Insurer Default.
"AUCTION PERIOD" means, with respect to each Class of Auction Rate
Certificates, the Interest Period applicable to such Class of Certificates
during which time the related Class Remittance Rate is determined pursuant to
Section 2.1.1 hereof, which Auction Period (after the Initial Period for such
Class) initially shall commence on each Remittance Date and shall continue
through the day immediately preceding the next Remittance Date.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.1.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.1.1(c)(ii) hereof.
"AUCTION RATE CERTIFICATES" means the Class A-11 Certificates.
"AUTHORIZED DENOMINATIONS" means, with respect to the Auction Rate
Certificates, $25,000 and integral multiples of $25,000 in excess thereof.
"AVAILABLE AUCTION RATE CERTIFICATES" has the meaning set forth in
Section 2.1.1(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"BIDDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Depository or its nominee as registered owner, with the securities
"immobilized" to the custody of the Depository, and (iii) the book entry is the
record that identifies the owners of beneficial interests in that principal and
interest.
"BROKER-DEALER" means Lehman Brothers or any other broker or dealer
(each as defined in the Securities Exchange Act of 1934, as amended), commercial
bank or other entity permitted by law to perform the functions required of a
Broker-Dealer set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the
Representative pursuant to Section 2.1.6 hereof and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Representative, pursuant to which
the Broker-Dealer agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreement
dated as of June 27, 1996 between Bankers Trust Company, as Auction Agent, and
Lehman Brothers, as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"CERTIFICATE INSURER DEFAULT" means a payment default by the
Certificate Insurer under the Certificate Insurance Policy relating to the
Auction Rate Certificates.
"CLASS INITIAL RATE" means 5.46% per annum.
"CLASS INITIAL RATE ADJUSTMENT DATE" means, with respect to the
Auction Rate Certificates, July 15, 1996.
"CLASS REMITTANCE RATE LIMITATION" means a per annum rate equal to
14.5%.
"CLASS RATE ADJUSTMENT DATE" means the date on which a Class
Remittance Rate is effective, and means, with respect to the Auction Rate
Certificates, the date of commencement of each related Auction Period.
"CLASS RATE DETERMINATION DATE" means, with respect to any Class of
Auction Rate Certificates, the related Auction Date, or if no Auction Date is
applicable to such Auction Rate Certificates, the Business Day immediately
preceding the date of commencement of the related Auction Period.
"CLASS REMITTANCE RATE" means, with respect to the Initial Period, the
Class Initial Rate, and thereafter, each variable rate of interest per annum
borne by a Class of Auction Rate Certificates for each Interest Period and
determined in accordance with the provisions of Sections 1.2 and 2.1 hereof;
provided, however, that in the event of a Certificate Insurer Default, the Class
Remittance Rate shall equal the Non-Payment Rate; provided, further, however,
that such Class Remittance Date shall in no event exceed the Class Remittance
Rate Limitation.
"EXISTING CERTIFICATEHOLDER" means (i) with respect to and for the
purpose of dealing with the Auction Agent in connection with an Auction, a
Person who is a Broker-Dealer listed in the Existing Certificateholder Registry
at the close of business on the Business Day immediately preceding such Auction
and (ii) with respect to and for the purpose of dealing with the Broker-Dealer
in connection with an Auction, a Person who is a beneficial owner of any Class
of Auction Rate Certificates.
"EXISTING CERTIFICATEHOLDER REGISTRY" means the registry of Persons
who are owners of the Auction Rate Certificates, maintained by the Auction Agent
as provided in the Auction Agent Agreement.
"FINAL MATURITY DATE" means October 15, 2027 with respect to the
Auction Rate Certificates.
"HOLD ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York
banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means the Auction Agent Agreement
dated as of June 27, 1996, by and among the Trustee and the Initial Auction
Agent, including any amendment thereof or supplement thereto.
"INITIAL PERIOD" means, with respect to any Class of Auction Rate
Certificates, the period commencing on the Closing Date and continuing through
the day immediately preceding the Class Initial Rate Adjustment Date.
"INTEREST PERIOD" means, with respect to a Class of Auction Rate
Certificates, the applicable Initial Period and each period commencing on a
Class Rate Adjustment Date for such Class and ending on the day before (i) the
next Class Rate Adjustment Date for such Class or (ii) the Final Maturity Date
of such Class, as applicable.
"LIBOR DETERMINATION DATE" means, with respect to a Class of Auction
Rate Certificates, the date which is both a Business Day and a London Banking
Day prior to the commencement of each related Interest Period.
"LONDON BANKING DAY" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"MARKET AGENT" means Lehman Brothers, in such capacity hereunder, or
any successor to it in such capacity hereunder.
"MAXIMUM AUCTION RATE" means, with respect to the Auction Rate
Certificates, either (A) One-Month LIBOR plus 0.60% (if both ratings assigned by
the Rating Agencies to the Auction Rate Certificates are "Aa3" or "AA-" or
better) or (B) One-Month LIBOR plus 1.00% (if any one of the ratings assigned by
the Rating Agencies to the Auction Rate Certificates is less than "Aa3" or
"AA-"). For purposes of the Auction Agent and the Auction Procedures, the
ratings referred to in this definition shall be the last ratings of which the
Auction Agent has been given notice pursuant to the Auction Agent Agreement.
"MINIMUM AUCTION RATE" means One-Month LIBOR less 0.20%.
"NON-PAYMENT RATE" means One-Month LIBOR plus 0.60%.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement.
"ONE-MONTH LIBOR" means the London interbank offered rate for deposits
in U.S. dollars having a maturity of one month commencing on the related LIBOR
Determination Date (the "Index Maturity") which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such LIBOR 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 U.S. dollars, having the Index
Maturity and in a principal amount of not less than U.S. $1,000,000, are offered
at approximately 11:00 a.m., London time, on such LIBOR Determination Date to
prime banks in the London interbank market by the Reference Banks. The Auction
Agent will request the principal London office of each of such 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, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Auction Agent, at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount equal to an amount of not
less than U.S. $1,000,000; provided that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, One-Month LIBOR in effect for the
applicable Interest Period will be One-Month LIBOR in effect for the previous
Interest Period.
"ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"OUTSTANDING" means, as of the date of determination, all Auction Rate
Certificates theretofore authenticated and delivered under the Pooling and
Servicing Agreement except:
(i) Auction Rate Certificates theretofore cancelled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(ii) Auction Rate Certificates or portions thereof the payment for
which money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Certificateholders thereof;
and
(iii) Auction Rate Certificates in exchange for or in lieu of other
Auction Rate Certificates which have been authenticated and delivered
pursuant to the Pooling and Servicing Agreement unless proof satisfactory
to the Trustee is presented that any such Certificates are held by a bona
fide purchaser.
"PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"POTENTIAL CERTIFICATEHOLDER" means any Person (including an Existing
Certificateholder that is (i) a Broker-Dealer when dealing with the Auction
Agent and (ii) a potential beneficial owner when dealing with a Broker-Dealer)
who may be interested in acquiring Auction Rate Certificates (or, in the case of
an Existing Certificateholder thereof, an additional principal amount of Auction
Rate Certificates).
"REFERENCE BANKS" means leading banks selected by the Auction Agent
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market.
"SELL ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"SUBMISSION DEADLINE" means 12:30 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"SUBMITTED BID" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.1.1(c)(i) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.1.1(c)(i) hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Trustee
enters into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section 2.1.5
of these Auction Procedures agrees with the Trustee and the Representative to
perform the duties of the Auction Agent under this Agreement.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
SECTION 1.2 GENERAL PROVISIONS.
During the Initial Period, the Auction Rate Certificates shall bear
interest at the Class Initial Rate. Thereafter, the Auction Rate Certificates
shall bear interest at a Class Remittance Rate, as determined pursuant to this
Section 1.2 and Section 2.1 hereof.
For the Initial Period and each Auction Period thereafter, interest at
the Class Remittance Rate shall accrue daily and shall be computed for the
actual number of days elapsed on the basis of a year consisting of 360 days.
The Class Remittance Rate to be borne by the Auction Rate Certificates
after such Initial Period for each Auction Period shall be determined as herein
described. Each such Auction Period shall commence on and include the first day
following the expiration of the immediately preceding Auction Period and
terminate on and include the day immediately preceding the next Remittance Day;
provided, however, that in the case of the Auction Period that immediately
follows the Initial Period for the Certificates, such Auction Period shall
commence on and include the Initial Rate Adjustment Date. The Class Remittance
Rate for each Auction Period shall be the lesser of the (i) applicable Net Funds
Cap in effect for such Auction Period and (ii) the Auction Rate in effect for
such Auction Period as determined in accordance with Section 2.1.1 hereof;
provided that if, on any Class Rate Determination Date, an Auction is not held
for any reason, then the Class Remittance Rate on the Auction Rate Certificates
for the next succeeding Auction Period shall be the lesser of (A) the Maximum
Auction Rate or (B) the Net Funds Cap applicable to the Auction Rate
Certificates, but in no event exceeding the Class Remittance Rate Limitation.
Notwithstanding the foregoing:
a) if the ownership of the Auction Rate Certificates is no longer
maintained in Book-Entry Form, the Class Remittance Rate for any Interest Period
commencing after the delivery of certificates representing such Certificates
shall equal the lesser of (i) the Maximum Auction Rate and (ii) the applicable
Net Funds Cap on the Business Day immediately preceding the first day of such
subsequent Interest Period; or
b) if a Certificate Insurer Default shall have occurred, the Class
Remittance Rate on the Auction Rate Certificates for the Interest Period
commencing on or immediately after such Certificate Insurer Default, and for the
Interest Period thereafter, to and including the Interest Period, if any, during
which, or commencing less than two Business Days after, such Certificate Insurer
Default is cured, shall equal the Non-Payment Rate on the first day of each such
Interest Period.
The Auction Agent shall promptly give written notice to the Trustee,
the Representative and the Certificate Insurer of the Class Remittance Rate
(unless the Class Remittance Rate is the Non-Payment Rate) and either the
Auction Rate or the Net Funds Cap, as the case may be, when such rate is not the
Class Remittance Rate. The Trustee shall notify the Certificateholders of the
Class Remittance Rate applicable to the Auction Rate Certificates for each
Auction Period on the second Business Day of such Auction Period.
Notwithstanding any other provision of the Auction Rate Certificates
or the Pooling and Servicing Agreement and except for the occurrence of a
Certificate Insurer Default, interest payable on the Auction Rate Certificates
for an Auction Period shall never exceed for such Auction Period the amount of
interest payable at the applicable Net Funds Cap (subject to the Class
Remittance Rate Limitation) in effect for such Auction Period.
If the Auction Rate for the Auction Rate Certificates is greater than
the applicable Net Funds Cap, then the Class Remittance Rate applicable to such
Class of Certificates for that Interest Period will be the Net Funds Cap
(subject to the Class Remittance Rate Limitation). If the Class Remittance Rate
applicable to such Class of Certificates for any Interest Period is the Net
Funds Cap, the Trustee shall determine the Certificateholders' Interest
Carryover, if any, with respect to such Certificates. Such Certificateholders'
Interest Carryover shall bear interest calculated at a rate equal to the then
applicable Class Remittance Rate, without giving effect to the Net Funds Cap,
but in no event exceeding the Class Remittance Rate Limitation, from the
Remittance Date for the Interest Period with respect to which such
Certificateholders' Interest Carryover was calculated, until paid. For purposes
of the Pooling and Servicing Agreement, any reference to "principal" or
"interest" herein shall not include within the meaning of such words
Certificateholders' Interest Carryover or any interest accrued on any such
Certificateholders' Interest Carryover.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Class Remittance Rate with respect to the Auction
Rate Certificates, or, if for any reason such manner of determination shall be
held to be invalid or unenforceable, the Class Remittance Rate for the next
succeeding Interest Period for the Auction Rate Notes shall be the applicable
Net Funds Cap for such next succeeding Auction Period.
ARTICLE II
AUCTION PROCEDURES
SECTION 2.1. CLASS REMITTANCE RATE.
SECTION 2.1.1. DETERMINING THE CLASS REMITTANCE RATE FOR THE AUCTION
RATE CERTIFICATES.
By purchasing Auction Rate Certificates, whether in an Auction or
otherwise, each purchaser of the Auction Rate Certificates, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described herein, (ii) to have its
beneficial ownership of the Auction Rate Certificates maintained at all times in
Book-Entry Form for the account of its Participant, which in turn will maintain
records of such beneficial ownership and (iii) to authorize such Participant to
disclose to the Auction Agent such information with respect to such beneficial
ownership as the Auction Agent may request.
So long as the ownership of a Class of Auction Rate Certificates is
maintained in Book-Entry Form, an Existing Certificateholder may sell, transfer
or otherwise dispose of Auction Rate Certificates only pursuant to a Bid or Sell
Order placed in an Auction or otherwise sell, transfer or dispose of Auction
Rate Certificates through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Certificateholder, its
Broker-Dealer or its Participant advises the Auction Agent of such transfer.
Auctions shall be conducted on each Auction Date, if there is an Auction Agent
on such Auction Date, in the following manner:
(a) (i) Prior to the Submission Deadline on each Auction Date
relating to a Class of the Auction Rate Certificates:
(A) each Existing Certificateholder of the applicable Class of
Auction Rate Certificates may submit to a Broker-Dealer by telephone or
otherwise any information as to:
(1) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, owned by such Existing
Certificateholder which such Existing Certificateholder desires to
continue to own without regard to the Class Remittance Rate for the
next succeeding Auction Period;
(2) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, which such Existing
Certificateholder offers to sell if the Class Remittance Rate for the
next succeeding Auction Period shall be less than the rate per annum
specified by such Existing Certificateholder; and/or
(3) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, owned by such Existing
Certificateholder which such Existing Certificateholder offers to sell
without regard to the Class Remittance Rate for the next succeeding
Auction Period;
and
(B) one or more Broker-Dealers may contact Potential
Certificateholders to determine the principal amount of Auction Rate
Certificates of such Class which each Potential Certificateholder offers to
purchase, if the Class Remittance Rate for the next succeeding Auction
Period shall not be less than the rate per annum specified by such
Potential Certificateholder.
The statement of an Existing Certificateholder or a Potential
Certificateholder referred to in (A) or (B) of this paragraph (i) is herein
referred to as an "Order," and each Existing Certificateholder and each
Potential Certificateholder placing an Order is herein referred to as a
"Bidder"; an Order described in clause (A)(1) is herein referred to as a "Hold
Order"; an Order described in clauses (A)(2) and (B) is herein referred to as a
"Bid"; and an Order described in clause (A)(3) is herein referred to as a "Sell
Order."
(ii) (A) Subject to the provisions of Section 2.1.1(b) hereof, a
Bid by an Existing Certificateholder shall constitute an irrevocable offer
to sell:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Bid if the Class Remittance Rate
determined as provided in this Section 2.1.1 shall be less than the
rate specified therein; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates to be determined as set forth in
Section 2.1.1(d)(i)(D) hereof, if the Class Remittance Rate determined
as provided in this Section 2.1.1 shall be equal to the rate specified
therein; or
(3) such principal amount, or a lesser principal amount of
outstanding Auction Rate Certificates to be determined as set forth in
Section 2.1.1(d)(ii)(C) hereof, if the rate specified therein shall be
higher than the Class Remittance Rate and Sufficient Bids have not
been made.
(B) Subject to the provisions of Section 2.1.1(b) hereof, a Sell
Order by an Existing Certificateholder shall constitute an irrevocable
offer to sell:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Sell Order; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates set forth in Section
2.1.1(d)(ii)(C) hereof, if Sufficient Bids have not been made.
(C) Subject to the provisions of Section 2.1.1(b) hereof, a Bid
by a Potential Certificateholder shall constitute an irrevocable offer to
purchase:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Bid if the Class Remittance Rate
determined as provided in this Section 2.1.1 shall be higher than the
rate specified in such Bid; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates set forth in Section
2.1.1(d)(i)(E) hereof, if the Class Remittance Rate determined as
provided in this Section 2.1.1 shall be equal to the rate specified in
such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders obtained
by such Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Class of Auction Rate
Certificates that are the subject of such Order;
(C) to the extent that such Bidder is an Existing
Certificateholder:
(1) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Hold Order placed by such
Existing Certificateholder;
(2) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Bid placed by such Existing
Certificateholder and the rate specified in such Bid; and
(3) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Sell Order placed by such
Existing Certificateholder;
and
(D) to the extent such Bidder is a Potential Certificateholder,
the rate specified in such Potential Certificateholder's Bid.
(ii) If any rate specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next higher one thousandth (.001) of one percent.
(iii) If an Order or Orders covering all Outstanding Auction
Rate Certificates of the applicable Class owned by an Existing
Certificateholder is not submitted to the Auction Agent prior to the
Submission Deadline, the Auction Agent shall deem a Hold Order to have been
submitted on behalf of such Existing Certificateholder covering the
principal amount of Outstanding Auction Rate Certificates of such Class
owned by such Existing Certificateholder and not subject to an Order
submitted to the Auction Agent.
(iv) Neither the Representative, the Trustee nor the Auction
Agent shall be responsible for any failure of a Broker-Dealer to submit an
Order to the Auction Agent on behalf of any Existing Certificateholder or
Potential Certificateholder.
(v) If any Existing Certificateholder submits through a
Broker-Dealer to the Auction Agent one or more Orders covering in the
aggregate more than the principal amount of the Class of Outstanding
Auction Rate Certificates owned by such Existing Certificateholder, such
Orders shall be considered valid as follows and in the following order of
priority:
(A) All Hold Orders shall be considered valid, but only up
to the aggregate principal amount of the Class of Outstanding Auction Rate
Certificates owned by such Existing Certificateholder, and if the aggregate
principal amount of the Class of Auction Rate Certificates subject to such
Hold Orders exceeds the aggregate principal amount of the Class of Auction
Rate Certificates owned by such Existing Certificateholder, the aggregate
principal amount of the Class of Auction Rate Certificates subject to each
such Hold Order shall be reduced pro rata so that the aggregate principal
amount of the Class of Auction Rate Certificates subject to such Hold Order
equals the aggregate principal amount of the Class of Outstanding Auction
Rate Certificates owned by such Existing Certificateholder.
(B) (1) any Bid shall be considered valid up to an amount
equal to the excess of the principal amount of the Class of
Outstanding Auction Rate Certificates owned by such Existing
Certificateholder over the aggregate principal amount of the
Class of Auction Rate Certificates subject to any Hold Order
referred to in clause (A) of this paragraph (v);
(2) subject to subclause (1) of this clause (B), if
more than one Bid with the same rate is submitted on behalf
of such Existing Certificateholder and the aggregate
principal amount of the Class of Outstanding Auction Rate
Certificates subject to such Bids is greater than such
excess, such Bids shall be considered valid up to an amount
equal to such excess;
(3) subject to subclauses (1) and (2) of this clause
(B), if more than one Bid with different rates are submitted
on behalf of such Existing Certificateholder, such Bids
shall be considered valid first in the ascending order of
their respective rates until the highest rate is reached at
which such excess exists and then at such rate up to the
amount of such excess; and
(4) in any such event, the amount of the Class of
Outstanding Auction Rate Certificates, if any, subject to
Bids not valid under this clause (B) shall be treated as the
subject of a Bid by a Potential Certificateholder at the
rate therein specified; and
(C) All Sell Orders shall be considered valid up to an
amount equal to the excess of the principal amount of the Class of
Outstanding Auction Rate Certificates owned by such Existing
Certificateholder over the aggregate principal amount of the Class of
Auction Rate Certificates subject to Hold Orders referred to in clause (A)
of this paragraph (v) and valid Bids referred to in clause (B) of this
paragraph (v).
(vi) If more than one Bid for a Class of Auction Rate
Certificates is submitted on behalf of any Potential Certificateholder,
each Bid submitted shall be a separate Bid with the rate and principal
amount therein specified.
(vii) An Existing Certificateholder of a Class of Auction
Rate Certificates that offers to purchase additional Auction Rate
Certificates is, for purposes of such offer, treated as a Potential
Certificateholder.
(viii) Any Bid or Sell Order submitted by an Existing
Certificateholder covering an aggregate principal amount of a Class of
Auction Rate Certificates not equal to an Authorized Denomination shall be
rejected and shall be deemed a Hold Order. Any Bid submitted by a Potential
Certificateholder covering an aggregate principal amount of a Class of
Auction Rate Certificates not equal to an Authorized Denomination shall be
rejected.
(ix) Any Bid specifying a rate higher than the Maximum
Auction Rate will (a) be treated as a Sell Order if submitted by an
Existing Certificateholder and (b) not be accepted if submitted by a
Potential Certificateholder.
(x) Any Bid submitted by an Existing Certificateholder or a
Potential Certificateholder specifying a rate lower than the Minimum
Auction Rate shall be treated as a Bid specifying the Minimum Auction Rate.
(xi) Any Order submitted in an Auction by a Broker-Dealer to
the Auction Agent at the Submission Deadline on any Auction Date shall be
irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being herein referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the
case may be, or as a "Submitted Order," and collectively as "Submitted Hold
Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall determine for the applicable Class of Auction Rate
Certificates:
(A) the excess of the total principal amount of Outstanding
Auction Rate Certificates of such Class over the sum of the aggregate
principal amount of Outstanding Auction Rate Certificates of such Class
subject to Submitted Hold Orders (such excess being herein referred to as
the "Available Auction Rate Certificates" of such Class), and
(B) from the Submitted Orders whether:
(1) the aggregate principal amount of Outstanding
Auction Rate Certificates of such Class subject to Submitted Bids
by Potential Certificateholders specifying one or more rates
equal to or lower than the Maximum Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding
Auction Rate Certificates of such Class subject to Submitted Bids
by Existing Certificateholders specifying one or more rates
higher than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding
Auction Rate Certificates of such Class subject to submitted Sell
Orders;
(in the event such excess or such equality exists, other than because all
of the Outstanding Auction Rate Certificates of such Class are subject to
Submitted Hold Orders, such Submitted Bids described in subclause (1) above
shall be referred to collectively as "Sufficient Bids"); and
(C) if Sufficient Bids exist, the "Bid Auction Rate", which shall
be the lowest rate specified in such Submitted Bids such that if:
(1) (x) each Submitted Bid from Existing Certificateholders
specifying such lowest rate and (y) all other Submitted Bids from
Existing Certificateholders specifying lower rates were rejected,
thus entitling such Existing Certificateholders to continue to
own the principal amount of Auction Rate Certificates of such
Class subject to such Submitted Bids; and
(2) (x) each such Submitted Bid from Potential
Certificateholders specifying such lowest rate and (y) all other
Submitted Bids from Potential Certificateholders specifying lower
rates were accepted;
the result would be that such Existing Certificateholders described in
subclause (1) above would continue to own an aggregate principal amount of
Outstanding Auction Rate Certificates of the applicable Class which, when
added to the aggregate principal amount of Outstanding Auction Rate
Certificates of such Class to be purchased by such Potential
Certificateholders described in subclause (2) above, would equal not less
than the Available Auction Rate Certificates of such Class.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 2.1.1(c)(i) hereof, the Auction Agent shall advise the
Trustee of the applicable Net Funds Cap (as provided by the Servicer
pursuant to Section 2.1.3 hereof), the Maximum Auction Rate and the All
Hold Rate and the components thereof on the Auction Date and, based on such
determinations, the Auction Rate for the next succeeding Interest Period
for such Class of Auction Rate Certificates as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Interest Period for such Class shall be equal to the Bid Auction
Rate so determined;
(B) if Sufficient Bids do not exist (other than because all of
the Outstanding Auction Rate Certificates of such Class are subject to
Submitted Hold Orders), that the Auction Rate for the next succeeding
Interest Period shall be equal to the Maximum Auction Rate; or
(C) if all Outstanding Auction Rate Certificates of such Class
are subject to Submitted Hold Orders, that the Auction Rate for the next
succeeding Interest Period shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction
Rate, the Auction Agent shall determine and advise the Trustee of the
applicable Class Remittance Rate, which rate shall be the lesser of (a) the
Auction Rate and (b) the applicable Net Funds Cap; provided, however, that
in no event shall the Class Remittance Rate exceed the Class Remittance
Rate Limitation.
(d) Existing Certificateholders shall continue to own the
principal amount of Auction Rate Certificates of such Class that are subject to
Submitted Hold Orders. If the applicable Net Funds Cap is equal to or greater
than the Bid Auction Rate and if Sufficient Bids have been received by the
Auction Agent, the Bid Auction Rate will be the Class Remittance Rate, and
Submitted Bids and Submitted Sell Orders will be accepted or rejected and the
Auction Agent will take such other action as described below in subparagraph
(i).
If the applicable Net Funds Cap is less than the Auction
Rate, the Net Funds Cap will be the Class Remittance Rate. If the Auction Rate
and the Net Funds Cap are both greater than the Class Remittance Rate
Limitation, the Class Remittance Rate shall be equal to the Class Remittance
Rate Limitation. If the Auction Agent has not received Sufficient Bids (other
than because all of the Outstanding Auction Rate Certificates of such Class are
subject to Submitted Hold Orders), the Class Remittance Rate will be the lesser
of the Maximum Auction Rate and the applicable Net Funds Cap. In any of the
cases described above, Submitted Orders will be accepted or rejected and the
Auction Agent will take such other action as described below in subparagraph
(ii).
(i) if Sufficient Bids have been made and the Net Funds Cap
is equal to or greater than the Bid Auction Rate (in which case the Class
Remittance Rate shall be the Bid Auction Rate), all Submitted Sell Orders
shall be accepted and, subject to the provisions of paragraphs (iv) and (v)
of this Section 2.1.1(d), Submitted Bids shall be accepted or rejected as
follows in the following order of priority, and all other Submitted Bids
shall be rejected:
(A) Existing Certificateholders' Submitted Bids specifying
any rate that is higher than the Class Remittance Rate shall be accepted,
thus requiring each such Existing Certificateholder to sell the aggregate
principal amount of Auction Rate Certificates subject to such Submitted
Bids;
(B) Existing Certificateholders' Submitted Bids specifying
any rate that is lower than the Class Remittance Rate shall be rejected,
thus entitling each such Existing Certificateholder to continue to own the
aggregate principal amount of Auction Rate Certificates subject to such
Submitted Bids;
(C) Potential Certificateholders' Submitted Bids specifying
any rate that is lower than the Class Remittance Rate shall be accepted;
(D) Each Existing Certificateholders' Submitted Bid
specifying a rate that is equal to the Class Remittance Rate shall be
rejected, thus entitling such Existing Certificateholder to continue to own
the aggregate principal amount of Auction Rate Certificates subject to such
Submitted Bid, unless the aggregate principal amount of Outstanding Auction
Rate Certificates subject to all such Submitted Bids shall be greater than
the principal amount of Auction Rate Certificates of the applicable Class
(the "remaining principal amount") equal to the excess of the Available
Auction Rate Certificates of such Class over the aggregate principal amount
of Auction Rate Certificates of such Class subject to Submitted Bids
described in clauses (B) and (C) of this Section 2.1.1(d)(i), in which
event such Submitted Bid of such Existing Certificateholder shall be
rejected in part, and such Existing Certificateholder shall be entitled to
continue to own the principal amount of such Class of Auction Rate
Certificates subject to such Submitted Bid, but only in an amount equal to
the aggregate principal amount of Auction Rate Certificates of such Class
obtained by multiplying the remaining principal amount by a fraction, the
numerator of which shall be the principal amount of Outstanding Auction
Rate Certificates of such Class owned by such Existing Certificateholder
subject to such Submitted Bid and the denominator of which shall be the sum
of the principal amount of Outstanding Auction Rate Certificates of such
Class subject to such Submitted Bids made by all such Existing
Certificateholders that specified a rate equal to the Class Remittance
Rate; and
(E) Each Potential Certificateholder's Submitted Bid
specifying a rate that is equal to the Class Remittance Rate shall be
accepted, but only in an amount equal to the principal amount of Auction
Rate Certificates of the applicable Class obtained by multiplying the
excess of the aggregate principal amount of Available Auction Rate
Certificates of such Class over the aggregate principal amount of Auction
Rate Certificates of such Class subject to Submitted Bids described in
clauses (B), (C) and (D) of this Section 2.1.1(d)(i) by a fraction the
numerator of which shall be the aggregate principal amount of Outstanding
Auction Rate Certificates of such Class subject to such Submitted Bid and
the denominator of which shall be the sum of the principal amount of
Outstanding Auction Rate Certificates of such Class subject to Submitted
Bids made by all such Potential Certificateholders that specified a rate
equal to the Class Remittance Rate.
(ii) If Sufficient Bids have not been made (other than
because all of the Outstanding Auction Rate Certificates of the applicable
Class are subject to submitted Hold Orders), or if the applicable Net Funds
Cap is less than the Bid Auction Rate (in which case the Class Remittance
Rate shall be the Net Funds Cap), or if the Class Remittance Rate
Limitation applies, subject to the provisions of Section 2.1.1(d)(iv)
hereof, Submitted Orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be rejected:
(A) Existing Certificateholders' Submitted Bids specifying
any rate that is equal to or lower than the Class Remittance Rate shall be
rejected, thus entitling such Existing Certificateholders to continue to
own the aggregate principal amount of Auction Rate Certificates subject to
such Submitted Bids;
(B) Potential Certificateholders' Submitted Bids specifying
(1) any rate that is equal to or lower than the Class Remittance Rate shall
be accepted and (2) any rate that is higher than the Class Remittance Rate
shall be rejected; and
(C) each Existing Certificateholder's Submitted Bid
specifying any rate that is higher than the Class Remittance Rate and the
Submitted Sell Order of each Existing Certificateholder shall be accepted,
thus entitling each Existing Certificateholder that submitted any such
Submitted Bid or Submitted Sell Order to sell the Auction Rate Certificates
subject to such Submitted Bid or Submitted Sell Order, but in both cases
only in an amount equal to the aggregate principal amount of Auction Rate
Certificates of the applicable Class obtained by multiplying the aggregate
principal amount of Auction Rate Certificates subject to Submitted Bids
described in clause (B) of this Section 2.1.1(d)(ii) by a fraction the
numerator of which shall be the aggregate principal amount of Outstanding
Auction Rate Certificates of such Class owned by such Existing
Certificateholder subject to such submitted Bid or Submitted Sell Order and
the denominator of which shall be the aggregate principal amount of
Outstanding Auction Rate Certificates of such Class subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Auction Rate Certificates of such
Class are subject to Submitted Hold Orders, all Submitted Bids shall be
rejected.
(iv) If, as a result of the procedures described in
paragraph (i) or (ii) of this Section 2.1.1(d), any Existing
Certificateholder would be entitled or required to sell, or any Potential
Certificateholder would be entitled or required to purchase, a principal
amount of Auction Rate Certificates of the applicable Class that is not
equal to an Authorized Denomination, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, round up or down the
principal amount of Auction Rate Certificates to be purchased or sold by
any Existing Certificateholder or Potential Certificateholder so that the
principal amount of Auction Rate Certificates purchased or sold by each
Existing Certificateholder or Potential Certificateholder shall be equal to
an Authorized Denomination or an integral multiple of $25,000 in excess
thereof.
(v) If, as a result of the procedures described in paragraph
(ii) of this Section 2.1.1(d), any Potential Certificateholder would be
entitled or required to purchase less than an Authorized Denomination of
Auction Rate Certificates of the applicable Class, the Auction Agent shall,
in such manner as in its sole discretion it shall determine, allocate
Auction Rate Certificates of such Class for purchase among Potential
Certificateholders so that only Auction Rate Certificates of such Class in
Authorized Denominations or integral multiples of $25,000 in excess thereof
are purchased by any Potential Certificateholder, even if such allocation
results in one or more of such Potential Certificateholders not purchasing
any Auction Rate Certificates of such Class.
(e) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Auction Rate Certificates of the
applicable Class to be purchased and the aggregate principal amount of Auction
Rate Certificates of the applicable Class to be sold by Potential
Certificateholders and Existing Certificateholders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of Auction
Rate Certificates of the applicable Class to be sold differs from such aggregate
principal amount of Auction Rate Certificates of the applicable Class to be
purchased, determine to which other Broker-Dealer or Broker-Dealers acting for
one or more purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Auction Rate Certificates of
the applicable Class.
(f) Any calculation by the Auction Agent, the Servicer or the
Trustee, as applicable, of the Class Remittance Rate, One-Month LIBOR, the
Maximum Auction Rate, the All Hold Rate, the Net Funds Cap and the Non-Payment
Rate shall, in the absence of manifest error, be binding on all other parties.
SECTION 2.1.2. CERTIFICATE INSURER DEFAULT; AUCTION AGENT FEES
AND EXPENSES.
(a) The Trustee shall determine not later than 2:00 p.m., eastern
time, on the Business Day next succeeding a Remittance Date, whether a
Certificate Insurer Default has occurred. If a Certificate Insurer Event has
occurred, the Trustee shall, not later than 2:15 p.m., eastern time, on such
Business Day, send a notice thereof in substantially the form of Annex A
attached hereto to the Auction Agent, the Representative and the Certificate
Insurer by telecopy or similar means and, if such Certificate Insurer Default is
cured, the Trustee shall immediately send a notice in substantially the form of
Annex B attached hereto to the Auction Agent, the Representative and the
Certificate Insurer by telecopy or similar means.
(b) Not later than 2:00 p.m., eastern time, on the first
Remittance Date for any Class of Certificates occurring in each month, the
Trustee shall pay to the Auction Agent, in immediately available funds out of
amounts in the Expense Account an amount equal to the Auction Agent Fee (which
shall include the Broker-Dealer Fee) as calculated in the Auction Agent
Agreement. The Representative shall from time to time at the request of the
Auction Agent reimburse the Auction Agent for its reasonable expenses as
provided in the Auction Agent Agreement.
SECTION 2.1.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD
RATE, NET FUNDS CAP, ONE-MONTH LIBOR AND NON-PAYMENT RATE. The Servicer shall
calculate the Net Funds Cap applicable to the Auction Rate Certificates and
inform the Auction Agent thereof in writing no later than the Business Day
preceding each Auction Date. The Auction Agent shall calculate the Maximum
Auction Rate, the All Hold Rate and One-Month LIBOR, on each Auction Date and
shall notify the Trustee, the Representative and the Broker-Dealers of the Net
Funds Cap, the Maximum Auction Rate, the All Hold Rate and One-Month LIBOR, as
provided in the Auction Agent Agreement. If the ownership of the Auction Rate
Certificates is no longer maintained in Book-Entry Form by the Depository, the
Trustee shall calculate the Maximum Auction Rate, and the Servicer will report
to the Trustee in writing the Net Funds Cap, on the Business Day immediately
preceding the first day of each Interest Period commencing after the delivery of
certificates representing the Auction Rate Certificates. If a Certificate
Insurer Default shall have occurred, the Trustee shall calculate the Non-Payment
Rate on the Class Rate Determination Date for (i) each Interest Period
commencing after the occurrence and during the continuance of such Certificate
Insurer Default and (ii) any Interest Period commencing less than two Business
Days after the cure of any Certificate Insurer Default. The Auction Agent shall
determine One-Month LIBOR for each Interest Period other than the first Interest
Period; provided, that if the ownership of the Auction Rate Certificates is no
longer maintained in Book-Entry Form, or if a Certificate Insurer Default has
occurred, then the Trustee shall determine One-Month LIBOR for each such
Interest Period. The determination by the Trustee or the Auction Agent, as the
case may be, of One-Month LIBOR shall (in the absence of manifest error) be
final and binding upon all parties. If calculated or determined by the Auction
Agent, the Auction Agent shall promptly advise the Trustee and the
Representative of One-Month LIBOR.
SECTION 2.1.4. NOTIFICATION OF RATES, AMOUNTS AND REMITTANCE
DATES.
Promptly after the Closing Date and after the beginning of each
subsequent Interest Period relating to each Class of Auction Rate Certificates,
and in any event at least 10 days prior to any Remittance Date relating to a
Class of Auction Rate Certificates, the Trustee shall confirm with the Auction
Agent, so long as no Certificate Insurer Default has occurred and is continuing
and the ownership of the Auction Rate Certificates is maintained in Book-Entry
Form by the Depository, (1) the date of such next Remittance Date relating to a
Class of Auction Rate Certificates and (2) the amount payable to the Auction
Agent on the Auction Date pursuant to Section 2.1.2(b) hereof.
If any day scheduled to be a Remittance Date shall be changed
after the Trustee shall have given the notice or confirmation referred to in the
preceding sentence, the Trustee shall, not later than 9:15 a.m., eastern time,
on the Business Day next preceding the earlier of the new Remittance Date or the
old Remittance Date, by such means as the Trustee deems practicable, give notice
of such change to the Auction Agent, so long as no Certificate Insurer Default
has occurred and is continuing and the ownership of the Auction Rate
Certificates is maintained in Book-Entry Form by the Depository.
SECTION 2.1.5. AUCTION AGENT.
(a) Bankers Trust Company is hereby appointed as Initial Auction
Agent to serve as agent for the Representative in connection with Auctions. The
Trustee will, and the Trustee is hereby directed to, enter into the Initial
Auction Agent Agreement with Bankers Trust Company, as the Initial Auction
Agent. Any Substitute Auction Agent shall be (i) a bank, national banking
association or trust company duly organized under the laws of the United States
of America or any state or territory thereof having its principal place of
business in the Borough of Manhattan, New York, or such other location as
approved by the Trustee and the Market Agent in writing and having a combined
capital stock or surplus of at least $50,000,000, or (ii) a member of the
National Association of Securities Dealers, Inc., having a capitalization of at
least $50,000,000, and, in either case, authorized by law to perform all the
duties imposed upon it hereunder and under the Auction Agent Agreement and
approved by the Certificate Insurer in writing. The Auction Agent may at any
time resign and be discharged of the duties and obligations created by these
Auction Procedures by giving at least 90 days' notice to the Trustee, the
Representative, the Certificate Insurer and the Market Agent. The Auction Agent
may be removed at any time by the Trustee upon the written direction of the
Certificate Insurer, or with the consent of the Certificate Insurer, the
Certificateholders of 66-2/3% of the aggregate principal amount of the Auction
Rate Certificates then Outstanding, and if by such Certificateholders, by an
instrument signed by the Certificate Insurer or such Certificateholders or their
attorneys and filed with the Auction Agent, the Representative, the Market Agent
and the Trustee upon at least 90 days' notice. Neither resignation nor removal
of the Auction Agent pursuant to the preceding two sentences shall be effective
until and unless a Substitute Auction Agent has been appointed and has accepted
such appointment. If required by the Certificate Insurer, the Certificateholders
of 66-2/3% of the aggregate principal amount of the Auction Rate Certificates
then outstanding or by the Market Agent, a Substitute Auction Agent Agreement
shall be entered into with a Substitute Auction Agent. Notwithstanding the
foregoing, the Auction Agent may terminate the Auction Agent Agreement if,
within 25 days after notifying the Trustee, the Representative, the Certificate
Insurer and the Market Agent in writing that it has not received payment of any
Auction Agent Fee due it in accordance with the terms of the Auction Agent
Agreement, the Auction Agent does not receive such payment.
(b) If the Auction Agent shall resign or be removed or be
dissolved, or if the property or affairs of the Auction Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, the Trustee, at the
direction of the Representative and the Certificate Insurer (after receipt of a
certificate from the Market Agent confirming that any proposed Substitute
Auction Agent meets the requirements described in the immediately preceding
paragraph), shall use its best efforts to appoint a Substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Representative
in connection with Auctions. In the absence of bad faith or negligence on its
part, the Auction Agent shall not be liable for any action taken, suffered or
omitted in good faith or for any error of judgment made by it in the performance
of its duties under the Auction Agent Agreement. The Auction Agent shall not be
liable for any error of judgment made in good faith unless the Auction Agent
shall have been negligent in ascertaining the pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate
pursuant to Section 6.4(b) of the Auction Agent Agreement, the Auction Agent
shall give a Notice of Fee Rate Change to the Trustee, the Certificate Insurer
and the Representative in accordance with the Auction Agent Agreement.
SECTION 2.1.6. BROKER-DEALERS.
(a) The Auction Agent will enter into a Broker-Dealer Agreement
with Lehman Brothers, as the initial Broker-Dealer. A Responsible Officer of the
Representative may, from time to time, with the written consent of the
Certificate Insurer, approve one or more additional persons to serve as
Broker-Dealers under Broker-Dealer Agreements and shall be responsible for
providing such Broker-Dealer Agreements to the Trustee, the Certificate Insurer
and the Auction Agent, provided, however that while Lehman Brothers is serving
as a Broker-Dealer, Lehman Brothers shall have the right to consent to the
approval of any additional Broker-Dealers, which consent will not be
unreasonably withheld. The Auction Agent shall have entered into a Broker-Dealer
Agreement with each Broker-Dealer prior to the participation of any such
Broker-Dealer in any Auction.
(b) Any Broker-Dealer may be removed at any time, at the request
of a Responsible Officer of the Representative, but there shall, at all times,
be at least one Broker-Dealer appointed and acting as such.
SECTION 2.1.7. CHANGES IN THE AUCTION DATE. The Market Agent,
with the written consent of a Responsible Officer of the Representative, and the
written consent of the Certificate Insurer, may specify an earlier or later
Auction Date (but in no event more than five Business Days earlier or later)
than the Auction Date that would otherwise be determined in accordance with the
definition of "Auction Date" in Article I of these Auction Procedures with
respect to one or more specified Auction Periods in order to conform with then
current market practice with respect to similar securities or to accommodate
economic and financial factors that may affect or be relevant to the day of the
week constituting an Auction Date and the Class Remittance Rate borne on a Class
of Auction Rate Certificates. The Market Agent shall deliver a written request
for consent to such change in the length of the Auction Date to the
Representative and the Certificate Insurer not less than three days nor more
than 20 days prior to the effective date of such change together with a
certificate demonstrating the need for change in reliance on such factors. The
Market Agent shall provide notice of its determination to specify an earlier
Auction Date for one or more Auction Periods by means of a written notice
delivered at least 10 days prior to the proposed changed Auction Date to the
Trustee, the Auction Agent, the Representative, the Rating Agencies, the
Certificate Insurer and the Depository. Such notice shall be substantially in
the form of, or contain substantially the information contained in, Annex C to
these Auction Procedures.
In connection with any change described in this Section 2.1.7,
the Auction Agent shall provide such further notice to such parties as is
specified in Section 2.5 of the Auction Agent Agreement.
SECTION 2.2. ADDITIONAL PROVISIONS REGARDING THE CLASS REMITTANCE
RATES ON THE AUCTION RATE CERTIFICATES. The determination of a Class Remittance
Rate by the Auction Agent, the Trustee or any other Person pursuant to the
provisions of the applicable Section of this Article II shall be conclusive and
binding on the Certificateholders of the Class of Auction Rate Certificates to
which such Class Remittance Rate applies, and the Representative and the Trustee
may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or
payable on a Class of Auction Rate Certificates (including interest calculated
as provided herein, plus any other amounts that constitute interest on the
Auction Rate Certificates of such Class under applicable law, which are
contracted for, charged, reserved, taken or received pursuant to the Auction
Rate Certificates of such Class or related documents) calculated from the date
of issuance of the Auction Rate Certificates of such Class through any
subsequent day during the term of the Auction Rate of such Class or otherwise
prior to payment in full of the Auction Rate Certificates of such Class exceed
the amount permitted by applicable law. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under the Auction
Rate Certificates of such Class or related documents or otherwise contracted
for, charged, reserved, taken or received in connection with the Auction Rate
Certificates of such Class, or if the acceleration of the maturity of the
Auction Rate Certificates of such Class results in payment to or receipt by the
Certificateholder or any former Certificateholder of the Auction Rate
Certificates of such Class of any interest in excess of that permitted by
applicable law, then, notwithstanding any provision of the Auction Rate
Certificates of such Class or related documents to the contrary, all excess
amounts theretofore paid or received with respect to the Auction Rate
Certificates of such Class shall be credited on the principal balance of the
Auction Rate Certificates of such Class (or, if the Auction Rate Certificates of
such Class have been paid or would thereby be paid in full, refunded by the
recipient thereof), and the provisions of the Auction Rate Certificates of such
Class and related documents shall automatically and immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for under the Auction Rate Certificates of such Class
and under the related documents.
SECTION 2.3. QUALIFICATIONS OF MARKET AGENT. The Market Agent
shall be a member of the National Association of Securities Dealers, Inc., have
a capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by these Auction Procedures. The Market Agent may
resign and be discharged of the duties and obligations created by these Auction
Procedures by giving at least 30 days' notice to the Representative and the
Trustee, provided that such resignation shall not be effective until the
appointment of a successor market agent by the Representative and the acceptance
of such appointment by such successor market agent. The Market Agent may be
replaced at the direction of the Representative, by an instrument signed by an
officer of the Representative, filed with the Market Agent and the Trustee at
least 30 days before the effective date of such replacement, provided that such
replacement shall not be effective until the appointment of a successor market
agent by the Representative and the acceptance of such appointment by such
successor market agent.
In the event that the Market Agent shall be removed or be
dissolved, or if the property or affairs of the Market Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and there is no Market
Agent and the Representative shall not have appointed its successor as Market
Agent, the Trustee, notwithstanding the provisions of the first paragraph of
this Section, shall be deemed to be the Market Agent for all purposes of these
Auction Procedures until the appointment by the Representative of the successor
Market Agent. Nothing in this Section shall be construed as conferring on the
Trustee additional duties other than as set forth herein.
<PAGE>
ANNEX A
THE MONEY STORE ASSET BACKED CERTIFICATES
SERIES 1996-B, CLASS A-11
NOTICE OF CERTIFICATE INSURER DEFAULT
NOTICE IS HEREBY GIVEN that a Certificate Insurer Default has
occurred and is continuing with respect to the Certificates identified above.
The next Auction for the Series 1996-B, Class A-11 Certificates will not be
held. The Auction Rate for the Series 1996-B, Class A-11 Certificates for the
next succeeding Interest Period shall be the Non-Payment Rate.
THE BANK OF NEW YORK,
as Trustee
Dated: By:______________________________
Name:
Title:
<PAGE>
ANNEX B
THE MONEY STORE ASSET BACKED CERTIFICATES
SERIES 1996-B, CLASS A-11
NOTICE OF CURE OF CERTIFICATE INSURER DEFAULT
NOTICE IS HEREBY GIVEN that an Certificate Insurer Default with
respect to the Certificates identified above has been waived or cured. The next
Remittance Date is __________________________ and the next Auction Date is
______________________________.
THE BANK OF NEW YORK,
as Trustee
Dated: By:
Name:
Title:
<PAGE>
ANNEX C
THE MONEY STORE ASSET BACKED CERTIFICATES
SERIES 1996-B, CLASS A-11
NOTICE OF CHANGE IN AUCTION DATE
Notice is hereby given by LEHMAN BROTHERS, as Market Agent for
the captioned Certificates, that with respect to the captioned Certificates, the
Auction Date is hereby changed as follows:
l. With respect to the captioned Certificates, the definition of
"Auction Date" shall be deemed amended by substituting "_________________
(number) Business Day" in the second line thereof.
2. This change shall take effect on ______________ which shall be
the Auction Date for the Auction Period commencing on ______________.
3. The Auction Date for the captioned Certificates shall be
subject to further change hereafter as provided in the Auction Procedures.
4. Terms not defined in this Notice shall have the meanings set
forth in the Auction Procedures relating to the captioned Certificates.
LEHMAN BROTHERS, as Market Agent
Dated: By:
Name:
<PAGE>
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include a copy of any of the following items delivered to the Trustee (or the
Co-Trustee, in the case of Pool III Mortgage Loans) and an original of any of
the other following items, all of which shall be available for inspection by the
Certificateholders:
1. The original Mortgage Note, endorsed "Pay to the order of
holder" or "Pay to the order of ______________" and signed
in the name of the Person delivering the note by a
Responsible Officer, with all prior and intervening
endorsements showing a complete chain of endorsement from
the originator to such Person;
2. Either: (i) the original recorded Mortgage, with evidence of
recording thereon, (ii) a copy of the Mortgage certified as
a true copy by a Responsible Officer where the original has
been transmitted for recording until such time as the
original is returned by the public recording office or (iii)
a copy of the Mortgage certified by the public recording
office in those instances where the original recorded
Mortgage has been lost.
3. Either (i) the original Assignment of Mortgage from the
Person delivering such Assignment to "The Bank of New York,
as Trustee under the Pooling and Servicing Agreement dated
as of May 31, 1996, Series 1996-B" or, in the case of the
Pool III Mortgage Loans, to "First Bank (N.A.), as Co-
Trustee under the Pooling and Servicing Agreement dated as
of May 31, 1996, Series 1996-B" with evidence of recording
thereon (provided, however, that where permitted under the
laws of the jurisdiction wherein the Mortgaged Property is
located, the Assignment of Mortgage may be effected by one
or more blanket assignments for Mortgage Loans secured by
Mortgaged Properties located in the same county) or (ii) a
copy of the Assignment of Mortgage certified as a true copy
by a Responsible Officer of the Originator where the
original was transmitted for recording (provided, however,
that where the original Assignment of Mortgage is not being
delivered to the Trustee (or the Co-Trustee, in the case of
Pool III Mortgage Loans), each such Responsible Officer may
complete one or more blanket certificates attaching copies
of one or more of such Assignments of Mortgage relating to
the Mortgages originated by the related Originator).
4. The original policy of title insurance or, if such policy
has not yet been delivered by the insurer, the commitment or
binder to issue same, or if the original principal balance
of the Mortgage Loan was less than or equal to $15,000 or
the Mortgage Loan was not originated by a Originator, other
evidence of the status of title, which shall consist of an
attorney's opinion of title or certificate of title, a
preliminary title report, a property search, a title search,
a lot book report, a property information report or a report
entitled "prelim" or "PIRT" (property information report),
and (ii) proof of hazard insurance in the form of a hazard
insurance policy or hazard insurance policy endorsement that
names the related Originator, its successors and assigns, as
a mortgagee/loss payee, and, if such endorsement does not
show the amount insured by the related hazard insurance
policy, some evidence of such amount.
5. Originals of all assumption and modification agreements, if
any.
6. Either: (i) original intervening assignments, if any,
showing a complete chain of title from the originator to the
Person delivering such Assignment, including warehousing
assignments, with recording information thereon, if such
assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer of the
Originator where the original has been transmitted for
recording until such time as the originals are returned by
the public recording office, or (iii) copies of any
assignments certified by the public recording office in
those instances where the original recorded assignments have
been lost.
7. Mortgage Loan closing statement and any other
truth-in-lending or real estate settlement procedure forms
required by law.
8. Residential loan application.
9. Verification of employment and income, and tax returns, if
any.
10. Credit report on the mortgagor.
11. Except with respect to certain Mortgage Loans with original
principal balances of less than $15,000, the appraisal made
in connection with the origination of the related Mortgage
Loan with photographs of the subject property and of
comparable properties (if available), constituting evidence
sufficient to indicate that the Mortgaged Property relates
to a Residential Dwelling and identifying the type thereof.
12. Copy of any Prior Lien.
13. All other papers and records developed or originated by the
Originator or others, required to document the Mortgage Loan
or to service the Mortgage Loan.
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8,
CLASS A-9, CLASS A-12, CLASS A-13, CLASS A-14,
CLASS A-15 AND CLASS A-16 CERTIFICATES]
THE MONEY STORE TRUST 1996-B
[ %] THE MONEY STORE ASSET BACKED CERTIFICATES
CLASS A-_
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC
PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed
by, The Money Store Inc. or any of its subsidiaries. This Certificate
represents a fractional ownership interest in the Trust described herein.)
No.: A-_-1 JUNE 27, 1996
Startup Day
$
Original Principal Amount Final Scheduled CUSIP
Distribution
CEDE & CO.
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of four sub-trusts, including two pools ("Pool I" and
"Pool II") of one-to four-family ("single family") residential first and second
mortgage loans, having fixed rates, in the case of Pool I, and adjustable rates,
in the case of Pool II (the "Pool I Home Equity Loans" and "Pool II Home Equity
Loans"), one pool ("Pool III") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Pool III Home
Improvement Loans") and one pool ("Pool IV") of fixed rate five or more unit
residential or mixed-use residential and commercial ("multifamily") first
mortgage loans ("Pool IV Multifamily Loans") and certain related assets. The
Certificates are issued pursuant to a Pooling and Servicing Agreement, dated as
of May 31, 1996 (the "Pooling and Servicing Agreement"), among The Money Store
Inc. (the "Representative," "Servicer" and "Claims Administrator"), certain
subsidiaries of the Representative (the "Originators") and The Bank of New York,
as trustee (the "Trustee").
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-_ Certificates on June
27, 1996 (the "Startup Day"), which aggregate amount on June 27, 1996 was
$__________. The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class A-_ Certificates. Therefore,
the actual outstanding principal amount of this Certificate may, on any date
subsequent to the Remittance Date in July 1996 (the first Remittance Date) be
less than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER
THAN THE FHA LOANS INCLUDED IN POOL III, ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-_ (the "Class A-_ Certificates"), and issued under and
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Trust 1996-B, Asset Backed Certificates, Class A-_
(the "Class A-_ Certificates"), The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Trust
1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Trust 1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_
Certificates"), The Money Store Trust 1996-B, Asset Backed Certificates, Class
A- (the "Class A- Certificates"), The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Trust
1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Trust 1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_
Certificates), The Money Store Trust 1996-B, Asset Backed Certificates, Class
A-_ (the "Class A-_ Certificates"), The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Trust
1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Trust 1996-B, Asset Backed Certificates, Class A-_ (the "Class A-_
Certificates"), The Money Store Trust 1996-B, Asset Backed Certificates, Class
A-_ (the "Class A-_ Certificates") and The Money Store Trust 1996-B, Asset
Backed Certificates, Class A-_ (the "Class A-_ Certificates" and together with
the Class A-_, Class A-_, Class A-_, Class A-_, Class A-_, Class A-_, Class A-
_, Class A-_, Class A-_, Class A-_, Class A-_, Class A-_, Class A-_ and Class
A-_ Certificates, the "Class A Certificates") and Certificates designated as The
Money Store Trust 1996-B, Asset Backed Certificates, Class R (the "Class R
Certificates"). The Class A Certificates and the Class R Certificates are
together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing July 1996, the Holders of the Class A-_ Certificates as of
the close of business on the last day of the calendar month immediately
preceding the calendar month in which such Remittance Date occurs (the "Record
Date") will be entitled to receive that portion of the Pool [I][III][IV]
Remittance Amount relating to such Remittance Date as described in the
Agreement. Except for the final distribution, distributions will be made in
immediately available funds to Holders of the Class A-_ Certificates, by wire
transfer or otherwise, to the account of a Holder at a domestic bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee, or by check mailed to the address of the person entitled thereto as
it appears on the Register.
Each Holder of record of a Class A-_ Certificate will be entitled
to receive such Holder's Percentage Interest in the amounts due on such
Remittance Date to the Holders of the Class A-_ Certificates. The Percentage
Interest of each Class A-_ Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Principal Amount set
forth on such Class A-_ Certificate by $__________.
The Pool [I][III][IV] Remittance Amount for any Remittance Date
will be an amount equal to the sum of (i) the Pool [I][III][IV] Current Interest
Requirement, (ii) the Pool [I][III][IV] Principal Distribution Amount, (iii) the
Pool [I][III][IV] Carry-Forward Amount and (iv) any amount received by the
Trustee from the Servicer or an Originator and paid to the Holders of the Pool
[I][II][IV] Certificates that constitutes a Monthly Advance and that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code, as amended from time
to time (11 U.S.C.), in accordance with a final, nonappealable order of a court
having competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above
constitute Insured Payments or any portion thereof, payment of such amounts
shall be disbursed to the trustee in bankruptcy named in the final order of the
court exercising jurisdiction and not directly to any Pool [I][III][IV]
Certificateholder unless such Pool [I][III][IV] Certificateholder has returned
principal or interest paid on the Pool [I][III][IV] Certificates to such trustee
in bankruptcy, in which case payment shall be disbursed to such Class A
Certificateholder.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation
of, or an interest in, nor are the underlying Mortgage Loans insured or
guaranteed by, The Money Store Inc. or any of its subsidiaries or affiliates
and, other than the FHA Loans included in Pool III, are not insured or
guaranteed by the Federal Deposit Insurance Corporation, the Government National
Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Mortgage Loans and amounts on deposit in the Certificate Account, and
payments received by the Trustee pursuant to the related MBIA Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to the Class A-_ Certificates shall be given by the Trustee to the Class A-_
Certificateholders after the Trustee determines that a final distribution is
required to be made, specifying (i) the final Remittance Date upon which final
distribution on the Class A-_ Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
The Holders of a majority of the Percentage Interests represented
by the Class A-_, Class A-_, Class A-_, Class A-_, Class A-_, Class A-_, Class
A-_, Class A-_, Class A-_, Class A- _, Class A-_, Class A-_ and Class A-_
Certificates, upon compliance with the requirements set forth in the Pooling and
Servicing Agreement, have the right to exercise any trust or power set forth in
the Pooling and Servicing Agreement with respect to the Certificates or the
Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The Trustee is required to furnish certain information on each
Remittance Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-_ Certificates are issuable only as registered
Certificates in the minimum Percentage Interest corresponding to a minimum
denomination of $1,000 original principal amount and integral multiples of
$1,000. As provided in the Pooling and Servicing Agreement, Class A-_
Certificates are exchangeable for new Class A-_ Certificates of authorized
denominations evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Trustee or any such agent shall be affected by notice to the
contrary.
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a
policy containing the following provisions, such policy being on file at The
Bank of New York, as trustee (the "Trustee"), New York, New York.
The Insurer in consideration of the payment of the premium and
subject to the terms of the policy hereby unconditionally and irrevocably
guarantees to any Owner (as described below) that an amount equal to each full
and complete Insured Payment (as described below) will be received by the
Trustee or its successor, on behalf of the Owners from the Insurer, for
distribution by the Trustee to each Owner of each Owner's proportionate share of
the Insured Payment. The Insurer's obligations hereunder with respect to a
particular Insured Payment shall be discharged to the extent funds equal to the
applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in the policy and no accelerated Insured Payments shall be
made regardless of any acceleration of the Obligations (as that term is
described below) unless such acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, the policy does not
cover shortfalls, if any, attributable to the liability of the Trust, any REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability). Additionally, the policy does not guaranty
payment of any Certificateholder's LIBOR Interest Carryover.
"Obligations" shall mean:
[$930,000,000 The Money Store Asset Backed Certificates, Series
1996-B, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7, Class A-8 and Class A-9.]
[$100,000,000 The Money Store Asset Backed Certificates, Series
1996-B, Class A-12, Class A-13, Class A-14 and Class A-15.]
[$20,000,000 The Money Store Asset Backed Certificates, Series
1996-B, Class A-16.]
The Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of such order, (ii) an
opinion of counsel satisfactory to the Insurer that such order is final and not
subject to appeal, (iii) an assignment in such form as is reasonably required by
the Insurer, irrevocably assigning to the Insurer all rights and claims of the
Owner relating to or arising under the Obligations against the debtor which made
such preference payment or otherwise with respect to such preference payment and
(iv) appropriate instruments to effect the appointment of the Insurer as agent
for such Owner in any legal proceeding related to such preference payment, such
instruments being in a form satisfactory to the Insurer, provided that if such
documents are received after 12:00 noon New York City time on such Business Day,
they will be deemed to be received on the following Business Day. Such payments
shall be disbursed to the receiver or trustee in bankruptcy named in the final
order of the court exercising jurisdiction on behalf of the Owner and not to any
Owner directly unless such Owner has returned principal or interest paid on the
Obligations to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the policy no
later than 12:00 noon New York City time on the later of the Remittance Date on
which the related Remittance Amount is due or the Business Day following receipt
in New York, New York on a Business Day by State Street Bank and Trust Company,
N.A. as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making a claim hereunder it shall be deemed not
to have been received by the Fiscal Agent for purposes of this paragraph, and
the Insurer or the Fiscal Agent shall promptly so advise the Trustee and the
Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein
will be disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by
wire transfer of immediately available funds in the amount of the Insured
Payment less, in respect of Insured Payments related to Preference Amounts, any
amount held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the policy.
As used herein, the following terms shall have the following
meanings:
"Agreement" means the Pooling and Servicing Agreement dated as of
May 31, 1996, among The Money Store Inc., as Representative, Servicer and Claims
Administrator, the Originators listed therein and the Trustee, as trustee
without regard to any amendment or supplement thereto.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to any Remittance Date,
(i) the excess, if any, of (a) the Pool [I][III][IV] Current Interest
Requirement over (b) the sum of the Pool [I][II][IV] Available Remittance Amount
(minus amounts withdrawn to pay required premiums to the Insurer), and the
Monthly Excess Spread and the Subordination Reduction Amount, plus (ii) the
Subordination Deficit for Pool [I][II][IV], if any, with respect to such
Remittance Date.
"Insured Payment" means (i) as of any Remittance Date, any
Deficiency Amount and (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Remittance Date.
"Owner" means each [Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9][Class A-12, Class
A-13, Class A-14 and Class A-15][Class A- 16] Certificateholder (as defined in
the Agreement)(other than the Servicer, the Originators or the Trustee) who, on
the applicable Remittance Date, is entitled under the terms of the applicable
[Class A-1, Class A-2, Class A-3, Class A-4, Class A- 5, Class A-6, Class A-7,
Class A-8 and Class A-9][Class A-12, Class A-13, Class A-14 and Class
A-15][Class A-16] Certificate to payment thereunder.
"Preference Amount" means any amount previously distributed to an
Owner on the Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Agreement as of the date of
execution of the policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent of
the Insurer may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61
Broadway, New York, New York 10006, Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
in writing.
The policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The policy is not cancelable for any reason. The premium on the
policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
Unless the certificate of authentication hereon has been executed
by the Trustee or an Authenticating Agent, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By: ________________________
Title: Executive Vice President
This is one of the Class A-_
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
as Trustee
By:________________________
Authorized Signatory
Date: June 27, 1996
<PAGE>
EXHIBIT B-2
[FORM OF CLASS A-10 AND CLASS A-11 CERTIFICATES]
THE MONEY STORE TRUST 1996-B
ADJUSTABLE RATE THE MONEY STORE ASSET BACKED CERTIFICATES
CLASS A-_
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
[THIS CLASS A-__ CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR
INDIRECTLY TO (1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL
RETIREMENT ACCOUNTS OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE
COMPANY GENERAL ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF ANY SUCH PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES.
FURTHER, THIS TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES
PERSON WITHIN THE MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.]
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is
made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, The Money Store Inc.
or any of its subsidiaries. This Certificate represents a fractional ownership
interest in the Trust described herein.)
No.: A-_-1 JUNE 27, 1996
Startup Day
$
Original Principal Amount Final Scheduled CUSIP
Distribution
CEDE & CO.
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of four sub-trusts, including two pools ("Pool I" and "Pool II") of
one- to four-family ("single family") residential first and second mortgage
loans, having fixed rates, in the case of Pool I, and adjustable rates, in the
case of Pool II (the "Pool I Home Equity Loans" and "Pool II Home Equity
Loans"), one pool ("Pool III") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Pool III Home
Improvement Loans") and one pool ("Pool IV") of fixed rate five or more unit
residential or mixed-use residential and commercial ("multifamily") first
mortgage loans ("Pool IV Multifamily Loans") and certain related assets. The
Certificates are issued pursuant to a Pooling and Servicing Agreement, dated as
of May 31, 1996 (the "Pooling and Servicing Agreement"), among The Money Store
Inc. (the "Representative," "Servicer" and "Claims Administrator"), certain
subsidiaries of the Representative (the "Originators") and The Bank of New York,
as trustee (the "Trustee").
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-_ Certificates on June
27, 1996 (the "Startup Day"), which aggregate amount on June 27, 1996 was
$_____________. The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class A-_ Certificates. Therefore,
the actual outstanding principal amount of this Certificate may, on any date
subsequent to the Remittance Date in July 1996 (the first Remittance Date), be
less than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER
THAN THE FHA LOANS INCLUDED IN POOL III, ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-_ (the "Class A-_ Certificates"), and issued under and
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Trust 1996-B, Asset Backed Certificates, Class A-1
(the "Class A-1 Certificates"), The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-2 (the "Class A-2 Certificates"), The Money Store Trust
1996-B, Asset Backed Certificates, Class A-3 (the "Class A-3 Certificates"), The
Money Store Trust 1996-B, Asset Backed Certificates, Class A-4 (the "Class A-4
Certificates"), The Money Store Trust 1996-B, Asset Backed Certificates, Class
A-5 (the "Class A-5 Certificates"), The Money Store Trust 1996-B, Asset Backed
Certificates, Class A-6 (the "Class A-6 Certificates"), The Money Store Trust
1996-B Asset Backed Certificates, Class A-7 (the "Class A-7 Certificates"), The
Money Store Trust 1996-B Asset Backed Certificates, Class A-8 (the "Class A-8
Certificates"), The Money Store Trust 1996-B Asset Backed Certificates, Class
A-9 (the "Class A-9 Certificates"), The Money Store Trust 1996-B Asset Backed
Certificates, Class A-11 (the "Class A-11 Certificates"), The Money Store Trust
1996-B, Asset Backed Certificates, Class A-12 (the "Class A-12 Certificates")
and The Money Store Trust 1996-B, Asset Backed Certificates, Class A-13 (the
"Class A-13 Certificates"), The Money Store Trust 1996-B, Class A-14 (the "Class
A-14 Certificates"), The Money Store Trust 1996-B, Class A-15 (the "Class A-15
Certificates") and The Money Store Trust 1996-B, Class A-16 (the "Class A-16
Certificates," and together with the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class A-12, Class A-13, Class A-14 and Class A-15 Certificates, the "Class A
Certificates") and Certificates designated as The Money Store Trust 1996-B,
Asset Backed Certificates, Class R (the "Class R Certificates"). The Class A
Certificates and the Class R Certificates are together referred to herein as the
"Certificates."
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing July 1995, the Holders of the Class A-__ Certificates as of
the close of business on the last day of the calendar month immediately
preceding the calendar month in which such Remittance Date occurs (the "Record
Date") will be entitled to receive that portion of the Pool II Remittance Amount
relating to such Remittance Date as described in the Agreement. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of the Class A-__ Certificates, by wire transfer or otherwise, to the
account of a Holder at a domestic bank or other entity having appropriate
facilities therefor, if such Holder has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class A-__ Certificate will be
entitled to receive such Holder's Percentage Interest in the amounts due on such
Remittance Date to the Holders of the Class A-__ Certificates. The Percentage
Interest of each Class A-__ Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Principal Amount set
forth on such Class A-__ Certificate by $_____________.
The Pool II Remittance Amount for any Remittance Date will be an
amount equal to the sum of (i) the Pool II Current Interest Requirement, (ii)
the Pool II Principal Distribution Amount, (iii) the Pool II Carry-Forward
Amount and (iv) any amount received by the Trustee from the Servicer or an
Originator and paid to the Holders of the Pool II Certificates that constitutes
a Monthly Advance and that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code, as amended from time to time (11 U.S.C.), in accordance with a
final, nonappealable order of a court having competent jurisdiction.
With respect to the Remittance Date occurring in July 1996, the
Class A-10 Remittance Rate will be ______% per annum. For each Remittance Date
thereafter, the Class A-10 Remittance Rate will equal, subject to a maximum rate
equal to the Net Funds Cap, a per annum rate equal to [the sum of the London
interbank offered rate for one-month U.S. dollar deposits ("LIBOR"), determined
as described in the Pooling and Servicing Agreement and ____% (or ____% for each
Remittance Date occurring after the Optional Servicer Termination Date).][the
annual rate of interest determined according to the Auction Procedures.] [In no
event will the Class A-__ Remittance Rate exceed 14.50%.]
If on any Remittance Date, the Class A-__ Remittance Rate is
based upon the Net Funds Cap, the excess of (i) the amount of interest Class
A-__ would be entitled to receive on such Remittance Date at a rate equal to
[LIBOR plus the applicable margin][the rate determined according to the Auction
Procedures] (but in no event greater than 14.5%) over (ii) the amount of
interest Class A-__ will receive on such Remittance Date at the Net Funds Cap,
together with the unpaid portion of any such excess from prior Remittance Dates
(and interest accrued thereon at the then applicable Class A-__ Remittance Rate
without giving effect to the Net Funds Cap, but in no event exceeding 14.50% per
annum) is referred to herein as the "Certificateholders' Interest Carryover."
Any Certificateholders' Interest Carryover will be paid on future Remittance
Dates as set forth in the Agreement. No Certificateholders' Interest Carryover
will be paid to the Class A-__ Certificates after the related principal balance
is reduced to zero. The ratings of the Class A-__ Certificates do not address
the likelihood of the payment of the amount of any Certificateholders' Interest
Carryover and the policy issued by the Certificate Insurer does not guaranty
payment of any such amounts.
In the event that any amounts referenced in subclause (iv) above
constitute Insured Payments or any portion thereof, payment of such amounts
shall be disbursed to the trustee in bankruptcy named in the final order of the
court exercising jurisdiction and not directly to any Pool II Certificateholder
unless such Pool II Certificateholder has returned principal or interest paid on
the Pool II Certificates to such trustee in bankruptcy, in which case payment
shall be disbursed to such Class A Certificateholder.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation
of, or an interest in, nor are the underlying Mortgage Loans insured or
guaranteed by, The Money Store Inc. or any of its subsidiaries or affiliates
and, other than the FHA Loans included in Pool III, are not insured or
guaranteed by the Federal Deposit Insurance Corporation, the Government National
Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Mortgage Loans and amounts on deposit in the Certificate Account, and
payments received by the Trustee pursuant to the related MBIA Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to the Class A-__ Certificates shall be given by the Trustee to the Class A-__
Certificateholders after the Trustee determines that a final distribution is
required to be made, specifying (i) the final Remittance Date upon which final
distribution on the Class A-__ Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
The Holders of a majority of the Percentage Interests represented
by the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A- 10, Class A-11, Class A-12, Class A-13,
Class A-14, Class A-15 and Class A-16 Certificates, upon compliance with the
requirements set forth in the Pooling and Servicing Agreement, have the right to
exercise any trust or power set forth in the Pooling and Servicing Agreement
with respect to the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The Trustee is required to furnish certain information on each
Remittance Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-__ Certificates are issuable only as registered
Certificates in the minimum Percentage Interest corresponding to a minimum
denomination of $[1,000][25,000] original principal amount and integral
multiples of $[1,000][25,000]. As provided in the Pooling and Servicing
Agreement, Class A-__ Certificates are exchangeable for new Class A-__
Certificates of authorized denominations evidencing the same aggregate
Percentage Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Trustee or any such agent shall be affected by notice to the
contrary.
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a
policy containing the following provisions, such policy being on file at The
Bank of New York, as trustee (the "Trustee"), New York, New York.
The Insurer in consideration of the payment of the premium and
subject to the terms of the policy hereby unconditionally and irrevocably
guarantees to any Owner (as described below) that an amount equal to each full
and complete Insured Payment (as described below) will be received by the
Trustee or its successor, on behalf of the Owners from the Insurer, for
distribution by the Trustee to each Owner of each Owner's proportionate share of
the Insured Payment. The Insurer's obligations hereunder with respect to a
particular Insured Payment shall be discharged to the extent funds equal to the
applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in the policy and no accelerated Insured Payments shall be
made regardless of any acceleration of the Obligations (as that term is
described below) unless such acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, the policy does not
cover shortfalls, if any, attributable to the liability of the Trust, and REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability). Additionally, the policy does not guaranty
payment of any Certificateholder's LIBOR Interest Carryover.
"Obligations" shall mean:
$200,000,000 The Money Store Asset Backed Certificates, Series
1996-B, Class A-10 and Class A-11.
The Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of such order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable under the policy no
later than 12:00 noon New York City time on the later of the Remittance Date on
which the related Remittance Amount is due or the Business Day following receipt
in New York, New York on a Business Day by State Street Bank and Trust Company,
N.A. as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making a claim hereunder it shall be deemed not
to have been received by the Fiscal Agent for purposes of this paragraph, and
the Insurer or the Fiscal Agent shall promptly so advise the Trustee and the
Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein
will be disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by
wire transfer of immediately available funds in the amount of the Insured
Payment less, in respect of Insured Payments related to Preference Amounts, any
amount held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the policy.
As used herein, the following terms shall have the following
meanings:
"Agreement" means the Pooling and Servicing Agreement dated as of
May 31, 1996, among The Money Store Inc., as Representative, Servicer and Claims
Administrator, the Originators listed therein and the Trustee, as trustee
without regard to any amendment or supplement thereto.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to any Remittance Date,
(i) the excess, if any, of (a) the Pool II Current Interest Requirement over (b)
the sum of the Pool II Available Remittance Amount (minus amounts withdrawn to
pay required premiums to the Insurer), and the Monthly Excess Spread and the
Subordination Reduction Amount, plus (ii) the Subordination Deficit for Pool II,
if any, with respect to such Remittance Date.
"Insured Payment" means (i) as of any Remittance Date, any
Deficiency Amount and (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Remittance Date.
"Owner" means each Class A-10 and Class A-11 Certificateholder
(as defined in the Agreement)(other than the Servicer, the Originators or the
Trustee) who, on the applicable Remittance Date, is entitled under the terms of
the applicable Class A-10 and Class A-11 Certificate to payment thereunder.
"Preference Amount" means any amount previously distributed to an
Owner on the Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Agreement as of the date of
execution of the policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent of
the Insurer may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61
Broadway, New York, New York 10006, Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
in writing.
The policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The policy is not cancelable for any reason. The premium on the
policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
Unless the certificate of authentication hereon has been executed
by the Trustee or an Authenticating Agent, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By: ______________________
Title: Executive Vice President
This is one of the Class A-__
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
as Trustee
By:________________________
Authorized Signatory
Date: June 27, 1996
<PAGE>
EXHIBIT B-3
THE MONEY STORE TRUST 1996-B
ASSET BACKED CERTIFICATE
CLASS R
Representing Certain Interests in a Trust
containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
The Money Store Inc. or any of its subsidiaries. This Certificate represents a
fractional ownership interest in the Trust Fund described herein.)
No.: R-_ JUNE 27, 1996
Startup Day
[.01%]
[99.99%] Percentage Interest _________________________________
Final Scheduled
Distribution
_______________________________________________________________________________
Registered Holder
The registered Holder named above is the registered Holder of a
fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of for sub-trusts, including two pools ("Pool I" and
"Pool II") of one- to four-family ("single family") residential first and second
mortgage loans, having fixed rates, in the case of Pool I, and adjustable rates,
in the case of Pool II (the "Pool I Home Equity Loans" and "Pool IV Home Equity
Loans"), one pool ("Pool III") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Pool III Home
Improvement Loans") and one pool ("Pool IV") of fixed rate five or more unit
residential or mixed-use residential and commercial ("multifamily") first
mortgage loans ("Pool IV Multifamily Loans") and certain related assets. The
Certificates are issued pursuant to a Pooling and Servicing Agreement, dated as
of May 31, 1996 (the "Pooling and Servicing Agreement"), among The Money Store
Inc. (the "Representative," "Servicer" and "Claims Administrator"), certain
subsidiaries of the Representative (the "Originators") and The Bank of New York,
as trustee (the "Trustee").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER
THAN THE FHA LOANS INCLUDED IN POOL III, ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as The Money Store Trust 1996-B, Asset-Backed
Certificates, Class R (the "Class R Certificates"), and issued under and subject
to the terms, provisions and conditions of the Pooling and Servicing Agreement,
to which Pooling and Servicing Agreement the Holder of this Certificate by
virtue of acceptance hereof assents and by which such Holder is bound. Also
issued under the Pooling and Servicing Agreement in connection with the Trust
Fund are Certificates designated as The Money Store Trust 1996-B, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A- 9, Class A-10, Class A-11, Class A-12, Class A-13, Class A-14, Class
A-15 and Class A-16 Certificates (collectively, the "Class A Certificates"). The
Class A Certificates and Class R Certificates are together referred to herein as
the "Certificates."
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Remittance
Date"), commencing in July 1996, the Holders of the Class R Certificates as of
the close of business on the Startup Day with respect to the first Remittance
Date and, with respect to each Remittance Date thereafter, on the last day of
the calendar month immediately preceding the calendar month in which such
Remittance Date occurs (the "Record Date") will be entitled to receive the
amounts due on such Remittance Date to the Holders of the Class R Certificates.
Except for the final distribution, distributions will be made in immediately
available funds to Holders of Certificates, by wire transfer or otherwise, to
the account of a Holder at a domestic bank or other entity having appropriate
facilities therefor, if such Holder has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class R Certificate will be entitled
to receive such Holder's Percentage Interest in the amounts due on such
Remittance Date to the Holders of the Class R Certificates. The amounts due on
each Remittance Date are limited to certain residual amounts remaining after all
amounts due to the Holders of the Class A Certificates have been paid on such
Remittance Date.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation
of, or an interest in, nor are the underlying Mortgage Loans, other than the FHA
Loans included in Pool III, insured or guaranteed by, The Money Store Inc. or
any of its subsidiaries or affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries relating to the Mortgage
Loans and amounts on deposit in the Certificate Account all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the trust created thereby
continue beyond the expiration of 21 years from the death of the survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the Startup Date.
Written notice of the final distribution to be made with respect
to the Class R Certificates shall be given by the Trustee to the Class R
Certificateholders, mailed promptly after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Remittance Date
upon which final distribution on the Class R Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final distribution and (iii)
that the Record Date otherwise applicable to such Remittance Date is not
applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The Trustee is required to furnish certain information on each
Remittance Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class R Certificates are exchangeable for
new Class R Certificates evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Trustee or any such agent shall be affected by notice to the
contrary.
Unless the certificate of authentication hereon has been executed
by the Trustee or an Authenticating Agent, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to
be duly executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By: ______________________
Title: Executive Vice President
This is one of the Class R-_
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE BANK OF NEW YORK,
as Trustee
By:____________________________
Authorized Signatory
Date: June 27, 1996
<PAGE>
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G and 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH
IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE
MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF
THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE
RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN
AGENT ACTING FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CLASS R
CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD HOLDER IN ANY
TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF
THIS CERTIFICATE OWNED THROUGH SUCH PASS-THRU ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THRU" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
IN ADDITION, THE TAX SIMPLIFICATION ACT OF 1991 (H.R. 2777 AND
S. 1394), INTRODUCED ON JUNE 26, 1991, PROVIDES THAT EACH PARTNER IN A "LARGE
PARTNERSHIP" HOLDING A RESIDUAL INTEREST IN A REMIC SHALL BE TREATED AS A
DISQUALIFIED ORGANIZATION FOR PURPOSES OF THE TAX IMPOSED ON PASS-THRU ENTITIES
UNDER SECTION 860E(e)(6) OF THE CODE. IF ENACTED, THIS DEFINITION WOULD BE
EFFECTIVE FOR A PASS-THRU ENTITY'S TAXABLE YEARS ENDING ON OR AFTER DECEMBER 31,
1992. NO PREDICTION CAN BE MADE REGARDING WHETHER SUCH LEGISLATION WILL BE
ENACTED OR IF SO, WHAT THE ULTIMATE EFFECTIVE DATE WILL BE.
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
June 27, 1996
To: First Union National Bank of North Carolina
One First Union Center, TW-19
Charlotte, N.C. 28288 (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as
of May 31, 1996, The Money Store Asset Backed Certificates, Series 1996-B, Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9, Class A-10, Class A-11, Class A-12, Class A-13, Class A-14,
Class A-15, Class A-16 and Class R (the "Agreement"), we hereby authorize and
request you to establish an account, as a Principal and Interest Account
pursuant to Section 5.03 of the Agreement, to be designated as "The Money Store
Inc., in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1996-B, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class
A-12, Class A-13, Class A-14, Class A-15, Class A-16 and Class R, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
The Money Store Inc.
By:_________________________
Name:
Title:
<PAGE>
The undersigned, as Depository, hereby certifies
that the above described account has been established under Account Number
________________, at the office of the depository indicated above, and agrees to
honor withdrawals on such account as provided above. The amounts deposited at
any time in the account will be insured to the maximum amount provided by
applicable law by the Federal Deposit Insurance Corporation through the Bank
Insurance Fund.
First Union National Bank of
North Carolina
(Name of Depository)
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT D
RESALE CERTIFICATION
_______________, 19__
[Representative]
[Servicer]
[Trustee]
[Co-Trustee]
[Certificate Insurer]
[Certificate Registrar]
Re: Class R Certificate issued under the Pooling and
Servicing Agreement, The Money Store Asset Backed
Certificates, Series 1996-B dated as of May 31,
1996, among The Bank of New York, as Trustee, The
Money Store Inc. (the "Representative"), and
CERTAIN SUBSIDIARIES OF THE REPRESENTATIVE
Dear Sirs:
___________________________________________ ("Seller") intends to
transfer the captioned Certificate to _______________ ("Purchaser"), for
registration in the name of _______________________.
1. In connection with such transfer, and in accordance with
Section 4.02 of the captioned Agreement, Seller hereby certifies to you the
following facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Certificate under the Securities Act of 1933,
as amended (the "1933 Act"), or which would render the disposition of the
Certificate a violation of Section 5 of the 1933 Act or require registration
pursuant thereto.
2. The Purchaser warrants and represents to, and covenants with,
the Seller, the Trustee and the Servicer pursuant to Section 4.02 of the Pooling
and Servicing Agreement that:
a. The Purchaser agrees to be bound, as Certifi- cateholder,
by all of the terms, covenants and conditions of the Pooling and Servicing
Agreement, the Certificate and the Custodial Agreement, and from and after the
date hereof, the Purchaser assumes for the benefit of each of the Servicer and
the Seller all of the Seller's obligations as Certificateholder thereunder;
b. The Purchaser understands that the Certificate has not
been registered under the 1933 Act or the securities laws of any state;
c. The Purchaser is acquiring the Certificate for investment
for its own account or the account of another qualified institutional buyer
(within the meaning of Rule 144A) only and not for any other person;
d. The Purchaser considers itself a substantial,
sophisticated institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of investment in the Certificate;
e. The Purchaser has been furnished with all information
regarding the Certificate that it has requested from the Seller, the Trustee or
the Servicer; and
f. Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Certificate,
any interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person
(other than a qualified institutional buyer within the meaning of Rule 144A) in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.
[The following is to be completed if transfer is being made
pursuant to Rule 144A].
3. The Purchaser understands and agrees with the Seller that the
Seller is transferring the Certificate pursuant to the exemption from
registration under the 1933 Act provided by Rule 144A thereunder ("Rule 144A")
and the Purchaser hereby represents and warrants to the Seller, the Trustee and
the Servicer that the Purchaser is a "qualified institutional buyer" as defined
in Rule 144A because (i) the Purchaser owned and/or invested on a discretionary
basis $_________* in securities (except for the excluded securities referred to
below) as of the end of the Purchaser's most recent fiscal year (such amount
being calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies
the criteria in the category marked below.
[ ] CORPORATION, ETC. The Purchaser is a corporation other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code.
[ ] BANK. The Purchaser (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, A COPY OF WHICH IS ATTACHED
HERETO.
[ ] SAVINGS AND LOAN. The Purchaser (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a state or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements,
A COPY OF WHICH IS ATTACHED HERETO.
[ ] BROKER-DEALER. The Purchaser is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
[ ] INSURANCE COMPANY. The Purchaser is an insurance company whose
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District of
Columbia.
The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Purchaser, (ii) securities
that are part of an unsold allotment to or subscription by the Purchaser (if the
Purchaser is a dealer), (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participation, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Purchaser, the Purchaser
used the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may
have included securities owned by subsidiaries of the Purchaser, but only if
such subsidiaries are consolidated with the Purchaser in its financial
statements prepared in accordance with generally accepted accounting principles
and if the investment of such subsidiaries are managed under the Purchaser's
direction. However, such securities were not included if the Purchaser is a
majority owned, consolidated subsidiary of another enterprise and the Purchaser
is not itself a reporting company under the Securities Exchange Act of 1934.
The Purchaser acknowledges that it is familiar with Rule 144A and
understands that you are and will continue to rely on the statements made
herein.
The Purchaser agrees to notify you of any changes in the
information and conclusions herein. Until such notice is given to you, the
Purchaser's purchase of the Certificate will constitute a reaffirmation of the
foregoing certifications and acknowledgments as of the date of such purchase.
Further, if the Purchaser is a bank or savings and loan as
provided above, the Purchaser agrees that it will furnish the Seller with
updated annual financial statements promptly after they become available.
4. The Purchaser warrants and represents to, and covenants with,
the Seller, the Servicer, the Trustee and the Representative that:
a. The Purchaser agrees to be bound, as Certifi- cateholder,
by the restrictions on transfer contained in the Pooling and Servicing
Agreement; and
b. Either: (1) the Purchaser is not an employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), ("Plan") or a plan within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code") (also a
"Plan"), and the Purchaser is not directly or indirectly purchasing the
Certificates on behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with assets of a Plan; or (2) Purchaser shall deliver the opinion
of counsel required pursuant to Section 4.02(c) of the Pooling and Servicing
Agreement.
5. This Certification may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Resale
Certification to be executed by their duly authorized officers as of the date
first above written.
______________________________, _____________________________________,
Seller Purchaser
By:____________________________ By:__________________________________
Its:___________________________ Its:_________________________________
Taxpayer Taxpayer
Identification No._____________ Identification No.___________________
--------
* The Purchaser must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
EXHIBIT E
ASSIGNMENT
THIS ASSIGNMENT dated as of the ____ day of __________, 19__, by
and between _________________________, ("Assignor") and
_________________________ ("Assignee"), provides:
That for and in consideration of the sum of TEN DOLLARS ($10.00)
and other valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee all
of the right, title and interest of Assignor, as Certificateholder, in, to and
under that certain Pooling and Servicing Agreement, The Money Store Asset Backed
Certificates, Series 1996-B, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class
A-12, Class A-13, Class A-14, Class A-15, Class A-16 and Class R (the "Pooling
and Servicing Agreement"), dated as of May 31, 1996 by and among The Bank of New
York, as Trustee ("Trustee") and The Money Store Inc., as Representative,
Servicer and Claims Administrator, and the Originators, and that certain
Certificate, Class R No. __ Series 1996-B (the "Certificate") issued thereunder
by the Servicer.
2. For the purpose of inducing Assignee to purchase the
Certificate from Assignor, Assignor warrants and represents that:
a. Assignor is the lawful owner of the Certifi- cate with the
full right to transfer the Certificate free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice, and has no knowledge, of
any offsets, counterclaims or other defenses available to the Servicer with
respect to the Pooling and Servicing Agreement or the Certificate; and
c. The Assignor has no knowledge of and has not received notice
of any amendments to the Pooling and Servicing Agreement or the Certificate.
3. By execution hereof Assignee agrees to be bound, as
Certificateholder, by all of the terms, covenants and conditions of the Pooling
and Servicing Agreement, and the Certificate and from and after the date hereof
Assignee assumes for the benefit of each of the Servicer, the Representative,
the Trustee and the Assignor all of Assignor's obligations as Certificateholder
thereunder.
4. The Assignee warrants and represents to, and covenants with,
the Assignor, the Representative and the Servicer that:
a. The Assignee agrees to be bound, as Certificateholder, by
the restrictions on transfer contained in the Pooling and Servicing Agreement;
and
b. Either: (1) the Assignee is not an employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), ("Plan") or a plan within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code") (also a
"Plan"), and the Assignee is not directly or indirectly purchasing the
Certificates on behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with assets of a Plan; or (2) Assignee shall deliver the opinion
of counsel required pursuant to Section 4.02(c) of the Pooling and Servicing
Agreement.
5. This Assignment may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement.
WITNESS the following signatures.
________________________________ _________________________________________
By______________________________ By_______________________________________
Its___________________________ Its____________________________________
Taxpayer Taxpayer
Identification No._____________ Identification No._____________________
<PAGE>
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
- ------------------------
- ------------------------
Re: The Money Store Asset Backed Certificates, Series
1996-B [Class A-1][Class A-2][Class A-3][Class A-
4][Class A-5][Class A-6][Class A-7] [Class A- 8][Class
A-9][Class A-10][Class A-11][Class A- 12][Class
A-13][Class A-14][Class A-15][Class A- 16][Class R],
Number ___ Issued by The Money Store Inc., as Servicer
Dear Sir:
In connection with the sale of the above-captioned Certificate by
___________________________________ to ____________________________________,
("Transferee") you, as Paying Agent with respect to the related Mortgages Loans,
are instructed to make all remittances to Transferee as Certificateholder as of
____________, 19__ by wire transfer. For such wire transfer, the wiring
instructions are as follows:
---------------------------
---------------------------
---------------------------
--------------------------------
Transferee
Certificateholder's mailing address:
Name:
Address:
<PAGE>
EXHIBIT F
FORM OF [TRUSTEE] [CUSTODIAN] INITIAL CERTIFICATION
, 1996
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
The Money Store, Inc.
2840 Morris Avenue
Union, New Jersey 07083
TMS Special Holdings, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Lehman Brothers Inc., as
representative of the Underwriters
3 World Financial Center
New York, New York 10285-1200
Re: Pooling and Servicing Agreement The Money Store
Asset Backed Certificates, Series 1996-B, dated
as of May 31, 1996 among The Money Store Inc. as
Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as
TRUSTEE
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby
certifies that, except as noted on the attachment hereto, if any (the "Loan
Exception Report"), it has received an Assignment of Mortgage, or a certified
copy thereof, and a Mortgage Note with respect to each [Initial] [Subsequent]
[Mortgage Loan] [Pool III Mortgage Loan] listed in the Mortgage Loan Schedule
and the documents contained therein appear to bear original signatures.
The [Trustee] [Custodian] has made no independent examination of
any such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The [Trustee] [Custodian]
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any such documents or any of the [Mortgage
Loans] [Pool III Mortgage Loans] identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
[Mortgage Loan] [Pool III Mortgage Loan].
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
[THE BANK OF NEW YORK,
as Trustee]
[FIRST TRUST NATIONAL ASSOCIATION,
as Custodian]
By:
Name:
Title:
<PAGE>
EXHIBIT F-1
FORM OF [TRUSTEE] [CUSTODIAN] INTERIM CERTIFICATION
_______________, 1995
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
The Money Store Inc.
2840 Morris Avenue
Union, New Jersey 07083
TMS Special Holdings, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Lehman Brothers Inc., as
representative of the Underwriters
3 World Financial Center
New York, New York 10285-1200
Re: Pooling and Servicing Agreement The Money Store
Asset Backed Certificates, Series 1996-B, dated
as of May 31, 1996 among The Money Store Inc. as
Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as
TRUSTEE
Gentlemen:
In accordance with Section 2.05 of the above-referenced Pooling
and Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby
certifies that as to each [Initial] [Subsequent] [Mortgage Loan] [Pool III
Mortgage Loan] listed in the Mortgage Loan Schedule (other than any [Initial]
[Subsequent] [Mortgage Loan] [Pool III Mortgage Loan] paid in full or any
[Initial] [Subsequent] [Mortgage Loan] [Pool III Mortgage Loan] listed on the
attachment hereto), it has reviewed the documents delivered to it pursuant to
Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the Pooling and
Servicing Agreement and has determined that (i) all such documents are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
[Mortgage Loan] [Pool III Mortgage Loan], (iii) based on its examination and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule respecting such [Initial] [Subsequent] [Mortgage Loan] [Pool III
Mortgage Loan] is correct and (iv) each Mortgage Note has been endorsed as
provided in Section 2.04 of the Pooling and Servicing Agreement. Further,
[except for Mortgaged Properties relating to [Mortgage Loans] [Pool III Mortgage
Loans] identified on the Mortgage Loan Schedule by an account number beginning
with __________ or ________, each Mortgaged Property is a Residential Dwelling
of the type set forth in the appraisal obtained in connection with the
origination of the related [Mortgage Loan] [Pool III Mortgage Loan], and for
each [Mortgage Loan] [Pool III Mortgage Loan] with an original principal balance
in excess of $15,000 for which the documents in the possession of the [Trustee]
[Custodian] indicate that the related Originator conducted a drive-by appraisal
pursuant to FHLMC Form 704 or alternative FNMA Form in connection with
originating such [Mortgage Loan] [Pool III Mortgage Loan], such [Mortgage Loan]
[Pool III Mortgage Loan] (A) had an original principal balance not in excess of
$35,000, and (B) has a Loan-to-Value Ratio less than 50% (based solely on the
LTV included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC
Form 1004 was performed by the related Originator within one year prior to the
origination of such [Mortgage Loan] [Pool III Mortgage Loan]. The [Trustee]
[Custodian] has made no independent examination of such documents beyond the
review specifically required in the above-referenced Pooling and Servicing
Agreement. The [Trustee] [Custodian] makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the [Mortgage Loans] [Pool III Mortgage Loans]
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such [Mortgage Loan] [Pool III
Mortgage Loan].
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
[THE BANK OF NEW YORK
as Trustee]
[FIRST TRUST NATIONAL ASSOCIATION,
as Custodian]
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT G
FORM OF [TRUSTEE] [CUSTODIAN] FINAL CERTIFICATION
[date]
[Certificate Insurer]
[Servicer]
[Certificateholders]
[Representative]
Re: Pooling and Servicing Agreement dated as of May
31, 1996 among The Money Store Inc. as
Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as
Trustee, The Money Store Asset Backed
CERTIFICATES, SERIES 1996-B
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby
certifies that, except as noted on the attachment hereto, as to each [Mortgage
Loan] [Pool III Mortgage Loan] listed in the Mortgage Loan Schedule (other than
any [Mortgage Loan] [Pool III Mortgage Loan] paid in full or listed on the
attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the Pooling and
Servicing Agreement and has determined that (i) all such documents are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
[Mortgage Loan] [Pool III Mortgage Loan], (iii) based on its examination, and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule respecting such [Mortgage Loan] [Pool III Mortgage Loan] is
correct and (iv) each Mortgage Note has been endorsed as provided in Section
2.04 of the Pooling and Servicing Agreement. Further, [except for Mortgaged
Properties relating to [Mortgage Loans] [Pool III Mortgage Loans] identified on
the Mortgage Loan Schedule by an account number beginning with _______ or
_______,] each Mortgaged Property is a Residential Dwelling of the type set
forth in the appraisal obtained in connection with the origination of the
related [Mortgage Loan] [Pool III Mortgage Loan], and for each [Mortgage Loan]
[Pool III Mortgage Loan] with an original principal balance in excess of $15,000
for which the documents in the possession of the [Trustee] [Custodian] indicate
that the related Originator conducted a drive-by appraisal pursuant to FHLMC
Form 704 or alternative FNMA Form in connection with originating such [Mortgage
Loan] [Pool III Mortgage Loan], such [Mortgage Loan] [Pool III Mortgage Loan]
(A) had an original principal balance not in excess of $35,000, and (B) has a
Loan-to-Value Ratio less than 50% (based solely on the LTV included on the
Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form 1004 was
performed by the related Originator within one year prior to the origination of
such [Mortgage Loan] [Pool III Mortgage Loan]. The [Trustee] [Custodian]has made
no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The [Trustee]
[Custodian]makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the [Mortgage Loans] [Pool III Mortgage Loans] identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such [Mortgage Loan] [Pool III Mortgage Loan].
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
[THE BANK OF NEW YORK
as Trustee]
[FIRST TRUST NATIONAL ASSOCIATION,
as Custodian]
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
EXHIBIT H
POOL I MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT H-1
POOL II MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT H-2
POOL III MORTGAGE LOAN SCHEDULE
[To Be Delivered to Co-Trustee]
<PAGE>
EXHIBIT H-3
POOL IV MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT I
LIST OF ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee]
[Custodian]
Re: Pooling and Servicing Agreement, The Money Store
Asset Backed Certificates, Series 1996-B, dated as
OF MAY 31, 1996
In connection with the administration of the pool of Mortgage
Loans held by you as [Trustee] [Custodian] for the Certificateholders, we
request the release, and acknowledge receipt, of the (Trustee's Mortgage
File/[specify document]) for the Mortgage Loan described below, for the reason
indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts
received in connection therewith have been
credited to the Principal and Interest Account
and remitted to the Trustee for deposit into the
Certificate Account pursuant to the Pooling and
Servicing Agreement.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been
finally received and credited to the Principal and
Interest Account and remitted to the Trustee for
deposit into the Certificate Account pursuant to the
Pooling and Servicing Agreement.)
____ 3. Mortgage Loan in Foreclosure
_____4. Mortgage Loan Purchased Pursuant to Section 11.01
of the Pooling and Servicing Agreement.
_____5. Mortgage Loan Repurchased or Substituted Pursuant to
Article II or III of the Pooling and Servicing
Agreement (Servicer hereby certifies that the
repurchase price or Substitution Adjustment has been
credited to the Principal and Interest Account and
remitted to the Trustee for deposit into the
Certificate Account pursuant to the Pooling and
Servicing Agreement.)
____ 6. Other (explain) ____________________________
----------------------------
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of
the above documents to you as [Trustee] [Custodian], please acknowledge your
receipt by signing in the space indicated below, and returning this form.
THE MONEY STORE INC.
By:___________________________
Name:_________________________
Date:_________________________
Documents returned to [Trustee] [Custodian]:
- -------------------------------
[Trustee] [Custodian]
By:____________________________
Date:__________________________
<PAGE>
EXHIBIT J-1
REQUEST FOR RELEASE OF DOCUMENTS OF
90 DAY DELINQUENT FHA LOANS
To: [Custodian]
Re: Pooling and Servicing Agreement, The Money Store
Asset Backed Certificates, Series 1996-B, dated as
OF MAY 31, 1996
In connection with the administration of the pool of Mortgage
Loans held by you as Custodian and agent for the Co-Trustee, we request the
release, and acknowledge receipt, of the (Trustee's Mortgage File/[specify
document]) for the 90 Day Delinquent FHA Loan described below, for the reason
indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
Upon receipt of this request, please execute and deliver such
90 Day Delinquent FHA Loan to us.
THE MONEY STORE INC.
By:_______________________________
Name:_____________________________
Date:_____________________________
Documents returned to Custodian:
- -------------------------------
Custodian
By:____________________________
Date:__________________________
<PAGE>
EXHIBIT K
TRANSFER AFFIDAVIT
STATE OF )
: ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is a ____________________ of , the proposed
transferee (the "Transferee") of a Percentage Interest in a Class R Certificate
(the "Certificate") issued pursuant to the Pooling and Servicing Agreement, The
Money Store Asset Backed Certificates, Series 1996-B, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10, Class A-11, Class A-12, Class A-13, Class A-14, Class A-15, Class
A-16 and Class R, dated as of May 31, 1996, (the "Agreement") among The Money
Store Inc., as Representative, servicer (the "Servicer") and claims
administrator ("Claims Administrator"), the Originators and The Bank of New
York, as Trustee. Capitalized terms used, but not defined herein shall have the
meanings ascribed to such terms in the Agreement. The Transferee has authorized
the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of
the date of the transfer, a Permitted Transferee. The Transferee is acquiring
its Percentage Interest in the Certificate either (i) for its own account or
(ii) as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass- through entity a Person that is not a
Permitted Transferee is a record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 4.02 of
the Agreement (incorporated herein by reference) and understands the legal
consequences of the acquisition of a Percentage Interest in the Certificate
including, without limitation, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the transfer to the Transferee contemplated hereby
null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to transfer its Percentage Interest in
the Certificate, and in connection with any transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
transfer its Percentage Interest or cause any Percentage Interest to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transfer
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the transfer is to be made is not a Permitted Transferee.
7. The Transferee's taxpayer identification number is __________.
8. Section references and defined terms not defined herein have
the meanings ascribed thereto in the Agreement.
IN WITNESS WHEREOF, the Transferee has caused this instrument to
be executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this _____ day of __________, 19__.
[NAME OF TRANSFEREE]
By:_______________________________
Name:
Title:
[Corporate seal]
ATTEST:
- -------------------------
[Assistant] Secretary
<PAGE>
Personally appeared before me the above-named __________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _____ day of __________, 19__
___________________________________
NOTARY PUBLIC
My Commission expires the
____ day of __________, 19__.
<PAGE>
EXHIBIT L-1
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: ___________
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER:
FORM OF NOTICE
State Street Bank and Trust
Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
20 Exchange Place
New York, NY 10005
Attention: Municipal Registrar and
Paying Agency (16th Floor)
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [Trustee], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
_____________ (the "Policy") issued by the Insurer in respect of the
$___________ The Money Store Asset Backed Certificates, Series 1996-B, Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8
and Class A-9 (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of May 31, 1996, among The Money Store Inc., as
Representative, Servicer and Claims Administrator, the Originators
named therein and the Trustee, as trustee for the Owners;
(ii) the Pool I Current Interest Requirement for the Remittance
Date occurring on ____________________ (the "Applicable Remittance
Date") is $_____________;
(iii) the sum of (a) the Pool I Available Remittance Amount
(including any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.01(a)(iii) of the Agreement
and minus amounts withdrawn required to pay premiums to the Insurer),
(b) the Monthly Excess Spread and (c) the Subordination Reduction
Amount (the "Pool I Adjusted Available Remittance Amount") respecting
the Applicable Remittance Date is $______________;
(iv) the Subordination Deficit respecting the Applicable
Remittance Date is $_______________;
(v) the amount of any previously distributed Pool I Available
Amount that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code
in accordance with a final nonappealable order of a court having
competent jurisdiction (the "Preference Amount") is $______________;
(vi) the amount by which the Pool I Current Interest Requirement
exceeds the Pool I Adjusted Available Remittance Amount, plus any
Subordination Deficit, plus any Preference Amount (the "Insured
Payment") is $____________;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (vi) above to be applied to the payment of the Remittance
Amount for the Applicable Remittance Date in accordance with the
Agreement;
(viii) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [INSURANCE PAYING AGENT'S ACCOUNT].
<PAGE>
Any capitalized term used in this Notice and not otherwise
defined herein shall have the meaning assigned thereto in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Notice under the Policy as of the _____ day of ____________, _____.
[TRUSTEE]
By_____________________________________
Title__________________________________
<PAGE>
EXHIBIT L-2
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: ___________
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER:
FORM OF NOTICE
State Street Bank and Trust
Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
20 Exchange Place
New York, NY 10005
Attention: Municipal Registrar and
Paying Agency (16th Floor)
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [Trustee], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
_____________ (the "Policy") issued by the Insurer in respect of the $_________
The Money Store Asset Backed Certificates, Series 1996-B, Class A-10 and Class
A-11 (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of May 31, 1996, among The Money Store Inc., as
Representative, Servicer and Claims Administrator, the Originators
named therein and the Trustee, as trustee for the Owners;
(ii) the Pool II Current Interest Requirement for the Remittance
Date occurring on ____________________ (the "Applicable Remittance
Date") is $_____________;
(iii) the sum of (a) the Pool II Available Remittance Amount
(including any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.01(a)(iii) of the Agreement
and minus amounts withdrawn required to pay premiums to the Insurer),
(b) the Monthly Excess Spread and (c) the Subordination Reduction
Amount (the "Pool II Adjusted Available Remittance Amount") respecting
the Applicable Remittance Date is $______________;
(iv) the Subordination Deficit respecting the Applicable
Remittance Date is $_______________;
(v) the amount of any previously distributed Pool II Available
Amount that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code
in accordance with a final nonappealable order of a court having
competent jurisdiction (the "Preference Amount") is $______________;
(vi) the Supplemental Interest Trust Deficiency Amount is
$________________________;
(vii) the amount by which the Pool II Current Interest
Requirement exceeds the Pool II Adjusted Available Remittance Amount,
plus any Subordination Deficit, plus any Preference Amount, plus any
Supplemental Interest Trust Deficiency Amount (the "Insured Payment")
is $____________;
(viii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (vii) above to be applied to the payment of the Remittance
Amount and, if applicable, Supplemental Interest Payments, for the
Applicable Remittance Date in accordance with the Agreement;
(xi) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [INSURANCE PAYING AGENT'S ACCOUNT].
Any capitalized term used in this Notice and not otherwise
defined herein shall have the meaning assigned thereto in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Notice under the Policy as of the _____ day of , ____.
[TRUSTEE]
By___________________________________
Title________________________________
<PAGE>
EXHIBIT L-3
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: ___________
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER:
FORM OF NOTICE
State Street Bank and Trust
Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
20 Exchange Place
New York, NY 10005
Attention: Municipal Registrar and
Paying Agency (16th Floor)
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [Trustee], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
_____________ (the "Policy") issued by the Insurer in respect of the $__________
The Money Store Asset Backed Certificates, Series 1996-B, Class A-12, Class
A-13, Class A-14 and Class A-15 (the "Obligations"), that:.
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of May 31, 1996, among The Money Store Inc., as
Representative, Servicer and Claims Administrator, the Originators
named therein and the Trustee, as trustee for the Owners;
(ii) the Pool III Current Interest Requirement for the Remittance
Date occurring on ____________________ (the "Applicable Remittance
Date") is $_____________;
(iii) the sum of (a) the Pool III Available Remittance Amount
(including any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.01(a)(iii) of the Agreement
and minus amounts withdrawn required to pay premiums to the Insurer
and the FHA Premium), (b) the Monthly Excess Spread and (c) the
Subordination Reduction Amount (the "Pool III Adjusted Available
Remittance Amount") respecting the Applicable Remittance Date is
$_______________;
(iv) the Subordination Deficit respecting the Applicable
Remittance Date is $_______________;
(v) the amount of any previously distributed Pool III Available
Amount that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code
in accordance with a final nonappealable order of a court having
competent jurisdiction (the "Preference Amount") is $______________;
(vi) the amount by which the Pool III Current Interest
Requirement exceeds the Pool III Adjusted Available Remittance Amount,
plus any Subordination Deficit, plus any Preference Amount (the
"Insured Payment") is $____________;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (vi) above to be applied to the payment of the Remittance
Amount for the Applicable Remittance Date in accordance with the
Agreement;
(viii) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [INSURANCE PAYING AGENT'S ACCOUNT].
Any capitalized term used in this Notice and not otherwise
defined herein shall have the meaning assigned thereto in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Notice under the Policy as of the _____ day of __________________, ____.
[TRUSTEE]
By_______________________________
Title____________________________
<PAGE>
EXHIBIT L-4
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: ___________
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER:
FORM OF NOTICE
State Street Bank and Trust
Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
20 Exchange Place
New York, NY 10005
Attention: Municipal Registrar and
Paying Agency (16th Floor)
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [Trustee], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
_____________ (the "Policy") issued by the Insurer in respect of the
$____________ The Money Store Asset Backed Certificates, Series 1996-B, Class
A-16 (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of May 31, 1996, among The Money Store Inc., as
Representative, Servicer and Claims Administrator, the Originators
named therein and the Trustee, as trustee for the Owners;
(ii) the Pool IV Current Interest Requirement for the Remittance
Date occurring on ____________________ (the "Applicable Remittance
Date") is $_____________;
(iii) the sum of (a) the Pool IV Available Remittance Amount
(including any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.01(a)(iii) of the Agreement
and minus amounts withdrawn required to pay premiums to the Insurer),
(b) the Monthly Excess Spread and (c) the Subordination Reduction
Amount (the "Pool IV Adjusted Available Remittance Amount") respecting
the Applicable Remittance Date is $______________;
(iv) the Subordination Deficit respecting the Applicable
Remittance Date is $_______________;
(v) the amount of any previously distributed Pool IV Available
Amount that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code
in accordance with a final nonappealable order of a court having
competent jurisdiction (the "Preference Amount") is $______________;
(vi) the amount by which the Pool IV Current Interest Requirement
exceeds the Pool IV Adjusted Available Remittance Amount, plus any
Subordination Deficit, plus any Preference Amount (the "Insured
Payment") is $____________;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (vi) above to be applied to the payment of the Remittance
Amount for the Applicable Remittance Date in accordance with the
Agreement;
(viii) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [INSURANCE PAYING AGENT'S ACCOUNT].
Any capitalized term used in this Notice and not otherwise
defined herein shall have the meaning assigned thereto in the Policy.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Notice under the Policy as of the _____ day of , ____.
[TRUSTEE]
By________________________________
Title_____________________________
<PAGE>
EXHIBIT M
CUSTODIAL AGREEMENT
Dated __________, 1996
THE BANK OF NEW YORK, a New York banking corporation, as Trustee
(the "Trustee") and _______________________________, a
____________________________ (the "Custodian"), agree as follows:
WHEREAS, the Trustee, the Originators and The Money Store Inc.
("The Money Store") have entered into a Pooling and Servicing Agreement dated as
of May 31, 1996 relating to The Money Store Asset Backed Certificates, Series
1996-B, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class A-12, Class A-13, Class
A-14, Class A-15, Class A-16 and Class R, (the "Pooling Agreement"), the terms
defined therein being used herein with the same meaning) pursuant to which the
Originators transferred, assigned, set-over and otherwise conveyed to the
Trustee, without recourse, all of the Originators' right, title and interest in
and to the mortgage loans identified in Exhibits H, H-1, H-2 and H-3 to the
Pooling Agreement (the "Mortgage Loans"); and
WHEREAS, in connection with such transfer and assignment and
pursuant to the Pooling Agreement, the Trustee holds, directly or pursuant to a
custodial agreement, the Mortgage Files:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Custodian and the Trustee agree as follows:
1. APPOINTMENT AS CUSTODIAN; ACKNOWLEDGMENT OF Receipt. Subject
to the terms and conditions herein, the Trustee hereby appoints the Custodian,
and the Custodian hereby accepts such appointment, as its Custodian to maintain
custody of the Trustee's Mortgage Files. The Custodian hereby acknowledges
receipt of the Mortgage Notes, the Mortgages, the assignments and other
documents relating to the Mortgage Loans referred to in Section 2.04, except for
the items referred to in Section 2.04(d)(ii), of the Pooling Agreement. The
Trustee shall be liable for all of the Custodian's fees under this Agreement.
2. MAINTENANCE OF OFFICE. The Custodian agrees to maintain each
Trustee's Mortgage File identified in Section 2.04 of the Pooling Agreement,
said Exhibit being incorporated herein by reference, at the office of the
Custodian located at ________ ___________________ or at such other office of the
Custodian in New York, New York as the Custodian shall designate from time to
time after giving the Trustee 30 days' prior written notice.
3. DUTIES OF CUSTODIAN. As Custodian, the Custodian shall have
and perform the following powers and duties:
(a) SAFEKEEPING. To segregate the Trustee's Mortgage Files
from all other mortgages and mortgage notes and similar records in its
possession, to identify the Trustee's Mortgage Files as being held and
to hold the Trustee's Mortgage Files for and on behalf of the Trustee
for the benefit of all present and future Certificateholders, to
maintain accurate records pertaining to each Mortgage Note and
Mortgage in the Trustee's Mortgage Files as will enable the Trustee to
comply with the terms and conditions of the Pooling Agreement, to
maintain at all times a current inventory thereof and to conduct
periodic physical inspections of the Trustee's Mortgage Files held by
it under this Agreement in such a manner as shall enable the Trustee
and the Custodian to verify the accuracy of such record-keeping,
inventory and physical possession. The Custodian will promptly report
to the Trustee any failure on its part to hold the Trustee's Mortgage
Files as herein provided and promptly take appropriate action to
remedy any such failure.
(b) RELEASE OF DOCUMENTS. To release any Mortgage Note and
Mortgage in the Trustee's Mortgage Files as provided in the Pooling
Agreement.
(c) ADMINISTRATION; REPORTS. In general, to attend to all
non-discretionary details in connection with maintaining custody of
the Trustee's Mortgage Files on behalf of the Trustee. In addition,
the Custodian shall assist the Trustee generally in the preparation of
reports to Certificateholders or to regulatory bodies to the extent
necessitated by the Custodian's custody of the Trustee's Mortgage
Files.
4. ACCESS TO RECORDS. The Custodian shall permit the Trustee or
its duly authorized representatives, attorneys or auditors and those persons
permitted access pursuant to Section 5.13 of the Pooling Agreement to inspect
the Trustee's Mortgage Files and the books and records maintained by the
Custodian pursuant hereto at such times as they may reasonably request, subject
only to compliance with the terms of the Pooling Agreement.
5. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed
to have received proper instructions with respect to the Trustee's Mortgage
Files upon its receipt of written instructions signed by a Responsible Officer
of the Trustee. A certified copy of a resolution of the Board of Directors of
the Trustee may be accepted by the Custodian as conclusive evidence of the
authority of any such officer to act and may be considered as in full force and
effect until receipt of written notice to the contrary by the Custodian from the
Trustee. Such instructions may be general or specific in terms.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to
indemnify the Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses, including attorneys' fees, of any kind whatsoever
which may be imposed on, incurred by or asserted against the Trustee as the
result of any act or omission in any way relating to the maintenance and custody
by the Custodian of the Trustee's Mortgage Files; provided, however, that the
Custodian shall not be liable for any portion of any such amount resulting from
the gross negligence or wilful misconduct of the Trustee.
7. ADVICE OF COUNSEL. The Custodian and the Trustee further agree
that the Custodian shall be entitled to rely and act upon advice of counsel with
respect to its performance hereunder as Custodian and shall be without liability
for any action reasonably taken pursuant to such advice, provided that such
action is not in violation of applicable Federal or State law. This paragraph
shall not negate the Custodian's obligations under paragraph 6 above.
8. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT, AND INTERPRETIVE
AND ADDITIONAL PROVISIONS. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, and may be amended at any time by mutual agreement of the
parties hereto. This Agreement may be terminated by either party in a writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after, the termination of
this Agreement, the Custodian shall redeliver the Trustee's Mortgage Files to
the Trustee at such place as the Trustee may reasonably designate. In connection
with the administration of this Agreement, the Custodian and the Trustee may
agree from time to time upon the interpretation of the provisions of this
Agreement as may in their opinion by consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed and annexed
hereto.
9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
10. NOTICES. Notices and other writings shall be delivered or
mailed, postage prepaid, to the Trustee at 101 Barclay Street, 12th Floor West,
New York, New York 10286, Attention: Corporate Trust Administration - MBS, or to
the Custodian at, _________________________________________, Attention:
__________; or to such other address as the Trustee or the Custodian may
hereafter specify in writing. Notices or other writings shall be effective only
upon actual receipt by the parties.
11. BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the Trustee and the Custodian and their respective
successors and assigns. Concurrently with the appointment of a successor trustee
as provided in Section 12.08 of the Pooling Agreement, the Trustee and the
Custodian shall amend this Agreement to make said successor trustee the
successor to the Trustee hereunder.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
THE BANK OF NEW YORK
as Trustee under the Pooling
Agreement referred to above
By:________________________________
________________________________, as
Custodian
By:_________________________________
<PAGE>
EXHIBIT M-1
CUSTODIAL AGREEMENT
(The Money Store Asset Backed Certificates, Series 1996-B)
Dated: June 27, 1996
FIRST BANK (N.A.), a national banking association headquartered
in Milwaukee, Wisconsin, as co-trustee (the "Co-Trustee"), and FIRST TRUST
NATIONAL ASSOCIATION, a national banking association headquartered in St. Paul,
Minnesota, as custodian ("Custodian"), agree as follows:
WHEREAS, the Trustee, the Originators and The Money Store Inc.
("The Money Store") have entered into a Pooling and Servicing Agreement dated as
of May 31, 1996 (the "Pooling Agreement") relating to The Money Store Asset
Backed Certificates, Series 1996-B, Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class A-12, Class A-13, Class A-14, Class A-15, Class A-16 and Class R, (the
applicable provisions of which Pooling Agreement have been accepted and agreed
to by the Co- Trustee and the Custodian in connection with The Pool III Mortgage
Loans) pursuant to which the Originators transferred, assigned, set-over and
otherwise conveyed to the Trustee (or, in connection with the Pool III Mortgage
Loans, to the Co-Trustee), without recourse, all of the Originator's right,
title and interest in and to the mortgage loans identified in Exhibits H, H-1,
H-2, and H-3 to the Pooling Agreement, including the Pool III Mortgage Loans;
and
WHEREAS, the Co-Trustee wishes to appoint the Custodian to hold
the Trustee's Mortgage Files relating to the Pool III Mortgage Loans as its
custodian:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Custodian and the Co-Trustee agree as follows:
1. APPOINTMENT AS CUSTODIAN; ACKNOWLEDGEMENT OF RECEIPT. Subject
to the terms and conditions herein, the Co-Trustee hereby appoints the
Custodian, and the Custodian hereby accepts such appointment, as its custodian
to maintain custody of the Trustee's Mortgage Loan Files relating to the Pool
III Mortgage Loans. The Custodian hereby acknowledges that it has possession of
the Trustee's Mortgages Files relating to the Pool III Mortgage Loans, except as
noted on the document exception listing previously delivered to The Money Store
or to be delivered to The Money Store and the Co-Trustee in accordance with the
Pooling Agreement.
2. CUSTODIAL ACCOUNT. The Custodian agrees to open a segregated
custody account in the Co-Trustee's name with itself at its office in St. Paul,
Minnesota or at such other of its offices in the State of Minnesota as shall
from time to time be identified to the Co-Trustee upon 30 days' prior written
notice, where the Trustee's Mortgage Files relating to the Pool III Mortgage
Loans will be held on behalf of the Co-Trustee.
3. DUTIES OF CUSTODIAN. As Custodian, the Custodian shall have
and perform the following powers and duties:
(a) SAFEKEEPING. The Custodian will hold the Trustee's Mortgage
Files relating to the Pool III Mortgage Loans on behalf of the Co-Trustee. The
Custodian will promptly report to the Co-Trustee any failure on its part to hold
the Trustee's Mortgage Files relating to the Pool III Mortgage Loans as herein
provided and promptly take appropriate action to remedy any such failure.
(b) ACCESS TO TRUSTEE'S MORTGAGE FILES. The Custodian will,
subject to security requirements of the Custodian applicable to its own
employees having access to similar records held by the Custodian and such
regulations as may be reasonably imposed by the Custodian, permit The Money
Store, the Co-Trustee or the Servicer or any of their duly authorized
representatives, attorneys or auditors to inspect the Trustee's Mortgage Files
relating to the Pool III Mortgage Loans at such times as the Co-Trustee may
reasonably request.
(c) RELEASE OF DOCUMENTS. The Custodian will release any Pool III
Mortgage Loan to the Servicer for servicing by the Servicer or to The Money
Store for purchase by The Money Store, all as provided in the Pooling Agreement.
(d) ADMINISTRATION; REPORTS. The Custodian will, in general,
attend to all non-discretionary details in connection with maintaining custody
of the Trustee's Mortgage Files relating to the Pool III Mortgage Loans on
behalf of the Co-Trustee. In addition, the Custodian shall assist The Money
Store, the Co- Trustee and the Servicer generally in the preparation of routine
reports to Certificateholders or to regulatory bodies, if any, to the extent
necessitated by the Custodian's custody of the Trustee's Mortgage Files relating
to the Pool III Mortgage Loans.
4. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed
to have received proper instructions with respect to the Trustee's Mortgage
Files relating to the Pool III Mortgage Loans upon its receipt of written
instructions signed by a Responsible Officer of the Co-Trustee. A certified copy
of a resolution of the Board of Directors of the Co-Trustee may be received and
accepted by the Custodian as conclusive evidence of the authority of any such
officer to act and may be considered as in full force and effect until receipt
of written notice to the contrary by the Co-Trustee. Such instructions may be
general or specific in terms.
5. CUSTODIAL FEE. For its services under this Agreement, the
Custodian shall be entitled to reasonable compensation out of the Co-Trustee's
fees received pursuant to the Pooling Agreement.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to
indemnify the Co-Trustee for any and all liabilities, obligations, losses,
damages, payments, costs or expenses, including attorneys' fees, of any kind
whatsoever which may be imposed on, incurred by or asserted against the
Co-Trustee as the result of any act or omission in any way relating to the
maintenance and custody by the Custodian of the Trustee's Mortgage Files
relating to the Pool III Mortgage Loans; provided, however, that the Custodian
shall not be liable for any portion of any such liabilities, obligations,
losses, damages, payments or costs due to the misconduct of the Co-Trustee.
7. ADVICE OF COUNSEL. The Custodian and the Co-Trustee further
agree that the Custodian shall be entitled to rely and act upon advice of
counsel with respect to its performance hereunder as Custodian and shall be
without liability for any action reasonably taken pursuant to such advice,
provided that such action is not in violation of applicable Federal or State
law.
8. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT, AND INTERPRETIVE
AND ADDITIONAL PROVISIONS. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by the Co-Trustee in a writing delivered or
mailed to the Custodian and The Money Store, postage prepaid, such termination
to take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after any such
termination, the Custodian shall assemble the Trustee's Mortgage Files relating
to the Pool III Mortgage Loans and return them to the Co-Trustee at such place
as the Co-Trustee may reasonably designate. In connection with the
administration of this Agreement, the Custodian and the Co-Trustee may agree
from time to time upon the interpretation of the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor and purposes of
this Agreement, any such interpretation to be signed by all parties and annexed
hereto.
9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Minnesota.
10. NOTICES. Notices and other writings shall be delivered or
mailed, postage prepaid, to the Co-Trustee at First Bank (N.A.), 201 West
Wisconsin Avenue, Milwaukee, Wisconsin, Attn: Corporate Trust Department, or to
the Custodian at First Trust National Association, 180 East Fifth Street, St.
Paul, Minnesota 55101, Attention: Barbara K. Armstrong, or to such other address
as the Co-Trustee or the Custodian may hereafter specify in writing, shall be
conclusively presumed to have been duly given hereunder to the respective party,
whether or not such party receives such notice.
11. BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the Co-Trustee and the Custodian and their
respective successors and assigns. Concurrently with the appointment of a
successor co-trustee as provided in the Pooling Agreement, the Co-Trustee and
the Custodian shall amend this Agreement to make said successor co-trustee the
successor to the Co-Trustee hereunder.
12. TERMS. Capitalized terms not otherwise defined in this
Agreement shall have the respective meanings given to them in the Pooling
Agreement.
FIRST BANK (N.A.),
as Co-Trustee under the Pooling
Agreement referred to above
By:_____________________________
Its:____________________________
By:_____________________________
Its:____________________________
FIRST TRUST NATIONAL ASSOCIATION
as Custodian under the Pooling
Agreement referred to above
By:_____________________________
Its:____________________________
By:_____________________________
Its:____________________________
<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Total Proceeds $_______
2. Servicing Advances $________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
EXHIBIT O
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
<TABLE>
<CAPTION>
REO FORECLOSURES
OUTSTANDING # # OF # OF OUTSTANDING # OF OUTSTANDING
INVESTOR DOLLARS ACCT RANGES AMOUNT ACCTS. PCT ACCTS DOLLARS % ACCTS DOLLARS %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 AND OVER
TOTALS
</TABLE>
<PAGE>
EXHIBIT P
[OMITTED]
<PAGE>
EXHIBIT Q
[OMITTED]
<PAGE>
EXHIBIT R
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section
6.10 shall contain the following information for each Mortgage Loan as of the
related Record Date:
1. Name of the Mortgagor, address of the Mortgaged Property and
Account Number.
2. The LTV as of the origination date of the Mortgage Loan.
3. The Due Date.
4. The Mortgage Loan Original Principal Balance.
5. The Mortgage Interest Rate.
6. The Monthly Payment.
7. The date on which the last payment was received and the amount of
such payment segregated into the following categories; (a) total
interest received (including Servicing Fee, Contingency Fee and
Excess Spread); (b) Servicing Fee and Contingency Fee; (c) Excess
Spread; (d) The amount equal to total interest received minus
Servicing Fee, Contingency Fee and Excess Spread; (e) principal
and Excess Payments received; (f) Curtailments received; and (g)
Principal Prepayments received.
8. The Mortgage Loan Principal Balance.
9. The Mortgage Note maturity date.
10. A "Delinquency Flag" noting that the Mortgage Loan is current or
delinquent. If delinquent, state the date on which the last
payment was received.
11. A "Foreclosure Flag" noting that the Mortgage Loan is the subject
of foreclosure proceedings.
12. An "REO Flag" noting that the Mortgage Loan is an REO Property.
13. A "Liquidated Mortgage Loan Flag" noting that the Mortgage Loan
is a Liquidated Mortgage Loan and the Net Liquidation Proceeds
received in connection therewith.
14. Lifetime Cap.
15. Lifetime Floor.
16. Periodic Cap.
17. Net Funds Cap.
18. Any additional information reasonably requested by the Trustee.
<PAGE>
EXHIBIT S
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the ____ day of
June 1996, by and between The Money Store Inc., a New Jersey corporation (the
"Servicer") whose principal business address is 2840 Morris Avenue, Union, New
Jersey 07083, and each of the entities listed on Schedule A hereto (each an
"Originator", and collectively the "Originators").
RECITALS
1. Each Originator is a wholly-owned subsidiary of the Servicer.
2. The Servicer, the Originators and The Bank of New York, as trustee
(the "Trustee"), are parties to that certain Pooling and Servicing Agreement
dated and effective as of May 31, 1996 (the "Pooling and Servicing Agreement").
3. Pursuant to the terms of the Pooling and Servicing Agreement, each
Originator has transferred those certain Mortgage Loans (as defined in the
Pooling and Servicing Agreement) listed next to each Originator's name on
Schedule B hereto to the Trustee or (in the case of the Pool III Loans
Co-Trustee), for the benefit of Certificateholders (as defined in the Pooling
and Servicing Agreement).
4. The Originators desire to convey to the Servicer the right to
service the Mortgage Loans. As authorized by the Pooling and Servicing
Agreement, the Servicer desires to enter into a subservicing agreement with each
Originator so that each Originator will perform subservicing functions for the
Mortgage Loans transferred by it to the Trustee or (in the case of the Pool III
Loans Co-Trustee), such subservicing functions to be rendered in compliance with
the terms of the Pooling and Servicing Agreement.
5. Each Originator desires to undertake such subservicing and
supervision of the Mortgage Loans on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the agreements of the parties
herein and other good and valuable consideration, the receipt and sufficiency of
which each party hereby acknowledges, and in order in part to induce the Trustee
to enter into the Pooling and Servicing Agreement and perform its obligations
thereunder, the parties agree as follows:
1. ASSIGNMENT OF SERVICING; SUBSERVICING AGREEMENT. Each Originator
hereby assigns, transfers, conveys and sets over to the Servicer, its successors
and assigns, all of such Originator's right, title and interest to service the
Mortgage Loans listed next to such Originator's name on the schedule furnished
by each Originator to the Servicer and dated the date hereof, to have and to
hold such rights hereby assigned, conveyed and transferred to the Servicer, for
its own use and benefit, and that of its successors and assigns, forever. In
consideration of the foregoing assignment, the Servicer hereby appoints each
Originator as subservicer with respect to the Mortgage Loans conveyed by each
such Originator to the Trustee (or, in the case of the Pool III Loans, to the
Co-Trustee), each such Originator to service and supervise such Mortgage Loans
as provided for herein, such subservicing to commence on the effective date of
this Agreement and to terminate as provided for herein. As compensation for such
subservicing and supervision, each Originator shall be entitled to an annual fee
for each Mortgage Loan serviced, such fee to be computed and paid as set forth
on Schedule B hereto. Each Originator, as contract subservicer, shall service
and administer the Mortgage Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Originator may deem necessary or desirable; PROVIDED,
HOWEVER, that each Originator shall conduct its servicing activities (i) in
compliance with and pursuant to the servicing requirements set out in the
Pooling and Servicing Agreement, as such requirements relate to subservicing
rendered thereunder, and (ii) to the extent not inconsistent with such
Originator's obligations as an authorized subservicer under the Pooling and
Servicing Agreement, (x) in accordance with the provisions of Section 3 hereof
and (y) otherwise in accordance with the standards and requirements set forth on
Schedule C hereto and subject to applicable Federal, state and local laws and
regulations. On or after the date hereof, each Originator shall deliver such
appropriately executed and authenticated instruments of sale, assignment,
transfer and conveyance to the Servicer, if any, including limited powers of
attorney, as the Servicer or its counsel determine to be reasonable in order to
accomplish the transfer to the Servicer of such Originator's rights with respect
to the servicing.
2. REPRESENTATIONS AND WARRANTIES. Each Originator represents and
warrants as follows:
2.1 Such Originator is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Originator is
and at all relevant times has been properly licensed and qualified to transact
business in all appropriate jurisdictions, to conduct all activities performed
with respect to origination and servicing of the Mortgage Loans and is in good
standing in each jurisdiction in which the failure to be in such good standing
would have a material, adverse effect on the consummation of the transactions
contemplated hereby.
2.2 Originator has all requisite corporate power, authority and
capacity to enter into this Agreement and to perform the obligations required of
it hereunder. The execution and delivery of this Agreement by the Originator,
and the consummation of the transactions contemplated hereby, have each been
duly and validly authorized by all necessary corporate action. This Agreement
constitutes the valid and legally binding agreement of Originator enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance of this Agreement, subject to laws respecting bankruptcy,
receivership, insolvency and other laws affecting creditors' rights generally.
2.3 The execution, delivery and performance of this Agreement by
Originator, its compliance with the terms hereof and consummation of the
transactions contemplated will not violate, conflict with, result in a breach
of, constitute a default under, be prohibited by or require any additional
approval under its certificate of incorporation, bylaws, or any instrument or
agreement to which it is a party or by which it is bound or which affects the
servicing conveyed hereunder.
2.4 Such Originator is the lawful owner of the servicing, has the sole
right and authority to transfer the servicing as contemplated hereby, and is not
contractually obligated to sell the servicing to any other party. The transfer,
assignment and delivery of the servicing in accordance with the terms and
conditions of this Agreement shall vest in the Servicer all rights as servicer
free and clear of any and all claims, charges, defenses, offsets and
encumbrances of any kind or nature whatsoever, including but not limited to
those of Originator.
2.5 With respect to each individual Mortgage Loan for which servicing
rights are assigned hereunder, such Originator makes to the Servicer those
representations and warranties that are contained in Section 3.02 of the Pooling
and Servicing Agreement.
3. ORIGINATOR'S DUTIES. Until the principal, interest and any other
amounts due on each Mortgage Loan are paid in full, each Originator shall:
A. Proceed diligently to collect all payments due under the terms
of each Mortgage Loan as they become due.
B. Keep a complete and accurate account of and properly apply all
sums collected by it from the mortgagor on account of each such
Mortgage Loan for principal and interest, and upon request, furnish
evidence acceptable to the Servicer of all expenditures for taxes,
assessments and other public charges and hazard insurance premiums. In
the event any Mortgagor fails to make a payment to an Originator
required to be made under the terms of any such Mortgage Loan, such
Originator will notify the Servicer of such fact within 20 days after
the same shall have become due and payable.
C. Deposit all funds received in respect of each Mortgage Loan in
an account in an institution the accounts of which are insured by an
agency of the United States government. Unless directed otherwise by
the Servicer such account shall be held by a Originator, which shall
maintain or shall cause to be maintained detailed records to show the
respective interest of each individual mortgagor in the account.
D. Pay into the related Principal and Interest Accounts (as
defined in the Pooling and Servicing Agreement) all amounts of
principal and interest collected under the Mortgage Loans.
E. Submit to the Servicer at least annually an accounting of the
balances in each such account, if any.
F. Perform such other customary duties, furnish such other
reports and execute such other documents in connection with its duties
hereunder as the Servicer from time to time reasonably may require.
4. ADVANCES BY ORIGINATOR. In the event an Originator, on behalf of
the Servicer, makes any advance of principal and/or interest to the holder of a
mortgage serviced hereunder before such Originator has received the applicable
mortgage payment from any mortgagor, or makes any other advance to protect the
security of a mortgage or otherwise (including but not limited to property
taxes, special assessments, and hazard insurance premiums), EXCEPT advances
related to foreclosure or real estate owned losses (which are covered by Section
8), then the Servicer, promptly upon being billed therefore, shall, at its
option, either (i) reimburse such Originator the full amount of all such
advances, (ii) credit such amount as a set-off against amounts such Originator
may then owe to the Servicer pursuant to this Agreement, (iii) use a combination
of such reimbursement and crediting to fully discharge such amount or (iv)
forego such reimbursement or crediting with respect to all or a portion of such
amount, in which case the amount not reimbursed or offset shall be deemed
currently due and payable and, until paid to such Originator, shall bear
interest on the average monthly balance thereof at the underlying Mortgage Loan
Rate.
5. ORIGINATOR'S RECORDS; MONITORING OF PROPERTY. Each Originator will
during regular business hours make all of its records and files relating to
Mortgage Loans covered by this Agreement available for inspection by the
Servicer and its authorized agents. In addition, an Originator will use ordinary
diligence to ascertain, and will forthwith notify the Servicer of any of the
following which might come to the attention of such Originator:
A. The vacating of or any change in the occupancy of any premises
securing a mortgage.
B. The sale or transfer of any such premises.
C. The death, bankruptcy, insolvency or other disability of a
mortgagor which might impair ability to repay the Mortgage Loan.
D. Any loss or damage in excess of $10,000 to any such premises,
in which event, in addition to notifying the Servicer, an Originator
shall see to it that the insurance companies concerned are promptly
notified. For losses or damages of $10,000 or less, the Servicer
hereby authorizes an Originator to endorse insurance checks or drafts
on behalf of the Servicer. For losses or damages in excess of $10,000,
an Originator shall make a report to the Servicer and the Servicer
retains the right to endorse any insurance drafts related to such loss
or damage.
E. Any lack of repair or any other deterioration or waste
suffered or committed in respect to the premises covered by any
mortgage.
It is understood and agreed, however, that no notice need be given to the
Servicer of any facts other than those of which an Originator has actual notice,
or those of which an Originator would, except for its negligence, have had
actual notice.
6. NO WAIVER, RELEASE OR CONSENT BY ORIGINATOR. An Originator will not
waive, modify, release or consent to postponement on the part of the mortgagor
of any term or provision of any Mortgage Loan without the consent of the
Servicer.
7. HAZARD INSURANCE. An Originator shall cause to be maintained such
fire and hazard insurance as shall be requested by the Servicer pursuant to
Sections 5.07 and 5.08 of the Pooling and Servicing Agreement.
8. FORECLOSURE AND REAL ESTATE OWNED. An Originator will assist in the
foreclosure or other acquisition of the property securing any Mortgage Loan and
the transfer of such property, pursuant to instruction of the Servicer given
under Section 5.10 of the Pooling and Servicing Agreement.
9. TERM; TERMINATION. This Agreement shall commence on the date hereof
and shall, subject to earlier termination pursuant to the provisions of this
Section 9, terminate upon the termination of the Pooling and Servicing
Agreement. This Agreement may be cancelled and terminated (i) at any time
hereunder by the Servicer on 10 days notice to an Originator, or (ii) by the
Trustee or the Co-Trustee on notice to an Originator, at any time after the
Trustee or the Co-Trustee, as the case may be, shall have become the successor
servicer with respect to the Mortgage Loans or Pool III Loans, as the case may
be, pursuant to Sections 10.01 and 10.02 of the Pooling and Servicing Agreement.
In addition, this Agreement may be cancelled and terminated by the Servicer, by
notice to an Originator, if:
A. An Originator fails in a material respect to perform its
obligations hereunder and (i) does not cure or rectify such failure
within 45 days or, (ii) if the character of such cure or rectification
is such that it cannot reasonably be effected within 45 days, does not
commence such cure or rectification within 45 days and complete the
same within a commercially reasonable time thereafter, given the
circumstances.
B. An Originator becomes insolvent or bankrupt or is placed under
conservatorship or receivership.
C. An Originator assigns or attempts to assign its rights and
obligations hereunder, without written consent of the Servicer,
provided that any assignment, transfer or other conveyance of an
Originator's rights and obligations hereunder that occurs as a result
of a merger, consolidation, reorganization, name change or acquisition
of or involving an Originator shall not be construed as an assignment
(or attempted assignment) under the provisions of this Section 9.C.
Upon termination of this Agreement, an Originator will account for and turn over
to the Servicer all funds collected under each Mortgage Loan for which said
termination is effective, less only the compensation, fees and reimbursements
then due an Originator, and will deliver to the Servicer or its designee all
records and documents relating to each such mortgage.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Each Originator will
comply with, and will use all reasonable efforts to cause each Mortgagor to
comply with, all applicable state and federal rules and regulations or
requirements including those requiring the giving of notices.
11. FIDELITY, ERRORS AND OMISSIONS INSURANCE, ETC. Each Originator
agrees to be responsible, at no expense to the Servicer, for seeing to it that
at all times, while this Agreement is in force, policies of fidelity, fire, and
extended coverage, theft, forgery, and errors and omissions insurance are
maintained in conformity with the Pooling and Servicing Agreement. Each
Originator will, without demand therefore, provide the Servicer annually, on a
date agreeable to the Servicer, a certificate or binder of insurance delineating
the various types of insurance carried by such Originator.
12. MISCELLANEOUS. This document contains the entire agreement between
the parties hereto and cannot be modified in any respect except by an amendment
in writing signed by each party. The invalidity of any portion of this Agreement
shall in no way affect the balance thereof. Any notice permitted or required
hereunder shall be in writing and shall be deemed given when hand delivered to
an officer or authorized agent of, or when mailed, registered or certified mail,
postage prepaid, to Servicer or an Originator at the address of the Servicer set
forth above. The captions and headings used in this Agreement are for
convenience only, and do not define or limit the terms and provisions of this
Agreement. Notwithstanding any provision in this Agreement to the contrary,
nothing contained herein shall be deemed an attempt to assign or an assignment
of any servicing rights by an Originator to the Servicer if an attempted
assignment of the same without the consent of any agency or instrumentality of
the United States or a state thereof (a "Regulatory Authority") with
jurisdiction over such assignment would constitute a breach of an applicable
regulatory requirement or agreement between an Originator and such Regulatory
Authority unless and until such consent shall have been obtained. In the event
the consent of any Regulatory Authority is required to authorize the conveyance
of any or all of the servicing to be conveyed hereunder and such consent shall
not have been granted prior to the occurrence of an Event of Default under
Section 10.01 of the Pooling and Servicing Agreement, then upon the occurrence
of an Event of Default, each Originator shall enter into an agreement with the
Trustee (or, in the case of the Pool III Loans, the Co-Trustee), which agreement
shall be in form and substance satisfactory to the Trustee (or, in the case of
the Pool III Loans, the Co-Trustee) and its counsel, which recognizes the
Trustee (or, in the case of the Pool III Loans, the Co-Trustee) as the successor
servicer of the Mortgage Loans as provided for by such Section 10.01, and shall
continue to subservice the Mortgage Loans or shall convey such subservicing at
the election and upon the direction of the Trustee (or, in the case of the Pool
III Loans, the Co-Trustee).
IN WITNESS WHEREOF, each party has caused this instrument to be signed
in its corporate name on its behalf by its proper officials duly authorized as
of the day and year first above written.
SERVICER:
ATTEST: The Money Store Inc.
By: ______________________ By: ______________________________
Philip Arem Morton Dear
Assistant Secretary Executive Vice President
ORIGINATORS:
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
ATTEST:
By: _______________________ By: ______________________________
Philip Arem Morton Dear
Assistant Secretary Executive Vice President
<PAGE>
SCHEDULE A
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
SCHEDULE B
Each Originator shall receive 25 basis points as compensation for
servicing hereunder as well as other servicing fees as permitted.
ORIGINATORS MORTGAGE LOANS TRANSFERRED
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
SCHEDULE C
1. Make telephone contact with any Mortgagor whose account is either a first
payment default or delinquent 9-29 days.
2. Confirm telephone contacts as necessary.
3. Contact, in writing, each Mortgagor who can not be contacted.
4. Send a "default" letter to any Mortgagor who is 30 days delinquent.
5. Commence foreclosure proceedings after 60 days delinquency.
6. Obtain legal counsel where appropriate including in foreclosure matter
commenced by prior lienholders and bankruptcy matters.
7. Monitor all outside counsel and proceedings.
8. Monitor loans for continuing performance.
