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) MARCH 31, 1997
The Money Store Home Improvement Trust 1997-I and the Originators
as listed below under a Pooling and Servicing Agreement dated as of
February 28, 1997 providing for the issuance of The Money Store
Home Improvement Loan Certificates, Series 1997-I.
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
The Money Store/Minnesota Inc.
(Exact name of registrant as specified in its charter)
* 333-20817 *
(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)
* See Schedule A attached hereto.
<PAGE>
Item 5. OTHER EVENTS
The Originators listed on Schedule A attached hereto, registered
issuances of up to $3,500,000,000 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. 333-20817) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, the Originators caused the
issuance of $175,000,000 principal amount of The Money Store Home Improvement
Loan Certificates, Series 1997-I (the "Certificates") by The Money Store Home
Improvement Trust 1997-I (the "Trust"), on March 31, 1997 (the "Closing Date").
This Current Report on Form 8-K is being filed to file a detailed description of
the Initial Home Improvement Loans contributed to the Trust, a copy of the
Pooling and Servicing Agreement referred to below and the Underwriting Agreement
entered into among The Money Store Inc., as representative (the
"Representative"), the Originators and Lehman Brother Inc., as underwriter.
The Certificates were issued pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), dated as of February 28, 1997
(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 M-1, Class M-2, Class B-1, Class B-2, Class X and Class R
Certificates. As of the Closing Date, the initial principal amount of the (i)
Class A-1 Certificates was $48,000,000, (ii) Class A-2 Certificates was
$53,700,000, (iii) Class A-3 Certificates was $19,487,000, (iv) Class M-1
Certificates was $25,375,000, (v) Class M-2 Certificates was $12,250,000, (vi)
Class B-1 Certificates was $9,625,000, and (vii) Class B-2 Certificates was
$6,563,000.
Capitalized terms not defined herein have the meanings assigned in the
Pooling and Servicing Agreement.
<PAGE>
CERTAIN CHARACTERISTICS OF POOL
Set forth below is a description of certain characteristics of the
Initial Home Improvement Loans. Certain of the percentage columns may not sum to
100.00% due to rounding.
<TABLE>
<CAPTION>
Number EOM Number EOM
EOM Balance of Loans Balance % Original Term of Loans Balance %
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 10,000.00 2,220 15,453,121.98 11.77 1- 60 424 2,422,061.64 1.85
10,000.01- 20,000.00 2,775 40,227,130.73 30.65 61-120 1,988 19,066,336.86 14.53
20,000.01- 30,000.00 1,673 41,097,835.31 31.31 121-180 2,111 32,776,301.98 24.97
30,000.01- 40,000.00 599 20,811,762.75 15.86 181-240 1,969 44,404,498.04 33.83
40,000.01- 50,000.00 285 13,091,686.87 9.97 241-300 1,070 32,580,842.08 24.82
50,000.01- 60,000.00 10 568,502.96 0.43
Total: 7,562 131,250,040.60 100 Total: 7,562 131,250,040.60 100
Min: 1,025.98 Max: 60,000.00 Avg: 17,356.52 NZMIN: 24 Max: 300 NZWA: 218
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Coupon of Loans Balance %
<S> <C> <C> <C>
8.501- 9.000 2 24,159.54 0.02
9.501-10.000 667 13,648,253.46 10.4
10.001-10.500 232 4,915,094.40 3.74
10.501-11.000 327 6,397,816.41 4.87
11.001-11.500 136 2,922,234.21 2.23
11.501-12.000 637 10,319,736.11 7.86
12.001-12.500 643 9,383,109.22 7.15
12.501-13.000 1,708 28,358,701.32 21.61
13.001-13.500 617 9,947,875.68 7.58
13.501-14.000 1,378 22,157,683.26 16.88
14.001-14.500 300 5,331,634.28 4.06
14.501-15.000 665 12,083,189.13 9.21
15.001+ 250 5,760,553.58 4.39
Total: 7,562 131,250,040.60 100
Min: 9.000 Max: 16.500 NZWA: 12.878
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Stated Remaining Term of Loans Balance %
<S> <C> <C> <C>
1- 60 434 2,467,214.28 1.88
61-120 1,980 19,053,047.48 14.52
121-180 2,110 32,762,643.72 24.96
181-240 1,968 44,386,293.04 33.82
241-300 1,070 32,580,842.08 24.82
Total: 7,562 131,250,040.60 100
NZMIN: 10 Max: 300 NZWA: 217
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Seasoning of Loans Balance %
<S> <C> <C> <C>
* 0 4,565 80,576,446.30 61.39
1- 12 2,776 48,558,729.91 37.00
13- 24 196 1,911,874.62 1.46
25- 36 22 167,913.47 0.13
37- 48 1 3,213.04 0.00
73- 84 1 13,658.26 0.01
109-120 1 18,205.00 0.01
Total: 7,562 131,250,040.60 100
NZMIN: 1 Max: 120 WA: 1
*=Less Than
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Amortization Type of Loans Balance %
<S> <C> <C> <C>
Regular 7,562 131,250,040.60 100
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Property Type of Loans Balance %
<S> <C> <C> <C>
SF Detached 7,479 129,559,107.32 98.71
SF Attached 10 274,692.48 0.21
2 Family 11 203,493.81 0.16
Town HousE 1 12,793.00 0.01
PUD 2 32,000.00 0.02
3-4 Family 7 207,770.92 0.16
Unk 52 960,183.07 0.73
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Lien Position of Loans Balance %
<S> <C> <C> <C>
1 175 2,606,160.83 1.99
2 7,387 128,643,879.77 98.01
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Occupancy Status of Loans Balance %
<S> <C> <C> <C>
Investment 10 313,762.47 0.24
Primary Home 7,532 130,598,099.52 99.5
Second Home 19 320,315.82 0.24
UNK 1 17,862.79 0.01
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
Number EOM
Loan Documentation of Loans Balance %
<S> <C> <C> <C>
F 7,562 131,250,040.60 100
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
Number EOM
States of Loans Balance %
<S> <C> <C> <C>
AK 6 124,754.03 0.1
AR 167 1,831,509.16 1.4
AZ 358 6,879,325.67 5.24
CA 1,585 37,508,346.53 28.58
CO 111 1,890,051.74 1.44
CT 29 431,295.17 0.33
DC 4 71,545.14 0.05
DE 10 94,769.19 0.07
FL 299 5,643,827.91 4.3
GA 325 6,313,332.47 4.81
IA 55 769,598.24 0.59
ID 34 463,856.20 0.35
IL 492 7,542,197.74 5.75
IN 75 1,022,631.62 0.78
KS 77 1,017,270.00 0.78
KY 25 318,590.96 0.24
LA 708 7,745,024.10 5.9
MA 13 322,397.75 0.25
MD 92 1,069,565.55 0.81
ME 6 108,911.32 0.08
MI 100 1,314,811.48 1
MN 79 1,184,316.16 0.9
MO 116 1,566,904.39 1.19
MS 89 1,157,762.82 0.88
MT 6 92,962.16 0.07
NC 94 1,414,186.37 1.08
ND 1 14,974.00 0.01
NE 12 148,839.77 0.11
NH 1 30,316.00 0.02
NJ 291 5,115,737.55 3.9
NM 42 676,352.97 0.52
NV 306 7,082,364.26 5.4
NY 396 8,247,963.44 6.28
OH 166 2,073,538.49 1.58
OK 116 1,343,536.75 1.02
OR 69 1,236,601.86 0.94
PA 209 2,747,043.50 2.09
RI 2 52,000.00 0.04
SC 51 965,563.95 0.74
SD 3 46,418.55 0.04
TN 127 1,835,456.10 1.4
TX 491 6,756,877.93 5.15
UT 32 549,329.04 0.42
VA 24 285,415.89 0.22
WA 195 3,271,863.81 2.49
WI 55 692,025.73 0.53
WV 12 115,041.19 0.09
WY 6 63,035.95 0.05
Total: 7,562 131,250,040.60 100
</TABLE>
<TABLE>
<CAPTION>
All Records
Number EOM
DUEDATE of Loans Balance %
<S> <C> <C> <C>
1997-01 56 920,076.29 0.7
1997-02 213 3,564,378.04 2.72
1997-03 1,394 23,084,981.71 17.59
1997-04 5,247 93,565,608.66 71.29
1997-05 577 9,104,521.31 6.94
1997-06 74 978,738.59 0.75
1997-11 1 31,736.00 0.02
Total: 7,562 131,250,040.60 100
</TABLE>
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
1.1 Underwriting Agreement, dated March 19, 1997, among The
Money Store Inc., the Originators and Lehman Brothers Inc.
1.2 Pricing Agreement, dated March 19, 1997, between The
Money Store Inc. and Lehman Brothers Inc.
4.1 Pooling and Servicing Agreement, dated February 28, 1997,
among The Money Store Inc., the Originators and The Bank of
New York, as Trustee.
<PAGE>
Schedule A
State of IRS Employer
Registrant Incorporation ID Number
TMS Mortgage Inc. New Jersey 22-3217781
The Money Store/D.C. Inc. D.C. 22-2133027
The Money Store/Kentucky Inc. Kentucky 22-2459832
The Money Store Home Equity Corp. Kentucky 22-2522232
The Money Store/Minnesota Inc. Minnesota 22-3003495
<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.
TMS MORTGAGE INC.
THE MONEY STORE/D.C. INC.
THE MONEY STORE/KENTUCKY INC.
THE MONEY STORE HOME EQUITY CORP.
THE MONEY STORE/MINNESOTA INC.
By: /S/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
Dated: April 11, 1997
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
`
1.1 Underwriting Agreement, dated March 19, 1997,
among The Money Store Inc., the Originators and
Lehman Brothers Inc.
1.2 Pricing Agreement, dated March 19, 1997, between
The Money Store Inc. and Lehman Brothers Inc.
4.1 Pooling and Servicing Agreement, dated February
28, 1997, among The Money Store Inc., the
Originators and The Bank of New York, as Trustee.
Exhibit 1.1
$175,000,000
THE MONEY STORE INC.
The Money Store Home Improvement Loan Certificates
Series 1997-I
UNDERWRITING AGREEMENT
March 25, 1997
Lehman Brothers Inc.
as representative of the several Underwriters
Three World Financial Center
New York, New York 10285
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" or the "Representative") on behalf 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 Home Improvement Loan Certificates Series 1997-I, Class A-1,
Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and Class B-2" (the
"Certificates"), to be issued pursuant to a Pooling and Servicing Agreement,
dated as of February 28, 1997 (the "Pooling and Servicing Agreement"), among the
Company, as Representative, Servicer and Claims Administrator, the Originators
and The Bank of New York, as trustee ("The 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 Certificates will be as set forth on
Annex B hereto. The Certificates will consist of (i) three classes of senior
Certificates (the "Senior Certificates"): Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates (collectively, the Class A
Certificates"); and (ii) four classes of subordinated Certificates (the
"Subordinated Certificates"): Class M-1 Certificates and Class M-2 Certificates
(the "Class M Certificates") and Class B-1 Certificates and Class B-2
Certificates (the "Class B Certificates"). The primary assets of the Trust will
consist of a pool (the "Pool") of loans (the "Loans") having the characteristics
described herein. The Loans will consist primarily of fixed rate, single family
residential first, second and more junior home improvement mortgage loans (the
"Home Improvement Loans"), certain of which Loans (the "FHA Loans") are
partially insured by the Federal Housing Administration of the United States
Department of Housing and Urban Development under Title I of the National
Housing Act of 1934. The Trust will also include funds on deposit in a separate
trust account (the "Pre-Funding Account") to be established with the Trustee.
Simultaneously with the issuance and delivery of the 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 Home Improvement Loan Certificates, Series 1997-I, Class R-1 and
Class R-2" (the "Class R Certificates"), and "The Money Store Home Improvement
Loan Certificates, Series 1997-I, Class X" (the "Class X Certificates"). The
Certificates will evidence fractional interests in the Trust Fund. The Class R
Certificates and Class X Certificates will be retained by the Company and TMS
Special Holdings, Inc. and are not being delivered to the Underwriters
hereunder.
The holders of the Class B-2 Certificates will each have the benefit
of a limited guaranty of the Company to protect against losses that would
otherwise be borne by the holders of the Class B-2 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 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 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 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. 333-20817) including a prospectus, and such
amendments thereto as may have been required to the date hereof, relating
to the 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 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 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 Date 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 (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 and the Pooling and Servicing Agreement (this Agreement, the
Pricing Agreement and the Pooling and Servicing Agreement being herein
referred to, collectively, as the "Basic Documents").
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 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, 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) The Pooling and Servicing Agreement has 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 conforms in all material respects to the
statements relating thereto contained in the Prospectus.
viii) The Certificates, the Class R Certificates and the Class X
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
Certificates, delivered to the Underwriters pursuant to this Agreement, the
Certificates, the Class R Certificates and the Class X Certificates will be
duly and validly issued and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement; and the Certificates, the Class R
Certificates and the Class X Certificates conform in all material respects
to all statements relating thereto contained in the Prospectus.
ix) Neither the issuance or delivery of the Certificates, the
Class R Certificates or the Class X Certificates, nor the consummation of
any other of the transactions herein contemplated or in any other Basic
Document nor the execution and delivery by the Company and the Originators
of the Basic Documents nor the fulfillment of the terms of the Certificates
or each Basic Document 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 neither the issuance or delivery of the Certificates,
the Class R Certificates or the Class X Certificates; nor the consummation
of any other of the transactions herein contemplated, nor the fulfillment
of the terms of the Certificates, the Class R Certificates, the Class X
Certificates or the Basic Documents will result in such a breach, violation
or default which would have such a material adverse effect.
x) 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 Certificates, the Class R
Certificates or the Class X Certificates, (2) seeking to prevent the
issuance of the Certificates, the Class R Certificates or the Class X
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, the Class R Certificates or the Class X Certificates or
(4) seeking to adversely affect the federal income tax attributes of the
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.
xi) 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 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.
xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the 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.
xiii) At the time of execution and delivery of the Pooling and
Servicing Agreement by the Company, the Originators and the Trustee, the
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 Certificates which they purchase, the Underwriters will have good
and marketable title to such Certificates free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
xiv) The transfer of the Loans to the Trust Fund at Closing Date
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.
xv) 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.
xvi) Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and issuance of
the Basic Documents and the Certificates which have become due or will
become due on or prior to Closing Date shall have been paid at or prior to
Closing Date.
xvii) 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 Certificates set forth opposite its name in Annex
B hereto at the price per Class of Certificate set forth below. In the event
that the pass-through rates for each Class of 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 Certificates shall be made at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, 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 March 31, 1997, 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 Date").
Each Class of 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 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) 99.99809% 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) 99.99215% 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) 99.98333% 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)
99.97125% of the aggregate principal amount of the Class M-1 Certificates being
purchased by such Underwriter, plus interest accrued at the Class M-1
Pass-Through Rate, (v) 99.97407% of the aggregate principal amount of the Class
M-2 Certificates being purchased by such Underwriter, plus interest accrued at
the Class M-2 Pass-Through Rate, (vi) 99.99464% of the aggregate principal
amount of the Class B-1 Certificates being purchased by such Underwriter, plus
interest accrued at the Class B-1 Pass-Through Rate, and (vii) 99.97169% of the
aggregate principal amount of the Class B-2 Certificates being purchased by such
Underwriter, plus interest accrued at the Class B-2 Pass-Through Rate. Interest
on the Certificates shall accrue at the applicable Pass-Through Rate in each
case from March 1, 1997 to, but not including, the Closing Date. The purchase
price set forth above reflects the deduction of the underwriter's fee with
respect to the principal amount of each Class of Certificates. The certificates
evidencing the 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 Date.
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 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 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
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 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; (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 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 any of
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Rating Services
("Standard & Poor's") for rating the 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), 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 Date, 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 Date, the
Prospectus shall have been filed with the Commission in accordance with Rule 424
of the 1933 Act Regulations.
(b) At Closing Date, the Representative, as representative of the
Underwriters, shall have received:
i) The favorable opinion, dated as of Closing Date, of Stroock &
Stroock & Lavan LLP, 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 and the Pooling and Servicing Agreement,
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 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 and the Pricing
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 Pooling and Servicing Agreement and the Pricing
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 Pricing 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 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 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 Certificates, Class X 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 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 Certificate will be
considered qualified assets in the same proportion as the REMIC Trust
Fund's assets which are such items. 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 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 Certificate will not be considered "residential loans" for purposes of
the residential loan requirement of Section 593(g)(4)(B) of the Code. 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 LLP may rely on
certificates of responsible officers of the Company, the Trustee, and public
officials or, as to matters of law other than New York, Florida, California 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 Date, 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, and, in the case of the Company, the Pricing
Agreement and the Certificates, and have all requisite power, authority and
legal right to execute and deliver this Agreement, the Pooling and
Servicing Agreement, and, in the case of the Company, the Pricing 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
Pricing Agreement and the Certificates each have been duly authorized,
executed and delivered by the Company; this Agreement and the Pooling and
Servicing 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 or, in
the case of the Company, the Pricing 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, 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 or the Pooling and Servicing Agreement,
or in the case of the Company, the Pricing 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, or, in the case of the Company, the
Pricing 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 -16-
Jersey as and in the manner contemplated by the Pooling and Servicing
Agreement is sufficient fully to transfer to 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 Date, of Dorsey &
Whitney, counsel for the Trustee and the Custodian, in form and substance
satisfactory to counsel for the Underwriters.
iv) In giving its opinion required by subsection (b)(i) of
this Section, Stroock & Stroock & Lavan LLP 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 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 Date,
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 and the information in the Exhibits thereto,
as to which such counsel need express no view).
(c) At Closing Date, the Representative, as representative of the
Underwriters, shall have received from Stroock & Stroock & Lavan LLP, counsel
for the Underwriters, a letter, dated as of Closing Date, authorizing the
Representative, as representative of the Underwriters, to rely upon each opinion
delivered by Stroock & Stroock & Lavan LLP to any of Moody's or 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 Date 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 Date, 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 Date; (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 Date; 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 Date 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 Date 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 Date.
(f) At Closing Date, 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 each of the
Trustee and the Co-Trustee, dated as of Closing Date, as to the due acceptance
of the Pooling and Servicing Agreement by the Trustee and 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) Reserved.
(h) At Closing Date, 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 Date
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
Loan Pool" 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 at
Closing Date 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 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 or (d) 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
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 M-1, Class M-2, Class B-1, Class B-2 Certificates, in each case using
the applicable pricing speed and a weighted average coupon and weighted average
maturity based upon the Loans actually delivered to the Trustee, will not vary
by more than 1/10th of one year from 1.00 years, 3.00 years, 5.39 years, 8.20
years, 13.86 years, 5.28 years and 11.03 years, respectively.
(i) At Closing Date, each Class of Class A Certificates shall have
been rated "AAA" by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and "Aaa" by Moody's Investors Service, Inc.
("Moody's"); the Class M-1 Certificates shall have been rated "A" by S&P and
"A2" by Moody's; the Class B-1 Certificates shall have been rated "BBB" by S&P
or "Baa1" by Moody's; and the Class B-2 Certificates shall have been rated "BBB"
by S&P and "Baa3" by Moody's.
(j) At Closing Date, 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
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
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 Date the Company and the Originators
shall have delivered to the Trustee, to hold in trust for the benefit of the
holders of the Certificates, the Home Improvement Loans (as defined in the
Prospectus) with aggregate outstanding principal balances as of the Cut-Off Date
of at least $131,250,040.60. The Company and the Originators shall, immediately
following the sale of the 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 M-1, Class M-2, Class B-1 and Class B-2 Certificates (i.e.,
$131,250,040.60) over (ii) the aggregate discounted outstanding principal
balances as of the Cut-Off Date of the Home Improvement Loans actually delivered
to the Trustee.
(l) On or before the Closing Date 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 at Closing
Date, in form and substance satisfactory to the Representative.
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 Date, 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 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 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 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 Certificates set forth next to such Underwriter's
name on Annex B hereto over the underwriting discount allocated to such
principal amount of 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 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 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 Date (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 which, in the reasonable judgment of the Representative, as
representative of the Underwriters, materially impairs the investment quality of
the Certificates; (ii) 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;
(iii) if any banking moratorium has been declared by Federal or New York
authorities; or (iv) 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 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 Date to purchase the 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 Date 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 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.
vi) 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, as representative of the Underwriters,
Three World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-528-6049); 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 (Fax: 908-688-3846).
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 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.
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:------------------------
Morton Dear
Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By:-------------------------
Morton Dear
Executive Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
LEHMAN BROTHERS INC.
By:--------------------
Name:
Title:
Acting on behalf of itself
and as the representative of
the Underwriters.
<PAGE>
ANNEX A
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.
<PAGE>
ANNEX B
Lehman
Brothers Inc.
-------------
Class A-1 $ 48,000,000
Class A-2 53,700,000
Class A-3 19,487,000
Class M-1 25,375,000
Class M-2 12,250,000
Class B-1 9,625,000
Class B-2 6,563,000
Total $175,000,000
Exhibit 1.2
$175,000,000
THE MONEY STORE INC.
The Money Store Home Improvement Loan Certificates,
Series 1997-I
PRICING AGREEMENT
March 25, 1997
Lehman Brothers Inc.
as representative of the several Underwriters
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated March 25, 1997
(the "Underwriting Agreement"), relating to $175,000,000 aggregate principal
amount of The Money Store Home Improvement Loan Certificates, Series 1997-I,
Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and Class B-2,
(collectively, the "Certificates"). Pursuant to the Underwriting Agreement, The
Money Store Inc. (the "Company") agrees with Lehman Brothers Inc., 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
Class Certificate Through Underwriting Originators
Balance Rate Price to Public(1) Discount (1)(2)
<S> <C> <C> <C> <C> <C>
Class A-1 $48,000,000 6.580% 99.99809% 0.255% 99.74809%
Class A-2 53,700,000 6.810% 99.99215% 0.350% 99.64215%
Class A-3 19,487,000 7.025% 99.98333% 0.450% 99.53333%
Class M-1 25,375,000 7.410% 99.97125% 0.500% 99.47125%
Class M-2 12,250,000 8.070% 99.97407% 0.550% 99.42407%
Class B-1 9,625,000 7.510% 99.99464% 0.650% 99.34464%
Class B-2 6,563,000 8.095% 99.97169% 0.725% 99.24669%
------------
Total: $175,000,000
$174,978,773.64 $ 700,035.75
============== ===========
<FN>
(1) Plus, for each Certificate accrued interest at the applicable
Pass-Through Rate from March 1, 1997 to, but
not including, the Closing Date.
(2) Before deducting expenses payable by the Company.
</FN>
</TABLE>
The 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:---------------------------
Morton Dear
Executive Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.
By: ---------------------------
Name:
Title:
Acting on behalf of itself
and as the representative
of the Underwriters.
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Dated as of February 28, 1997
THE BANK OF NEW YORK
(Trustee)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Home Improvement Loan Certificates,
Series 1997-I
Class A-1, Class A-2, Class A-3,
Class M-1, Class M-2, Class B-1, Class B-2,
Class X, Class R-1 and Class R-2
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.................................................I-1
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND.......................II-1
Section 2.01 SALE AND CONVEYANCE OF TRUST
FUND; PRIORITY AND SUBORDINATION
OF OWNERSHIP INTERESTS........................II-1
Section 2.02 POSSESSION OF MORTGAGE FILES..................II-1
Section 2.03 BOOKS AND RECORDS.............................II-1
Section 2.04 DELIVERY OF HOME IMPROVEMENT LOAN
DOCUMENTS.....................................II-1
Section 2.05 ACCEPTANCE BY TRUSTEE AND
CUSTODIAN OF THE TRUST FUND;
CERTAIN SUBSTITUTIONS;
CERTIFICATION BY TRUSTEE AND
CUSTODIAN.....................................II-3
Section 2.06 DESIGNATIONS UNDER REMIC
PROVISIONS; DESIGNATION OF STARTUP
DAY...........................................II-4
Section 2.07 AUTHENTICATION OF
CERTIFICATES..................................II-5
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE..............II-5
Section 2.09 SALE AND CONVEYANCE OF THE
SUBSEQUENT HOME IMPROVEMENT LOANS.............II-6
ARTICLE III REPRESENTATIONS AND WARRANTIES................III-1
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE,
SERVICER, CLAIMS ADMINISTRATOR
AND ORIGINATORS...............................III-1
Section 3.02 INDIVIDUAL HOME IMPROVEMENT LOANS.............III-6
Section 3.03 PURCHASE AND SUBSTITUTION.....................III-13
ARTICLE IV THE CERTIFICATES................................IV-1
Section 4.01 THE CERTIFICATES..............................IV-1
Section 4.02 REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES......................IV-2
Section 4.03 MUTILATED, DESTROYED, LOST OR
STOLEN CERTIFICATES...........................IV-5
Section 4.04 PERSONS DEEMED OWNERS.........................IV-6
ARTICLE V ADMINISTRATION AND SERVICING OF HOME
IMPROVEMENT LOANS................................V-1
Section 5.01 DUTIES OF THE SERVICER........................V-1
Section 5.02 LIQUIDATION OF HOME IMPROVEMENT
LOANS.........................................V-4
Section 5.03 ESTABLISHMENT OF PRINCIPAL
AND INTEREST ACCOUNTS; DEPOSITS
IN PRINCIPAL AND INTEREST
ACCOUNTS......................................V-4
Section 5.04 PERMITTED WITHDRAWALS FROM
THE PRINCIPAL AND INTEREST
ACCOUNTS......................................V-5
Section 5.05 PAYMENT OF TAXES, INSURANCE
AND OTHER CHARGES.............................V-7
Section 5.06 TRANSFER OF ACCOUNTS..........................V-7
Section 5.07 MAINTENANCE OF HAZARD
INSURANCE.....................................V-7
Section 5.08 MAINTENANCE OF MORTGAGE
IMPAIRMENT INSURANCE POLICY...................V-8
Section 5.09 FIDELITY BOND.................................V-8
Section 5.10 TITLE, MANAGEMENT AND
DISPOSITION OF REO PROPERTY...................V-8
Section 5.11 CERTAIN TAX INFORMATION.......................V-9
Section 5.12 COLLECTION OF CERTAIN HOME
IMPROVEMENT LOAN PAYMENTS.....................V-9
Section 5.13 ACCESS TO CERTAIN
DOCUMENTATION AND INFORMATION
REGARDING THE HOME
IMPROVEMENT LOANS.............................V-10
Section 5.14 SUPERIOR LIENS................................V-10
Section 5.15 DUTIES OF THE CLAIMS
ADMINISTRATOR.................................V-10
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS............VI-1
Section 6.01 ESTABLISHMENT OF CERTIFICATE
ACCOUNTS; DEPOSITS IN
CERTIFICATE ACCOUNTS;
PERMITTED WITHDRAWALS FROM
CERTIFICATE ACCOUNTS..........................VI-1
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..................VI-2
Section 6.03 ESTABLISHMENT OF EXPENSE
ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED
WITHDRAWALS FROM EXPENSE
ACCOUNTS......................................VI-3
Section 6.04 Reserved......................................VI-4
Section 6.05 Reserved. ....................................VI-4
Section 6.06 ESTABLISHMENT OF FHA PREMIUM
ACCOUNT; DEPOSITS IN FHA
PREMIUM ACCOUNT; PERMITTED
WITHDRAWALS FROM FHA PREMIUM
ACCOUNT.......................................VI-4
Section 6.07 INVESTMENT OF ACCOUNTS........................VI-5
Section 6.08 PRIORITY AND SUBORDINATION OF
DISTRIBUTIONS.................................VI-6
Section 6.09 AVAILABLE MAXIMUM
SUBORDINATION AMOUNT;
PRINCIPAL WRITEDOWN AMOUNTS...................VI-8
Section 6.10 STATEMENTS....................................VI-9
Section 6.11 ADVANCES BY THE SERVICER......................VI-12
Section 6.12 COMPENSATING INTEREST.........................VI-12
Section 6.13 REPORTS OF FORECLOSURE AND
ABANDONMENT OF MORTGAGED
PROPERTY......................................VI-12
Section 6.14. Reserved......................................VI-13
Section 6.15 ESTABLISHMENT OF SERVICING
ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.................VI-13
ARTICLE VII GENERAL SERVICING PROCEDURE...................VII-1
Section 7.01 ASSUMPTION AGREEMENTS.........................VII-1
Section 7.02 SATISFACTION OF MORTGAGES AND
RELEASE OF MORTGAGE FILES.....................VII-1
Section 7.03 SERVICING COMPENSATION AND
CONTINGENCY FEE...............................VII-2
Section 7.04 ANNUAL STATEMENT AS TO
COMPLIANCE....................................VII-3
Section 7.05 ANNUAL INDEPENDENT PUBLIC
ACCOUNTANTS' SERVICING REPORT.................VII-3
Section 7.06 TRUSTEE'S AND CO-TRUSTEE'S
RIGHT TO EXAMINE SERVICER
RECORDS AND AUDIT OPERATIONS..................VII-3
Section 7.07 REPORTS TO THE TRUSTEE;
PRINCIPAL AND INTEREST
ACCOUNT STATEMENTS............................VII-3
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER............VIII-1
Section 8.01 FINANCIAL STATEMENTS..........................VIII-1
ARTICLE IX THE SERVICER....................................IX-1
Section 9.01 INDEMNIFICATION; THIRD PARTY
CLAIMS........................................IX-1
Section 9.02 MERGER OR CONSOLIDATION OF THE
REPRESENTATIVE, THE SERVICER
AND THE CLAIMS ADMINISTRATOR..................IX-1
Section 9.03 LIMITATION ON LIABILITY OF
THE SERVICER AND OTHERS.......................IX-2
Section 9.04 SERVICER AND CLAIMS
ADMINISTRATOR NOT TO RESIGN...................IX-2
Section 9.05 APPOINTMENT OF ASSISTANT CLAIMS
ADMINISTRATOR.................................IX-2
Section 9.06 RIGHT OF
CERTIFICATEHOLDERS TO
REPLACE SERVICER AND
CLAIMS ADMINISTRATOR..........................IX-2
ARTICLE X DEFAULT.......................................X-1
Section 10.01 EVENTS OF DEFAULT.............................X-1
Section 10.02 TRUSTEE AND CO-TRUSTEE TO ACT;
APPOINTMENT OF SUCCESSOR......................X-2
Section 10.03 WAIVER OF DEFAULTS............................X-4
Section 10.04 TRANSFER OF TAX MATTERS PERSON
RESIDUAL INTEREST.............................X-4
Section 10.05 CONTROL BY MAJORITY
CERTIFICATEHOLDERS............................X-4
ARTICLE XI TERMINATION...................................XI-1
Section 11.01 TERMINATION...................................XI-1
Section 11.02 TERMINATION UPON LOSS OF REMIC
STATUS........................................XI-2
Section 11.03 ADDITIONAL TERMINATION
REQUIREMENTS..................................XI-3
Section 11.04 RESERVED......................................XI-3
Section 11.05 ACCOUNTING UPON TERMINATION OF
SERVICER AND CLAIMS
ADMINISTRATOR.................................XI-3
ARTICLE XII THE TRUSTEE....................................XII-1
Section 12.01 DUTIES OF TRUSTEE.............................XII-1
Section 12.02 CERTAIN MATTERS AFFECTING THE
TRUSTEE.......................................XII-2
Section 12.03 TRUSTEE NOT LIABLE FOR
CERTIFICATES OR HOME IMPROVEMENT LOANS........XII-3
Section 12.04 TRUSTEE MAY OWN CERTIFICATES..................XII-3
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES
AND EXPENSES..................................XII-3
Section 12.06 ELIGIBILITY REQUIREMENTS FOR
TRUSTEE.......................................XII-4
Section 12.07 RESIGNATION AND REMOVAL OF THE
TRUSTEE.......................................XII-4
Section 12.08 SUCCESSOR TRUSTEE.............................XII-4
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE
OR CO-TRUSTEE.................................XII-5
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR
SEPARATE TRUSTEE..............................XII-5
Section 12.11 AUTHENTICATING AGENT..........................XII-6
Section 12.12 TAX RETURNS AND REPORTS.......................XII-7
Section 12.13 APPOINTMENT OF CUSTODIANS.....................XII-8
Section 12.14 PROTECTION OF TRUST FUND......................XII-8
Section 12.15 Reserved......................................XII-8
ARTICLE XIII MISCELLANEOUS PROVISIONS.....................XIII-1
Section 13.01 ACTS OF CERTIFICATEHOLDERS...................XIII-1
Section 13.02 AMENDMENT....................................XIII-1
Section 13.03 RECORDATION OF AGREEMENT.....................XIII-1
Section 13.04 DURATION OF AGREEMENT........................XIII-2
Section 13.05 GOVERNING LAW................................XIII-2
Section 13.06 NOTICES......................................XIII-2
Section 13.07 SEVERABILITY OF PROVISIONS...................XIII-2
Section 13.08 NO PARTNERSHIP...............................XIII-2
Section 13.09 COUNTERPARTS.................................XIII-2
Section 13.10 SUCCESSORS AND ASSIGNS.......................XIII-2
Section 13.11 HEADINGS.....................................XIII-3
Section 13.12 Reserved.....................................XIII-3
Section 13.13 PAYING AGENT.................................XIII-3
Section 13.14 NOTIFICATION TO RATING
AGENCIES.....................................XIII-3
Section 13.15 Reserved.....................................XIII-4
<PAGE>
SCHEDULE I Description of Certain Litigation
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 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 Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L Form of Notice
EXHIBIT M Custodial Agreement
EXHIBIT M-1 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 Low Interest Home Improvement Loan
Schedule
<PAGE>
Agreement dated as of February 28, 1997, 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 Home Improvement 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 Home Improvement Loans and amounts on deposit in the
Pre- Funding Account to the Trustee for the benefit of the Certificateholders,
pursuant to which 10 classes of Certificates are being issued, denominated on
the face thereof as The Money Store Home Improvement Loan Certificates, 1997-I,
Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1, Class B-2,
Class X, Class R-1 and Class R-2, respectively, representing in the aggregate a
100% undivided ownership interest in the Home Improvement Loans and amounts on
deposit in the Pre-Funding Account. The Initial Home Improvement Loans have an
aggregate outstanding principal balance of $131,250,040.60 (which gives effect
to the discounts on the Low Interest Home Improvement Loans of $0) as of
February 28, 1997, except for those Initial Home Improvement Loans originated
after February 28, 1997 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 "CutOff Date"), after application of payments
received by the Originators on or before such date, and the original Pre-Funded
Amount equals $43,749,959.40. Except for the Low Interest Home Improvement
Loans, each Initial Home Improvement Loan has, and each Subsequent Home
Improvement Loan will have, a Home Improvement Loan Interest Rate in excess of
the Adjusted Home Improvement Loan Remittance Rate of each Class of
Certificates. As provided herein, two separate REMIC elections will be made in
connection with the assets constituting each of REMIC I and REMIC II for federal
income tax purposes. On the Startup Day, all the Classes of REMIC II Regular
Certificates will be designated "regular interests" in REMIC II and the Class
R-2 Certificates will be designated the single class of "residual interests" in
such REMIC for purposes of the REMIC Provisions (as defined herein). On the
Startup Day, all the Classes of Certificates except for the Class R-1 and Class
R-2 Certificates will be designated "regular interests" in REMIC I and the Class
R-1 Certificates will be designated the single class of "residual interests" in
such REMIC for purposes of the REMIC Provisions.
The parties hereto agree as follows:
[Balance Of Page 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 Home Improvement Loan
Certificates, Series 1997-I, Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class B- 1, Class B-2, Class X, Class R-1 and Class R-2. 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 Account, Pre-Funding Account, Expense Account,
Capitalized Interest Account or Servicing Account (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 to reimburse the Servicer
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 Home
Improvement 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 Home
Improvement Loans to be sold to the Trust Fund and the aggregate Principal
Balance of such Subsequent Home Improvement Loans.
ADJUSTED HOME IMPROVEMENT LOAN INTEREST RATE: With respect to each Home
Improvement Loan, a percentage per annum, equal to the related Home Improvement
Loan Interest Rate less the per annum rate used in calculating (i) the Annual
Expense Escrow Amount, (ii) the FHA Insurance Premium in connection with FHA
Loans for which the related Mortgagor pays the FHA Insurance Premium as part of
the Home Improvement Loan Interest Rate, (iii) the Servicing Fee, and (iv) the
Contingency Fee.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ALTERNATE CREDIT ENHANCEMENT: Alternate credit enhancement obtained by
The Money Store Inc. in lieu of the Limited Guaranty pursuant to Section 6.17
hereof.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i)
.04% per annum and (ii) the aggregate Class Principal Balances of the Class A,
Class M and Class B 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.
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 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.
AVAILABLE MAXIMUM SUBORDINATION AMOUNT: With respect to any Remittance
Date, the amount determined by subtracting (i) the aggregate Shortfall
Carryforward Amounts prior to such Remittance Date (other than the portion
thereof allocable to the Class B-2 Certificates), from (ii) the Maximum
Subordination Amount.
AVAILABLE REMITTANCE AMOUNT: With respect to any Remittance Date, (i)
the sum of all amounts relating to the Home Improvement Loans of the Trust
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 amounts withdrawn by the Servicer with
respect to the Home Improvement Loans pursuant to Sections 5.04(b), (c), (e) and
(f) as of the related Determination Date and any amounts deposited into the
Servicing Account with respect to the Home Improvement Loans 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 Certificate Account as of the Determination Date, plus (ii)
the amount of any Monthly Advances and Compensating Interest payments relating
to the Home Improvement Loans, remitted by the Servicer for such Remittance
Date, plus (iii) amounts to be transferred to the Certificate Account from the
Pre-Funding Account and the Capitalized Interest Account with respect to the
Remittance Dates in April, May and June 1997, less (iv) those amounts
withdrawable from the Certificate Account pursuant to Section 6.01(b)(VI). The
"Available Remittance Amount" does not include (i) funds in the Principal and
Interest Account and available to be withdrawn pursuant to Section 5.04(d)(ii),
(ii) funds in the Certificate Account and available to be withdrawn pursuant to
Section 6.01(b)(v) and (iii) funds in the 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.).
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 Pennsylvania are authorized or obligated by law or executive order
to be closed.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance
with Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance Dates
in April, May and June 1997, the excess, if any, of (i) 30 days' interest
calculated at the Weighted Average Remittance Rate on the excess of (a) the
aggregate Class A, Class M and Class B Principal Balances for such Remittance
Date (or, with respect to the first Remittance Date, the Closing Date) over (b)
the aggregate Principal Balances of the Home Improvement Loans as of the
immediately preceding Remittance Date (or, with respect to the first Remittance
Date, the Closing Date) over (ii) any Pre-Funding Earnings to be transferred to
the Certificate Account on such Remittance Date pursuant to Section 6.02(d).
With respect to the Special Remittance Date, 12 days' interest calculated at the
weighted average Class Remittance Rates of the Class A, Class M and Class B
Certificates on the amount to be transferred on the Special Remittance Date from
the Pre-Funding Account to the Certificate Account relating to the Certificates
pursuant to Section 6.02(c).
CERTIFICATE: Any Class A-1, Class A-2, Class A-3, Class M-1, Class M-2,
Class B-1, Class B-2, Class X, Class R-1 or Class R-2 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, B-3 or B-4.
CERTIFICATE ACCOUNT: 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 of Certificates, a Certificateholder or Holder of such Class of
Certificates, as the case may be.
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.
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 or Class A-3 Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A CURRENT INTEREST DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date, the sum of the Current Interest Distribution Requirements for
the Class A-1, Class A-2 and Class A-3 Certificates.
CLASS ADJUSTED HOME IMPROVEMENT LOAN REMITTANCE RATE: With respect to
each Home Improvement Loan, a percentage per annum, being the sum of (i) the
Weighted Average Remittance Rate, (ii) 0.04% per annum, relating to the Annual
Expense Escrow Amount, and (iii) with respect to FHA Loans for which the FHA
Insurance Premium is paid by the related Mortgagor as part of the Mortgage
Interest Rate, the Insurance Rate.
CLASS A INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any
Remittance Date, the sum of the Interest Shortfall Carryforward Amounts for the
Class A-1, Class A-2 and Class A-3 Certificates.
CLASS A PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Class A-1, Class A-2 and Class A-3 Certificates.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class A Principal Distribution Requirement or
(ii) the Available Remittance Amount remaining after the payment of all Current
Interest Distribution Requirements payable on such Remittance Date.
CLASS A PRINCIPAL DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date on or prior to the Third Cross-over Date, means the applicable
Senior Percentage multiplied by the Principal Distribution Amount; provided,
however, that, with respect to any Remittance Date, the Class A Principal
Distribution Requirement shall never exceed the Class Principal Balance of the
Class A Certificates. After the Third Cross-over Date, the Class A Principal
Distribution Requirement shall be $0.
CLASS A SUBORDINATION PERCENTAGE: Means, with respect to any Remittance
Date, a fraction, expressed as a percentage, determined by dividing (i) the sum
of the Class Principal Balances of the Class M-1, Class M-2, Class B-1 and Class
B-2 Certificates by (ii) the sum of the Class Principal Balances of the Class A,
Class M and Class B Certificates.
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 6.580%.
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 6.810%.
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 7.025%.
CLASS B CERTIFICATE: A Certificate denominated as a Class B-1 or Class
B-2 Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B CROSS-OVER DATE: Means the earlier of (a) the Fifth Cross-over
Date and (b) the first Remittance Date on or after the Remittance Date occurring
in April 2000 on which the fraction, expressed as a percentage, the numerator of
which is the Class Principal Balance of the Class B Certificates and the
denominator of which is the sum of the Class Principal Balances of the Class A,
Class M and Class B Certificates, is equal to or greater than 18.5%.
CLASS B CURRENT INTEREST DISTRIBUTION REQUIREMENT: The sum of the
Current Interest Distribution Requirements for the Class B-1 and Class B-2
Certificates.
CLASS B PERCENTAGE: 100% minus the Senior Percentage.
CLASS B PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Class B-1 and Class B-2 Certificates.
CLASS B PRINCIPAL DISTRIBUTION TEST: The Class B Principal Distribution
Test shall be satisfied on any Remittance Date only if (i) the Sixty-Day
Delinquency Ratio as of such Remittance Date does not exceed 50% of the Class A
Subordination Percentage and (ii) either (A) both (x) the Weighted Average Five-
Month Sixty-Day Delinquency Ratio as of such Remittance Date does not exceed 9%
and (y) the Cumulative Realized Losses as of such Remittance Date do not exceed
$19,425,000, or (B) both (x) the Weighted Average Five-Month Sixty-Day
Delinquency Ratio as of such Remittance Date does not exceed 15% and (y) the
Cumulative Realized Losses as of such Remittance Date do not exceed $6,475,000.
CLASS B-1 CERTIFICATE: A Certificate denominated as a Class B-1
Certificate.
CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class B-1 Principal Distribution Requirement or
(ii) the Available Remittance Amount remaining after the payment of all Current
Interest Distribution Requirements and all Class A and Class M Principal
Distribution Amounts payable on such Remittance Date.
CLASS B-1 PRINCIPAL DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date on or prior to the Sixth Cross-over Date, means the applicable
Class B Percentage multiplied by the Principal Distribution Amount; provided,
however, that, with respect to any Remittance Date, the Class B-1 Principal
Distribution Requirement shall never exceed the Class Principal Balance of the
Class B-1 Certificates. After the Sixth Cross-over Date, the Class B-1 Principal
Distribution Requirement shall equal $0.
CLASS B-1 REMITTANCE RATE: The annual rate of interest payable to the
Class B-1 Certificateholders, which shall be equal to 7.510%.
CLASS B-2 CERTIFICATE: A Certificate denominated as a Class B-2
Certificate.
CLASS B-2 PRINCIPAL DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date prior to the Sixth Cross-over Date, $0. With respect to any
Remittance Date on or after the Sixth Cross-over Date, the applicable Class B
Percentage multiplied by the Principal Distribution Amount (less any portion of
the Principal Distribution Amount required to be distributed to the Holders of
the Class B-1 Certificates on such Distribution Date); provided, however, that,
with respect to any Remittance Date, the Class B-2 Principal Distribution
Requirement shall never exceed the Class Principal Balance of the Class B-2
Certificates.
CLASS B-2 PRINCIPAL LIQUIDATION LOSS AMOUNT: With respect to any
Remittance Date, the lesser of (A) the Class Principal Balance of the Class B-2
Certificates and (B) the amount, if any, by which (i) the sum of the Class A
Principal Balance, the Class M Principal Balance and the Class B Principal
Balance exceeds (ii) the sum of the Principal Balances of all Home Improvement
Loans in the Trust as of the last day of the related Due Period (in each case
after giving effect to all distributions of principal on such Remittance Date,
but exclusive of any Guaranty Payment with respect to such Remittance Date).
CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date, the lesser of the Class B-2 Principal Distribution Requirement or (ii) the
Available Remittance Amount remaining after the payment of all Current Interest
Distribution Requirements and Class A, Class M and Class B-1 Principal
Distribution Amounts payable on such Remittance Date.
CLASS B-2 REMITTANCE RATE: The annual rate of interest payable to the
Class B-2 Certificateholders, which shall be equal to 8.095%.
CLASS M CERTIFICATE: A Certificate denominated as a Class M-1 or Class
M-2 Certificate.
CLASS M CERTIFICATEHOLDER: A Holder of a Class M Certificate.
CLASS M CURRENT INTEREST DISTRIBUTION REQUIREMENT: The sum of the
Current Interest Distribution Requirements for the Class M-1 and Class M-2
Certificates.
CLASS M PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Class M-1 and Class M-2 Certificates.
CLASS M-1 CERTIFICATE: A Certificate denominated as a Class M-1
Certificate.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class M-1 Principal Distribution Requirement or
(ii) the Available Remittance Amount remaining after the payment of all Current
Interest Distribution Requirements and all Class A Principal Distribution
Amounts payable on such Remittance Date.
CLASS M-1 PRINCIPAL DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date on or prior to the Fourth Cross-over Date, means the applicable
Senior Percentage multiplied by the Principal Distribution Amount (less any
portion of the Principal Distribution Amount required to be distributed to the
Holders of the Class A Certificates on such Remittance Date); provided, however,
that, with respect to any Remittance Date, the Class M-1 Principal Distribution
Requirement shall never exceed the Class Principal Balance of the Class M-1
Certificates. After the Fourth Cross-over Date, the Class M-1 Principal
Distribution Requirement shall be $0.
CLASS M-1 REMITTANCE RATE: The annual rate of interest payable to the
Class M-1 Certificateholders, which shall be equal to 7.410%
CLASS M-2 CERTIFICATE: A Certificate denominated as a Class M-2
Certificate.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date, the lesser of (i) the Class M-2 Principal Distribution Requirement or (ii)
the Available Remittance Amount remaining after giving effect to all payments of
Current Interest Distribution Requirements, Class A Principal Distribution
Amounts and Class M-1 Principal Distribution Amounts payable on such Remittance
Date.
CLASS M-2 PRINCIPAL DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date on or prior to the Fifth Cross-over Date, means the applicable
Senior Percentage multiplied by the Principal Distribution Amount (less any
portion of the Principal Distribution Amount required to be distributed to the
Holders of the Class A or Class M-1 Certificates on such Remittance Date);
provided, however, that, with respect to any Remittance Date, the Class M-2
Principal Distribution Requirement shall never exceed the Class Principal
Balance of the Class M-2 Certificates. After the Fifth Cross-over Date, the
Class M-2 Principal Distribution Requirement shall be $0.
CLASS M-2 REMITTANCE RATE: The annual rate of interest payable to the
Class M-2 Certificateholders, which shall be equal to 8.070%.
CLASS POOL FACTOR: With respect to a Class of Class A, Class M or Class
B 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, Class M
or Class B Certificates, as of any date of determination, the Original Principal
Balance of such Class less (i) the sum of all amounts (including 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)(v) through (ix), (xii) and, with respect to the Class B-2 Certificates,
(xiii), and (ii) the amount, if any, of Principal Writedown Amounts previously
allocated to such Class pursuant to Section 6.09. For purposes of determining
the Class Principal Balance of each Class of Class A, Class M or Class B
Certificates with respect to any Remittance Date, no effect shall be given to
any principal to be distributed, or Principal Writedown Amounts to be allocated,
to each such Class on such Remittance Date.
CLASS REMITTANCE RATE: With respect to a Class of Class A, Class M or
Class B 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-3 Remittance
Rates, Class M-1 and Class M- 2 Remittance Rates and Class B-1 and Class B-2
Remittance Rates.
CLASS R-1 CERTIFICATE: A Certificate denominated as a Class R-1
Certificate.
CLASS R-2 CERTIFICATE: A Certificate denominated as a Class R-2
Certificate.
CLASS R CERTIFICATE: Collectively or singularly, the Class R-1 and/or
Class R-2 Certificates, as applicable.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: A Certificate denominated as a Class X
Certificate.
CLASS X REMITTANCE AMOUNT: As of any Remittance Date, an amount equal
to the Remaining Amount Available, net of reimbursements to the Servicer or the
Representative of Reimbursable Amounts pursuant to Section 5.04(f).
CLOSING DATE: March 31, 1997.
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 Home Improvement 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 Home Improvement
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 Home Improvement 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: Home Improvement Loans that are
not FHA Loans.
CORRESPONDING CLASS: With respect to the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-M- 1, Class II-M-2, Class II-B-I and Class II-B-2 REMIC
II Certificates, the "Corresponding Classes of Certificates" shall be the Class
A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1, and Class B-2
Certificates, respectively, as set forth in the chart appearing in Section
4.01(b).
CO-TRUSTEE: Dauphin Deposit Bank and Trust Company, a banking
corporation organized under the laws of the Commonwealth of Pennsylvania and
headquartered in Harrisburg, Pennsylvania.
CROSS-OVER DATE: The date on which the Available Maximum Subordination
Amount is reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Improvement Loans
since the Startup Day.
CURRENT INTEREST DISTRIBUTION REQUIREMENT: For each Class of Class A,
Class M and Class B Certificates, and with respect to each Remittance Date, the
amount equal to 30 days' interest at the applicable Remittance Rate on the Class
Principal Balance for such Class outstanding immediately prior to such
Remittance Date. If a principal prepayment is made to a Class of Class A, Class
M and Class B Certificates on the Special Remittance Date, the Current Interest
Requirement for each such Class for the July 1997 Remittance Date will be equal
to 30 days' interest on the Class Principal Balance for such Class on the
Special Remittance Date, after giving effect to such principal prepayment.
CURRENT PRINCIPAL DISTRIBUTION REQUIREMENT: The Class A Principal
Distribution Requirement, the Class M-1 Principal Distribution Requirement, the
Class M-2 Principal Distribution Requirement, the Class B-1 Principal
Distribution Requirement and the Class B-2 Principal Distribution Requirement.
CURTAILMENT: With respect to a Home Improvement 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 Home Improvement 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 Home Improvement Loans shall be First Trust National
Association, a national banking association headquartered in Minneapolis,
Minnesota.
CUT-OFF DATE: February 28, 1997; provided, however, that for purposes
of determining characteristics of the Initial Home Improvement Loans as of the
Cut-Off Date, the Cut-Off Date for those Initial Home Improvement Loans
originated after February 28, 1997 shall be deemed to be the date of the
applicable Mortgage Note.
DEALER LOANS: Home Improvement Loans in which a dealer-contractor
participates in the financing.
DEFAULTED GUARANTY PAYMENT AMOUNT: Means the amount of any Guaranty
Payments which the Guarantor fails to pay as provided for in this Agreement,
together with interest thereon at the Class B- 2 Remittance Rate.
DEFICIENT VALUATION: With respect to any Home Improvement Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Home Improvement
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 HOME IMPROVEMENT LOAN: A Home Improvement Loan replaced by a
Qualified Substitute Home Improvement Loan.
DEPOSITORY: The Depository Trust Company 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, Class M or Class B
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 Home Improvement 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.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on
a Home Improvement 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 Home Improvement Loan, the excess, if any, of (a) the total Net
Liquidation Proceeds, over (b) the Principal Balance of such Home Improvement
Loan as of the date such Home Improvement Loan became a Liquidated Home
Improvement Loan plus 30 days interest thereon at the Weighted Average Class
Adjusted Home Improvement Loan Remittance Rate; 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 Home
Improvement Loan Interest Rate exceeds interest accrued on such advance at the
applicable Class Remittance Rates.
EXPENSE ACCOUNT: The expense account 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 successors in
interest.
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.
FHA LOAN: A Home Improvement 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 maintained 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 Home Improvement Loan 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.
FIFTH CROSS-OVER DATE: The Remittance Date on which the Class Principal
Balance of the Class M-2 Certificates (after giving effect to the distributions
of principal on the Class M-2 Certificates on such Remittance Date) is reduced
to zero.
FIRST CROSS-OVER DATE: The Remittance Date on which the Class Principal
Balance of the Class A-1 Certificates (after giving effect to the distributions
of principal on the Class A-1 Certificates on such Remittance Date) is
reduced to zero.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FOURTH CROSS-OVER DATE: The Remittance Date on which the Class
Principal Balance of the Class M-1 Certificates (after giving effect to the
distributions of principal on the Class M-1 Certificates on such Remittance
Date) is reduced to zero.
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 $200,000, (ii) the date on which an Event of
Default occurs and (iii) the close of business on June 26, 1997.
GUARANTOR: The Money Store Inc., a New Jersey corporation, its
successors and assigns or any other party obligated to make Guaranty Payments
under the Limited Guaranty or any other payments due under any Alternate Credit
Enhancement.
GUARANTY PAYMENT: Prior to the Class B Cross-over Date, and on any
Remittance Date on or after the Class B Cross-over Date on which the Class B
Principal Distribution Test is not satisfied (unless the Class A Principal
Balance and the Class M Principal Balance have been reduced to zero), the
Guaranty Payment will equal the amount, if any, by which (a) the sum of (i) the
Class B-2 Formula Distribution Amount for such Remittance Date (which will be
equal to accrued and unpaid interest on the Class B-2 Certificates) and (ii) the
Class B-2 Principal Liquidation Loss Amount, if any, for such Remittance Date
exceeds (b) the Class B-2 Distribution Amount for such Remittance Date. On each
Remittance Date on or after the Class B Cross-over Date, on which the Class B
Principal Distribution Test is satisfied on such Remittance Date (or on which
the Class A Principal Balance and the Class M Principal Balance have been
reduced to zero), the Guaranty Payment will equal the amount, if any, by which
(a) the sum of (i) the Class B-2 Formula Distribution Amount for such Remittance
Date (which will include both interest and principal) and (ii) the Class B-2
Principal Liquidation Loss Amount, if any, for such Remittance Date exceeds (b)
the Class B-2 Distribution Amount for such Remittance Date.
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.
HOME IMPROVEMENT LOAN: An individual mortgage loan which is transferred
to the Co-Trustee pursuant to this Agreement, including any Subsequent Home
Improvement Loan, together with the rights and obligations of a holder thereof
and payments thereon and proceeds therefrom, the Home Improvement Loans
originally subject to this Agreement being identified on the Home Improvement
Loan Schedule delivered to the Co-Trustee as Exhibit H. 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 Exhibit H),
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 "Home Improvement Loan" for all
purposes of this Agreement.
HOME IMPROVEMENT LOAN INTEREST RATE: The fixed rate of interest borne
by a Mortgage Note, as shown on the Home Improvement Loan Schedule.
HOME IMPROVEMENT LOAN SCHEDULE: The schedule of Home Improvement Loans
delivered to the Co-Trustee as Exhibit H, such schedule identifying each Home
Improvement Loan by address of the Mortgaged Property and the name of the
Mortgagor and setting forth as to each Home Improvement 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)
the Due Date, (v) the Home Improvement Loan Interest Rate, (vi) the first Due
Date, (vii) the Monthly Payment, (viii) the maturity date of the Mortgage Note,
and (ix) the remaining number of months to maturity as of the Cut-Off Date.
Also, the Home Improvement Loan Schedule will indicate, based upon loan number,
whether the related Home Improvement Loan is an FHA Loan or a Conventional Home
Improvement Loan.
HUD: The United States Department of Housing and Urban Development, and
its successor in interest.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Class A, Class M or Class B Certificate.
INITIAL HOME IMPROVEMENT LOANS: The Home Improvement Loans listed on
Exhibit H delivered to the Trustee on the Closing Date.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Trustee or the Servicer by any insurer pursuant to any insurance policy covering
a Home Improvement 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 Home
Improvement Loan 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.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance
Date and with respect to any Class of Certificates, the sum of (i) the amount,
if any, by which (X) the sum of (a) the Current Interest Distribution
Requirement for such Class for such Remittance Date plus (b) the Interest
Shortfall Carryforward Amount for such Class as of the immediately preceding
Remittance Date exceeds (Y) the amount paid to the Certificateholders of such
Class on such Remittance Date pursuant to Sections 6.08(d)(ii), (iii), (iv), (x)
and (xi) of this Agreement and (ii) one month's interest on the amount
determined pursuant to clause (i) at the applicable Class Remittance Rate.
LIMITED GUARANTY: The obligation of The Money Store Inc. to make
Guaranty Payments as set forth in Section 6.16 hereof.
LIQUIDATED HOME IMPROVEMENT LOAN: (a) Any defaulted Home Improvement
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 Home Improvement Loan (including, with respect to FHA
Loans, FHA Payments) or (b) any 90 Day Delinquent Loan other than a 90 Day
Delinquent FHA Loan for which a Claim is eligible to be filed with the FHA.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
any REO Disposition, amounts required to be deposited in the 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 Home Improvement Loans, whether through trustee's sale,
foreclosure sale or otherwise.
LOAN-TO-VALUE RATIO: 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.
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, Class M
and Class B Certificates evidencing in excess of 50% of the aggregate Class
Principal Balances of the Class A, Class M and Class B Certificates; provided,
however, that with respect to any action or event affecting fewer than all
Classes of Class A, Class M and Class B 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, Class M or Class B Certificates.
MAXIMUM SUBORDINATION AMOUNT: Means $8,285,127.
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 PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Home Improvement
Loan, as set forth in the related Mortgage Note.
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 NOTE: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Home Improvement Loan.
MORTGAGED PROPERTY: The underlying property securing a Home Improvement
Loan, consisting of a fee simple estate in a single contiguous parcel of land
improved by a Residential Dwelling.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Home Improvement 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 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.
1933 ACT: The Securities Act of 1993, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Loan that is an FHA
Loan.
90 DAY DELINQUENT LOAN: With respect to any Remittance Date, a Home
Improvement 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 Co-Trustee,
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 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: $ 48,000,000.
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $ 53,700,000.
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $ 19,487,000.
ORIGINAL CLASS M-1 PRINCIPAL BALANCE: $ 25,375,000.
ORIGINAL CLASS M-2 PRINCIPAL BALANCE: $ 12,250,000.
ORIGINAL CLASS B-1 PRINCIPAL BALANCE: $ 9,625,000.
ORIGINAL CLASS B-2 PRINCIPAL BALANCE: $ 6,563,000.
ORIGINAL PRE-FUNDED AMOUNT: $43,749,959.40, representing the amount
deposited in the Pre- Funding Account on the Closing Date.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A,
Class M and Class B Certificates, the amount set forth for such Class under the
definitions of Original Class A-1 through Original Class A-3 Principal Balances,
Original Class M-1 and Original Class M-2 Principal Balances and Original Class
B-1 and Original Class B-2 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 April 1997, the difference between (i) three-months' interest
on the aggregate Principal Balances of the Subsequent Home Improvement Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
Weighted Average Remittance Rate and (ii) three-months' interest on the
aggregate Principal Balances of the Subsequent Home Improvement 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 May 1997,
the difference between (i) two- months' interest on the aggregate Principal
Balances of the Subsequent Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the Weighted Average Remittance Rate and (ii)
two-months' interest on the aggregate Principal Balances of the Subsequent 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 June 1997,
the difference between (i) one- month's interest on the aggregate Principal
Balances of the Subsequent Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the Weighted Average Remittance Rate and (ii)
one-month's interest on the aggregate Principal Balances of the Subsequent 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 Home
Improvement 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, Class M or Class B
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 X Certificates, the
portion of the Class evidenced thereby, expressed as a percentage, which shall
equal 100%. 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, Class M and
Class B 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, Class M and Class B
Certificate of each Class may be issued in a different denomination.
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 "AAA" 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 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:
(a) Must be between the Trustee and a dealer
bank or securities firm described in 1. or 2.
below:
1. Primary dealers on the Federal
Reserve reporting dealer list which
are rated "A" or better by the Rating
Agencies, or
2. Banks rated "A" or above by the Rating
Agencies;
(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,
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%; and
(ix) any other investment acceptable to the
Rating Agencies.
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) rural 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, Class M or Class B
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: The pool of Home Improvement Loans delivered to the Co-Trustee or
the Custodian pursuant hereto.
PRE-FUNDING EARNINGS: With respect to the Remittance Dates in April,
May and June 1997, the actual investment earnings earned during the period from
the Closing Date through the Business Day immediately preceding the
Determination Date in April, May and June 1997 (inclusive) on the Pre-Funding
Account during such period as calculated by the Representative pursuant to
Section 2.09(e) hereof.
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.
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 Home Improvement Loan or related
REO Property, at any date of determination, (i) the principal balance of the
Home Improvement Loan outstanding as of the Cut- Off Date or as of the
applicable Subsequent Cut-Off Date relative to Subsequent Home Improvement Loans
or as of the applicable substitution date relative to Qualified Substitute Home
Improvement 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 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 DISTRIBUTION AMOUNT: With respect to each Remittance Date,
the sum, without duplication, of (i) all payments and other recoveries of
principal of a Home Improvement Loan (net of amounts reimbursable to the
Servicer pursuant to this Agreement) received by the Servicer or any Subservicer
in the related Due Period: (ii) the principal portion of any Home Improvement
Loan actually purchased by the Seller for breach of a representation and
warranty or other defect and actually received by the Trustee as of the related
Determination Date; (iii) any Substitution Adjustments deposited in the
Principal and Interest Account and transferred to the Certificate Account as of
the related Determination Date: (iv) the then outstanding Principal Balance of
any Home Improvement Loan which, during the related Due Period, has become a
Liquidated Home Improvement Loan; and (v) the amount, if any, released from the
Pre-Funding Account on the April, May and June Remittance Dates.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Home Improvement Loan equal to the outstanding principal balance thereof,
received in advance of the final scheduled Due Date which is intended to satisfy
a Home Improvement Loan in full.
PRINCIPAL SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance
Date and with respect to any Class of Certificates, the amount, if any, by which
(X) the sum of
(a) the Current Principal Distribution Amount for
such Class for such Remittance Date, and
(b) the Principal Shortfall Carryforward Amount
for such Class of the immediately
preceding Remittance Date exceeds
(Y) the sum of
(a) the amounts paid to the
Certificateholders of such Class on such
Remittance Date pursuant to Sections
6.08(d)(v) through (ix) and (xii) of this
Agreement and
(b) the lesser of
(1) the excess of the amount in clause (X)
above over the amount in subclause (a) of
this clause (Y) and
(2) the amount paid to the Class B-2
Certificates pursuant to the Limited
Guaranty with respect to principal, in
excess of the amounts computed pursuant to
subclause (b)(1) of this clause (Y) for
all Classes of Certificates senior in
priority to such Class.
PRINCIPAL WRITEDOWN AMOUNTS: Any amount of principal of any Class of
Certificates required to be written down pursuant to Section 6.09.
PRIOR LIEN: With respect to any Home Improvement 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).
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 HOME IMPROVEMENT LOAN: A mortgage loan or mortgage
loans substituted for a Deleted Home Improvement Loan pursuant to Section 2.05
or 3.03 hereof, which (i) has or have a mortgage interest rate or rates of not
less than (and not more than two percentage points more than) the Home
Improvement Loan Interest Rate for the Deleted Home Improvement Loan, (ii)
relates or relate to the same type of Residential Dwelling or Multifamily
Property, as the case may be, as the Deleted Home Improvement Loan, (iii)
matures or mature no later than (and not more than one year earlier than) the
Deleted Home Improvement Loan, (vi) 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 Home Improvement Loan as of such
date, (v) with respect to each Deleted Home Improvement Loan that is a first
mortgage loan, is a first mortgage loan, (vi) 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),
(vii) is an FHA Loan if the Deleted Home Improvement Loan was an FHA Loan or a
Conventional Home Improvement Loan if the Deleted Home Improvement Loan was a
Conventional Home Improvement Loan and (viii) 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.
RATING AGENCY CONDITION: Means that each of the Rating Agencies shall
have notified the Servicer and the Trustee, orally or in writing, that the
substitution of the Alternate Credit Enhancement for the Limited Guaranty will
not result in a reduction or withdrawal of the then current rating assigned by
the respective Rating Agencies to each Class of Certificates.
REALIZED LOSS: With respect to each Liquidated Home Improvement 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 Home Improvement Loan as of the date of
such liquidation, minus the Net Liquidation Proceeds relating to such Liquidated
Home Improvement Loan (such Net Liquidation Proceeds to be applied first to the
principal balance of the Liquidated Home Improvement 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 Home
Improvement 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 Home Improvement Loan immediately prior to such Deficient
Valuation and the principal balance of the Home Improvement Loan as reduced by
the Deficient Valuation. With respect to any Home Improvement 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 Home Improvement Loan pursuant to Section
5.04(c), and shall be equal to the amount of such withdrawal.
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, May 30, 1997.
REGISTRATION STATEMENT: The registration statement (File No. 333-20817)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Class A, Class M and Class B
Certificates, including the Prospectus dated March 7, 1997 and the Prospectus
Supplement dated March 27, 1997.
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 Home Improvement 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.
REMAINING AMOUNT AVAILABLE: As of any Remittance Date the greater of
(x) zero dollars and (y)(i) the Available Remittance Amount minus (ii) payments
made pursuant to Sections 6.08(d)(i) through (xv).
REMIC: A "real estate mortgage investment conduit" within 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 I: The assets constituting the Trust Fund consisting of the REMIC
II Regular Certificates.
REMIC II: The assets constituting the Trust Fund other than the
Pre-Funding Account and the Capitalized Interest Account. Expenses and fees of
the Trust Fund shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As designated in Section 4.1.
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.
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 April
1997; 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.
REPRESENTATION LETTER: The Letter of Representations executed by the
Representative, the Trustee and the Depository with respect to the Class A,
Class M and Class B Certificates.
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 aggregate Principal Balance of the FHA
Loans as of the Cut-Off Date and will decline as set forth in 24 C.F.R.
ss. 201.32(b).
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 or 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 HOME IMPROVEMENT LOANS: The schedule of Home Improvement
Loans attached to the related Subsequent Transfer Agreement.
SECOND CROSS-OVER DATE: The Remittance Date on which the Class
Principal Balance of the Class A-2 Certificates (after giving effect to the
distributions of principal on the Class A-2 Certificates on such Remittance
Date) is reduced to zero.
SENIOR PERCENTAGE: Means (a) as to any Remittance Date prior to the
Class B Cross-over Date, 100%; (b) as to any Remittance Date on or after the
Class B Cross-over Date, and on which the Class B Principal Distribution Test is
not satisfied, 100%; (c) as to any Remittance Date on or after the Class B
Cross- over Date, and on which the Class B Principal Distribution Test is
satisfied, a fraction, expressed as a percentage, the numerator of which is the
sum of the Class Principal Balances of the Class A Certificates and the Class
Principal Balances of the Class M Certificates and the denominator of which is
the aggregate Principal Balances of the Home Improvement Loans as of the
immediately preceding Remittance Date; and (d) as to any Remittance Date after
the Fifth Cross-over Date, 0%.
SERIES: 1997-I.
SERVICER: The Money Store Inc., a New Jersey corporation, 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 Home Improvement 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 Home Improvement Loan Interest Rate, except that any amount of such
interest accrued at a rate in excess of the Weighted Average Remittance Rate
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 March 31, 2002, if the Total Expected
Losses (as defined below) of the Home Improvement Loans exceed 18.5% of the sum
of (A) the aggregate Principal Balances of the Home Improvement Loans as of the
Cut-off Date and (B) the aggregate Principal Balances of the Subsequent Home
Improvement Loans as of the applicable Subsequent Cut-off Date and (ii) after
March 31, 2002, but on or prior to March 31, 2007, if the Total Expected Losses
of the Home Improvement Loans exceed 27.5% of the sum of (A) the aggregate
Principal Balances of the Home Improvement Loans as of the Cut-off Date and (B)
the aggregate Principal Balances of the Subsequent Home Improvement Loans as of
the applicable Subsequent Cut-off Date.
For purposes of the foregoing definition, the "Total Expected Losses"
of the Home Improvement Loans on any date of determination shall equal the sum
of (i) the Cumulative Realized Losses on the Home Improvement 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 Home Improvement Loans 30-59 days
delinquent multiplied by 25%;
(ii) the Principal Balance of all Home Improvement Loans 60-89
days delinquent multiplied by 50%; and
(iii) the Principal Balance of all Home Improvement Loans 90 days
or more delinquent multiplied by 100%.
SERVICING FEE: As to each Home Improvement 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 Home Improvement 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 Home Improvement 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 Home
Improvement 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.
SHORTFALL CARRYFORWARD AMOUNTS: The Interest Shortfall Carryforward
Amounts and the Principal Shortfall Carryforward Amounts.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not
attached in any way to any other unit.
SINGLE FAMILY LOANS: Home Improvement Loans secured by Mortgaged
Property consisting of one-to-four family units.
SIXTH CROSS-OVER DATE: The Remittance Date on which the Class Principal
Balance of the Class B-1 Certificates (after giving effect to the distributions
of principal on the Class B-1 Certificates on such Remittance Date) is reduced
to zero.
SIXTY-DAY DELINQUENCY RATIO: Means, as of any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding Principal Balances of all Home Improvement Loans that were
delinquent 60 days or more as of the end of the prior Due Period (including Home
Improvement Loans in respect of which the related real estate has been
foreclosed upon but is still in inventory), and the denominator of which is the
sum of the Principal Balances of all the Home Improvement Loans as of the end of
the immediately preceding Due Period.
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: June 27, 1997.
STARTUP DAY: The day designated as such pursuant to Section 2.06
hereof.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
Home Improvement Loans which are transferred and assigned to the Trust Fund
pursuant to the related Subsequent Transfer Agreement.
SUBSEQUENT HOME IMPROVEMENT LOANS: The Home Improvement Loans sold to
the Trust Fund pursuant to Section 2.09, which shall be listed on the Schedule
of Home Improvement Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Co-Trustee and the
Representative, by which Subsequent Home Improvement 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 Home
Improvement Loans as provided in Section 5.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, 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 Home Improvement
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 Home Improvement Loans.
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 each Class of
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.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THIRD CROSS-OVER DATE: The Remittance Date on which the Class Principal
Balance of the Class A-3 Certificates (after giving effect to the distributions
of principal on the Class A-3 Certificates on such Remittance Date) is
reduced to zero.
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.
TRUST FUND: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
such Home Improvement 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 Home Improvement Loans or are deposited
in or constitute the Certificate Accounts, Principal and Interest Account,
Expense Account, Pre-Funding Account, Capitalized Interest Account and FHA
Premium Account, (iii) the Co- Trustee's rights under all insurance policies
with respect to the Home Improvement Loans required to be maintained pursuant to
this Agreement and any related Insurance Proceeds, (iv) Liquidation Proceeds,
(v) Released Mortgaged Property Proceeds, (vi) the Limited Guaranty and (vii)
any Alternate Credit Enhancement, including all earnings thereon and proceeds
thereof.
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.
WEIGHTED AVERAGE CLASS ADJUSTED HOME IMPROVEMENT LOAN REMITTANCE RATE:
With respect to each Home Improvement Loan, a percentage per annum, being the
sum of (i) the Weighted Average Remittance Rate, (ii) .04% per annum, relating
to the Annual Expense Escrow Amount, and (iii) with respect to FHA Loans for
which the FHA Insurance Premium is paid by the related Mortgagor as part of the
Home Improvement Loan Interest Rate, the applicable Insurance Rate.
WEIGHTED AVERAGE FIVE-MONTH SIXTY-DAY DELINQUENCY RATIO: Means, as of
any Remittance Date, the average of the Sixty-Day Delinquency Ratios for such
Remittance Date and for each of the four Remittance Dates immediately preceding
such Remittance Date, weighted by the sum of the Principal Balances of the Home
Improvement Loans as of the ends of the related Due Periods.
WEIGHTED AVERAGE REMITTANCE RATE: Means the average of the Class A-1
Remittance Rate, the Class A-2 Remittance Rate, the Class A-3 Remittance Rate,
the Class M-1 Remittance Rate, the Class M-2 Remittance Rate, the Class B-1
Remittance Rate and the Class B-2 Remittance Rate, weighted by the Class
Principal Balances of the Certificates.
<PAGE>
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 Co-Trustee without recourse and for the benefit of the
Certificateholders, subject to the terms of this Agreement, all of the right,
title and interest of the Originators in and to the Initial Home Improvement
Loans, all rights under the Reserve Amount relating to the Home Improvement
Loans and all other assets included or to be included in the Trust Fund.
(b) The rights of the Certificateholders to receive payments with
respect to the Home Improvement Loans in respect of the Certificates, and all
ownership interests of the Certificateholders in such payments, shall be as set
forth in 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 Home Improvement 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 Home
Improvement Loans will be, vested in 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 Home
Improvement Loans to 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 Home Improvement Loans to the Custodian.
Section 2.03 BOOKS AND RECORDS.
The sale of each Home Improvement 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 Home Improvement Loan which shall be
clearly marked to reflect the ownership of each Home Improvement Loan by the
Trustee for the benefit of the Certificateholders.
Section 2.04 DELIVERY OF HOME IMPROVEMENT LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this
Agreement, has delivered or caused to be delivered to the Custodian each of the
following documents for each Initial Home Improvement Loan and (ii) on each
Subsequent Transfer Date, will deliver or cause to be delivered to the Custodian
each of the following documents for each Subsequent Home Improvement 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 Dauphin Deposit Bank and Trust Company, as
Co-Trustee under the Pooling and Servicing Agreement dated as of February 28,
1997, 1997-I," 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 Home Improvement 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 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 Home Improvement Loan was less than or equal to $15,000 or the Home
Improvement 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 Home Improvement 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 Home Improvement
Loans with original principal balances of less than $15,000, the appraisal made
in connection with the origination of the related Home Improvement 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 Home Improvement Loans, within one year of the related
Subsequent Transfer Date), deliver or cause to be delivered to the Custodian:
(a) the original recorded Mortgage in those instances where a copy thereof
certified by a Responsible Officer was delivered to the Custodian; (b) the
original recorded Assignment of Mortgage to the Co-Trustee, which, together with
any intervening assignments of Mortgage, evidences a complete chain of title
from the originator to the Co-Trustee in those instances where copies thereof
certified by a Responsible Officer were delivered to the Custodian; and (c) any
intervening assignments of Mortgage in those instances where copies thereof
certified by a Responsible Officer were delivered to the Custodian.
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 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 Custodian
additional original documents evidencing an assumption or modification of a Home
Improvement Loan. All Home Improvement Loan documents held by the Custodian as
to each Home Improvement 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 Custodian, as agent for the Co-Trustee, agrees to execute and
deliver on the Closing Date with respect to the Initial Home Improvement Loans,
and on each Subsequent Transfer Date with respect to the related Subsequent Home
Improvement Loans, an acknowledgment of receipt of, for each Home Improvement
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 Custodian, as agent for the Co-Trustee, and subject to the conditions set
forth herein for the benefit of the Certificateholders. The Custodian agrees,
for the benefit of the Certificateholders, to review each Trustee's Mortgage
File relating to the Initial Home Improvement Loans delivered to it within 60
days after the Closing Date and each Trustee's Mortgage File relating to the
Subsequent Home Improvement Loans delivered to it within 60 days after the
related Subsequent Transfer Date (or, with respect to any Qualified Substitute
Home Improvement Loan, within 45 days after the assignment thereof) and, on each
such date, to deliver to the Representative and the Servicer a certification in
the form attached hereto as Exhibit F-1 to the effect that, as to each Home
Improvement Loan listed in the Home Improvement Loan Schedule (other than any
Home Improvement Loan paid in full or any Home Improvement 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 Home
Improvement Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Home Improvement 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. 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 Custodian shall deliver to the
Servicer, the Representative and any Certificateholder who requests a copy from
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 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
Home Improvement Loan identified in the Home Improvement 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 Home Improvement Loan Schedule, the
Custodian shall promptly so notify the Servicer, the Representative and the
Custodian. 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 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 Home Improvement Loans identified in the Home Improvement 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 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 Certificateholders in the related Home Improvement Loan, the
Representative will (i) substitute in lieu of such Home Improvement Loan a
Qualified Substitute Home Improvement Loan in the manner and subject to the
conditions set forth in Section 3.03 or (ii) purchase such Home Improvement Loan
at a purchase price equal to the Principal Balance of the Home Improvement Loan
as of the date of purchase, before the occurrence of Realized Losses, if any,
plus 30 days' interest on such Principal Balance, computed at the weighted
average Class Adjusted Home Improvement Loan Remittance Rates for the Class A,
Class M and Class B Certificates as of the next succeeding Determination Date,
plus any accrued unpaid Servicing Fees, Contingency Fees, Monthly Advances and
Servicing Advances reimbursable to the Servicer, which purchase price shall be
deposited in the Principal and Interest Account on the next succeeding
Determination Date.
(c) Upon receipt by 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 Principal and Interest Account (which
certification shall be in the form of Exhibit J hereto), the Custodian shall
release to the Servicer for release to the Representative the related Trustee's
Mortgage File and the Co-Trustee shall execute, without recourse, and deliver
such instruments of transfer necessary to transfer such Home Improvement 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 or the Servicer, on the
Remittance Date in June of each year, commencing 1997, the Custodian shall
deliver to the Representative and the Servicer a certification detailing all
transactions with respect to the Home Improvement 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, all Classes of Certificates except for the
Class R-1 and Class R-2 Certificates are hereby designated as the "regular
interests" in REMIC I and the Class R-1 Certificates are designated the single
class of "residual interests" in REMIC I for the purposes of the REMIC
Provisions. As of the Startup Day, the REMIC II Regular Certificates are hereby
designated as the "regular interests" in REMIC II and the Class R-2 Certificates
are designated the single class of "residual interests" in REMIC II for the
purposes of the REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code. The latest possible
maturity date of the REMIC II Regular Certificates is May 15, 2023.
(c) The latest possible maturity dates of the Class A, Class M and
Class B Certificates are as follows:
CLASS LATEST POSSIBLE MATURITY DATE
Class A-1 June 15, 2005
Class A-2 July 15, 2011
Class A-3 November 15, 2013
Class M-1 May 15, 2017
Class M-2 May 15, 2023
Class B-1 June 15, 2020
Class B-2 May 15, 2023
(d) The Servicer, at the direction of the Originators, shall acquire
and retain a .01% Percentage Interest in each Class of 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 each of REMIC I and REMIC II be treated as a
REMIC.
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Co-Trustee acknowledges the assignment to it of the Home
Improvement Loans and the delivery to it of the Trustee's Mortgage Files
relating to the Initial Home Improvement 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 Home Improvement Loans, 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
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 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 HOME IMPROVEMENT
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 Co-Trustee all right, title and interest of the applicable
Originators in and to each Subsequent Home Improvement 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 Home Improvement 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
Home Improvement Loan prior to the related Subsequent Cut-Off Date. The transfer
by the Originators of the Subsequent Home Improvement Loans set forth on the
Home Improvement Loan Schedule to 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 Home Improvement Loans so
transferred.
(b) The Originators shall transfer to the Co-Trustee the Subsequent
Home Improvement 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 Co-Trustee and the
Custodian with a timely Addition Notice and shall have provided any
information reasonably requested by any of the foregoing with respect
to the Subsequent Home Improvement Loans;
(ii) the Originators shall have delivered to the Co-Trustee and
the Custodian a duly executed written assignment (including an
acceptance by the Co-Trustee and the Custodian) which shall include
Home Improvement Loan Schedules, listing the Subsequent Home
Improvement 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 Home
Improvement 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 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; and
(viii) the Representative shall have delivered to the Rating
Agencies and the Co-Trustee, Opinions of Counsel with respect to the
transfer of the Subsequent Home Improvement Loans substantially in the
form of the Opinions of Counsel delivered to the Trustee on the Startup
Day (bankruptcy, corporate and tax opinions).
(c) The obligation of the Trust Fund to purchase a Subsequent Home
Improvement Loan 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 Home Improvement Loan conforms in all material respects to
the representations and warranties concerning the individual Initial Home
Improvement 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
Home Improvement Loans being transferred to the Trust Fund on such Subsequent
Transfer Date will not change, in any material respect, the characteristics of
the Initial Home Improvement Loans in the aggregate, set forth in Sections 3.01
and 3.02 or in the Prospectus Supplement dated March 27, 1997 forming a part of
the Registration Statement under the headings "Summary of Terms -- The Pool" and
"The Loan Pool -- Home Improvement Loans."
(d) In connection with the transfer and assignment of the Subsequent
Home Improvement 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 April, May and June 1997 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, the Overfunded Interest Amount, the
Pre-Funding Earnings, the amounts of Pre-Funding Account moneys 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) Reserved.
(g) Each Subsequent Home Improvement Loan shall have been originated
and identified by the applicable Originator on or prior to the Closing Date;
PROVIDED, HOWEVER, that if a home improvement loan that was identified as a
Subsequent Home Improvement Loan does not satisfy the representations and
warranties referenced in Subsection (c) above, the applicable Originator may
substitute for such loan another Home Improvement Loan that satisfies the
representations and warranties referenced in Subsection (c) above.
<PAGE>
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 jurisdiction in which a Mortgaged Property is located
if the laws of such jurisdiction 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 Home Improvement 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 Agreement;
(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 Home Improvement 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 Home
Improvement 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 Home Improvement 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 Home Improvement Loans, and will receive fair consideration and
reasonably equivalent value in exchange for the sale of the interest in
the Subsequent Home Improvement Loans, evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial Home
Improvement Loan, and no Originator will sell any interest in any
Subsequent Home Improvement 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 will not be
rendered insolvent as a result of the sale of the Home Improvement
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 jurisdiction in which
a Mortgaged Property is located if the laws of such jurisdiction
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
Home Improvement 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 Home Improvement 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 Home Improvement
Loans and does not omit to state a material fact necessary to make the
statements contained therein with respect to such Originator or the
Home Improvement 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 Home Improvement 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 Home Improvement 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
Custodian on behalf of the Co-Trustee under this Agreement, the
Co-Trustee will have good and marketable title on behalf of the related
Trust Fund to each Home Improvement 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 Home Improvement 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 Home Improvement 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 Home Improvement Loans will be,
in all material respects legal, proper, prudent and customary in the
mortgage origination and servicing business;
(xii) Each Initial Home Improvement Loan was selected, and each
Subsequent Home Improvement Loan will be selected, from among the
existing Home Improvement Loans in the respective Originator's
portfolio at the date hereof or, in the case of the Subsequent Home
Improvement 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 Home Improvement
Loans, will receive fair consideration and reasonably equivalent value,
in exchange for the sale of the interest in the Home Improvement Loans
evidenced by the Certificates;
(xv) Such Originator did not sell or, in the case of the
Subsequent Home Improvement Loans, will not sell, any interest in any
Home Improvement 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 Home Improvement
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 HOME IMPROVEMENT LOANS.
Each Originator hereby represents and warrants to the Trustee, the
Co-Trustee and the Certificateholders, with respect to each Initial Home
Improvement Loan, as of the Closing Date and, with respect to each Subsequent
Home Improvement Loan, as of the related Subsequent Transfer Date:
(a) The information with respect to each Home Improvement Loan set
forth in the Home Improvement 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 Home Improvement Loans, on the related Subsequent
Transfer Date, or as otherwise provided in Section 2.04;
(c) Each Initial Home Improvement Loan being transferred to the Trust
Fund is, and each Subsequent Home Improvement 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.
(e) Each Initial Home Improvement Loan has been, and each Subsequent
Home Improvement 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 the
Underwriting Guidelines dated August 10, 1995 (which Underwriting Guidelines are
consistent with the underwriting criteria set forth in the Registration
Statement) and is being, or with respect to the Subsequent Home Improvement
Loans, will be, serviced by the Servicer or one or more Subservicers and, with
respect to each Initial Home Improvement Loan originated by an Originator, there
is, and with respect to each Subsequent Home Improvement Loan, there will be,
only one originally executed Mortgage Note not stamped as a duplicate copy with
respect to each such Home Improvement Loan;
(f) The Mortgage Note with respect to each Initial Home Improvement
Loan bears, and with respect to each Subsequent Home Improvement Loan will bear,
a fixed Home Improvement Loan Interest Rate, which rate shall at least equal the
sum of (i) the Weighted Average Remittance Rate plus 0.04%, (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 $0 aggregate principal amount
of the Initial Home Improvement Loans may be Low Interest Home Improvement Loans
and (B) 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) Each Mortgage Note relating to the Home Improvement 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 Home Improvement
Loans, and will be with respect to the Subsequent Home Improvement 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 2% of the Home
Improvement Loans 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 Home
Improvement 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 Home Improvement 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 Home Improvement 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 Co-Trustee will hold good and indefeasible
title, to, and be the sole owner of, each Home Improvement 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 Home Improvement Loan is 59 days
or more delinquent in payment and, except as provided in the next sentence, no
Initial Home Improvement 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. As of the related Subsequent Cut-Off Date, no Subsequent Home Improvement
Loan shall be 59 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 Home Improvement 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) As of the applicable dates of origination, the Weighted Average
Loan-to-Value Ratio of the Home Improvement Loans was no greater than 79.0%;
(n) Each Home Improvement 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;
(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 Home Improvement Loan had full legal capacity to execute all
Home Improvement 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 Home Improvement 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 Trustee the FHA
Reserve Amount relating to the Home Improvement Loans;
(t) No more than approximately 2% of the Principal Balances of the Home
Improvement 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 Home Improvement Loan conforms, and all such Home Improvement
Loans in the aggregate conform, to the description thereof set forth in the
Registration Statement;
(w) Reserved;
(x) Approximately 22% and 78% of the Initial Home Improvement 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 Home Improvement Loans are Single-Family Loans
(provided, however, that no more than approximately 1% of the Initial Home
Improvement Loans, measured by Pool Principal Balances of the Cut-Off Date, may
be Multifamily Loans); and, when measured by outstanding principal balance as of
the Closing Date, no more than approximately 2% of the Initial Home Improvement
Loans are secured by vacation homes, secondary residences, or investment
properties, less than approximately 2% of the Initial Home Improvement Loans are
secured by individual units in Low-Rise Condominiums, no more than approximately
2% of the Initial Home Improvement Loans are secured by Two-, Three- or
Four-Family Houses, and none of the Initial Home Improvement Loans are secured
by individual units of other types including High-Rise Condominiums. No Initial
Home Improvement Loan is secured by a mobile home or co-op;
(z) Reserved;
(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 the Custodian.
The substance of any such alteration or modification is reflected on the Home
Improvement 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 Home Improvement 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 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 Home Improvement 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 Home
Improvement Loan or the use for which the premises were intended;
(ee) Reserved;
(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 Home
Improvement Loan as an unacceptable investment, cause the Home Improvement Loan
to become delinquent or adversely affect the value or marketability of the Home
Improvement Loan;
(gg) Reserved;
(hh) The proceeds of the Home Improvement 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 Home Improvement 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 Home Improvement Loan was, and no Subsequent Home
Improvement 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 Home Improvement Loan has, and no Subsequent Home
Improvement Loan will have, a shared appreciation feature, or other contingent
interest feature;
(pp) With respect to each Home Improvement 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 Home Improvement Loan, the related Prior Lien was not 30 or
more days delinquent;
(qq) With respect to each Home Improvement Loan that is not a first
mortgage loan, either (i) no consent for the Home Improvement 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) Reserved;
(ss) With respect to each Home Improvement Loan that is not a first
mortgage loan, the maturity date of the Home Improvement 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
Home Improvement 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 Home Improvement
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 Home
Improvement 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 Home Improvement Loan Schedule. The
consolidated principal amount does not exceed the original principal amount of
the Home Improvement 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 Home Improvement Loan was not, and the Subsequent
Home Improvement 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 Home Improvement Loans have been deposited and all amounts received
after the Subsequent Cut-off Date with respect to the Subsequent Home
Improvement Loans will be deposited into the applicable Principal and Interest
Account and are, as of the Closing Date with respect to the Initial Home
Improvement Loans, in the applicable Principal and Interest Account;
(ccc) Reserved;
(ddd) At the applicable dates of origination of the Home Improvement
Loans, for each Home Improvement Loan, after giving effect to all improvements
to be made on the related Mortgaged Property with the proceeds of such Home
Improvement 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 Home Improvement Loan and the outstanding amount of all other loans secured
by Prior Liens on such Mortgaged Property;
(eee) Reserved;
(fff) At the applicable dates of origination, each Home Improvement
Loan had an original term to maturity of no greater than 25 years;
(ggg) Each Subsequent Home Improvement Loan will comply with the
representations and warranties respecting Subsequent Home Improvement Loans set
forth in Section 3.01(d) of the Insurance Agreement, which representations and
warranties are incorporated herein;
(hhh) Each Initial Home Improvement Loan bears, and each Subsequent
Home Improvement Loan will bear, a fixed rate of interest;
(iii) Reserved;
(jjj) Reserved;
(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 25% 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;
(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 Trustee's FHA Reserve Account within 180 days after the
Funding Period, and the Originators will give 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 Home Improvement Loan
(including each Subsequent Home Improvement 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 Home Improvement Loan, was the only
security for such Home Improvement Loan;
(ppp) Each Subsequent Home Improvement Loan will have been identified,
originated and funded on or prior to the Closing Date;
(qqq) A portion of the Home Improvement Loans are governed by the FTC
holder regulation provided in 16 C.F.R. Part 433;
(rrr) All obligations of the seller or subcontractor under each Home
Improvement Loan have been completed in accordance with the terms of such Home
Improvement Loans as of the Closing Date, and no additional goods or services
will be, or are required to be, provided by the seller or subcontractor under
the terms of such Home Improvement Loans after the Closing Date. All
improvements and other goods and services provided under each Home Improvement
Loan shall have been inspected by the Originator within the time period and in
accordance to the applicable Title I regulations and prior to the Closing Date,
and evidence of such inspection shall be included in the Mortgage File;
(sss) With respect to each Home Improvement Loan that is a home
improvement loan or retail installment sales contract for goods or services, no
Mortgagor has or will have a claim, counterclaim, right of rescission, set-off
or defense under any express or implied warranty or otherwise with respect to
goods or services provided under such Home Improvement Loan; and
(ttt) The Mortgage and the Mortgage Note contain the entire agreement
of the parties and all obligations of the seller or subcontractor under the
related Home Improvement Loan, and no other agreement defines, modifies or
expands the obligations of the seller or subcontractor under the Home
Improvement Loan.
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 or the Co-Trustee of a breach of any of
such representations and warranties which materially and adversely affects the
value of the Home Improvement Loans or the interest of the Certificateholders,
or which materially and adversely affects the interests of the
Certificateholders in the related Home Improvement Loan in the case of a
representation and warranty relating to a particular Home Improvement 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 Home Improvement Loan by
depositing in the 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 Home Improvement Loan from the Trust Fund (in which case it shall
become a Deleted Home Improvement Loan) and substitute one or more Qualified
Substitute Home Improvement 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 receives an Opinion of Counsel that such substitution would
not constitute a Prohibited Transaction or cause either REMIC I or REMIC II to
fail to qualify as a REMIC at any time any Certificates are outstanding.
As to any Deleted Home Improvement Loan for which the Representative
substitutes a Qualified Substitute Home Improvement Loan or Loans, the Servicer
shall effect such substitution by delivering to 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 Home Improvement Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest
Account all payments received in connection with such Qualified Substitute Home
Improvement Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Home Improvement 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 Home Improvement 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 Home
Improvement Loan. The Servicer shall give written notice to the Trustee and the
Representative that such substitution has taken place and shall amend the
applicable Home Improvement Loan Schedule to reflect the removal of such Deleted
Home Improvement Loan from the terms of this Agreement and the substitution of
the Qualified Substitute Home Improvement Loan. Upon such substitution, such
Qualified Substitute Home Improvement 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 Home Improvement 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 Custodian and the Certificateholders
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 Home Improvement Loan
and to indemnify the Certificateholders, the Trustee and the Custodian as
provided in Sections 2.05 and 3.03 constitute the sole remedies of the Trustee,
the Custodian 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 Home
Improvement Loan upon (i) discovery of such breach by any party and notice
thereof to the Representative or notice thereof by the Representative to the
Co-Trustee, (ii) failure by the Representative to cure such breach or purchase
or substitute such Home Improvement Loan as specified above, and (iii) demand
upon the Representative by the Co-Trustee for all amounts payable in respect of
such Home Improvement 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 each of REMIC I and REMIC II 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 Home Improvement Loans or of any Permitted Instrument unless such sale is
as a result of a repurchase of the Home Improvement Loans pursuant to this
Agreement or 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) 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.
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
(a) The Certificates shall be substantially in the forms annexed hereto
as Exhibits B-1, B-2, B-3 and B-4 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.
(b) REMIC II will be evidenced by (x) Class II-A-1, Class II-A-2, Class
II-A-3, Class II-M-1, Class II-M-2, Class II-B-1 and Class II-B-2 Certificates
(the "REMIC II Regular Certificates"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
II and (y) the Class R-2 Certificates, which are hereby designated as the single
"residual interest" in REMIC II. Except as discussed below, principal and
interest shall be paid on the REMIC II Regular Certificates in the same order
and priority as payments are to be made on the Corresponding Classes of
Certificates (disregarding the Class X Certificates). The REMIC II Regular
Certificates and the Class R-2 Certificates will have the following designations
and pass-through rates, and distributions of principal and interest thereon
shall be allocated to the Corresponding Class of Certificates in the following
manner:
<TABLE>
<CAPTION>
Corresponding Classes
OF CERTIFICATE (1)
Allocation Allocation
REMIC II Initial Pass-Through of of
CERTIFICATES BALANCE RATE PRINCIPAL INTEREST
<S> <C> <C> <C> <C> <C>
II-A-1 $48,000,000 (2) A-1 A-1(3)
II-A-2 $53,700,000 (2) A-2 A-2(3)
II-A-3 $19,487,000 (2) A-3 A-3(3)
II-M-1 $25,375,000 (2) M-1 M-1(3)
II-M-2 $12,250,000 (2) M-2 M-2(3)
II-B-1 $ 9,625,000 (2) B-1 B-1(3)
II-B-2 $ 6,563,000 (2) B-2 B-2 (3)
R-2 $ 0 0 N/A N/A(4)
</TABLE>
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC II Certificate to its corresponding Class of
Certificates on any Distribution Date shall be 100%.
(2) As of any Remittance Date, the Pass-Through Rate is the weighted average
of the Adjusted Home Improvement Loan Interest Rates of the Home
Improvement Loans.
(3) Interest from this REMIC II Certificate in excess of interests on its
Corresponding Class of Certificates at the Class A-1, Class A-2, Class
A-3, Class M-1, Class M-2, Class B-1, or Class B-2 Remittance Rate, as
the case may be, that is applicable with respect to such Corresponding
Class of Certificates shall be allocated to the Class X Certificates as a
Separate Component.
(4) On each Remittance Date, funds, if any, remaining in REMIC II after
payment of interest and principal, as designated above, as well as all
expenses and fees of the Trusts Fund, will be distributed to the Class
R-2 Certificate.
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 Certificateholder. 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, Class M and Class B Certificates shall initially
be issued in the form of a single fully registered Certificate of such Class.
The Class A, Class M and Class B Certificates shall have an aggregate
denomination equal to the following:
<TABLE>
<CAPTION>
CLASS DENOMINATION
----- ------------
<S> <C> <C>
Class A-1 $48,000,000
Class A-2 $53,700,000
Class A-3 $19,487,000
Class M-1 $25,375,000
Class M-2 $12,250,000
Class B-1 $ 9,625,000
Class B-2 $ 6,563,000
</TABLE>
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, Class M or Class R 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, Class M or Class R 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, Class M or Class R Certificates, (b) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class R Certificate or (c) the payment to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class R Certificate as shown in the Register, of any amount
with respect to any distribution of principal or interest on the Class A, Class
M or Class R Certificates. No Person other than a registered Holder of a Class
A, Class M or Class R Certificate as shown in the Register shall receive a
certificate evidencing such Class A, Class M or Class R Certificate, as the case
may be.
(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, Class M and Class B 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, Class M and Class B 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, Class M and Class B 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, Class M and Class B 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, Class M and Class B Certificates may be
registered in whatever name or names registered Holders of Class A, Class M and
Class B Certificates transferring Class A, Class M and Class B 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, Class M or Class B Certificates are registered
in the name of Cede & Co., as nominee of the Depository, all distributions of
principal and interest on such Class A, Class M or Class B Certificates, and all
notices with respect to such Class A, Class M and Class B Certificates shall be
made and given, respectively, in the manner provided in the Representation
Letter.
(g) The Class R Certificates and Class X 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 or Class X
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 or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
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 or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a
Class R or Class X 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 or Class X Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest in a
Class R or Class X 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 or Class X Certificate
may be transferred (including the sale to the initial holder) and the
Trustee shall not register the transfer of a Class R or Class X
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 or Class X 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 or Class X 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 Class X Certificate or to cause the transfer of a Percentage
Interest in a Class R or Class X 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 or Class X 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 or Class X 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 or Class X Certificate. The Trustee shall notify the
Representative upon knowledge of a Responsible Officer that the
registration of transfer of a Class R or Class X 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
or Class X 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 or Class X 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 or Class X 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
or Class X 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 or Class X Certificate,
as the case may be, sell such Class R or Class X 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 or Class X
Certificate, except that in the event that the Representative
determines that the Holder or any prior Holder of such Class R or Class
X 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 or Class X Certificate, as applicable, as a
result of its exercise of such discretion.
No Class R or Class X 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 or Class X Certificates, as applicable, will not result in the
assets of the Trust Fund being deemed to be "plan assets" within the meaning of
Department of Labor Regulations 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 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 and the Certificate Registrar shall not be affected by
notice to the contrary.
<PAGE>
ARTICLE V
ADMINISTRATION AND SERVICING OF HOME IMPROVEMENT LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) It is intended that each of REMIC I and REMIC II hereunder shall
constitute, and that the affairs of each of REMIC I and REMIC II 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 REMIC I and REMIC II
and as Tax Matters Person on behalf of REMIC I and REMIC II, 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 REMIC I and
REMIC II using a calendar year as the taxable year for each of REMIC I and REMIC
II 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 each of REMIC I and REMIC II, to be treated as a REMIC on the federal
tax return of each of REMIC I and REMIC II for their 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 REMIC I or REMIC II are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of each of REMIC I and REMIC II 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 either REMIC I or REMIC II or that would
cause the imposition of a prohibited transaction tax or a tax on contributions
to REMIC I or REMIC II; (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 each of REMIC I and REMIC II 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
REMIC I and REMIC II are properly executed by the appropriate person; (viii)
represent REMIC I and REMIC II 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 REMIC I and REMIC
II, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of REMIC I or REMIC II and
otherwise act on behalf of REMIC I and REMIC II in relation to any tax matter
involving either REMIC I and REMIC II; (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 I and REMIC II. 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 REMIC I or REMIC II, as
applicable, for any liability it may incur in connection with this Section
5.01(a), which indemnification shall survive the termination of REMIC I and
REMIC II; 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 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 February 28, 1997, 1997-I" 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 February 28, 1997, 1997-I" with respect to those Mortgage
Notes currently endorsed "Pay to the order of Holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Home Improvement 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 Home Improvement 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. 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 Home Improvement
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 and the Certificateholders for the servicing and administering of the
Home Improvement 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 Home Improvement Loans.
For purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Improvement 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 Home Improvement 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 Home Improvement 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 Home Improvement 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, Class M or Class B Certificateholders, provided,
however, that (unless (x) the Mortgagor is in default with respect to the Home
Improvement Loan, or such default is, in the judgment of the Servicer, imminent
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 Home Improvement Loan that would change the
Home Improvement Loan 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 Home Improvement Loan), or extend the final maturity
date on such Home Improvement 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 Home Improvement Loan. Without limiting the generality of the foregoing,
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 Home Improvement 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 Home Improvement
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 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 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 Custodian all documents and records (including computer tapes and
diskettes) relating to the Home Improvement 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 REMIC I or REMIC II, such
tax shall be charged against amounts otherwise distributable to the Holders of
the Class R-1 or Class R-2 Certificates, respectively. 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-1 or Class R-2
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 HOME IMPROVEMENT LOANS.
In the event that any payment due under any Home Improvement 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 Home Improvement 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 Certificateholders. 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 Home Improvement 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 Home Improvement Loan has become a Liquidated Home Improvement
Loan, the Servicer shall promptly prepare and forward to the Trustee and, upon
request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit N, detailing the Liquidation Proceeds received from the
Liquidated Home Improvement 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 Home
Improvement Certificates, 1997-I, Class A, Class M, Class B, Class X, 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 and,
upon request, any Certificateholder.
(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 Home Improvement Loans, 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 Home Improvement Loans;
(iii) all Net Liquidation Proceeds received with respect to the
Home Improvement Loans;
(iv) all Insurance Proceeds received with respect to the Home
Improvement Loans (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 Home Improvement Loans;
(vi) any amounts paid in connection with the purchase of any Home
Improvement Loan and the amount of any Substitution Adjustment received
with respect to the Home Improvement Loans 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 Home Improvement Loan delivered to the Co-Trustee on the
Closing Date that was originated after February 28, 1997, the Servicer shall
deposit in the applicable Principal and Interest Account 30 days' interest on
the original principal balance of each such Home Improvement Loan calculated at
the applicable Home Improvement Loan 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 Home Improvement 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 Available Remittance Amount 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: that portion of the Available Remittance Amount, that is 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 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 Home Improvement 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 Home Improvement
Loans, generally, including Liquidation Proceeds, Released Mortgaged Property
Proceeds and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or 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, Class M and Class B
Certificateholders to receive the Shortfall Carryforward Amounts.
(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) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds, 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 Home Improvement Loan
Certificates, Series 1997-I." 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 Home Improvement Loan, the Servicer shall maintain
accurate records reflecting fire and hazard insurance coverage.
With respect to each Home Improvement Loan which is a first Home
Improvement 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 Home Improvement 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, 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
Home Improvement Loan and any Prior Lien, (b) the full insurable value of the
premises securing the Home Improvement 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
Home Improvement 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 Home
Improvement Loans, then, to the extent such policy names the Trustee or the
Co-Trustee on behalf of the Certificateholders as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal balance on the
Home Improvement 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 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 Home
Improvement 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 or any
Certificateholder, the Servicer shall cause to be delivered to the Trustee, the
Co-Trustee or such Certificateholder 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 Co-Trustee for the benefit
of the Class A, Class M and Class B Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders 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 Class A, Class M and Class B 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 Class A, Class M and Class B Certificateholders. 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
Class A, Class M or Class B 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 Home Improvement
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 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, Class M
or Class B 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 Co-Trustee and shall
report monthly to 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 HOME IMPROVEMENT LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Improvement 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 Home Improvement
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 HOME IMPROVEMENT LOANS.
The Servicer shall provide to the Trustee, the Co-Trustee the
Certificateholders, the FDIC, the Office of Thrift Supervision and the
supervisory agents and examiners of each of the foregoing access to the
documentation regarding the Home Improvement 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 Co-Trustee's
interest 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 Home Improvement 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/or to preserve the security of
the related Home Improvement Loan, subject to the application of the REMIC
Provisions. The Servicer shall immediately notify 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 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 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 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 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 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 Loan; and (iii) any principal and interest
payments received with respect to a 90 Day Delinquent 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 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 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
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).
<PAGE>
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 a trust account, which shall not be
interest-bearing, titled "TMS Home Improvement Certificate Account 1997-I," (the
"Certificate Account"). The Trustee shall, promptly upon receipt, deposit in the
Certificate Account and retain therein:
(i) the Available Remittance Amount (net of the amount of Monthly
Advances and Compensating Interest deposited pursuant to subclause (ii)
below), remitted by the Servicer;
(ii) the Compensating Interest and the portion of the Monthly
Advance allocable to the Class Adjusted Home Improvement Loan
Remittance Rates remitted to the Trustee by the Servicer;
(iii) Guaranty Payments or any amounts received from any Alternate
Credit Enhancement pursuant to Sections 6.16 and 6.17, respectively;
(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 Certificate Account; and
(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.
(b) Amounts on deposit in the Certificate Account shall be withdrawn on
each Remittance Date by the following parties in the following order of
priority:
(i) Reserved;
(ii) by the Trustee, to make deposits in the FHA Premium Account
pursuant to Section 6.06(a)(i);
(iii) 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:
(iv) by the Trustee, to invest amounts on deposit in the
Certificate Account in Permitted Instruments pursuant to Section 6.07;
(v) by the Trustee, to pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings realized
on Permitted Instruments;
(vi) by the Trustee, to withdraw any amount not required to be
deposited in the Certificate Account or deposited therein in error; and
(vii) by the Trustee, to clear and terminate the Certificate
Account upon the termination of the 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 Home Improvement Pre- Funding Account
1997-I" (the "Pre-Funding Account"). The Pre-Funding Account shall constitute
part of the Trust Fund but shall not be an asset of REMIC I or REMIC II. It is
an outside reserve fund, the owners of which are the Class R-1
Certificateholders and for Federal tax purposes, amounts, if any, transferred by
REMIC I to the Pre-Funding Account are treated as distributed by REMIC I to the
Class R-1 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 $43,749,959.40 from the proceeds of the sale of the
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 Home Improvement Loans (or,
with respect to the Low Interest Home Improvement Loans, if any, 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 Home Improvement 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 no
event shall the Representative be permitted to instruct the Trustee to release
from the Pre-Funding Account with respect to subsequent Home Improvement Loans
an amount in excess of $43,749,959.40.
(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 Certificate Account any Pre-Funded Amount then remaining in the Pre-
Funding Account. However, if at the close of business on June 26, 1997, 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 Certificate Account any Pre-Funded Amount then remaining in
the Pre-Funding Account.
(d) On the Remittance Dates occurring in April, May and June 1997, the
Trustee shall transfer from the Pre-Funding Account to the Certificate Account
the Pre-Funding Earnings, 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 Home Improvement Capitalized Interest
Account 1997-I" (the "Capitalized Interest Account"). The Capitalized Interest
Account shall constitute part of the Trust Fund but shall not be a part of REMIC
I or REMIC II. It is an outside reserve fund, the owners of which are the Class
R-1 Certificateholders and for Federal tax purposes amounts, if any, transferred
by REMIC I to the Capitalized Interest Account are treated as distributed by
REMIC I to the Class R Certificateholders. The Trustee shall, promptly upon
receipt, deposit into the Capitalized Interest Account $544,075.95. 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, that constitutes a Permitted Instrument, the Trustee shall, within
one Business Day of its receipt of written notification from the Servicer,
withdraw from the Capitalized Interest Account and pay to the Owners of the
Class R-1 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-1 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 April, May and June 1997, the
Trustee shall transfer from the Capitalized Interest Account to the Certificate
Account the Capitalized Interest Requirement, 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-1
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 a trust account, which shall not be
interest-bearing, titled "TMS Home Improvement Expense Account 1997-I" (the
"Expense Account"). The Trustee shall deposit into the applicable Expense
Account:
(i) on each Remittance Date from the amounts on deposit in the
Certificate Account an amount equal to one-twelfth of that portion of
the Annual Expense Escrow Amount relating to the Home Improvement
Loans, 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 Account, 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 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 Expense Account for payment to the
Trustee or the Co-Trustee, as the case may be, pursuant to Section 6.08(d)(i),
to the extent of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the 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;
(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
Expense Account or deposited therein in error; and
(iv) to clear and terminate the 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 Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Representative, 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 the Expense Account after payments made
pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i) and (c)(ii),
above.
Section 6.04 Reserved.
Section 6.05 Reserved.
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 1997-I" (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, 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, 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, pursuant to Section 6.08(d)(xv) hereof,
transfer an amount from the Certificate Account to the FHA Premium Account
sufficient to pay in full 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) as reimbursement for the FHA
Insurance Premiums paid by the Servicer 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) Reserved; 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 Account shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Expense
Account, Pre- Funding Account, Capitalized Interest Account or FHA Premium
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
Certificate Account; 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 X and Class R
Certificateholders to receive distributions in respect of the Class X and Class
R Certificates, respectively, and all ownership interests of the Class X and
Class R Certificateholders in and to such distributions, shall be subject and
subordinate to the preferential rights of the Class A, Class M and Class B
Certificateholders to receive distributions in respect of the Class A, Class M
and Class B Certificates, and the ownership interests of the Class A, Class M
and Class B Certificateholders in such distributions, as described herein. In
accordance with the foregoing, the ownership interests of the Class X and 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 X and Class R
Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Class X and Class R
Certificateholders shall not be required to refund any amount properly
distributed on the Class X and Class R Certificates pursuant to Section
6.08(d)(xvii) and (xviii).
(b) Reserved.
(c) Reserved.
(d) On each Remittance Date, the Trustee shall withdraw from the
Certificate Account the sum of (i) the Available Remittance Amount, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 5.04(f) and (ii) the amounts, if any, of Guaranty Payments
or payments relating to Alternate Credit Enhancement received pursuant to
Section 6.01(a), and make distributions thereof in the following order of
priority (provided, however, that Guaranty Payments and payments relating to
Alternate Credit Enhancement may be distributed only pursuant to clauses (iv)(B)
and (ix) below):
(i) to the Expense Account, an amount equal to one-twelfth of
the Annual Expense Escrow Amount with respect to the Home Improvement
Loans, 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 Expense Account;
(ii) after the payment of the amounts specified in clause (i)
above, to pay the Class A Current Interest Distribution Requirement
concurrently to the Holders of the respective Classes of Class A
Certificates as follows: (A) the Current Interest Distribution
Requirement applicable to the Class A-1 Certificates to the Class A-1
Certificateholders; (B) the Current Interest Distribution Requirement
applicable to the Class A-2 Certificates to the Class A-2
Certificateholders; (C) the Current Interest Distribution Requirement
applicable to the Class A-3 Certificates to the Class A-3
Certificateholders; or (D) if the Available Remittance Amount after
payment of the amount specified in clause (i) above is less than the
Class A Current Interest Distribution Requirement, pro rata to each
Class of Class A Certificates in accordance with their respective
Current Interest Distribution Requirements;
(iii) after payment of the amounts specified in clauses (i)
and (ii) above, to pay the Class M Current Interest Distribution
Requirement as follows and in the following order of priority:
(A) the Current Interest Distribution Requirement
applicable to the Class M-1 Certificates to the Class M-1
Certificateholders; and
(B) the Current Interest Distribution Requirement
applicable to the Class M-2 Certificates to the Class M-2
Certificateholders;
(iv) after payment of the amounts specified in clauses (i),
(ii) and (iii) above, to pay the Class B Current Interest Distribution
Requirement as follows and in the following order of priority:
(A) the Current Interest Distribution Requirement
applicable to the Class B-1 Certificates to the Class B-1
Certificateholders; and
(B) the Current Interest Distribution Requirement
applicable to the Class B-2 Certificates to the Class B-2
Certificateholders.
(v) after payment of the amounts specified in clauses (i),
(ii), (iii) and (iv) above, to pay the Class A Principal Distribution
Amount sequentially to the Class A-1 Certificateholders, the Class A- 2
Certificateholders and the Class A-3 Certificateholders, in that order
of priority, but in no event will any Class of Class A Certificates be
paid more than is necessary to reduce the Class Principal Balance of
such Class to zero;
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class M-1 Principal Distribution Amount
to the Holders of the Class M-1 Certificates, but in no event more than
is necessary to reduce the Class Principal Balance of the Class M-1
Certificates to zero;
(vii) after payment of the amounts specified in clauses (i)
through (vi) above, to pay the Class M-2 Principal Distribution Amount
to the Holders of the Class M-2 Certificates, but in no event more than
is necessary to reduce the Class Principal Balance of the Class M-2
Certificates to zero;
(viii) after payment of the amounts specified in clauses (i)
through (vii) above, to pay the Class B-1 Principal Distribution Amount
to the Holders of the Class B-1 Certificates, but in no event more than
is necessary to reduce the Class Principal Balance of the Class B-1
Certificates to zero;
(ix) after payment of the amounts specified in clauses (i)
through (viii) above, to pay the Class B-2 Principal Distribution
Amount to the Holders of the Class B-2 Certificates, but in no event
more than is necessary to reduce the Class Principal Balance of the
Class B-2 Certificates to zero;
(x) after payment of the amounts specified in clauses (i)
through (ix) above, to pay any Interest Shortfall Carryforward Amounts
applicable to the Class A Certificates to the Holders of the Class A
Certificates as follows: (A) any Interest Shortfall Carryforward
Amounts applicable to the Class A-1 Certificates to the Class A-1
Certificateholders; (B) any Interest Shortfall Carryforward Amounts
applicable to the Class A-2 Certificates to the Class A-2
Certificateholders; (C) any Interest Shortfall Carryforward Amounts
applicable to the Class A-3 Certificates to the Class A-3
Certificateholders; or (D) if the Available Remittance Amount after
payment of the amounts specified in clauses (i) through (ix) above is
less than the Interest Shortfall Carryforward Amounts attributable to
the Class A-1, Class A-2 and Class A-3 Certificates, pro rata to each
Class of Class A Certificates in accordance with their respective
Interest Shortfall Carryforward Amounts.
(xi) after payment of the amounts specified in clauses (i)
through (x) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class M-1, Class M-2, Class B-1 and Class B-2
Certificates to the Holders of the Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates, respectively, and in that order of priority;
(xii) after payment of the amounts specified in clauses (i)
through (xi) above, to pay Principal Shortfall Carryforward Amounts
applicable to the Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class B-1 and Class B-2 Certificates to the Holders of the Class
A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and Class
B-2 Certificates, respectively, and in that order of priority;
provided, however, in no event will any Class of Certificates receive
payment for any Principal Shortfall Carryforward Amounts applicable to
such Class after the Class Principal Balance of such Class has been
reduced to zero;
(xiii) after payment of the amounts specified in clauses (i)
through (xii) above, then to the Holders of the Class B-2 Certificates
to the extent of any Defaulted Guaranty Payment Amounts;
(xiv) after payment of the amounts specified in clauses (i)
through (xiii) above, then to the Servicer and/or the Representative,
an amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xv) after payment of the amounts specified in clauses (i)
through (xiv) above, then to the FHA Premium Account pursuant to
Section 6.06(a) hereof;
(xvi) after payment of the amounts specified in clauses (i)
through (xv) above, then to the Guarantor, an amount equal to any
unreimbursed Guaranty Payments made under the Limited Guaranty or any
other payments made under the Alternate Credit Enhancement, as the case
may be;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, then to the Class X Certificateholders, the lesser
of (i) the Class X Remittance Amount, and (ii) any interest accrued
(and yet unpaid) with respect to the Class X Certificates in accordance
with footnote (3) of Section 4.01(b); and
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, then to the Class R Certificateholders, any
remainder.
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 Certificates then entitled to receive distributions
of principal in the priority and proportions set forth in this Section 6.08(d)
and (ii) from amounts transferred from the Capitalized Interest Account,
distributions of interest to such Classes of Certificates equal to the
applicable Capitalized Interest Requirement.
(e) All distributions made to the Certificateholders on each Remittance
Date and the Special Remittance Date will be made on a pro rata basis 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
Certificateholder 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.
Section 6.09 AVAILABLE MAXIMUM SUBORDINATION AMOUNT; PRINCIPAL
WRITEDOWN AMOUNTS.
On and after the Remittance Date on which the Available Maximum
Subordination Amount has been reduced to zero, then (i) no further Shortfall
Distribution Amounts shall be created as a result of shortfalls in the Available
Remittance Amount, (ii) interest shall cease to accrue on all Interest Shortfall
Carryforward Amounts remaining outstanding at the time the Available Maximum
Subordination Amount become zero, and (iii) all future shortfalls of principal
shall result in corresponding writedowns of the Class Principal Balances of the
Class of Certificates to which such shortfalls relate (the amount of such
writedowns being hereinafter referred to as "Principal Writedown Amounts"),
which Principal Writedown Amounts will be allocated first to the Class B-2
Certificates, until the Class Principal Balance of the Class B-2 Certificates
shall equal zero, then to the Class B-1 Certificates, until the Class Principal
Balance of the Class B-1 Certificates shall equal zero, then to the Class M-2
Certificates, until the Class Principal Balance of the Class M-2 Certificates
shall equal zero, then to the Class M- 1 Certificates, until the Class Principal
Balance of the Class M-1 Certificates shall equal zero, then to the Class A-1,
Class A-2 and Class B-1 Certificates, pro rata based upon then respective Class
Principal Balances until the Class Principal Balances of the Class A
Certificates shall equal zero.
Section 6.10 STATEMENTS.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver 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 Servicer'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 Available Remittance Amounts for the related Remittance Date;
(ii) the Class Principal Balances for each Class of Class A, Class M
and Class B 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, Class M and
Class B Certificates;
(iii) the Principal Distribution Amounts for the related Remittance
Date, in the aggregate and listed separately for the portions relating to each
Class of Class A, Class M and Class B Certificates;
(iv) the Interest Shortfall Carryforward Amounts and Principal
Shortfall Carryforward Amounts for the related Remittance Date and the aggregate
Shortfall Carryforward Amounts;
(v) the Available Maximum Subordination Amount for the related
Remittance Date;
(vi) the number and Principal Balances of all Home Improvement Loans
which were the subject of Principal Prepayments during the Due Period;
(vii) the amount of all Curtailments which were received during the Due
Period;
(viii) the aggregate amount of all Excess Payments and the amounts of
Monthly Payments in respect of principal received during the Due Period;
(ix) the amount of interest received on the Home Improvement Loans;
(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
Account pursuant to Section 6.01(a)(ii), and the Compensating Interest payment
to be made on the Determination Date;
(xi) the delinquency and foreclosure information set forth in the form
attached hereto as Exhibit O;
(xii) the amount of any Realized Losses incurred during the related Due
Period;
(xiii) the Available Remittance Amounts for the Remittance Date, in the
aggregate and by component and listed separately for the portions relating to
each Class of Class A, Class M and Class B Certificates;
(xiv) the Reimbursable Amounts and the Class X Remittance Amount
payable pursuant to Section 6.08(d)(xiv) and (xvii) with respect to the
Remittance Date;
(xv) the Class Principal Balance for each Class of Class A, Class M and
Class B Certificates and the Pool Principal Balance after giving effect to the
distribution to be made on the Remittance Date and after allocation of Principal
Writedown Amounts made on such Remittance Date;
(xvi) the calculation of the Class B Principal Distribution Test,
including the various components thereof;
(xvii) the Cumulative Realized Losses, with respect to the Remittance
Date;
(xviii) Reserved;
(xix) the Servicing Fees, the Contingency Fees and amounts to be
deposited to the Expense Account and the FHA Premium Account;
(xx) the amount of all payments and reimbursements to the Servicer
pursuant to Section 5.04(b), (c), (d)(ii), (e) and (f);
(xxi) the Class Factor for each Class determined using the balances in
subclause (xv) above;
(xxii) the weighted average Home Improvement Loan Interest Rate and
Adjusted Home Improvement Loan Interest Rate and the weighted average Class
Adjusted Loan Remittance Rates, in each case for the related Remittance Date,
and the weighted average Home Improvement Loan Interest Rate for the prior three
month period;
(xxiii) the amount of Guaranty Payments or Altenate Credit Enhancement
Payments received during the related Due Period;
(xxiv) the amount of any Defaulted Guaranty Payment Amount for such
related Due Period;
(xxv) Reserved;
(xxvi) Reserved;
(xxvii) Reserved;
(xxviii) the amount to be deposited into the FHA Premium Account on the
related Remittance Date and the amount reimbursable to the Servicer 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 Certificateholders may reasonably
require.
The Trustee shall forward such report to the Certificateholders on the
Remittance Date, together with a separate report indicating the amount of funds
deposited in the 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) 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), (viii) and (xiii) above, the amounts shall be
expressed in a separate section of the report as a dollar amount for each Class
per $1,000 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
and the Rating Agencies, a report setting forth the amount of principal and
interest, if any, being paid to each Class of Class A, Class M and Class B
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, Class M and Class B
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 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 are in force.
(b) On each Remittance Date and the Special Remittance Date, the
Trustee shall forward to the Class X and 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 X and
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 X or 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 X or R Certificateholder, as applicable. 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, Class M and Class B Certificateholder which is a
savings and loan association, bank or insurance company certain reports and
access to information and documentation regarding the Home Improvement Loans
sufficient to permit such Class A, Class M and Class B Certificateholder to
comply with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Class A, Class M and
Class B Certificates.
(e) The Servicer shall furnish to each Certificateholder, 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 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 may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder 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 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 amount equal to 30 days'
interest at the weighted average Class Adjusted Home Improvement Loan Remittance
Rates on the Pool Principal Balance immediately prior to the related Remittance
Date exceeds (b) the amount received by the Servicer as of the related Record
Date in respect of interest on the Home Improvement Loans (and, with respect to
the Remittance Dates in April, May and June 1997, the sum of (i) all funds to be
transferred to the Certificate Account from the Capitalized Interest Account for
such Remittance Date pursuant to Section 6.02(g) and (ii) the Pre-Funding
Earnings for the applicable Remittance Date). The sum of such excess 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 Home Improvement Loan for any month during which a Principal Prepayment or
Curtailment is received on such Home Improvement Loan. Not later than the close
of business on each Determination Date, with respect to each Home Improvement
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
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 at the then weighted average Class Adjusted Home
Improvement Loan Remittance Rates on the Principal Balance of each such Home
Improvement Loan and (b) the amount of interest actually received on each such
Home Improvement 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 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 Home Improvement 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. Reserved.
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 "Home
Improvement 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.
Section 6.16 LIMITED GUARANTY.
(a) No later than the third Business Day prior to each Remittance Date,
the Servicer (if other than the Guarantor) shall notify the Guarantor of the
amount of the Guaranty Payment (if any) for such Remittance Date. Not later than
the Business Day preceding each Remittance Date, the Guarantor shall deposit the
Guaranty Payment, if any, for such Remittance Date into the Certificate Account.
Any Guaranty Payment shall be distributable to Certificateholders pursuant to
Section 6.08.
(b) The obligations of the Guarantor under this Agreement shall not
terminate upon or otherwise be affected by an Event of Default pursuant to
Article X of this Agreement.
(c) The obligation of the Guarantor to provide the Limited Guaranty
under this Agreement shall terminate on the sooner of (i) the date the amount of
principal received by the Class B-2 Certificateholders equals the Original Class
B-2 Principal Balance, (ii) the date on which any Interest Shortfall
Carryforward Amounts relating to the Class B-2 Certificates shall equal zero or
(iii) the date on which an Alternate Credit Enhancement is substituted for the
Limited Guaranty in accordance with Section 6.17 hereof.
(d) The obligation of the Guarantor to make the Guaranty Payments
described in subsection (a) above shall be unconditional and irrevocable and
shall constitute an unsecured obligation of the Guarantor and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the
Guarantor. The Guarantor acknowledges that its obligation to make the Guaranty
Payments described in subsection (a) above shall be deemed a guaranty by the
Guarantor of indebtedness of the Trust Fund for money borrowed from the Class
B-2 Certificateholders, and the Guarantor acknowledges and agrees that it has no
right of reimbursement, indemnity, exoneration, contribution or other similar
right of recovery arising from amounts expended pursuant to its obligations
under this Agreement, other than the right to receive distributions, to the
extent available, from the Trust Fund as provided in this Agreement. In no event
shall the amount paid on the Class B-2 Certificates in respect of principal
pursuant to the Limited Guaranty exceed the Original Class B-2 Principal
Balance.
(e) If the Guarantor fails to make a Guaranty Payment in whole or in
part, the Guarantor shall promptly notify the Trustee, and the Trustee shall
promptly notify the Rating Agencies. The Guarantor shall promptly notify each
Rating Agency in the event of any termination of the Limited Guaranty or any
change of the Person providing the Limited Guaranty, including but not limited
to a change by merger.
Section 6.17 ALTERNATE CREDIT ENHANCEMENT.
The Guarantor, at its option and upon prior written notice to each
Rating Agency, may substitute a Alternate Credit Enhancement in place of the
Limited Guaranty, provided that (i) the Rating Agency Condition shall have been
satisfied and (ii) the Guarantor shall cause to be delivered to the Trustee an
Opinion of Counsel to the effect that such substitution of credit enhancement
shall not adversely affect the status of the Trust Fund as a REMIC. The
alternate form of credit enhancement may consist of cash or securities deposited
by the Guarantor or any other Person in a segregated escrow, trust or collateral
account or a letter of credit, certificate insurance policy or surety bond
provided by a third party and delivered to or held by the Trustee or any other
credit enhancement or support approved by the Rating Agencies ("Alternate Credit
Enhancement").
<PAGE>
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 Home Improvement 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 Home Improvement 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 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 Co- Trustee and the Custodian
that any such substitution or assumption agreement has been completed by
forwarding to the Custodian the original of such substitution or assumption
agreement, which original shall be added by 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 Home Improvement Loan 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 Home Improvement
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
Home Improvement 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 Home Improvement Loan not
satisfied in accordance with the procedures set forth herein.
Upon the payment in full of any Home Improvement 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
Co-Trustee and 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 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 Co-Trustee and 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 Home Improvement Loan, including, for this purpose, collection under any
primary mortgage guaranty insurance policy, the Co-Trustee and the Custodian
shall, upon request of the Servicer and delivery to the Co-Trustee and 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 Co-Trustee and the Custodian 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 Custodian
when the need therefor by the Servicer no longer exists, unless the Home
Improvement Loan has been liquidated and the Liquidation Proceeds relating to
the Home Improvement Loan have been deposited in the Principal and Interest
Account and remitted to the Trustee for deposit in the 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 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 Home Improvement Loan was
liquidated, the servicing receipt shall be released by the Custodian to the
Servicer.
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 Co-Trustee a certificate of a Servicing Officer requesting that
such pleadings or documents be executed by the Trustee and certifying as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by 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 Co-Trustee shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to 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 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 Co-Trustee's receipt
of such certificate or documents. Such certificate or documents shall establish
to the Co-Trustee's satisfaction that the related Home Improvement Loan has been
paid in full by or on behalf of the Mortgagor and that such payment has been
deposited in the 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 Principal and Interest Account or to retain from
interest payments on the Home Improvement 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 Section
6.03(c)(iii) 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 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 Principal and
Interest Account or to retain from interest payments on the Home Improvement
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 Home Improvement
Loans the successor Servicer's Contingency Fee.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Trustee, the Co-Trustee and each of
the Rating Agencies, on or before March 31 of each year beginning March 31,
1998, 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, 1998, the
Servicer, at its expense, shall cause a firm of independent public accountants
reasonably acceptable to the Trustee to furnish a letter or letters to 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 AND CO-TRUSTEE'S RIGHT TO EXAMINE SERVICER
RECORDS AND AUDIT OPERATIONS.
The Trustee and the Co-Trustee 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. No
amounts payable in respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE; PRINCIPAL AND INTEREST ACCOUNT
STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Trustee a statement, certified by a Servicing Officer, setting
forth the status of the 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 the Principal and Interest
Account for each category of deposit specified in Section 5.03, the aggregate of
withdrawals from the 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.
<PAGE>
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.
<PAGE>
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the
Co-Trustee 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 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 Home
Improvement Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Trustee, the Co-Trustee 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 and/or
Certificateholder in respect of such claim. The Trustee may reimburse the
Servicer from the Expense Account pursuant to Section 6.03(c)(i), and, if
necessary, from amounts otherwise payable to the Holders of the Class X
Certificates from the Remaining Amount Available 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 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 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 Certificateholders. The Representative shall
immediately notify the Trustee and each Certificateholder 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 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 X
Certificates from the Remaining Amount Available 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 interest of 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 Home Improvement 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 and the
Co-Trustee.
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 Home Improvement 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 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 and to each Certificateholder,
which Opinion of Counsel shall be in form and substance acceptable to the
Trustee. 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 CERTIFICATEHOLDERS TO REPLACE SERVICER AND CLAIMS
ADMINISTRATOR.
From and after the occurrence of a Servicing Delinquency Trigger, the
Majority Certificateholders 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.
<PAGE>
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) Reserved; (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 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
(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
(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, by receipt of payment, by 12:00 Noon New York time
on the following Business Day, 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 Majority Certificateholders, by notice in
writing to the Servicer and the Claims Administrator, may, in addition to
whatever rights such Certificateholders 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 Home Improvement 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
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 Home Improvement Loans or otherwise,
shall, subject to Section 10.02, pass to and be vested in the Co-Trustee or its
designees 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 Home Improvement 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 the Principal and
Interest Account or thereafter received with respect to the Home Improvement
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 or Co-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 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 shall
not be liable for any actions of any servicer or claims administrator prior to
it, and that the Trustee shall not be obligated to make advances or payments
pursuant to Sections 6.03, 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 Co- Trustee shall be entitled to all funds relating to the Home
Improvement 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 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 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 the Co-Trustee is required to solicit bids as provided herein, the Trustee or
the 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 Home Improvement Loans each would be servicing, the full amount of the
aggregate Servicing Fees and Contingency Fee relating to such Home Improvement
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 the 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 the Co- Trustee shall deduct from any sum
received by the Trustee or the Co-Trustee or 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 the
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 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 the 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 the 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 the
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 Home Improvement 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 Trustee shall have consented thereto. Neither the
Trustee nor the Co-Trustee shall resign as servicer until a successor servicer
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 may make such arrangements for the compensation of such
successor out of payments on Home Improvement 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 Majority Certificateholders may, on behalf of all
Certificateholders, 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 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 Majority Certificateholders 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.
<PAGE>
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 Home Improvement Loan or the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure of any Home Improvement Loan and
the remittance of all funds due thereunder, or (b) mutual consent of the
Servicer, 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, on any date
on which the aggregate Principal Balance of the Home Improvement Loans is less
than ten percent of the sum of (i) the aggregate Principal Balance of the
Initial Home Improvement Loans as of the Cut-Off Date and (ii) the Original
Pre-Funded Amount (such date, the "Optional Servicer Termination Date"),
purchase on the next succeeding Remittance Date, all of the Home Improvement
Loans and any related REO Properties at a price equal to the sum of (x) 100% of
the Principal Balances of the Home Improvement 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 and (y) 30 days' interest thereon at the weighted average Class A-1,
Class A-2, Class A-3, Class M-1, Class M-2, Class B-1, Class B-2 Remittance
Rates (the "Termination Price").
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 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. Any obligation of the Servicer
to pay amounts due to 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 either of REMIC I or REMIC II 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, the Majority Certificateholders may direct
the Trustee and the Co-Trustee on behalf of REMIC I and REMIC II to adopt a
"plan of complete liquidation" (within the meaning of Section 860F(a)(4) of the
Code). Upon receipt of such direction by the Majority Certificateholders, 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 REMIC II all Home Improvement Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Home Improvement Loan then remaining in REMIC II at a purchase
price equal to the Termination Price for REMIC II.
(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 in
the event that the Majority Certificateholders have given the Trustee and the
Co-Trustee the direction described in clause (a)(i) above, the Co-Trustee shall
sell the Home Improvement Loans and distribute the proceeds of the liquidation
of REMIC II in accordance with the plan of complete liquidation, such that, if
so directed, the liquidation of REMIC II, 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, Class M and Class B
Certificateholders shall permit or direct in writing, 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 Trustee 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 to the effect that the effect of the Final Determination is
to increase substantially the probability that the gross income of REMIC II will
be subject to federal taxation, purchase from REMIC II all Home Improvement
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Improvement Loan then remaining
in REMIC II at a purchase price equal to the Termination Price for REMIC II. 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. 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 exercises its purchase option as provided
in Section 11.01 or 11.02, each of REMIC I and REMIC II 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
Trust Fund to comply with the requirements of this Section 11.03 will not (i)
result in the imposition of taxes on "prohibited transactions" on REMIC I or
REMIC II as defined in Section 860F of the Code, or (ii) cause REMIC I or REMIC
II 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-1 and Class R-2 Certificates shall adopt a plan
of complete liquidation of REMIC I and REMIC II, respectively, 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
Co-Trustee shall sell for cash all of the assets of REMIC I and REMIC
II to the Servicer; 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 Account 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 at the related Class Remittance Rate,
and (y) to the Class R-1 Certificateholders, distribute all cash on
hand after such payment to the respective Class A, Class M and Class B
Certificateholders and REMIC I and REMIC II 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 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 RESERVED.
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 the Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Custodian all Mortgage Files and related documents and statements held by
it hereunder and a Home Improvement 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 Home Improvement 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 Home Improvement 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.
<PAGE>
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 Class A, Class M and
Class B 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, 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 any of the Class A, Class M and Class B 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 any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders
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 Holders of Class A, Class M and Class B Certificates evidencing
Percentage Interests aggregating not less than 25% of each Class of
Class A, Class M and Class B 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;
(v) 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;
(vi) 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
(vii) 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, 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 HOME IMPROVEMENT
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 Home Improvement
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 Home Improvement 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 and the
Co-Trustee from time to time, and the Trustee and the Co-Trustee shall each 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 Co-Trustee, and the Servicer will pay or reimburse the
Trustee and the Co- Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee or the Co-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 and the Co-Trustee shall have no lien on the Trust Fund, other than the
Expense Account, for the payment of its fees and expenses. To the extent that
actual fees and expenses of the Trustee or the Co-Trustee exceed the amount
available for payment thereof on deposit in the Expense Account as of the date
such fees and expenses are due and payable (including, the case of the
Co-Trustee, the amount needed to pay the fees and expenses of the Custodian),
the Servicer shall reimburse the Trustee or the Co-Trustee for such shortfall,
as the case may be, out of its own funds without reimbursement therefor, except
as provided in Section 6.03. The Trustee and the Co-Trustee and any director,
officer, employee or agent of the Trustee or the Co-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, or (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, and (iv) subject to
supervision or examination by federal or state authority. 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 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 and to all
Certificateholders. Upon receiving such notice of resignation, the Servicer
shall 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
Certificateholders 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 Class R-1
Certificateholder 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 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 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 or Co-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 or Co-Trustee shall be a party, or any corporation or national
banking association succeeding to the business of the Trustee or Co-Trustee,
shall be the successor of the Trustee or Co-Trustee hereunder, as the case may
be, provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06 (in the case of the Trustee) or Section
12.10 (in the case of the Co-Trustee), 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, 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.
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 Dauphin Deposit Bank and
Trust Company as Co-Trustee with respect to all Home Improvement 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 Home Improvement 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 Home Improvement Loans shall be obligations of, and benefits, protection and
indemnities provided to, the Co-Trustee with respect to the Home Improvement
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, FHA Title I
insurance coverage, substitution, sale, release and discharge of Home
Improvement Loans, and shall not be responsible for, and shall incur no
liability in connection with, the actions, duties and functions of the Trustee.
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 REMIC I and REMIC II and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
REMIC I and REMIC II 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 REMIC I and REMIC II 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 REMIC I
and REMIC II 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 REMIC I and REMIC
II (the "REMIC Reporting Agent") as required by IRS Form 8811. The Servicer
shall indicate the election to treat each of REMIC I and REMIC II as a REMIC
(which election shall apply to the taxable period ending December 31, 1997 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 each of REMIC I and REMIC
II. 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 for the related REMIC. 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 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 Co-Trustee by entering into a Custodial Agreement. Subject to this
Article XII, 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. The Co- Trustee shall be liable for
the fees of any Custodian appointed hereunder, which fees shall be payable by
the Co- Trustee solely from the fees received by the Co-Trustee pursuant to
Section 6.03. 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 Home Improvement 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 Home Improvement 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, 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 Home Improvement 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
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, 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 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 Reserved.
<PAGE>
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,
the Trustee and the Co- Trustee by written agreement, 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 or any Custodial Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee and the
Co-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 Home Improvement 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, the Trustee and the Co-Trustee, with the prior
written consent, the Majority Certificateholders and the Holders of the majority
of the Percentage Interest in each of the Class X, Class R-1 and Class R-2
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 and the Co-Trustee receive an Opinion of
Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of either REMIC I or REMIC II as a REMIC or
cause a tax to be imposed on REMIC I or REMIC II, 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 Home Improvement 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, to Dauphin Deposit Bank and Trust Company, 213
Market Street, Harrisburg, Pennsylvania, 17101. 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 Reserved.
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:
(i) 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
(ii) 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 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, Class M and Class B Certificates.
Section 13.15 Reserved.
<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:_______________________________________
Name: Morton Dear
Title: Executive Vice President
THE BANK OF NEW YORK (N.A.) as Trustee
By:______________________________________
Name:
Title:
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:_______________________________________
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:__________________________________
Name: Morton Dear
Title: Executive Vice President
<PAGE>
ACCEPTANCE OF CO-TRUSTEE
Dauphin Deposit Bank and Trust Company hereby accepts its appointment
pursuant to Section 12.10 of the within instrument to serve as Co-Trustee with
respect to the Home Improvement Loans. In connection therewith, Dauphin Deposit
Bank and Trust Company agrees to be bound by all applicable
provisions of such instrument.
DAUPHIN DEPOSIT BANK AND TRUST
COMPANY, as Co-Trustee
By:__________________________________
Name:
Title:
<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
Home Improvement 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:______________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the ___ day of March 1997 before me, a Notary Public in and for said
State, personally appeared ____________________ known to me to be an officer of
The Bank of New York (N.A.), 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 ___ day of March 1997 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
<PAGE>
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the __the day of March 1997 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>
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 Co-Trustee 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 "Dauphin Deposit
Bank and Trust Company, as Co-Trustee under the Pooling and
Servicing Agreement dated as of February 28, 1997, Series
1997-I" 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 Co-Trustee 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.
14. Evidence of the inspection by the Originator of all
improvements and other goods and services provided under the
Mortgage Loan as required under Section 3.02(rrr).
<PAGE>
EXHIBIT B-1
FORM OF CLASS A-1, CLASS A-2 AND CLASS A-3 CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-I
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN 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 March 31, 1997
Startup Day
$
Original Scheduled Final CUSIP
Principal Amount Distribution
<PAGE>
Cede & Co.
Registered Holder
<PAGE>
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 a pool (the "Pool") of fixed rate single family
residential first, second and more junior home improvement mortgage loans (the
"Mortgage Loans") and certain related assets. The Certificates are issued
pursuant to a Pooling and Servicing Agreement, dated as of February 28, 1997
(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 March 31,
1997 (the "Startup Day"), which aggregate amount on March 31, 1997 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 April 1997 (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 THE POOL, 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 Home Improvement Trust 1997-I, Home Improvement
Loan 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 Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-I, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class B-1 (the "Class B-1 Certificates"), The Money Store Home
Improvement Loan Trust 1997-I, Home Improvement Loan Certificates, Class B-2
(the "Class B-2 Certificates") and together with the Class A-1, Class A-2, Class
A-3, Class M-1, Class M-2 and Class B-1 Certificates, the "Senior
Certificates"), The Money Store Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class X (the "Class X Certificates") and
Certificates designated as The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class R-1 and Class R-2 (the "Class R
Certificates"). The Class A, Class M, Class B, Class X and Class R Certificates
are collectively 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 April 1997 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 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 Remittance Amount for any Remittance Date will be an amount equal
to the sum of (i) the Current Interest Requirement, (ii) the Principal
Distribution Amount, (iii) the Carry-Forward Amount and (iv) any amount received
by the Trustee from the Servicer or an Originator and paid to the Holders of the
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.]
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.
Except to the extent of Limited Guaranty given by The Money Store Inc.
with respect to the Class B-2 Certificates, 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, 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 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 M-1, Class M-2, Class B-1 and Class
B-2 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.
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.
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.
<PAGE>
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: March 31, 1997
<PAGE>
EXHIBIT B-2
FORM OF CLASS M-1 AND CLASS M-2 CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-I
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN CERTIFICATES
CLASS M
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.: M-_-1 March 31, 1997
Startup Day
$
Original Scheduled Final CUSIP
Principal Amount Distribution
<PAGE>
Cede & Co.
Registered Holder
<PAGE>
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 a pool (the "Pool") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Mortgage Loans")
and certain related assets. The Certificates are issued pursuant to a Pooling
and Servicing Agreement, dated as of February 28, 1997 (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 M-_ Certificates on March 31, 1997 (the
"Startup Day"), which aggregate amount on March 31, 1997 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 M-_ Certificates. Therefore, the actual outstanding principal
amount of this Certificate may, on any date subsequent to the Remittance Date in
April 1997 (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 THE POOL, 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 Home Improvement Trust 1997-I, Home Improvement
Loan 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 Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-I, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class B-1 (the "Class B-1 Certificates"), The Money Store
Home Improvement Loan Trust 1997-I, Home Improvement Loan Certificates, Class
B-2 (the "Class B-2 Certificates") and together with the Class A-1, Class A-2,
Class A-3, Class M-1, Class M-2 and Class B-1 Certificates, the "Senior
Certificates"), The Money Store Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class X (the "Class X Certificates") and
Certificates designated as The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class R-1 and Class R-2 (the "Class R
Certificates"). The Class A, Class M, Class B, Class X and Class R Certificates
are collectively 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 April 1997 the Holders of the Class M-_ 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 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 M-_ 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 M-_ 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 M-_ Certificates. The Percentage Interest of
each Class M-_ 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 M-_ Certificate by $__________.
[The Remittance Amount for any Remittance Date will be an amount equal
to the sum of (i) the Current Interest Requirement, (ii) the Principal
Distribution Amount, (iii) the Carry-Forward Amount and (iv) any amount received
by the Trustee from the Servicer or an Originator and paid to the Holders of the
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.]
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.
Except to the extent of Limited Guaranty given by The Money Store Inc.
with respect to the Class B-2 Certificates, 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, 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 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 M-_ Certificates shall be given by the Trustee to the Class M-_
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 M-_ 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 M-1, Class M-2, Class B-1 and Class
B-2 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 M-_ 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 M-_
Certificates are exchangeable for new Class M-_ 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.
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.
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.
<PAGE>
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 M-_
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
as Trustee
By:________________________
Authorized Signatory
Date: March 31, 1997
<PAGE>
EXHIBIT B-3
FORM OF CLASS B-1 AND CLASS B-2 CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-I
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN CERTIFICATES
CLASS B
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.: B-_-1 March 31, 1997
Startup Day
$
Original Scheduled Final CUSIP
Principal Amount Distribution
<PAGE>
Cede & Co.
Registered Holder
<PAGE>
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 a pool (the "Pool") of fixed rate single family
residential first, second and more junior home improvement mortgage loans (the
"Mortgage Loans") and certain related assets. The Certificates are issued
pursuant to a Pooling and Servicing Agreement, dated as of February 28, 1997
(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 B-_ Certificates on March 31,
1997 (the "Startup Day"), which aggregate amount on March 31, 1997 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 B-_ Certificates. Therefore,
the actual outstanding principal amount of this Certificate may, on any date
subsequent to the Remittance Date in April 1997 (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 THE POOL, 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 Home Improvement Trust 1997-I, Home Improvement
Loan 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 Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-I, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-I, Home Improvement Loan
Certificates, Class B-1 (the "Class B-1 Certificates"), The Money Store Home
Improvement Loan Trust 1997-I, Home Improvement Loan Certificates, Class B-2
(the "Class B-2 Certificates") and together with the Class A-1, Class A-2, Class
A-3, Class M-1, Class M-2 and Class B-1 Certificates, the "Senior
Certificates"), The Money Store Home Improvement Loan Trust 1997-I, Home
Improvement Loan Certificates, Class X (the "Class X Certificates") and
Certificates designated as The Money Store Home Improvement Loan Trust 1997-I,
Home Improvement Loan Certificates, Class R-1 and Class R-2 (the "Class R
Certificates"). The Class A, Class M, Class B, Class X and Class R Certificates
are collectively 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 April 1997 the Holders of the Class B-_ 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 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 B-_ 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 B-_ 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 B-_ Certificates. The Percentage Interest of
each Class B-_ 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 B-_ Certificate by $__________.
[The Remittance Amount for any Remittance Date will be an amount equal
to the sum of (i) the Current Interest Requirement, (ii) the Principal
Distribution Amount, (iii) the Carry-Forward Amount and (iv) any amount received
by the Trustee from the Servicer or an Originator and paid to the Holders of the
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.]
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.
Except to the extent of Limited Guaranty given by The Money Store Inc.
with respect to the Class B-2 Certificates, 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, 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 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 B-_ Certificates shall be given by the Trustee to the Class B-_
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 B-_ 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 M-1, Class M-2, Class B-1 and Class
B-2 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 B-_ 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 B-_
Certificates are exchangeable for new Class B-_ 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.
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.
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.
<PAGE>
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 B-_
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
as Trustee
By:________________________
Authorized Signatory
Date: March 31, 1997
<PAGE>
EXHIBIT B-4
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-I
HOME IMPROVEMENT LOAN 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-_ December 30, 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 a pool (the "Pool") of fixed rate single family
residential first, second and more junior home improvement mortgage loans (the
"Mortgage Loans") and certain related assets. The Certificates are issued
pursuant to a Pooling and Servicing Agreement, dated as of February 28, 1997
(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, 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 Home Improvement Loan Trust 1997-I, Home
Improvement 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 Home Improvement
Loan Trust 1997-I, Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class
B-1 and Class B- 2 Certificates (collectively, the "Senior Certificates"), and
Certificates designated as The Money Store Home Improvement Loan Trust 1997-I,
Class X (the "Class X Certificates"). The Senior Certificates, Class X 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 April 1997, 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, 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.
<PAGE>
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:__________________________
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: March 31, 1997
<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
March 31, 1997
To: First Union National Bank of North Carolina
One First Union Center, TW-19
Charlotte, North Carolina. 28288 (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
February 28, 1997, The Money Store Home Improvement Loan Certificates, Series
1997-I, Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and
Class B-2 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 Home Improvement Loan Certificates,
Series 1997-I, Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1
and Class B-2 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 Registrar]
Re: Class R Certificate issued under the Pooling and Servicing
Agreement, The Money Store Home Improvement Loan Certificates,
Series 1997-I dated as of February 28, 1997, 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 Certificateholder,
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 $_________1 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.
- --------
1 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>
___ 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 Certificateholder,
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.
<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 Home
Improvement Loan Certificates, Series 1997-I, Class A-1, Class A-2, Class A-3,
Class M-1, Class M-2, Class B-1, Class B-2, Class X and Class R (the "Pooling
and Servicing Agreement"), dated as of February 28, 1997 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 1997-I (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 Certificate 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
By By Its
Its
Taxpayer Taxpayer
Identification No. Identification No.
By Its By Its
Taxpayer
Identification No. Taxpayer
Identification No.
</TABLE>
<PAGE>
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
========================
- ------------------------
Re: The Money Store Home Improvement Loan Certificates, Series
1997-I [Class A-1][Class A-2][Class A-3][Class M-1][Class
M-2][Class B-1][Class B-2][Class X][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>
CUSTODIAN INITIAL CERTIFICATION
, 1997
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 Home
Improvement Loan Certificates, Series 1997-I, dated as of
February 28, 1997 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 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 Mortgage Loan listed in the Mortgage
Loan Schedule and the documents contained therein appear to bear original
signatures.
The Custodian has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Custodian makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
such documents or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By:
Name:
Title:
<PAGE>
EXHIBIT F-1
FORM OF CUSTODIAN INTERIM CERTIFICATION
_______________, 1997
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 Home
Improvement Loan Certificates, Series 1997-I, dated as of
February 28, 1997 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 Custodian, hereby certifies that as to
each [Initial] [Subsequent] Mortgage Loan listed in the Mortgage Loan Schedule
(other than any [Initial] [Subsequent] Mortgage Loan paid in full or any
[Initial] [Subsequent] 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, (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 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 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, and for each Mortgage Loan with an original principal
balance in excess of $15,000 for which the documents in the possession of the
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, 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 Custodian has made
no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The 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
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By:
Name:
Title:
<PAGE>
EXHIBIT G
FORM OF CUSTODIAN FINAL CERTIFICATION
[date]
[Servicer]
[Certificateholders]
[Representative]
Re: Pooling and Servicing Agreement dated as of February 28,
1997 among The Money Store Inc. as Representative, Servicer
and Claims Administrator, the Originators and The Bank of
New York, as Trustee, The Money Store Home Improvement Loan
Certificates, Series 1997-I
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any 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, (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 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 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, and for each Mortgage Loan with an original principal balance in excess of
$15,000 for which the documents in the possession of the 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, 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 Custodian has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The 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 identified
on the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By:
Name:
Title:
<PAGE>
EXHIBIT H 1
MORTGAGE LOAN SCHEDULE
[To Be Delivered to Co-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: [Custodian]
Re: Pooling and Servicing Agreement, The Money Store Home
Improvement Loan Certificates, Series 1997-I, dated as
of February 28, 1997
In connection with the administration of the pool of Loans held by you
as Custodian for the Certificateholders and agent for the Co-Trustee, 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 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 Custodian:
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By:____________________________
Name:__________________________
Title:_________________________
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 Home Improvement Loan
Certificates, Series 1997-I, dated as of February 28, 1997
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 Home Improvement Loan Certificates, Series 1997-I, Class A-1, Class A-2,
Class A-3, Class M-1, Class M-2, Class B-1, Class B-2, Class X and Class R,
dated as of February 28, 1997, (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.
<PAGE>
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 OMITTED
<PAGE>
EXHIBIT M
CUSTODIAL AGREEMENT
Dated __________, 199_
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
February 28, 1997 relating to The Money Store Home Improvement Loan
Certificates, Series 1997-I, Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class B-1, Class B-2, Class X 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-1, and H-2, 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 willful 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 The Bank of New York, 101 Barclay Street,
12th Floor East, New York, New York 10286, Attention: Corporate Trust MBS
Administration, 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:____________________________
Name:_______________________
Title:______________________
, as
Custodian
By:____________________________
Name:_______________________
Title:______________________
<PAGE>
CUSTODIAL AGREEMENT
(The Money Store Home Improvement Loan Certificates,
Series 1997-I)
Dated: March 31, 1997
DAUPHIN DEPOSIT BANK AND TRUST COMPANY, a ______________________
______________________ headquartered in ____________________________, 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
February 28, 1997 (the "Pooling Agreement") relating to The Money Store Home
Improvement Loan Certificates, Series 1997-I, Class A-1, Class A-2, Class A-3,
Class M-1, Class M-2, Class B-1, Class B-2, Class X 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 Mortgage Loans) pursuant to
which the Originators transferred, assigned, set-over and otherwise conveyed to
the Co-Trustee, without recourse, all of the Originator's right, title and
interest in and to the mortgage loans identified in Exhibit H to the Pooling
Agreement; and
WHEREAS, the Co-Trustee wishes to appoint the Custodian to hold the
Co-Trustee's Mortgage Files relating to the 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; Acknowledgment 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 Co- Trustee's Mortgage Loan Files relating to the Mortgage Loans.
The Custodian hereby acknowledges that it has possession of the Trustee's
Mortgages Files relating to the 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 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 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 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 Mortgage Loans at such times as the Co-Trustee may reasonably
request.
(c) Release of Documents. The Custodian will release any
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 nondiscretionary details in connection with maintaining custody of
the Trustee's Mortgage Files relating to the 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
Mortgage Loans.
4. Instructions; Authority to Act. The Custodian shall be deemed to
have received proper instructions with respect to the Co-Trustee's Mortgage
Files relating to the Mortgage Loans upon its receipt of written instructions
signed by a Responsible Officer of the CoTrustee. 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 Co-Trustee's Mortgage Files relating to the 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 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 Dauphin Deposit Bank and Trust Company,
- ------------------------------------------------------------------------------
__________________________________________________________________, 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 Trustee hereunder.
12. Terms. Capitalized terms not otherwise defined in this Agreement
shall have the respective meanings given to them in the Pooling Agreement.
DAUPHIN DEPOSIT BANK AND TRUST COMPANY 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>
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.
18. Any additional information reasonably requested by the Trustee.
<PAGE>
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the 31st day of
March, 1997, 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 February 28, 1997 (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 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 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 CoTrustee, 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.
<PAGE>
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 canceled and terminated (i) at any time hereunder by the
Servicer on 10 days notice to an Originator, or (ii) by the Co-Trustee on notice
to an Originator, at any time after the CoTrustee shall have become the
successor servicer with respect to the Mortgage Loans pursuant to Sections 10.01
and 10.02 of the Pooling and Servicing Agreement. In addition, this Agreement
may be canceled 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
Co-Trustee, which agreement shall be in form and substance satisfactory to the
Co-Trustee and its counsel, which recognizes 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 CoTrustee.
<PAGE>
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.
