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): December 30, 1997
The Originators listed below under the Sale and
Servicing Agreement, dated as of November 30, 1997
relating to The Money Store Residential Trust 1997-II.
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)
* 333-32775 *
(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>
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>
Item 5. OTHER EVENTS
The Originators listed on Schedule A on the previous page (the
"Originators"), registered issuances of up to $10,000,000,000 principal amount
of TMS Asset Backed Notes and 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. 333-32775) (as
amended, the "Registration Statement"). Pursuant to the Registration Statement,
the Originators caused The Money Store Residential Trust 1997-II (the "Trust")
to issue $135,000,000 aggregate principal amount of The Money Store Residential
Asset-Backed Notes, Series 1997-II (the "Notes") on December 30, 1997 (the
"Closing Date"). This Current Report on Form 8-K is being filed to file a
detailed description of the Initial Loans transferred to the Trust, a copy of
the Sale and Servicing Agreement referred to below, a copy of the Indenture
referred to below, a copy of the Trust Agreement referred to below, a copy of
the Underwriting Agreement dated as of December 23, 1997 among The Money Store
Inc., as representative (the "Representative"), the Originators, the Trust and
Lehman Brothers Inc., as representative of the underwriters, and the related
Pricing Agreement.
The Trust was formed, pursuant to a Trust Agreement dated as of November
30, 1997 between the Originators and Chase Manhattan Bank of Delaware, as Owner
Trustee (the "Trust Agreement"). The Initial Loans were conveyed to the Trust
pursuant to a Sale and Servicing Agreement dated as of November 30, 1997 by and
among the Originators, the Representative and the Trust (the "Sale and Servicing
Agreement").
The Notes were issued pursuant to an Indenture (the "Indenture"), dated as
of November 30, 1997, between the Trust and The Bank of New York, as Indenture
Trustee. The Notes consist of the Class A-1, Class A-2, Class A-3, Class A-4,
Class M-1, Class M-2 and Class B Notes. As of the Closing Date, the initial
principal amount of the (i) Class A-1, 6.650% Notes was $50,644,000, (ii) Class
A-2, 6.680% Notes was $17,885,000, (iii) Class A-3, 6.845% Notes was
$12,315,000, (iv) Class A-4 7.385% Notes was $16,693,000, (v) Class M-1, 7.615%
Notes was $13,837,000, (vi) Class M-2, 7.810% Notes was $13,837,000 and (vii)
Class B, 8.595% Notes was $9,789,000.
Capitalized terms not defined herein have the meanings assigned in the Sale
and Servicing Agreement attached hereto as Exhibit 4.1.
<PAGE>
CERTAIN CHARACTERISTICS OF POOL
Set forth below is a description of certain characteristics of the Initial
Loans. Certain of the percentage columns may not sum to 100.00% due to rounding.
Records: 7,389
Balance: $134,999,951.62
Selection: All Records
<TABLE>
<CAPTION>
Number Current
EOM Balance of Loans Balance %
<S> <C> <C> <C>
$ 0.01- 5,000.00 2,059 $ 6,687,530.32 4.95
5,000.01- 10,000.00 1,150 $ 8,281,140.22 6.13
10,000.01- 15,000.00 583 $ 7,346,698.94 5.44
15,000.01- 20,000.00 536 $ 9,593,888.79 7.11
20,000.01- 25,000.00 1,001 $ 23,820,795.04 17.65
25,000.01- 30,000.00 533 $ 14,888,726.72 11.03
30,000.01- 35,000.00 687 $ 23,177,984.76 17.17
35,000.01- 40,000.00 248 $ 9,406,488.78 6.97
40,000.01- 45,000.00 247 $ 10,699,746.66 7.93
45,000.01- 50,000.00 130 $ 6,312,458.05 4.68
50,000.01- 55,000.00 84 $ 4,513,303.91 3.34
55,000.01- 60,000.00 28 $ 1,624,100.86 1.20
60,000.01- 65,000.00 30 $ 1,927,804.16 1.43
65,000.01- 70,000.00 11 $ 748,191.92 0.55
70,000.01- 75,000.00 14 $ 1,028,124.20 0.76
75,000.01- 80,000.00 4 $ 312,764.88 0.23
80,000.01- 85,000.00 9 $ 745,200.02 0.55
85,000.01- 90,000.00 8 $ 701,117.74 0.52
90,000.01- 95,000.00 3 $ 277,500.90 0.21
95,000.01-100,000.00 8 $ 797,742.20 0.59
100,000.01+ 16 $ 2,108,642.55 1.56
Total: 7,389 $134,999,951.62 100.00
Min: $1,000.00 Max: $202,033.56 Avg: $18,270.40
Number Current
Coupon of Loans Balance %
7.001- 7.500% 1 $ 84,000.00 0.06
7.501- 8.000 1 $ 14,547.65 0.01
8.001- 8.500 1 $ 24,976.00 0.02
8.501- 9.000 4 $ 296,008.29 0.22
9.001- 9.500 4 $ 191,554.49 0.14
9.501-10.000 153 $ 4,001,990.02 2.96
10.001-10.500 55 $ 1,457,458.66 1.08
10.501-11.000 102 $ 2,410,491.61 1.79
11.001-11.500 57 $ 1,384,272.79 1.03
11.501-12.000 160 $ 4,033,474.59 2.99
12.001-12.500 121 $ 2,876,564.40 2.13
12.501-13.000 426 $12,107,545.65 8.97
13.001-13.500 507 $13,936,836.51 10.32
13.501-14.000 2,269 $36,207,535.37 26.82
14.001-14.500 942 $19,856,801.44 14.71
14.501-15.000 1,058 $20,495,885.29 15.18
15.001+ 1,528 $15,620,008.86 11.57
Total: 7,389 $ 134,999,951.62 100.00
Min: 7.450% Max: 23.980% NZWA: 13.840%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Records: 7,389
Balance: $134,999,951.62
Selection: All Records
Number Current
Stated Remaining Term of Loans Balance %
<S> <C> <C> <C>
less than 0 1 $ 5,557.00 0.00
1- 60 1,345 $ 4,893,536.35 3.62
61-120 2,006 $15,267,431.36 11.31
121-180 1,788 $42,951,476.76 31.82
181-240 1,262 $35,901,744.65 26.59
241-300 940 $32,735,626.19 24.25
301-360 47 $ 3,244,579.31 2.40
Total: 7,389 $134,999,951.62 100.00
NZMIN: 6 Max: 360 NZWA: 215.57
Number Current
Seasoning of Loans Balance %
<S> <C> <C> <C>
Less Than 0 4,939 $ 92,643,313.48 68.62
1- 3 2,087 $ 35,072,748.10 25.98
4- 6 118 $ 1,660,514.12 1.23
7- 9 51 $ 939,053.70 0.70
10-12 43 $ 888,095.08 0.66
13-15 25 $ 257,151.29 0.19
16+ 126 $ 3,539,075.85 2.62
Total: 7,389 $134,999,951.62 100.00
NZMIN: 1 Max: 271 WA: 1.31
Number Current
Jr. Mtg Ratio of Loans Balance %
<S> <C> <C> <C>
Less than 0.000% 3,070 $ 18,056,091.40 13.37
0.001- 10.000 341 $ 3,603,964.80 2.67
10.001- 20.000 1,277 $ 28,500,251.89 21.11
20.001- 30.000 1,571 $ 46,299,348.09 34.30
30.001- 40.000 775 $ 26,782,749.12 19.84
40.001- 50.000 194 $ 7,586,752.01 5.62
50.001- 60.000 54 $ 2,469,134.84 1.83
60.001- 70.000 11 $ 456,941.03 0.34
70.001- 80.000 7 $ 491,175.87 0.36
80.001- 90.000 1 $ 81,000.00 0.06
90.001-100.000 88 $ 672,542.57 0.50
Total: 7,389 $134,999,951.62 100.00
NZMIN: 1.56% Max: 100.00% NZWA: 27.06%
Number Current
Original Term(months) of Loans Balance %
<S> <C> <C> <C>
1- 60 1,336 $ 4,817,606.89 3.57
61-120 2,014 $ 15,308,400.87 11.34
121-180 1,789 $ 42,961,100.04 31.82
181-240 1,262 $ 35,901,744.65 26.59
241-300 941 $ 32,766,519.86 24.27
301-360 47 $ 3,244,579.31 2.40
Total: 7,389 $134,999,951.62 100.00
NZMIN: 12 Max: 360 NZWA: 216.86
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Records: 7,389
Balance: $134,999,951.62
Selection: All Records
Number Current
Property Type of Loans Balance %
<S> <C> <C> <C>
SF Detached 7,157 $128,846,940.63 95.44
Detached PUD 18 $ 741,886.06 0.55
Manufac. Single Wide 5 $ 215,605.49 0.16
Attached PUD 2 $ 91,500.00 0.07
Attached Town House 48 $ 1,044,757.31 0.77
Attached Condo 75 $ 1,770,556.81 1.31
Multi-Family 25 $ 467,881.00 0.35
2-4 Family 54 $ 1,664,101.92 1.23
Manufac. Double Wide 5 $ 156,722.40 0.12
Total: 7,389 $134,999,951.62 100.00
Number Current
Product Type of Loans Balance %
<S> <C> <C> <C>
Arm Home Equity 24 $ 1,785,383.27 1.32
FHA Secured 428 $ 7,229,271.01 5.36
FHA Unsecured 43 $ 200,111.28 0.15
Fix Home Equity 2,486 $ 72,595,237.30 53.77
Home Improvmnt Sec 1,436 $ 38,629,230.79 28.61
Home Improvmnt Unsec 2,972 $ 14,560,717.97 10.79
Total: 7,389 $134,999,951.62 100.00
Number Current
Lien Position of Loans Balance %
<S> <C> <C> <C>
1 51 $ 3,261,873.88 2.42
2 3,881 $109,201,238.30 80.89
3 422 $ 7,595,808.36 5.63
4 16 $ 146,813.56 0.11
N/A 3,019 $ 14,794,217.52 10.96
Total: 7,389 $134,999,951.62 100.00
Number Current
Loan Purpose of Loans Balance %
<S> <C> <C> <C>
Debt Consolidation 1,862 $ 55,042,041.51 40.77
Cash Out 214 $ 5,190,661.80 3.84
Real Estate Owned 1 $ 21,600.00 0.02
Purchase 25 $ 1,503,390.29 1.11
Rate/Term Refinance 321 $ 11,768,869.46 8.72
Home Improvement 4,966 $ 61,473,388.56 45.54
Total: 7,389 $134,999,951.62 100.00
Number Current
Occupancy Status of Loans Balance %
<S> <C> <C> <C>
Investment 10 $ 532,549.74 0.39
Primary Home 7,374 $134,341,113.72 99.51
Second Home 5 $ 126,288.16 0.09
Total: 7,389 $134,999,951.62 100.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Records: 7,389
Balance: $134,999,951.62
Selection: All Records
Number Current
Top States of Loans Balance %
<S> <C> <C> <C>
CA 1,312 $ 27,929,284.22 20.69
IL 507 $ 8,257,488.44 6.12
PA 470 $ 7,208,191.02 5.34
IN 271 $ 6,000,569.26 4.44
FL 301 $ 5,928,022.78 4.39
GA 287 $ 5,870,782.69 4.35
OH 337 $ 5,602,144.82 4.15
NY 236 $ 5,305,176.32 3.93
NV 276 $ 4,731,462.10 3.50
MO 257 $ 4,061,550.65 3.01
MD 235 $ 3,826,201.79 2.83
WA 183 $ 3,619,923.24 2.68
NC 162 $ 3,568,870.16 2.64
VA 156 $ 3,304,289.78 2.45
NJ 191 $ 3,232,840.24 2.39
TN 152 $ 3,220,867.34 2.39
MI 210 $ 3,082,905.31 2.28
CO 176 $ 3,055,118.48 2.26
AZ 181 $ 2,896,777.64 2.15
MN 101 $ 2,377,795.92 1.76
WI 95 $ 1,690,671.50 1.25
SC 85 $ 1,507,073.64 1.12
LA 78 $ 1,501,565.24 1.11
MS 75 $ 1,435,962.58 1.06
NM 85 $ 1,277,817.03 0.95
OK 71 $ 1,217,715.52 0.90
KS 80 $ 1,175,817.94 0.87
TX 179 $ 1,165,437.79 0.86
MA 44 $ 1,098,034.58 0.81
ID 47 $ 1,016,057.81 0.75
KY 58 $ 996,911.72 0.74
OR 65 $ 972,585.43 0.72
UT 49 $ 954,272.16 0.71
WV 58 $ 604,970.75 0.45
NE 22 $ 577,047.25 0.43
IA 38 $ 569,565.28 0.42
CT 27 $ 547,875.21 0.41
AR 73 $ 539,226.65 0.40
ME 22 $ 524,438.07 0.39
DE 20 $ 511,249.38 0.38
RI 16 $ 421,521.48 0.31
NH 12 $ 308,520.66 0.23
WY 14 $ 277,389.83 0.21
VT 9 $ 249,652.67 0.18
ND 5 $ 154,937.43 0.11
HI 16 $ 154,348.68 0.11
AK 8 $ 145,813.54 0.11
DC 17 $ 117,453.51 0.09
SD 6 $ 109,617.86 0.08
MT 14 $ 96,138.23 0.07
Total: 7,389 $134,999,951.62 100.00
Mon Delq= Number Current
CutOffDt - Due Date of Loans Balance %
<S> <C> <C> <C>
0 7,347 $ 134,247,586.58 99.44
1 42 $ 752,365.04 0.56
Total: 7,389 $ 134,999,951.62 100.00
</TABLE>
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
1.1 Underwriting Agreement, dated December 23, 1997, among The Money
Store Inc., the Originators, The Money Store Residential Trust 1997-II
and Lehman Brothers Inc., as representative of the underwriters.
1.2 Pricing Agreement, dated December 23, 1997, between The Money Store
Inc., the Originators, The Money Store Residential Trust 1997-II and
Lehman Brothers Inc., as representative of the underwriters.
4.1 Sale and Servicing Agreement, dated as of November 30, 1997, among
The Money Store Inc., the Originators and The Money Store Residential
Trust 1997-II.
4.2 Indenture, dated as of November 30, 1997, between The Money Store
Residential Trust 1997-II and The Bank of New York, as Indenture
Trustee.
4.3 Trust Agreement, dated as of November 30, 1997, among the
Originators and Chase Manhattan Bank Delaware, as Owner Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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/ Michael H. Benoff
Name: Michael H. Benoff
Title: Senior Vice President
Dated: January 12, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
1.1 Underwriting Agreement, dated December 23, 1997,
among The Money Store Inc., the Originators, The
Money Store Residential Trust 1997-II and Lehman
Brothers Inc., as representative of the underwriters.
1.2 Pricing Agreement, dated December 23, 1997, between
The Money Store Inc., the Originators, The Money
Store Residential Trust 1997-II and Lehman Brothers
Inc., as representative of the underwriters.
4.1 Sale and Servicing Agreement, dated as of November
30, 1997, among The Money Store Inc., the
Originators and The Money Store Residential Trust
1997-II.
4.2 Indenture, dated as of November 30, 1997, between The
Money Store Residential Trust 1997-II and The Bank
of New York, as Indenture Trustee.
4.3 Trust Agreement, dated as of November 30, 1997, among
the Originators and Chase Manhattan Bank Delaware,
as Owner Trustee.
Exhibit 1.1
EXECUTION COPY
$50,644,000 Class A-1 6.650% Notes
$17,885,000 Class A-2 6.680% Notes
$12,315,000 Class A-3 6.845% Notes
$16,693,000 Class A-4 7.385% Notes
$13,837,000 Class M-1 7.615% Notes
$13,837,000 Class M-2 7.810% Notes
$9,789,000 Class B 8.595% Notes
THE MONEY STORE INC.
The Money Store Residential Trust 1997-II
UNDERWRITING AGREEMENT
December 23, 1997
Lehman Brothers Inc.
as representative and Underwriter
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), as
Representative of each of the Originators listed on Annex A hereto (each an
"Originator" and, collectively, the "Originators") and the Originators propose
to cause The Money Store Residential Trust 1997-II (the "Trust") to issue: Class
A-1 6.650% Notes in the aggregate original principal amount of $50,644,000 (the
"Class A-1 Notes"), Class A-2 6.680% Notes in the aggregate original principal
amount of $17,885,000 (the "Class A-2 Notes"), Class A-3 6.845% Notes in the
aggregate original principal amount of $12,315,000 (the "Class A-3 Notes"),
Class A-4 7.385% Notes in the aggregate amount of $16,693,000 (the "Class A-4
Notes"), Class M-1 7.615% Notes in the aggregate original principal amount of
$13,837,000 (the "Class M-1 Notes"), the Class M-2 7.810 % Notes in the
aggregate original principal amount of $13,837,000 (the "Class M-2 Notes"), and
the Class B 8.595% Notes in the aggregate original principal amount of
$9,789,000 (the "Class B Notes" and together with the Class A-1, Class A-2,
Class A-3, Class A-4, Class M-1 and Class M-2 Notes, the "Notes") and, the
Company, the Originators and the Trust hereby confirm their agreement with
Lehman Brothers Inc. ("Lehman" or the "Representative") on behalf of one or more
Underwriters listed on Annex B hereto (the "Underwriters"), to sell the Notes to
the Underwriters on the terms and conditions hereof. The Trust will be formed
pursuant to the Trust Agreement (the "Trust Agreement"), dated as of November
30, 1997 among the Originators and Chase Manhattan Bank Delaware, as owner
trustee (the "Owner Trustee"). The Notes will be issued pursuant to an Indenture
(the "Indenture"), dated as of November 30, 1997, among the Trust and the Bank
of New York, as trustee (the "Indenture Trustee"). The primary assets of the
Trust will consist of a pool (the "Pool") of loans (the "Loans") having the
characteristics described in the Prospectus Supplement (as defined below). The
Trust will also include funds on deposit in a separate account (the "Pre-Funding
Account") to be established with the Indenture Trustee.
Simultaneously with the issuance and delivery of the Notes as
contemplated herein, the Trust Agreement provides for the issuance of
certificates entitled "The Money Store Residential Trust 1997-II Trust
Certificates (the "Certificates"). The Certificates will evidence fractional
interests in the Trust (the Notes and the Certificates are collectively referred
to as the "Securities"). The Certificates are not being delivered to the
Underwriters hereunder.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Sale and Servicing Agreement.
Prior to the delivery of the Notes by the Trust, and the public
offering thereof by the Underwriters, Originators, the Company, the Trust 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 offering of the Notes 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, the Trust and the Originators understand that the
Underwriters propose to make a public offering of the Notes 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. 333-32775) 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, the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as
applicable (this Agreement, the Pricing Agreement, the Sale and
Servicing Agreement, the Indenture and the Trust 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 to which it is a party; 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 to which it is a party; 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) Each Basic Document to which it is a party has been
duly and validly authorized by the Company and the Originators, as the
case may be, 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, as the case may be,
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 such
Basic Documents conform in all material respects to the statements
relating thereto contained in the Prospectus.
viii) The Notes, when duly and validly executed by the
Indenture Trustee, authenticated and delivered in accordance with the
Indenture, and delivered and paid for pursuant hereto will be validly
issued and outstanding and entitled to the benefits of the Indenture.
The Certificates, when duly and validly executed by the Owner Trustee,
authenticated and delivered in accordance with the Trust Agreement, and
delivered and paid for pursuant thereto will be validly issued and
outstanding and entitled to the benefits of the Trust Agreement. The
Securities conform in all material respects to all statements relating
thereto contained in the Prospectus.
ix) Neither the issuance or delivery of the Notes or the
Certificates, nor the consummation of any other of the transactions
herein contemplated or in any other Basic Document to which it is a
party nor the execution and delivery by the Company and the Originators
of the Basic Documents to which it is a party nor the fulfillment of
the terms of each Basic Document to which it is a party 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 to which it is a
party; and neither the issuance or delivery of the Notes or
Certificates nor the consummation of any other of the transactions
herein contemplated, nor the fulfillment of the terms of the Notes or
the 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 Notes or the
Certificates, (2) seeking to prevent the issuance of the Notes or the
Certificates, 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 to which it is
a party, or the validity or enforceability of any Basic Document or the
Notes or the 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 to which it is a party.
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
Notes or 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 Notes 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
Indenture, the Trust will have acquired good title 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 Notes which they purchase, the Underwriters will have good and
marketable title to such Notes free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
xiv) The transfer of the Loans to the Trust at Closing
Date will be treated by the Company and the Originators for financial
accounting and reporting purposes as a contribution of assets and not
as a pledge of assets to secure debt.
xv) Each assignment of Mortgage required to be prepared
pursuant to the Sale 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 Securities 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 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
Originators agree to cause the Trust to sell to each Underwriter, severally and
not jointly, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Trust, the Notes set forth below its name in Annex B hereto at
the price set forth in the Pricing Agreement. In the event that the interest
rates for each Class of Notes 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 Securities 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 Underwriters and the Company, at
11:00 A.M., New York City time, on December 30, 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 Notes will initially be represented by one note
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC") (the "DTC Notes"). The interests of beneficial owners of the DTC
Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive certificates evidencing the Notes will
be available only under the limited circumstances specified in the Sale and
Servicing Agreement. The interest in the DTC Notes to be purchased by the
applicable Underwriter will be delivered by the Trust to the applicable
Underwriter (which delivery shall be made through the facilities of DTC) against
payment of the purchase price therefor as set forth in the Pricing Agreement.
The Notes 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 Notes 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 Notes 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 Notes 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) So long as any Notes 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 Notes 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 letters, (D) the Owner Trustee and its counsel, (E)
the Indenture Trustee and its counsel, and (F) DTC in connection with the
book-entry registration of the DTC Notes; (v) the qualification of the Notes
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
Fitch IBCA, Inc. ("Fitch") or Standard & Poor's Ratings Services ("Standard &
Poor's") for rating the Notes; 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 Securities" and "The Agreements" and the
information in the Prospectus Supplement under "The Transfer
and Servicing Agreements" and "Description of The Notes,"
insofar as they constitute summaries of certain provisions of
the Notes and the Certificates, the Indenture, the Trust
Agreement and the Sale 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 SPV, Inc. has been duly incorporated
and is validly existing and in good standing under the laws of
the State of Delaware.
(F) Assuming due authorization, execution
and delivery by the other parties thereto (including but not
limited to the Originators), (i) the Sale and Servicing
Agreement, the Pricing Agreement and this Agreement are legal,
valid and binding agreements enforceable in accordance with
their respective terms against the Company and (ii) the
Indenture is a legal, valid and binding Agreement enforceable
in accordance with its terms against the Trust, 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 Sale
and Servicing Agreement and the Pricing Agreement or the
offer, issuance, sale or delivery of the Notes, or the
consummation of any other transactions by the Company
contemplated by this Agreement, the Sale 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 Sale and Servicing Agreement, the
Pricing Agreement, and the Notes, 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 Sale and Servicing
Agreement is sufficient fully to transfer to the Trust 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 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 Trust to enforce
such Mortgages.
(J) The Notes, 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 Indenture and the Sale and Servicing Agreement.
(K) The Sale and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of
1939, as amended. The Trust created by the Trust Agreement is
not required to be registered under the Investment Company Act
of 1940, as amended.
(L) The Indenture has been duly qualified
under the Trust Indenture Act.
Stroock & Stroock & Lavan LLP shall additionally provide an opinion,
in form and substance satisfactory to the Rating Agencies, regarding the
creation, attachment, perfection and priority of a security interest in the
Loans in favor of the Indenture Trustee on behalf of the Noteholders. Such
opinions may contain such assumptions, qualifications and limitations as are
customary in opinions of this type. In rendering such opinion, such counsel may
state that they express no opinion as to the laws of any jurisdiction other than
the federal law of the United States of America and the laws of the States of
New York and California.
In rendering its opinion, 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
Underwriters by the Company for use in connection with the offering of the
Securities 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
Underwriters for such use) or on 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 as to which such counsel need express
no view).
In rendering such opinion, Stroock & Stroock & Lavan LLP may rely on
certificates of responsible officers of the Company, the Indenture Trustee, the
Owner Trustee, and public officials or, as to matters of law other than New
York, 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 Sale and Servicing Agreement, in the case
of the Company, the Pricing Agreement and in the case of the
Originators, the Trust Agreement, and have all requisite
power, authority and legal right to execute and deliver this
Agreement, the Sale and Servicing Agreement, and, in the case
of the Company, the Pricing Agreement and in the case of the
Originators, the Trust Agreement, (and any other documents
delivered in connection therewith) and to perform and observe
the terms and conditions of such instruments.
(C) This Agreement, the Sale and Servicing
Agreement, the Pricing Agreement and the Certificates each
have been duly authorized, executed and delivered by the
Company; this Agreement, the Trust Agreement and the Sale 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, the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, this Agreement, the Sale
and Servicing Agreement in the case of the Company, the
Pricing Agreement and in the case of the Originators, the
Trust Agreement, (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 or upon the related Securities, except as otherwise
contemplated by the Sale 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 Trust Agreement, or the Sale 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
Trust Agreement, and Servicing Agreement, in the case of the
Company, the Pricing Agreement or in the case of the
Originators, the Trust Agreement.
(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 in the case of the Originators, the Trust
Agreement, 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.
iii) The favorable opinion, dated as of the Closing
Date, of Emmitt, Marvin & Martin, counsel for the Indenture Trustee.
iv) The favorable opinion, dated as of the Closing
Date, of Hunton & Williams, counsel for the Custodian, in form and
substance satisfactory to counsel for the Underwriters.
v) The favorable opinion, dated as of the Closing
Date, of Thacher Proffitt & Wood, in form and substance satisfactory,
to counsel for the Underwriters, to the effect that:
(A) The Owner Trustee is a national banking
association duly formed and validly existing under
the laws of the United States of America.
(B) The Owner Trustee has the full corporate
power and authority to execute and deliver and
perform its obligations under the Trust Agreement.
(C) The Trust Agreement has been duly
authorized, executed and delivered by the Owner
Trustee.
(D) The Trust Agreement constitutes the
valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance
with its terms.
(E) The execution and delivery by the Owner
Trustee of the Trust Agreement, the Sale and
Servicing Agreement and, on behalf of the Trust, of
the Indenture and the Sale and Servicing Agreement do
not require any consent, approval or authorization
of, or any registration or filing with, any
applicable governmental authority.
(F) Neither the consummation by the Owner
Trustee of the transactions contemplated in the Sale
and Servicing Agreement, the Indenture or the Trust
Agreement, nor the fulfillment of the terms thereof
by the Owner Trustee will conflict with, result in a
breach or violation of, or constitute a default under
any law or the charter, by-laws or other
organizational documents of the Owner Trustee or the
terms of any indenture or other agreement or
instrument known to such counsel and to which the
Owner Trustee or any of its subsidiaries is a party
or is bound or any judgment, order or decree known to
such counsel to be applicable to the Owner Trustee or
any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or
arbitrator having jurisdiction over the Owner Trustee
or any of its subsidiaries.
(G) There are no actions, suits or
proceedings pending or, to the best of such counsel's
knowledge, threatened against the Owner Trustee (as
owner trustee under the Trust Agreement or in its
individual capacity) before or by any governmental
authority that might materially and adversely affect
the performance by the Owner Trustee of its
obligations under, or the validity or enforceability
of, the Trust Agreement or the Sale and Servicing
Agreement, as applicable.
(H) The execution, delivery and performance
by the Owner Trustee of the Sale and Servicing
Agreement, the Indenture or the Trust Agreement will
not subject any of the property or assets of the
Trust or any portion thereof, to any lien created by
or resulting from any actions of the Owner Trustee
that are unrelated to the transactions contemplated
in such agreements.
(I) The Trust has been duly formed and is
validly existing in good standing as a business trust
under the Business Trust Statute. The Trust Agreement
authorizes the Trust to execute and deliver the Trust
Agreement, the Indenture and the Sale and Servicing
Agreement, to issue the Notes, the Certificates and
the Voting Interest and to grant the Trust Estate to
the Indenture Trustee as security for the Notes.
(J) Under Section 3805(b) of the Business
Trust Statute, no creditor of any Noteholder shall
have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with
respect to, the property of the Trust except in
accordance with the terms of the Trust Agreement.
(K) Under Section 3805(c) of the Business
Trust Statute, and assuming that the Sale and
Servicing Agreement conveys good title to the Loans
to the Trust as a true sale and not as a security
arrangement, the Trust rather than the
Certificateholders is the owner of the Loans.
(L) The Delaware Trustee is not required to
hold legal title to the Trust Estate in order for the
Trust to qualify as a business trust under the Act.
(M) The execution and delivery by the Owner
Trustee of the Trust Agreement and, on behalf of the
Trust, the Indenture and the Sale and Servicing
Agreement do not require any consent, approval or
authorization of, or any registration or filing with,
any governmental authority of the State of Delaware,
except for the filing of the Certificate of Trust
with the Secretary of State.
(N) Neither the consummation by the Trust of
the transactions contemplated in the Trust Agreement
nor the fulfillment of the terms thereof by the Trust
is prohibited by the Business Trust Statute or other
related laws of the State of Delaware.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Delaware.
(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 either of Fitch's or Standard &
Poor's in connection with the issuance of the Notes 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 on the 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 the Trustee a certificate signed by one
or more duly authorized officers of the Indenture Trustee, dated as of Closing
Date, as to the due acceptance of the Indenture by the Indenture Trustee, the
due authentication of the Notes by the Indenture Trustee, 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 each of the Basic Documents 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 Notes;
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 Sale 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 Basic Documents to which it is a party;
vii) each person who, as an officer or
representative of the Company or of any Originator, signed (a) this
Agreement, (b) the Sale and Servicing Agreement, (c) the Trust
Agreement or (d) any other document delivered prior hereto or on the
date hereof in connection with the purchase described in this
Agreement and the Sale 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 Securities subject to this Agreement and the Sale
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 Securities;
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; and
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.
(i) At Closing Date, each of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes shall have been rated "AAA" by Standard &
Poor's and at least "AAA" by Fitch; the Class M-1 Notes shall have been rated at
least "AA" by S&P and at least "AA+" by Fitch; the Class M-2 Notes shall have
been rated at least "A" by S&P and at least "A" by Fitch; and the Class B Notes
shall have been rated at least "BBB" by S&P and at least "BBB" by Fitch.
(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 Notes
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 Notes 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 Indenture Trustee, to hold in trust for the benefit
of the holders of the Notes and the Certificates, the Loans (as defined in the
Prospectus) with aggregate outstanding principal balances as of the Cut-Off Date
of at least $135,000,000.
(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 (w), (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 Notes 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 Notes 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 (w) the first sentence of the second to last paragraph
on the front cover page of the Prospectus (discussing the plan of distribution),
(x) the second sentence of the fifth paragraph on the inside cover of the
Prospectus (discussing the risk of a lack of secondary trading), (y) the second
paragraph under the heading "Underwriting" in the Prospectus 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 Notes 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 Notes set forth next to such Underwriter's name on Annex B
hereto over the underwriting discount allocated to such principal amount of
Notes), 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 Notes 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 Notes which it is
obligated to purchase hereunder (the "Defaulted Notes"), 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 Notes 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 Notes, 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.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Trust, the Underwriter and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Executive Vice President
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE
RESIDENTIAL TRUST 1997-II
By: Chase Manhattan Bank Delaware,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
<PAGE>
CONFIRMED AND ACCEPTED, as of the date first above written:
LEHMAN BROTHERS INC.
By: /s/ William E. Lighten
Name: William E. Lighten
Title: Managing Director
<PAGE>
ANNEX A
THE ORIGINATORS
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
<PAGE>
ANNEX B
LIST OF UNDERWRITERS
LEHMAN BROTHERS INC.
Class A-1 Notes $ 50,644,000
Class A-2 Notes $ 17,885,000
Class A-3 Notes $ 12,315,000
Class A-4 Notes $ 16,693,000
Class M-1 Notes $ 13,837,000
Class M-2 Notes $ 13,837,000
Class B Notes $ 9,789,000
------------
Total $135,000,000
============
Exhibit 1.2
THE MONEY STORE INC.
$50,644,000 Class A-1 6.650% Notes
$17,885,000 Class A-2 6.680% Notes
$12,315,000 Class A-3 6.845% Notes
$16,693,000 Class A-4 7.385% Notes
$13,837,000 Class M-1 7.615% Notes
$13,837,000 Class M-2 7.810% Notes
$9,789,000 Class B 8.595% Notes
THE MONEY STORE RESIDENTIAL TRUST 1997-II
PRICING AGREEMENT
December 23, 1997
Lehman Brothers Inc.
as representative ("Representative") of and Underwriters
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated December 23,
1997 (the "Underwriting Agreement"), relating to: Class A-1 6.650% Notes in the
aggregate original principal amount of $50,644,000 (the "Class A-1 Notes"),
Class A-2 6.680% Notes in the aggregate original principal amount of $17,885,000
(the "Class A-2 Notes"), Class A-3 6.845% Notes in the aggregate original
principal amount of $12,315,000 (the "Class A-3 Notes"), Class A-4 7.385% Notes
in the aggregate amount of $16,693,000 (the "Class A-4 Notes"), Class M-1 7.615%
Notes in the aggregate original principal amount of $13,837,000 (the "Class M-1
Notes"), the Class M-2 7.810 % Notes in the aggregate original principal amount
of $13,837,000 (the "Class M-2 Notes"), and the Class B 8.595% Notes in the
aggregate original principal amount of $9,789,000 (the "Class B Notes" and
together with the Class A-1, Class A-2, Class A-3, Class A-4, Class M-1 and
Class M-2 Notes, the "Notes") and all issued by the Money Store Residential
Trust 1997-II (the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, The Money Store
Inc. (the "Company") on behalf of itself and each of the Originators on Annex A
hereto agree with the Representative on behalf of the Underwriters identified in
Annex B of the Underwriting Agreement as follows:
1) The Class A-1 Notes Remittance Rate shall be 6.650% per annum.
2) The Class A-2 Notes Remittance Rate shall be 6.680% per annum.
3) The Class A-3 Notes Remittance Rate shall be 6.845% per annum.
4) The Class A-4 Notes Remittance Rate shall be 7.385% per annum.
5) The Class M-1 Notes Remittance Rate shall be 7.615% per annum.
6) The Class M-2 Notes Remittance Rate shall be 7.810% per annum.
7) The Class B Notes Remittance Rate shall be 8.595% per annum.
8) The purchase price for the Notes shall be 99.6911709% of the aggregate
initial principal amount of the Notes, plus accrued interest on the
aggregate initial principal amount at the weighted average Remittance
Rate of the Notes, from December 1, 1997 through but not including the
Closing Date.
9) The Notes shall be offered, from time to time, in negotiated
transactions or otherwise, at prices determined at the time of sale.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Trust, the Underwriter and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Executive Vice President
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE
RESIDENTIAL TRUST 1997-II
By: Chase Manhattan Bank Delaware,
not in its individual capacity but
solely as Owner Trustee
By: /s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
<PAGE>
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.
By:/s/ William E. Lighten
Name: William E. Lighten
Title: Managing Director
<PAGE>
ANNEX A
THE ORIGINATORS
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
EXECUTION COPY
SALE AND SERVICING
AGREEMENT
among
THE MONEY STORE RESIDENTIAL TRUST 1997-II
Issuer,
THE ORIGINATORS LISTED HEREIN
ORIGINATORS
and
THE MONEY STORE INC.
Representative, Servicer and Claims Administrator
Dated as of November 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Section 1.01 Definitions..............................................2
Section 1.02 Other Definitional Provisions...........................28
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST
Section 2.01 Contribution and Conveyance of Trust Account Property.
Priority and Subordination of Ownership Interests.......29
Section 2.02 Possession of Loan Files................................30
Section 2.03 Books and Records.......................................30
Section 2.04 Delivery of Mortgage Loan Documents.....................30
Section 2.05 Acceptance by Trustee and Custodian of the Trust;
Certain Substitutions; Certification by Trustee
and Custodian...........................................32
Section 2.06 Fees and Expenses of the Trustee, Co-Trustee
and Owner Trustee.......................................35
Section 2.07 Sale and Conveyance of the Subsequent Mortgage Loans....35
Section 2.08 Optional Repurchase of Defaulted Loans..................37
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of Representative, Servicer,
Claims Administrator and Originators...................37
Section 3.02 Individual Loans.......................................44
Section 3.03 Purchase and Substitution..............................53
ARTICLE IV
ADMINISTRATION AND SERVICING OF LOANS
Section 4.01 Duties of the Servicer.................................55
Section 4.02 Liquidation of Loans...................................58
Section 4.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Account.............59
Section 4.04 Permitted Withdrawals From the Principal and
Interest Account.......................................60
Section 4.05 Payment of Taxes, Insurance and Other Charges62
Section 4.06 Transfer of Accounts...................................62
Section 4.07 Maintenance of Hazard Insurance........................62
Section 4.08 Maintenance of Mortgage Impairment Insurance Policy....63
Section 4.09 Fidelity Bond..........................................64
Section 4.10 Title, Management and Disposition of REO Property......64
Section 4.11 [RESERVED].............................................65
Section 4.12 Collection of Certain Loan Payments....................65
Section 4.13 Access to Certain Documentation and Information
Regarding the Loans....................................65
Section 4.14 Superior Liens.........................................66
Section 4.15 Duties of the Claims Administrator.....................66
ARTICLE V
GENERAL SERVICING PROCEDURE
Section 5.01 Assumption Agreements..................................67
Section 5.02 Satisfaction of Mortgages and Release of Loan Files....68
Section 5.03 Servicing Compensation and Contingency Fee.............70
Section 5.04 Annual Statement as to Compliance......................71
Section 5.05 Annual Independent Public Accountants'
Servicing Report.......................................71
Section 5.06 Trustee's, Co-Trustee's and Owner Trustee's Right
to Examine Servicer Records and Audit Operations.......71
Section 5.07 Reports to the Trustee; Principal and Interest
Account Statements.....................................71
ARTICLE VI
REPORTS TO BE PROVIDED BY SERVICER
Section 6.01 Financial Statements...................................72
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS;
Section 7.01 Note Distribution Account..............................72
Section 7.02 Pre-Funding Account and Capitalized Interest Account...73
Section 7.03 FHA Premium Account....................................74
Section 7.04 Expense Account........................................75
Section 7.05 Priority and Subordination of Distributions............77
Section 7.06 Available Maximum Subordination Amount; Allocation of
Realized Losses........................................80
Section 7.07 Statements.............................................81
Section 7.08 Investment of Accounts.................................85
Section 7.09 Advances by the Servicer...............................86
Section 7.10 Compensating Interest..................................86
Section 7.11 Establishment of Servicing Accounts; Collection of
Taxes, Assessments and Similar Items...................86
ARTICLE VIII
[RESERVED]
ARTICLE IX
The Servicer
Section 9.01 Indemnification; Third Party Claims....................87
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator..................88
Section 9.03 Limitation on Liability of the Servicer and Others.....89
Section 9.04 Servicer and Claims Administrator Not to Resign........89
Section 9.05 Appointment of Assistant Claims Administrator..........90
Section 9.06 Right of Majority Securityholders to Replace Servicer
and Claims Administrator...............................90
ARTICLE X
DEFAULT
Section 10.01 Servicer Default.......................................90
Section 10.02 Trustee and Co-Trustee to Act; Appointment of
Successor..............................................92
Section 10.03 Waiver of Defaults.....................................94
Section 10.04 [RESERVED].............................................94
Section 10.05 Control by Majority Securityholders....................95
ARTICLE XI
TERMINATION
Section 11.01 Termination............................................95
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
Section 12.01 Administrative Duties..................................96
Section 12.02 Records................................................98
Section 12.03 Additional Information To Be Furnished to the Issuer...98
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Noteholders and Certificateholders.............99
Section 13.02 Amendment..............................................99
Section 13.03 Recordation of Agreement..............................100
Section 13.04 Duration of Agreement.................................100
Section 13.05 Governing Law.........................................100
Section 13.06 Notices...............................................101
Section 13.07 Severability of Provisions............................101
Section 13.08 No Partnership........................................101
Section 13.09 Counterparts..........................................101
Section 13.10 Successors and Assigns................................102
Section 13.11 Headings..............................................102
Section 13.12 Assignment to Trustee.................................102
Section 13.13 Nonpetition Covenant..................................102
Section 13.14 Limitation of Liability of Owner Trustee and Trustee..102
Section 13.15 Independence of the Servicer..........................103
Section 13.16 Notification to Rating Agencies.......................103
Section 13.17 Third Party Rights....................................104
<PAGE>
EXHIBITS
SCHEDULE I Description of Certain Litigation
EXHIBIT A Contents of Trustee's Loan File
EXHIBIT B Principal and Interest Account Letter Agreement
EXHIBIT C Form of Trustee/Custodian Initial Certification
EXHIBIT C-1 Form of Trustee/Custodian Interim Certification
EXHIBIT D Form of Trustee/Custodian Final Certification
EXHIBIT E Loan Schedule
EXHIBIT F List of Originators
EXHIBIT G Request for Release of Documents
EXHIBIT G-1 Request for Release Documents of 90 Day Delinquent FHA Loans
EXHIBIT H [Reserved]
EXHIBIT I Custodial Agreement
EXHIBIT J Home Improvement Loan Custodial Agreement
EXHIBIT K Form of Liquidation Report
EXHIBIT L Form of Delinquency Report
EXHIBIT M Servicer's Monthly Computer Tape Format
EXHIBIT N Subservicing Agreement
EXHIBIT O Prices for Low Interest Mortgage Loans
EXHIBIT P Form of Power of Attorney
<PAGE>
SALE AND SERVICING AGREEMENT
dated as of November 30, 1997, among The
Money Store Residential Trust 1997-II, a
Delaware business trust (the "Issuer"), the
entities listed on Exhibit F hereto
(collectively, the "Originators"), and The
Money Store Inc., a New Jersey corporation
("TMS"), as Representative (the
"Representative"), Servicer (the "Servicer")
and Claims Administrator (the "Claims
Administrator").
WHEREAS, the Issuer desires to acquire a portfolio of residential
loans from the Originators;
WHEREAS, the Originators have either originated and underwritten, or
purchased and re-underwritten, such residential loans, and are willing to
contribute such residential loans to the Issuer; and
WHEREAS, the Servicer is willing to service such residential loans and
the Claims Administrator is willing to serve as Claims Administrator;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date,
the lesser of (i) the positive difference, if any, of (x) the Monthly Excess
Spread for such Remittance Date MINUS (y) the Class A Interest Shortfall
Carryforward Amount for such Remittance Date and (ii) the Subordinated
Deficiency Amount for such Remittance Date, calculated for this purpose without
giving effect to payment of the Accelerated Principal Distribution Amount and
prior to taking into account the Applied Realized Loss Amount for such
Remittance Date.
ACCOUNT: The Certificate Distribution Account, Note Distribution
Account, Pre-Funding Account, Expense Account, Capitalized Interest Account, or
Servicing Account (including any sub-accounts of any of the foregoing) and the
FHA Premium Account.
ADDITION NOTICE: With respect to the transfer of Subsequent Loans to
the Trust pursuant to Section 2.07 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 Loans to be contributed to the
Trust and the aggregate Principal Balance of such Subsequent Loans.
ADJUSTED LOAN INTEREST RATE: A percentage per annum, equal to the
related Loan Interest Rate less the per annum rate used in calculating (i) the
Annual Expense Escrow Amount, (ii) the FHA Premium in connection with FHA Loans
for which the related Obligor pays the FHA Premium as part of the Loan Interest
Rate, (iii) the Servicing Fee and (iv) the Contingency Fee.
AGREEMENT: This Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i)
0.04% per annum and (ii) the sum of the Certificate Balance and the aggregate
Note Balance, which is computed and payable on a monthly basis and represents
the estimated annual Trustee's, Co-Trustee's and Owner Trustee's fees and
expenses.
APPLIED REALIZED LOSS AMOUNT: Means, for any Remittance Date, an
amount equal to the excess, if any, of (i) the aggregate Class Principal
Balances of the Notes (after taking into account the distribution of principal
(including the Accelerated Principal Distribution Amount) with respect to the
Notes on such Remittance Date) over (ii) the aggregate Principal Balance of the
Loans as of the end of the prior Due Period (after taking into account all
Realized Losses experienced during such Due Period).
ASSIGNMENT OF MORTGAGE: An assignment, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction in which the related Mortgaged Property is located to reflect the
contribution of the Mortgage to the Issuer, which assignment, notice of transfer
or equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction.
AVAILABLE MAXIMUM SUBORDINATION AMOUNT: With respect to any Remittance
Date, the excess, if any, of (i) the Maximum Subordination Amount over (ii) the
amount of all distributions made in respect of Shortfall Amounts up to and
including the current Remittance Date.
AVAILABLE REMITTANCE AMOUNT: With respect to any Remittance Date, (i)
the sum of all amounts relating to the Loans of the Trust described in clauses
(i) through (viii), inclusive, of Section 4.03(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 Loans pursuant to Sections 4.04(b), (c), (e) and (f) as of the related
Determination Date and any amounts deposited into the Servicing Account with
respect to the Loans pursuant to Section 4.04(g) as of the related Determination
Date) during the related Due Period or, with respect to Section 4.03(b)(vi), on
the related Determination Date, and deposited into the Note Distribution Account
as of the Determination Date, plus (ii) the amount of any Monthly Advances and
Compensating Interest payments relating to the Loans, remitted by the Servicer
for such Remittance Date, plus (iii) amounts to be transferred to the Note
Distribution Account from the Pre-Funding Account and the Capitalized Interest
Account with respect to the Remittance Dates during the Funding Period, less
(iv) those amounts withdrawable from the Note Distribution Account pursuant to
Section 7.01(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 4.04(d)(ii), (ii) funds in the Note Distribution Account or
Certificate Distribution Account and available to be withdrawn pursuant to
Section 7.01(b)(v) and (iii) funds in the Note Distribution Account or
Certificate Distribution Account that cannot be distributed by the Trustee or
the Owner 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.).
BASIC DOCUMENTS: The Certificate of Trust, the Trust Agreement, the
Indenture, the Depository Agreement, this Sale and Servicing Agreement and other
documents and certificates delivered in connection therewith.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions or trust companies in the States of New York,
North Carolina or Delaware are required or authorized by law to be closed.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance
with Section 7.02(e) hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to each Remittance Date
during the Funding Period, the excess, if any, of (i) 30 days' interest
calculated at the Weighted Average Remittance Rate on the excess of (a) the
Original Pre-Funded Amount over (b) the aggregate Principal Balances of the
Subsequent Loans as of the applicable Subsequent Cut-Off Dates contributed on or
prior to the last day of the Due Period relating to such Remittance Date over
(ii) any Pre-Funding Earnings to be transferred to the Note Distribution Account
on such Remittance Date pursuant to Section 7.02(f).
CERTIFICATE: A Trust Certificate (as defined in the Trust Agreement).
CERTIFICATE DISTRIBUTION ACCOUNT: Has the meaning assigned to such
term in the Trust Agreement.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate
is registered in the Certificate Register and the Holder of the GP Interest.
CERTIFICATE 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 4.04(f).
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
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, and its successors and assigns
hereunder.
CLASS: Collectively, Notes having the same priority of payment and
bearing the same designation.
CLASS ADJUSTED LOAN REMITTANCE RATE: With respect to each 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 the FHA Loans for which the FHA Insurance Premium is paid by the
related Obligor as part of the Loan Interest Rate, the Insurance Rate.
CLASS A NOTE: A Note denominated as a Class A-1, Class A-2, Class A-3
or Class A-4 Note.
CLASS A NOTEHOLDER: A Holder of a Class A Note.
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, Class A-3 and Class A-4 Notes.
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, Class A-3 and Class A-4 Notes.
CLASS A PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Class A-1, Class A-2, Class A-3 and Class A-4 Notes.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date (a)
prior to the Stepdown Date, and for any Remittance Date on or after the Stepdown
Date on which the Trigger Event is in effect, the lesser of (i) 100% of the
Principal Distribution Amount and (ii) the Class A Principal Balance and (b) on
any other Remittance Date, the excess, if any, of (i) the Class A Principal
Balance immediately prior to such Remittance Date over (ii) the lesser of (A)
33.5% of the outstanding principal balance of the Loans as of the last day of
the related Due Period and (B) the outstanding principal balance of the Loans as
of the last day of the related Due Period MINUS $675,000.
CLASS A-1 NOTE: A Note denominated as a Class A-1 Note.
CLASS A-1 REMITTANCE RATE: The annual rate of interest payable to the
Class A-1 Noteholders, which shall be equal to 6.650%.
CLASS A-2 NOTE: A Note denominated as a Class A-2 Note.
CLASS A-2 REMITTANCE RATE: The annual rate of interest payable to the
Class A-2 Noteholders, which shall be equal to 6.680%.
CLASS A-3 NOTE: A Note denominated as a Class A-3 Note.
CLASS A-3 REMITTANCE RATE: The annual rate of interest payable to the
Class A-3 Noteholders, which shall be equal to 6.845%.
CLASS A-4 NOTES: A Note denominated as a Class A-4 Note.
CLASS A-4 REMITTANCE RATE: The annual rate of interest payable to the
Class A-4 Noteholders, which shall be equal to 7.385%.
CLASS B APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class B Notes (after
taking into account the distribution of the Class B Principal Distribution
Amount on such Remittance Date, but prior to the application for the Class B
Applied Realized Loss Amount, if any, on such Remittance Date) and (y) the
Applied Realized Loss Amount as of such Remittance Date.
CLASS B NOTE: A Note denominated as a Class B Note.
CLASS B NOTEHOLDER: A Holder of a Class B Note.
CLASS B PRINCIPAL BALANCE: The Class Principal Balance of the Class B
Notes.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date (a)
prior to the Stepdown Date, and for any Remittance Date on or after the Stepdown
Date on which the Trigger Event is in effect and the Class A Notes or Class M
Notes remain outstanding, zero and (b) on any other Remittance Date, the excess,
if any, of (i) the sum of (A) the Class A Principal Balance after giving effect
to the payment of the Class A Principal Distribution Amount on such Remittance
Date, (B) the Class M-1 Principal Balance after giving effect to the payment of
the Class M-1 Principal Distribution Amount on such Remittance Date, (C) the
Class M-2 Principal Balance after giving effect to the payment of the Class M-2
Principal Distribution Amount on such Remittance Date and (D) the Class B
Principal Balance immediately prior to such Remittance Date over (ii) the lesser
of 89.0% of the outstanding principal balance of the Loans as of the last day of
the related Due Period and (B) the outstanding principal balance of the Loans as
of the last day of the related Due Period MINUS $675,000.
CLASS B REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class B Unpaid Realized Loss Amount as of such Remittance Date
and (y) the portion of the Available Remittance Amount for such Remittance Date
remaining after application of amounts set forth in Section 7.05(d)(i) through
(xiv), inclusive.
CLASS B REMITTANCE RATE: The annual rate of interest payable to the
Class B Certificateholders, which shall be equal to 8.595%.
CLASS M CURRENT INTEREST DISTRIBUTION REQUIREMENT: The sum of the
Current Interest Distribution Requirements for the Class M-1 and Class M-2
Notes.
CLASS M NOTE: A Note denominated as a Class M-1 or Class M-2 Note.
CLASS M NOTEHOLDER: A Holder of a Class M Note.
CLASS M PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Class M-1 and Class M-2 Notes.
CLASS M-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class M-1 Notes
(after taking into account the distribution of the Class M-1 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class M-1 Applied Realized Loss Amount, if any, on such Remittance Date) and (y)
the excess of (i) the Applied Realized Loss Amount for such Remittance Date over
(ii) the sum of the Class M-2 Applied Realized Loss Amount and the Class B
Applied Realized Amount, in each case for such Remittance Date.
CLASS M-1 NOTE: A Note denominated as a Class M-1 Note.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date (a)
prior to the Stepdown Date, and for any Remittance Date on or after the Stepdown
Date on which the Trigger Event is in effect and the Class A Notes remain
outstanding, zero and (b) on any other Remittance Date, the excess, if any, of
(i) the sum of (A) the Class A Principal Balance after giving effect to the
payment of the Class A Principal Distribution Amount on such Remittance Date and
(B) the Class M-1 Principal Balance immediately prior to such Remittance Date
over (ii) the lesser of (A) 54.0% of the outstanding principal balance of the
Loans as of the last day of the related Due Period and (B) the outstanding
principal balance of the Loans as of the last day of the related Due Period
MINUS $675,000.
CLASS M-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class M-1 Unpaid Realized Loss Amount as of such Remittance
Date and (y) the portion of the Available Remittance Amount for such Remittance
Date remaining after application of amounts set forth in Section 7.05(d)(i)
through (x), inclusive.
CLASS M-1 REMITTANCE RATE: The annual rate of interest payable to the
Class M-1 Noteholders, which shall be equal to 7.615%.
CLASS M-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class M-2 Notes
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class M-2 Applied Realized Loss Amount, if any, on such Remittance Date) and (y)
the excess of (i) the Applied Realized Loss Amount for such Remittance Date over
(ii) the Class B Applied Realized Loss Amount for such Remittance Date.
CLASS M-2 NOTE: A Note denominated as a Class M-2 Note.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date (a)
prior to the Stepdown Date, and for any Remittance Date on or after the Stepdown
Date on which the Trigger Event is in effect and the Class A Notes or the Class
M-1 Notes remain outstanding, zero and (b) on any other Remittance Date, the
excess, if any, of (i) the sum of (A) the Class A Principal Balance after giving
effect to the payment of the Class A Principal Distribution Amount on such
Remittance Date, (B) the Class M-1 Principal Balance after giving effect to the
payment of the Class M-1 Principal Distribution Amount on such Remittance Date
and (C) the Class M-2 Principal Balance immediately prior to such Remittance
Date over (ii) the lesser of (A) 74.5% of the outstanding principal balance of
the Loans as of the last day of the related Due Period and (B) the outstanding
principal balance of the Loans as of the last day of the related Due Period
MINUS $675,000.
CLASS M-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class M-2 Unpaid Realized Loss Amount as of such Remittance
Date and (y) the portion of the Available Remittance Amount for such Remittance
Date remaining after application of amounts set forth in Section 7.05(d)(i)
through (xii), inclusive.
CLASS M-2 REMITTANCE RATE: The annual rate of interest payable to the
Class M-2 Noteholders, which shall be equal to 7.810%.
CLASS POOL FACTOR: With respect to a Class of Class A, Class M or
Class B Notes, 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
Notes, 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 Noteholders of such Class in
respect of principal pursuant to Section 7.05(d)(v) through (viii), inclusive
and (ii) the amount, if any, of Applied Realized Loss Amounts previously
allocated to such Class pursuant to Section 7.06. For purposes of determining
the Class Principal Balance of each Class of Class A, Class M or Class B Notes
with respect to any Remittance Date, no effect shall be given to any principal
to be distributed, or Applied Realized 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 Notes, the annual rate of interest payable to the Noteholders of such
Class, which rate is set forth, or determined as provided, under the definitions
of the Class A-1 through Class A-4 Remittance Rates, Class M-1 and Class M-2
Remittance Rates and Class B Remittance Rate.
CLOSING DATE: December 30, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
CO-TRUSTEE: First Union Trust Company, National Association, a
national banking association headquartered in Wilmington, Delaware.
COMPENSATING INTEREST: As defined in Section 7.10.
CONTINGENCY FEE: As to each Loan, the annual fee which is, in addition
to the Servicing Fee, payable to the Servicer pursuant to Section 5.03 of this
Agreement. Such fee shall be calculated and payable monthly only from the
amounts received in respect of interest on such Loan, shall accrue at the rate
of 0.25% 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
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 4.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CONVENTIONAL LOANS: Loans that are not FHA Loans.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses since the Closing Date.
CURRENT INTEREST DISTRIBUTION REQUIREMENT: For each Class of Class A,
Class M and Class B Notes, 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.
CURTAILMENT: With respect to a 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 Loan in full, nor is intended to cure a delinquency.
CUSTODIAL AGREEMENT: Any agreement to be entered into pursuant to the
Indenture for the retention of each Loan File.
CUSTODIAN: Any custodian appointed pursuant to the Indenture, provided
that such custodian shall be independent of the Servicer, the Representative and
the Claims Administrator, except in the event the Trustee shall be the Servicer
or the Claims Administrator.
CUT-OFF DATE: November 30, 1997; provided, however, that for purposes
of determining characteristics of the Initial Loans as of the Cut-Off Date, the
Cut-Off Date for those Initial Loans originated after November 30, 1997 shall be
deemed to be the date of the applicable Note.
CUTOFF DATE PRINCIPAL BALANCE: With respect to any Loan, the unpaid
principal balance thereof as of the Cut-Off Date (or as of the applicable date
of substitution with respect to a Qualified Substitute Loan pursuant to Section
3.02 or 3.03).
DEALER LOANS: Loans in which a dealer-contractor participates in the
financing.
DEFAULTED LOAN: Means any Loan as to which the related Obligor has
failed to make unexcused payment in full of three or more consecutive monthly
payments.
DEFICIENT VALUATION: With respect to any Loan, a valuation by a court
of competent jurisdiction of the related Mortgaged Property in an amount less
than the then outstanding indebtedness under the 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 LOAN: A Loan replaced by a Qualified Substitute Loan.
DEPOSITORY: The Depository Trust Company, and any successor Depository
hereafter named.
DEPOSITORY AGREEMENT: The Note Depository Agreement.
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 "A" or better by Fitch (if Fitch rates such debt obligations),
or one of the two highest short-term ratings by another nationally recognized
statistical rating agency, 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 Notes from time to time as a
securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due
from the Obligor on a Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date appears.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on
a 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 Loan, the excess, if any, of (a) the total Net Liquidation Proceeds,
over (b) the Principal Balance of such Loan as of the date such Loan became a
Liquidated Loan plus 30 days interest thereon at the Weighted Average Class
Adjusted 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 4.14 at the related 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 7.04 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 4.04(b) hereof.
FHA LOAN: A 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 7.03 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 Obligor as part of
the 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 Obligor 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
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 other loans 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 4.09.
FINAL DATE: With respect to (i) the Class A-1 Notes, November 15,
2007, (ii) the Class A-2 Notes, July 15, 2010, (iii) the Class A-3 Notes, April
15, 2012, (iv) the Class A-4 Notes, March 15, 2029, (v) the Class M-1 Notes,
March 15, 2029, (vi) the Class M-2 Notes, March 15, 2029,and (vii) the Class B
Notes, March 15, 2029.
FITCH: Fitch IBCA, Inc. and any successor thereto.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $200,000, (ii) the date on which a Servicer
Default occurs and (iii) at the close of business on March 27, 1998.
GP INTEREST: The 1% interest in the Trust held by TMS SPV, Inc., a
Delaware corporation, pursuant to the Trust Agreement.
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.
HOLDER OF THE GP INTEREST: The Person holding the GP Interest.
HOME IMPROVEMENT LOAN: A Loan, at least 66% of the proceeds of which
were used by the related Obligor, either (i) to acquire, improve or protect an
interest in real property or (ii) to refinance one or more loans the proceeds of
which were used to acquire, improve or protect an interest in real property.
HUD: The United States Department of Housing and Urban Development,
and its successor in interest.
INDENTURE: The Indenture dated as of November 30, 1997, between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
INITIAL LOANS: The Loans listed on Exhibit E hereto and delivered to
the Trustee or Co-Trustee (or the Custodian on behalf of the Trustee or
Co-Trustee) on the Closing Date.
INSOLVENCY EVENT: With respect to a specified Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Issuer or the Servicer by any insurer pursuant to any insurance policy covering
a 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 4.08, 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 Obligor as part of the 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 RATE: Means, for each Class of Notes, the applicable Class
Remittance Rate for such Class.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance
Date and with respect to any Class of Notes, 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 Noteholders of such Class on such Remittance Date
pursuant to Section 7.05(d)(ii), (iii), (iv), (ix), (x), (xii) and (xiv) of this
Agreement and (ii) one month's interest on the amount determined pursuant to
clause (i) at the applicable Class Remittance Rate.
ISSUER: Means The Money Store Residential Trust 1997-II.
LIQUIDATED LOAN: (a) Any defaulted 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 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 4.10 hereof, and any other amounts other
than FHA Payments and Related Payments received in connection with the
liquidation of defaulted Loans, whether through trustee's sale, foreclosure sale
or otherwise.
LOAN: An individual loan which is transferred to the Trustee or
Co-Trustee pursuant to this Agreement, including any Subsequent Loan, together
with the rights and obligations of a holder thereof and payments thereon and
proceeds therefrom, the Loans originally subject to this Agreement being
identified on the Loan Schedules annexed hereto as Exhibit E. Any loan which,
although intended by the parties hereto to have been, and which purportedly was,
contributed to the Issuer by the applicable Originator (as indicated by Exhibit
E), in fact was not contributed or otherwise transferred and assigned to the
Issuer for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.02(i) hereof with respect
to such loan, shall nevertheless be considered a "Loan" for all purposes of this
Agreement.
LOAN FILE: The documents listed in Section 2.04 pertaining to a
particular Loan and any additional documents required to be added to the Loan
File pursuant to this Agreement.
LOAN INTEREST RATE: The fixed rate of interest borne by a Note, as
shown on the applicable Loan Schedule.
LOAN SCHEDULE: The schedule of Loans attached hereto as Exhibit E,
such schedule identifying each Loan by address of the Obligor (or, with respect
to Mortgage Loans, the address of the Mortgaged Property) and the name of the
Obligor and setting forth as to each 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) with respect to
Mortgage Loans, the LTV as of the date of the origination of the related Loan,
(v) the Due Date, (vi) the Loan Interest Rate, (vii) the first Due Date, (viii)
the Monthly Payment, (ix) the maturity date of the Note, and (x) the remaining
number of months to maturity as of the CutOff Date. Also, the Loan Schedule will
indicate, based upon loan number, whether the related Loan is an FHA Loan or a
Conventional Loan and whether such Loan is a Mortgage Loan or an Unsecured Loan.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Loan, (i) the sum of
(a) the original principal balance of such Loan plus (b) the remaining balance
of any Prior Lien, if any, at the time of origination of such 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 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 Loan.
LOW INTEREST LOAN: [Not applicable].
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 SECURITYHOLDERS: Until such time as the principal amount of
all classes of Notes have been reduced to zero, the holder or holders (as shown
on the Note Register) of in excess of 50% of the current then-principal amount
of all classes of Notes voting together as a single class as certified to the
Owner Trustee in writing by the Trustee (accordingly, the holders of the
Certificates shall be excluded from any rights or actions of the Majority
Securityholders during such period); and (ii) thereafter, the holder or holders
of the Voting Interest.
MAXIMUM SUBORDINATION AMOUNT: Means $7,184,806.
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
7.09 hereof.
MONTHLY EXCESS SPREAD: With respect to any Remittance Date, an amount
equal to the excess of (A) the product of (i) the aggregate Principal Balances
of the Loans as of the first day of the immediately preceding Due Period and
(ii) one-twelfth of the weighted average Loan Interest Rate as of the first day
of the related Due Period over (B) the sum of the Current Interest Distribution
Requirement for such Remittance Date, (iii) amounts to be deposited into the
Expense Account on such Remittance Date pursuant to Section 7.04(d)(ii), the
Servicing Fee and the Contingency Fee with respect to such Remittance Date and
(iv) with respect to those FHA Loans for which the FHA Insurance Premium is paid
by the related Obligor as part of the interest payment, the applicable FHA
Insurance Premium. With respect to the Remittance Dates during the Funding
Period, the Monthly Excess Spread also will include the Pre-Funding Earnings for
the applicable Remittance Date.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Loan, as set forth in
the related Note.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
lien on the Mortgaged Property.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 4.08.
MORTGAGE LOAN: A Loan that is secured by a Mortgage on a Mortgaged
Property.
MORTGAGED PROPERTY: The underlying property securing a Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MULTIFAMILY LOANS: 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 4.04(b) and
(ii) amounts required to be released to the related Obligor 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 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 Obligor an amount at least equal to
one unpaid Monthly Payment.
NON-ACKNOWLEDGED FHA LOAN: As defined in Section 3.02(lll) hereof.
NONRECOVERABLE ADVANCES: With respect to any Loan, (i) any Monthly
Advance previously made and not reimbursed pursuant to Section 4.04 or 7.09, or
(ii) a Servicing Advance or Monthly Advance proposed to be made in respect of a
Loan or REO Property which, in the good faith business judgment of the Servicer,
will not or, in the case of a proposed advance, would not be ultimately
recoverable pursuant to Sections 4.04 or 7.09.
NOTE: The promissory note, retail installment contract or obligation,
sales agreement or other evidence of indebtedness evidencing the indebtedness of
an Obligor under a Loan.
NOTE DISTRIBUTION ACCOUNT: The account designated as such, established
and maintained pursuant to Section 7.01.
OBLIGOR: The obligor on a Note.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, Vice 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.
ORIGINAL CLASS A-1 PRINCIPAL BALANCE: $50,644,000.00.
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $17,885,000.00.
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $12,315,000.00.
ORIGINAL CLASS A-4 PRINCIPAL BALANCE: $16,693,000.00.
ORIGINAL CLASS M-1 PRINCIPAL BALANCE: $13,837,000.00.
ORIGINAL CLASS M-2 PRINCIPAL BALANCE: $13,837,000.00.
ORIGINAL CLASS B PRINCIPAL BALANCE: $9,789,000.00.
ORIGINAL COLLATERAL AMOUNT: The sum of (i) the aggregate Principal
Balance of the Initial Loans as of the Cut-Off Date and (ii) the Original
Pre-Funded Amount.
ORIGINAL PRE-FUNDED AMOUNT: $0., 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 Notes, the amount set forth for such Class under the
definitions of Original Class A-1 through Original Class A-4 Principal Balances,
Original Class M-1 and Original Class M-2 Principal Balances and Original Class
B Principal Balances.
ORIGINATOR: Any of the entities listed on Exhibit F hereto, each of
which is a direct wholly-owned subsidiary of the Representative, and each of
which is a Subservicer as of the date hereof.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which
the related Obligor represented at the time of the origination of the Loan an
intent to occupy as such Obligor's primary, secondary or vacation residence.
OWNER TRUST ESTATE: Has the meaning assigned to such term in the Trust
Agreement.
OWNER TRUSTEE: Chase Manhattan Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, its successors in interest or any successor Owner Trustee
under the Trust Agreement.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
include the following:
(a) 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;
(b) 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 "A-1" or better by Fitch;
(c) 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 "BBB" or better by Fitch;
(d) commercial paper (having original maturities of
not more than 365 days) rated "A-1" or better by S&P and "A-1"
or better by Fitch;
(e) debt obligations rated "AAA" by S&P and "AAA"
by Fitch (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);
(f) investments in money market funds rated "AAA"
or better by S&P or "AAA" or better by Fitch the assets of which are invested
solely in instruments described in clauses (a)-(e) above;
(g) guaranteed investment contracts or surety bonds
issued by or reasonably acceptable to the Rating Agencies 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:
(i) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial strength or
laims paying ability are rated "AAA" by S&P and "AAA" by Fitch; and
(ii) provide that the Trustee may exercise all of the
rights of the Representative under such contract or surety bond without
he necessity of the taking of any action by the Representative;
(h) A repurchase agreement that satisfies the following
criteria:
(i) Must be between the Trustee and a dealer bank or
securities firm described in A. or B. below:
A. Primary dealers on the Federal Reserve
reporting dealer list which are rated "A" or
better by S&P and Fitch, or
B. Banks rated "A" or above by S&P and
Fitch,
(ii) The written repurchase agreement must include
the following:
Securities which are acceptable for the transfer are:
1. Direct U.S. governments, or
2. Federal Agencies backed by the
full faith and credit of the U.S. government
(and FNMA & FHLMC)
a. the term of the repurchase
agreement may be up to 60 days
b. 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)
Valuation of collateral: The securities must be
valued weekly, marked-to-market at current
market price plus accrued interest. 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%.
(i) any other investment acceptable to the Rating Agencies.
PERSON: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL BALANCE: As of the close of business on the last day of a Due
Period means the aggregate Principal Balance of the Loans.
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 7.01 hereof and maintained by the Trustee.
PRE-FUNDING EARNINGS: With respect to each Remittance Dates during the
Funding Period, the actual investment earnings earned during the period from the
Closing Date through the Business Day immediately preceding the related
Determination Date on the Pre-Funding Account during such period as calculated
by the Representative pursuant to Section 2.07(e) hereof.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 4.03 hereof.
PRINCIPAL BALANCE: With respect to any Loan or related REO Property,
at any date of determination, (i) the principal balance of the Loan (or, with
respect to a Low Interest Loan, the product of such principal balance and the
percentage set forth on Exhibit O attached hereto) outstanding as of the Cut-Off
Date or as of the applicable Subsequent Cut-Off Date relative to Subsequent
Loans or as of the applicable substitution date relative to Qualified Substitute
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 7.05 on any previous Remittance Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, all Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property (but not including the proceeds of any Insured
Payment) to the extent applied by the Servicer as recoveries of principal in
accordance with the provisions hereof, which were distributed pursuant to
Section 7.05 on any previous Remittance Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Remittance Date,
the excess, if any, of (A) the sum, without duplication, of (i) all payments and
other recoveries of principal of a 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 Loan actually
purchased by the Seller or the Servicer 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 Note Distribution
Account as of the related Determination Date; (iv) the then outstanding
Principal Balance of any Loan which, during the related Due Period, has become a
Liquidated Mortgage Loan; (v) the amount, if any, released from the Pre-Funding
Account on the Remittance Dates during the Funding Period and (vi) the
Accelerated Principal Distribution Amount for such Remittance Date over (B) the
Subordination Reduction Amount for such Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Loan equal to the outstanding principal balance thereof, received in advance of
the final scheduled Due Date which is intended to satisfy a Loan in full.
PRIOR LIEN: With respect to any Loan which is not a first priority
lien, each loan relating to the corresponding Mortgaged Property having a higher
priority lien.
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 SUBSTITUTE LOAN: A loan or loans substituted for a Deleted
Loan pursuant to Section 2.05 or 3.03 hereof, which (i) has or have an interest
rate or rates of not less than (and not more than two percentage points more
than) the Interest Rate for the Deleted Loan; (ii) if such Loan is secured by a
Mortgaged Property, relates or relate to the same type of Residential Dwelling
or Multifamily Property, as the case may be, as the Deleted Loan; (iii) matures
or mature no later than (and not more than one year earlier than) the Deleted
Loan; (iv) if such Loan is secured by a Mortgaged Property, satisfies the
requirements for a Loan set forth in Section 3.02(ddd)(ii); (v) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance (prior to the occurrence of Realized Losses) of the Deleted
Loan as of such date; (vi) is an FHA Loan if the Deleted Loan was an FHA Loan or
a Conventional Loan if the Deleted Loan was a Conventional Mortgage Loan; and
(vii) 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: S&P and Fitch.
RATING AGENCY CONDITION: With respect to any action, that each of the
Rating Agencies shall have notified the Servicer, the Owner Trustee and the
Trustee, orally or in writing, that such action will, in and of itself, result
in a reduction or withdrawal of the then current rating of any class of Notes,
or the Certificates.
REALIZED LOSS: With respect to each Liquidated 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 Loan as of the date of such liquidation,
minus the Net Liquidation Proceeds relating to such Liquidated Loan (such Net
Liquidation Proceeds to be applied first to the principal balance of the
Liquidated 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 Owner 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 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 Loan immediately prior to such Deficient Valuation and the
principal balance of the Loan as reduced by the Deficient Valuation. With
respect to any 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 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.
REGISTRATION STATEMENT: The registration statement (File No.
333-32775) filed by the Representative with the Securities and Exchange
Commission in connection with the issuance and sale of the Notes and the
Certificates, including the Prospectus dated December 23, 1997 and the
Prospectus Supplement dated December 23, 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 4.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 4.04(b), (iii) any advances
reimbursable pursuant to Section 4.04 and not previously reimbursed pursuant to
Section 7.09, and (iv) any other amounts reimbursable to the Servicer or the
Representative pursuant to this Agreement.
RELATED PAYMENTS: As described in Section 4.15(c).
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any 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 Obligor in accordance with applicable law, the Servicer's customary
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 7.05(d)(i) through (xvi).
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 on
January 15, 1998; 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 4.10.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and
its successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of
FHA insurance available with respect to all FHA Loans. The Reserve Amount
initially will equal at least 10% of the aggregate Principal Balance 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, or (viii) 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, Corporate
Trust Office, or similar group, and when used with respect to the Owner Trustee,
any officer assigned to the Owner Trustee's Corporate Trust Office as set forth
in the Trust Agreement, in each case including any Vice President, Assistant
Vice President, any Assistant Secretary, any trust officer or any other officer
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.
S&P: Standard & Poor's Ratings Services, a Division of the McGraw-Hill
Companies, Inc. and any successor thereto.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SENIOR ENHANCEMENT PERCENTAGE: For any Remittance Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Class Principal Balance of
the Subordinated Notes and (ii) the Spread Amount, in each case after giving
effect to the distribution of the Principal Distribution Amount on such
Remittance Date by (y) the aggregate principal balance of the Loans as of the
last day of the related Due Period.
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: Means 66.50%.
SERIES: 1997-II.
SERIES 1997-II NOTES: The Money Store Residential Loan Notes, Series
1997-II, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and
Class B.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
SERVICER DEFAULT: An event specified in Section 10.01.
SERVICER'S CERTIFICATE: The certificate as defined in Section 7.08.
SERVICING ACCOUNT: The Servicing Account established and maintained by
the Servicer in accordance with Section 7.11 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Account
Property and Certificateholders and Noteholders shall have no interest therein.
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 4.01(a) and Sections 4.02, 4.05 and 4.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
4.04(b), and (e) in connection with the liquidation of a Loan, expenditures
relating to the purchase or maintenance of any Prior Lien pursuant to Section
4.14, 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 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 December 31, 2002, if the Total
Expected Losses (as defined below) of the Loans exceed 23.50% of the aggregate
Principal Balances of the Loans as of the end of the first Due Period
immediately following the Funding Period and (ii) after December 31, 2002 but on
or prior to December 31, 2007, if the Total Expected Losses of the Loans exceed
35.25% of the sum of (A) the aggregate Principal Balances of the Initial Loans
as of the Cut-off Date and (B) the aggregate Principal Balances of the
Subsequent Loans as of the applicable Subsequent Cut-off Date.
For purposes of the foregoing definition, the "Total Expected Losses"
of the Loans on any date of determination shall equal the sum of (i) the
cumulative Realized Losses on the 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 Loans 30-59 days
delinquent multiplied by 25%;
(ii) the Principal Balance of all Loans 60-89 days
delinquent multiplied by 50%; and
(iii) the Principal Balance of all Loans 90 days or
more delinquent multiplied by 100%.
SERVICING FEE: As to each 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 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 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 4.04. 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 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 AMOUNTS: Means, as of any Remittance Date, the sum of (i)
the Interest Shortfall Carryforward Amounts with respect to the Class M-1, Class
M-2 and Class B Certificates, and (ii) the Class M-1, Class M-2 and Class B
Realized Loss Amounts.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not
attached in any way to any other unit.
SINGLE FAMILY LOANS: Loans secured by a Mortgaged Property consisting
of one- to-four family units.
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 Loans that were delinquent 60 days or
more as of the end of the prior Due Period (including 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 Loans
as of the end of the immediately preceding Due Period.
SPECIAL HOLDINGS: TMS SPV, Inc., a Delaware corporation.
SPECIFIED SUBORDINATED AMOUNT: Means, for any Remittance Date (i)
prior to the Spread Amount Stepdown Date, 5.5% of the Original Collateral Amount
and (ii) on and after the Spread Amount Stepdown Date, the greater of (A) 11.0%
of the aggregate Principal Balance of the Loans as of the last day of the
related Due Period and (B) 0.5% of the Original Collateral Amount; PROVIDED,
HOWEVER, that the Specified Subordinated Amount shall never exceed the then
aggregate Class Principal Balance of the Notes. If a Trigger Event is in effect
on and after the Spread Amount Stepdown Date, the Specified Subordinated Amount
shall be equal to the Specified Subordinated Amount for the immediately
preceding Remittance Date. Notwithstanding the foregoing, following the Funding
Period, the Specified Subordinated Amount may be revised at the request of the
Servicer and with the consent of each Rating Agency.
SPREAD AMOUNT: Means, for any Remittance Date, the difference between
(i) the aggregate Principal Balances of the Loans as of the last day of the
immediately preceding Due Period and any amounts on deposit in the Pre-Funding
Account over (ii) the aggregate principal balances of the Notes (after taking
into account all distributions of principal on such Remittance Date).
SPREAD AMOUNT STEPDOWN DATE: Means the later to occur of (i) the
Remittance Date occurring in January 2001 and (ii) the first Remittance Date on
which the Principal Balance of the Loans as of the last day of the related Due
Period is less than 50% of the Original Collateral Amount.
STEPDOWN DATE: The earlier to occur of (i) the later to occur of (x)
the Remittance Date in January 2001 and (y) the first Remittance Date on which
the Senior Enhancement Percentage (after taking into account distributions of
principal on such Remittance Date) is greater than or equal to the Senior
Specified Enhancement Percentage and (ii) the Remittance Date on which the Class
A Principal Balance has been reduced to zero.
SUBORDINATED DEFICIENCY AMOUNT: Means, for any Remittance Date, the
excess, if any, of (i) the Specified Subordinated Amount for such Remittance
Date over (ii) the then current Spread Amount, after giving effect to all
payments previously made on such Remittance Date.
SUBORDINATED NOTES: Means the Class M Notes and the Class B Notes.
SUBORDINATION REDUCTION AMOUNT: Means for any Remittance Date, the
lesser of (i) the amount set forth in clause (A) (i) through (v) of the
definition of Principal Distribution Amount and (ii) the excess, if any, of the
then current Spread Amount over the then current Specified Subordinated Amount.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
Loans which are transferred and assigned to the Trust pursuant to the related
Subsequent Transfer Agreement.
SUBSEQUENT FHA LOANS: Subsequent Loans that are FHA Loans.
SUBSEQUENT HOME IMPROVEMENT LOANS: Subsequent Loans that are Home
Improvement Loans.
SUBSEQUENT LOANS: The Loans contributed to the Trust pursuant to
Section 2.07, which shall be listed on the Schedule of 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 Trust, the Representative
and the Originators, by which Subsequent Loans are contributed and assigned to
the Trust.
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
4.01(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 Loans as
provided in Section 4.01(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 sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
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 Loans.
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.
TMS: The Money Store Inc., a New Jersey Corporation.
TRIGGER EVENT: A Trigger Event will be in effect on a Remittance Date
if either (i) the Sixty-Day Delinquency Ratio as of such Remittance Date exceeds
50% of the Senior Enhancement Percentage; or (ii) both (A) either (x) the
Weighted Average Five-Month Sixty-Day Delinquency Ratio as of such Remittance
Date exceeds 9% or (y) the Cumulative Realized Losses as of such Remittance Date
exceed $19,035,000; and (B) either (x) the Weighted Average Five-Month Sixty-Day
Delinquency Ratio as of such Remittance Date exceeds 15% or (y) the Cumulative
Realized Losses as of such Remittance Date exceed $6,345,000.
TRUST: The Issuer.
TRUST ACCOUNT PROPERTY: The Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
TRUST ACCOUNTS: Means the Note Distribution Account, the Pre-Funding
Account, the Capitalized Interest Account and the FHA Premium Account.
TRUST AGREEMENT: Trust Agreement dated as of November 30, 1997, among
the Originators and the Owner Trustee, as the same may be amended and
supplemented from time to time. TRUSTEE: The Person acting as Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
TRUSTEE'S LOAN FILE: The documents delivered to the Trustee or the
Custodian pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: Means for any Class of the Class M or
Class B Notes as of any Remittance Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Remittance Dates over (y) the aggregate, cumulative amount
of related Realized Loss Amounts with respect to such Class for all prior
Remittance Dates.
UNSECURED LOAN: A Loan for which no collateral was pledged as security
by the related Obligor.
VOTING INTEREST: The interest in the Trust issued pursuant to the
Trust Agreement entitling the holder thereof to exercise sole voting control
over actions requiring the approval or disapproval of Certificateholders.
WEIGHTED AVERAGE CLASS ADJUSTED LOAN REMITTANCE RATE: With respect to
each 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 Obligor 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 Loans
as of the ends of the related Due Periods.
WEIGHTED AVERAGE REMITTANCE RATE: Means the average of the Interest
Rate for each outstanding class of Notes, weighted by the Class Principal
Balance of each such class of Notes.
Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture, or, if not defined therein,
in the Trust Agreement.
(b) All terms defined in this Agreement shall have
the defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(c) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
CONTRIBUTION AND CONVEYANCE OF THE TRUST
Section 2.01 CONTRIBUTION AND CONVEYANCE OF TRUST ACCOUNT PROPERTY;
PRIORITY AND SUBORDINATION OF OWNERSHIP INTERESTS.
The Originators do hereby contribute, transfer, assign, set over and
convey to the Issuer without recourse, subject to the terms of this Agreement,
all of the right, title and interest of the Originators in and to the Initial
Loans, all rights under the Reserve Amount relating to the FHA Loans and all
other assets included or to be included in the Trust Account Property. The
Initial Loans have an aggregate Principal Balance as of the Cut-Off Date of
$134,999,951.62.
Section 2.02 POSSESSION OF LOAN FILES.
(a) Upon the issuance of the Series 1997-II Notes and Certificates,
the ownership of each Note, the Mortgage, if applicable, and the contents of the
related Loan File relating to the Initial Loans is, and upon each Subsequent
Transfer Date the ownership of each Note, the Mortgage, if applicable, and the
contents of the related Loan File relating to the applicable Subsequent Loans
will be, vested in the Issuer for the benefit of the Noteholders and the
Certificateholders, as the case may be.
(b) Pursuant to Section 2.04, the Originators have delivered or caused
to be delivered each Trustee's Loan File relating to the Initial Loans to the
Trustee (or, with respect to the Home Improvement Loans, the Custodian) and on
each Subsequent Transfer Date the Originators will deliver or cause to be
delivered each Loan File relating to the related Subsequent Loans to the Trustee
(or, with respect to the Home Improvement Loans, the Custodian).
Section 2.03 BOOKS AND RECORDS.
The contribution of each Loan shall be reflected on the Originator's
balance sheets and other financial statements as a contribution 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 Loan which shall be clearly marked to reflect
the ownership of each Loan by the Issuer for the benefit of the Noteholders and
the Certificateholders.
Section 2.04 DELIVERY OF LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this
Agreement, has delivered or caused to be delivered to the Trustee (or, with
respect to the Home Improvement Loans, the Custodian) each of the following
documents for each Initial Loan and (ii) on each Subsequent Transfer Date, will
deliver or cause to be delivered to the Trustee (or, with respect to the Home
Improvement Loans, the Custodian) each of the following documents for each
Subsequent Loan originated by such Originator:
(a) The original 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) With respect to Mortgage Loans, 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) With respect to Mortgage Loans, either: (i) the original
Assignment of Mortgage from the Person delivering such Assignment to "The Bank
of New York, as Trustee for The Money Store Residential Trust 1997-II" (or, with
respect to the FHA Loans, to "First Union Trust Company, National Association,
as Co-Trustee for The Money Store Residential Trust 1997-II") with evidence of
recording thereon (provided, however, that where permitted under the laws of the
jurisdiction wherein the Mortgaged Property is located, the Assignment of
Mortgage may be effected by one or more blanket assignments for Mortgage Loans
secured by Mortgaged Properties located in the same county), or (ii) a copy of
such Assignment of Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording (provided, however, that
where the original Assignment of Mortgage is not being delivered to the Trustee
(or with respect to the Home Improvement Loans, the Custodian), 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) With respect to the Mortgage Loans (except for FHA Loans) (i)
The original policy of title insurance or, if such policy has not yet been
delivered by the insurer, the commitment or binder to issue same, or if the
original principal balance of the Mortgage Loan was less than or equal to
$15,000 or the Mortgage Loan was not originated by the Originators, other
evidence of the status of title, which shall consist of an attorney's opinion of
title or certificate of title, a preliminary title report, a property search, a
title search, a lot book report, a property information report or a report
entitled "prelim" or "PIRT" (property information report), and (ii) proof of
hazard insurance in the form of a hazard insurance policy or hazard insurance
policy endorsement that names the related Originator, its successors and
assigns, as a mortgagee/loss payee, and, if such endorsement does not show the
amount insured by the related hazard insurance policy, some evidence of such
amount and (Y) with respect to the Unsecured Loans, the written Loan
application, credit reconciliation worksheet, credit investigation receipts and
approval sheet;
(e) With respect to the Mortgage Loans, 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) With respect to the Mortgage Loans, original of all assumption and
modification agreements, if any; and
(g) With respect to the Mortgage Loans, except with respect to FHA
Loans and certain Mortgage Loans with original principal balances of less than
$15,000, the appraisal made in connection with the origination of the related
Mortgage Loan with photographs of the subject property and of comparable
properties (if available), constituting evidence sufficient to indicate that the
Mortgaged Property relates to a Residential Dwelling (or, with respect to
Multifamily Loans, a Multifamily Property) and identifying the type thereof.
With respect to the Mortgage Loan, 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 Loans, within one year of
the related Subsequent Transfer Date), deliver or cause to be delivered to the
Trustee (or, with respect to the Home Improvement Loans, the Custodian): (a) the
original recorded Mortgage in those instances where a copy thereof certified by
a Responsible Officer was delivered to the Trustee (or, with respect to the Home
Improvement Loans, the Custodian); (b) the original recorded Assignment of
Mortgage to the Trustee (or, with respect to the Home Improvement Loans, the
Custodian), which, together with any intervening assignments of Mortgage,
evidences a complete chain of title from the Originator to the Trustee (or, with
respect to the FHA Loans, the Co-Trustee) in those instances where copies
thereof certified by a Responsible Officer were delivered to the Trustee (or,
with respect to the Home Improvement Loans, the Custodian); (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer were delivered to the Trustee (or, with respect to the Home
Improvement Loans, the Custodian); and (d) except with respect to the FHA Loans,
the title insurance policy, or, where no such policy is required to be provided,
the other evidence of title and hazard insurance required in clause (d) above.
Notwithstanding anything to the contrary contained in this Section 2.04, in
those instances where the public recording office retains the original Mortgage,
Assignment of Mortgage or the intervening assignments of the Mortgage after it
has been recorded, the Originator shall be deemed to have satisfied its
obligations hereunder upon delivery to the Trustee (or, with respect to the Home
Improvement Loans, the Custodian) of a copy of such Mortgage, Assignment of
Mortgage or assignments of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof. From time to time the
Originator may forward or cause to be forwarded to the Trustee (or, with respect
to the Home Improvement Loans, the Custodian) additional original documents
evidencing an assumption or modification of a Mortgage Loan. All Loan documents
held by the Trustee (or, with respect to the Home Improvement Loans, the
Custodian) as to each Loan are referred to herein as the "Trustee's Loan 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; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE AND CUSTODIAN.
(a) The Trustee (or, with respect to the Home Improvement Loans, the
Custodian) agrees to execute and deliver on the Closing Date with respect to the
Initial Loans, and on each Subsequent Transfer Date with respect to the related
Subsequent Loans, an acknowledgment of receipt of, for each Mortgage Loan, an
Assignment of Mortgage or certified copy thereof, and, for each Loan, a Note, in
the form attached as Exhibit C 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 Account Property and
delivered to the Trustee, as Trustee in trust upon (or, with respect to the Home
Improvement Loans, to the Custodian), and subject to the conditions set forth
herein for the benefit of the Noteholders and the Certificateholders. The
Trustee (or, with respect to the Home Improvement Loans, the Custodian) agrees,
for the benefit of the Noteholders and the Certificateholders, to review each
Trustee's Loan File relating to the Initial Loans delivered to it within 60 days
after the Closing Date and each Trustee's Loan File relating to the Subsequent
Loans delivered to it within 60 days after the related Subsequent Transfer Date
(or, with respect to any Qualified Substitute 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 C-1 to the
effect that, as to each Loan listed in the Loan Schedule (other than any Loan
paid in full or any 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 Loan, (iii) based on its
examination and only as to the foregoing documents, the information set forth on
the Loan Schedule accurately reflects the information set forth in the Trustee's
Loan File, and (iv) each Note has been endorsed as provided in Section 2.04 of
this Agreement. The Trustee and the Custodian shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face. Within 375 days after the Closing Date, the Trustee
(or, with respect to the Home Improvement Loans, the Custodian) shall deliver to
the Servicer, the Representative, and any Noteholder or Certificateholder who
requests a copy from the Trustee (or, with respect to the Home Improvement
Loans, the Custodian) a final certification in the form attached hereto as
Exhibit D evidencing, if such be the case, the completeness of the Trustee's
Loan Files (other than items listed in Section 2.04(d)(ii)).
(b) If the Trustee (or, with respect to the Home Improvement Loans,
the Custodian) during the process of reviewing the Trustee's Loan Files finds
any document constituting a part of a Trustee's Loan File which is not properly
executed, has not been received, is unrelated to a Loan identified in the 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 Loan Schedule, the
Trustee (or, with respect to the Home Improvement Loans, the Custodian) shall
promptly so notify the Servicer, the Representative and the Trustee (or, with
respect to the Home Improvement Loans, the Custodian), respectively. In
performing any such review, the Trustee and the Custodian may conclusively rely
on the related Originator as to the purported genuineness of any such document
and any signature thereon. It is understood that the scope of the Trustee's (or,
with respect to the Home Improvement Loans, the Custodian's) review of the 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 Loans identified in the Loan
Schedule, and to verify that each Mortgaged Property appears from the
information contained in the Trustee's Loan 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 Loan 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 Noteholders and the Certificateholders in the related Loan, the
Representative will (i) substitute in lieu of such Loan a Qualified Substitute
Loan in the manner and subject to the conditions set forth in Section 3.03 or
(ii) purchase such Loan at a purchase price equal to the Principal Balance of
the Mortgage Loan as of the date of purchase, before the occurrence of Realized
Losses, if any, plus 30 days' interest on such Principal Balance, computed at
the Class Adjusted Loan Remittance Rate 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 applicable Principal and Interest Account on the next
succeeding Determination Date.
(c) Upon receipt by the Trustee (or, with respect to the Home
Improvement Loans, the Custodian) of a certification of a Servicing Officer of
the Servicer of such substitution or purchase and the deposit of the amounts
described above in the applicable Principal and Interest Account (which
certification shall be in the form of Exhibit G hereto), the Trustee (or, with
respect to the Home Improvement Loans, the Custodian) shall release to the
Servicer for release to the Representative the related Trustee's Loan File and
the Trustee (or with respect to the FHA Loans, the Co-Trustee) shall execute,
without recourse, and deliver such instruments of transfer necessary to transfer
such 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 1998, the Trustee (and, with
respect to the Home Improvement Loans, the Custodian) shall deliver to the
Representative and the Servicer a certification detailing all transactions with
respect to the Loans for which the Trustee or the Custodian holds a Trustee's
Loan File pursuant to this Agreement during the prior calendar year. Such
certification shall list all Trustee's Loan 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 Loan File was released or the person who returned
the Trustee's Loan File.
Section 2.06 FEES AND EXPENSES OF THE TRUSTEE, CO-TRUSTEE AND OWNER
TRUSTEE.
The fees and expenses of the Trustee, Co-Trustee and Owner Trustee
including (i) the annual fees of the Trustee, Co-Trustee and Owner 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,
Co-Trustee or Owner Trustee is entitled, and (iii) reimbursements to the
Servicer for any advances made by the Servicer to the applicable Expense
Accounts pursuant to Section 7.04 hereof, shall be paid from the Expense
Accounts in the manner set forth in Section 7.04 hereof; PROVIDED, however, that
the Representative shall be liable for any expenses of the Trust incurred prior
to the Closing Date. The fees and expenses payable to the Trustee shall include
the fees and expenses payable to the Custodian (which shall be in addition to
the fees and expenses payable to the Trustee).
Section 2.07 CONVEYANCE OF THE SUBSEQUENT 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 contribute, transfer, assign, set over and otherwise convey
without recourse, to the Issuer all right, title and interest of the applicable
Originators in and to each Subsequent Loan listed on the 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 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 Loan prior to the related Subsequent Cut-Off
Date. The transfer by the Originators of the Subsequent Loans set forth on the
Loan Schedule to the Issuer 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
Transfer Date of the Subsequent Loans so transferred; provided, however, that
the amount released from the Pre-Funding Account for a Low Interest Loan, if
applicable, shall be the percentage set forth on Exhibit O attached hereto of
the aggregate principal balance thereof as of the related Subsequent Transfer
Date.
(b) The Originators shall transfer to the Issuer the Subsequent 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 Owner
Trustee, the Trustee, 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
Loans;
(ii) the Originators shall have delivered to the
Trustee (or, with respect to the Subsequent Home Improvement Loans,
the Custodian) a duly executed written assignment (including an
acceptance by the Trustee (or, with respect to the Subsequent Home
Improvement Loans, the Custodian)) which shall include Loan Schedules,
listing the Subsequent 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 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, the Noteholders or the Holders
of the Certificates;
(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Representative shall have delivered to the
Trustee and the Owner 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, the Owner Trustee and the Trustee, Opinions of
Counsel with respect to the transfer of the Subsequent Loans
substantially in the form of the Opinions of Counsel delivered to the
Trustee and the Owner Trustee on the Closing Date (bankruptcy,
corporate and tax opinions).
(c) The obligation of the Issuer to acquire a Subsequent Loan on any
Subsequent Transfer Date is subject to the requirement, as evidenced by a
certificate from a Responsible Officer of the Representative, that (i) such
Subsequent Loan conforms in all material respects to the representations and
warranties concerning the individual Initial Loans (including, if such
Subsequent Loan is an FHA Loan, the representations and warranties concerning
the FHA Loans) set forth in Sections 3.01 and 3.02 (except that any reference
therein to the Cut-Off Date shall be deemed a reference to the applicable
Subsequent Cut-Off Date), (ii) that the inclusion of all Subsequent Loans being
transferred to the Issuer on such Subsequent Transfer Date will not change, in
any material respect, the characteristics of the Initial Loans, in the
aggregate, set forth in Sections 3.01 and 3.02 (including without limitation the
representation set forth in Section 3.02(ddd)) or in the Prospectus Supplement
dated December 23, 1997 forming a part of the Registration Statement under the
headings "Summary of Terms - The Pool" and "The Loan Pool" and (iii) the
Subsequent Loans, in the aggregate, conform to the following standards: (w) the
weighted average Loan Interest Rate of the Subsequent Loans shall be no less
than 13.84% (x) the weighted average credit score of the Subsequent Loans shall
be no less than 5 points below the weighted average credit score of the Initial
Loans (y) no more than 20% of the Subsequent Loans are Unsecured Loans and (z)
no more than 10% of the Subsequent Loans are FHA Loans.
(d) In connection with the transfer and assignment of the Subsequent
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 during the Funding Period, 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,
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.
Section 2.08. OPTIONAL REPURCHASE OF DEFAULTED Loans.
The Servicer shall have the right, but not the obligation, to
repurchase any Defaulted Loan for a purchase price equal to the Principal
Balance of such Defaulted Loan as of the date of repurchase, plus 30 days'
interest on such Principal Balance, computed at the Adjusted Loan Interest Rate
as of the next succeeding Determination Date, plus any accrued unpaid Servicing
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. In no event shall the aggregate
Principal Balance of all Defaulted Loans purchased pursuant to this Section 2.08
exceed 10% of the Original Collateral Amount.
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, the Owner Trustee, the Noteholders
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 state where the laws of such
state require licensing or qualification in order to conduct business
of the type conducted by The Money Store Inc. and perform its
obligations hereunder; The Money Store Inc. has corporate power and
authority to execute and deliver this Agreement and each Subservicing
Agreement and to perform in accordance herewith and therewith; the
execution, delivery and performance of this Agreement and each
Subservicing Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement and each Subservicing Agreement)
by The Money Store Inc. and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary corporate action; this Agreement and each
Subservicing Agreement evidences the valid, binding and enforceable
obligation of The Money Store Inc.; 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 Loans by the Trust;
(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 Notes and 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 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 Issuer 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 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 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 contribution of the
Initial Loans, and will receive fair consideration and reasonably
equivalent value in exchange for the contribution of the Subsequent
Loans;
(xi) No Originator contributed any interest in any
Initial Loan, and no Originator will contribute any interest in any
Subsequent Loan, 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
contribution of the Loans to the Trust or the sale of the Notes or the
Certificates; and
(xiii) No Noteholder or Certificateholder is subject
to state licensing requirements solely by virtue of holding the Notes
or the Certificates.
(b) Each Originator hereby represents and warrants to the Noteholders,
the Certificateholders, the Trustee and the Owner 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 state where
the laws of such state require licensing or qualification in order to
conduct business of the type conducted by such Originator and perform
its obligations hereunder; such Originator has corporate power and
authority to execute and deliver this Agreement and the Subservicing
Agreement to which it is a party and to perform in accordance herewith
and therewith; the execution, delivery and performance of this
Agreement and the Subservicing Agreement to which it is a party
(including all instruments of transfer to be delivered pursuant to
this Agreement and the Subservicing Agreement to which it is a party)
by such Originator and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary corporate action; this Agreement and the Subservicing
Agreement to which it is a party evidences the valid, binding and
enforceable obligation of such Originator; 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 Loans by the Trust;
(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 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 Loans and does not omit to state a material fact necessary to make
the statements contained therein with respect to such Originator or
the 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 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 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 Loan File
by the Trustee (or, with respect to the Home Improvement Loans, the
Custodian on behalf of the Trustee) under this Agreement, the Trustee
will have good and marketable title to each Loan and such other items
comprising the corpus of the related Trust free and clear of any lien
(other than liens which will be simultaneously released or liens
contemplated by the Basic Documents);
(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 Notes and 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
Notes and the Mortgages by the Originators pursuant to this Agreement
are not or, with respect to the Subsequent 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 Note
and Mortgage relating to the Initial Loans have been, and the
origination and collection practices to be used by each Originator and
the primary servicer with respect to each Note and Mortgage relating
to the Subsequent Loans will be, in all material respects legal,
proper, prudent and customary in the second mortgage origination and
servicing business;
(xii) Each Initial Loan was selected, and each
Subsequent Loan will be selected, from among the existing loans in the
respective Originator's portfolio at the date hereof or, in the case
of the Subsequent Loans, at the related Subsequent Cut-off Date, in a
manner not designed to adversely affect the Noteholders and 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
Loans, will receive fair consideration and reasonably equivalent
value, in exchange for the contribution of the Loans;
(xv) Such Originator did not contribute or, in the
case of the Subsequent Loans, will not contribute, any interest in any
Loan 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
contribution of the Loans to the Trust or the sale of the Notes or the
Certificates;
(xvii) No Noteholder or Certificateholder is subject
to state licensing requirements solely by virtue of holding the Notes
or 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 Unsecured FHA-insured Title I loans in such Originator's
portfolio at the date hereof in a manner not designed to adversely
affect the Noteholders or 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 LOANS.
Each Originator hereby represents and warrants to the
Issuer, with respect to each Initial Loan, as of the Closing Date and, with
respect to each Subsequent Loan, as of the related Subsequent Transfer Date:
(a) The information with respect to each Loan set forth in the 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 Loans, on the related Subsequent Transfer Date, or as
otherwise provided in Section 2.04;
(c) [Reserved];
(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 not attached to a
foundation and does not constitute other than real property under state law;
(e) Each Initial Loan has been, and each Subsequent Loan will be,
originated by an Originator except as otherwise provided in clause (w) below, is
being, or with respect to the Subsequent Loans, will be, serviced by the
Servicer or one or more Subservicers and, with respect to each Initial Loan
originated by an Originator, there is, and with respect to each Subsequent
Mortgage Loan, there will be, only one originally executed Note not stamped as a
duplicate copy with respect to each such Loan;
(f) The Note with respect to each Initial Loan bears, and with respect
to each Subsequent Loan will bear, a fixed 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 if the related Obligor
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 Note relating to the 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 Note on or before its
maturity date;
(h) Each Mortgage is, with respect to the Initial Loans constituting
Mortgage Loans, and will be with respect to the Subsequent Loans constituting
Mortgage Loans, a valid and subsisting first or second lien of record on the
Mortgaged Property (except that the Mortgages relating to no more than 8% of the
Mortgage Loans measured by Principal Balances as of the Cut-Off Date may be more
junior liens) subject, in the case of any second or more junior Mortgage Loan,
only to any applicable Prior Liens on such Mortgaged Property and subject in all
cases to the exceptions to title set forth in the title insurance policy or the
other evidence of title enumerated in Section 2.04(d), with respect to the
related Mortgage Loan, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending activities, and
such other exceptions to which similar properties are commonly subject and which
do not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(i) Immediately prior to the transfer and assignment herein
contemplated, the Originator held good and indefeasible title to, and was the
sole owner of, each 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 Issuer will hold good and indefeasible title, to, and be the
sole owner of, each 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 Loan is more than 59 days
delinquent in payment and no Initial Loan has been delinquent more than 59 days.
As of the related Subsequent Cut-Off Date, no Subsequent Loan shall be more than
59 days delinquent. As of the Cut-Off Date, no more than 2% of the Initial Loans
(by principal balance) will be more than 30 days delinquent in payment. As of
each Subsequent Cut-Off Date, no more than 2% of the Subsequent Loans (by
principal balance) being transferred on the related Subsequent Transfer Date
will be more than 30 days delinquent in payment;
(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 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 Note or the Mortgage, or the exercise of any right
thereunder, render either the 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) [Reserved];
(n) Each Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording
laws;
(o) With respect to each Mortgage Loan with an original principal
balance greater than $15,000 other than any Mortgage Loan which was not
originated by an Originator and other than the FHA Loans, a lender's title
insurance policy, issued in standard American Land Title Association, California
Land Title Association, New York Board of Title Underwriters form, or other form
acceptable in a particular jurisdiction, by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, together with a condominium endorsement, if applicable, in an amount
at least equal to the original principal balance of such Mortgage Loan insuring
the mortgagee's interest under the related Mortgage Loan as the holder of a
valid first, second or more junior lien of record on the real property described
in the Mortgage, subject only to exceptions of the character referred to in
Section 3.02(h) above, or, with respect to any Mortgage Loan with an original
principal balance less than or equal to $15,000 or any Mortgage Loan which was
not originated by an Originator and other than the FHA Loans, some other
evidence of the status of title, or other evidence of title as enumerated in
Section 2.04(d), was effective on the date of the origination of such Mortgage
Loan, and, as of the Closing Date, such policy will be valid and thereafter such
policy shall continue in full force and effect;
(p) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage described in
Sections 4.07 and 4.08;
(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 4.07 and 4.08;
(r) Each Mortgage and 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 Loan had full legal capacity to execute all 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 in any insurance policies
applicable to the 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 Originator of any FHA Loan has the authority and power to
transfer to the Owner Trustee the FHA Reserve Amount relating to the FHA Loans;
(t) No more than 1% of the Principal Balances of the Loans were
originated to Obligors 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 Loan conforms, and all such Loans in the aggregate conform,
to the description thereof set forth in the Registration Statement;
(w) The Loans were originated or were purchased and re-underwritten,
by the Originators in accordance with the Representative's underwriting criteria
set forth in the Registration Statement;
(x) (i) Approximately 61% of the Initial Loans (measured by
outstanding principal balance as of the Cut-Off Date) were Mortgage Loans other
than Home Improvement Loans, (ii) approximately 5.5% and 29% of the Initial
Loans (measured by outstanding principal balance as of the Cut-Off Date) were
Secured FHA Loans and Secured Home Improvement Loans, respectively, and (iii)
approximately 1% and 11% of the Initial Loans (measured by outstanding principal
balance of the Cut-Off Date) were Unsecured FHA Loans and Unsecured Home
Improvement Loans, respectively;
(y) Except with respect to no more than approximately 1% of the
Mortgage Loans (measured by outstanding principal balance as of the Cut-Off
Date), each Mortgage Loan is secured by one-to four-family residences; and, when
measured by outstanding principal balance as of the Cut-Off Date, no more than
approximately 2% of the Mortgage Loans are secured by vacation homes, secondary
residences, or investment properties, no more than approximately 2% of the
Mortgage Loans are secured by individual units in Low-Rise Condominiums, no more
than approximately 2% of the Mortgage Loans are secured by Two-, Three- or
Four-Family Houses, and no more than approximately 1% of the Mortgage Loans are
secured by individual units of other types including High-Rise Condominiums and
Mixed-Use Buildings. No more than approximately 1% of the Mortgage Loans are
secured by manufactured homes. No Mortgage Loan is secured by a mobile home or
co-op;
(z) [Reserved];
(aa) The terms of the 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 Noteholders and which has been delivered to the Trustee or, with respect to
the Home Improvement Loans, the Custodian. The substance of any such alteration
or modification is reflected on the 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 Loan, and no Obligor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
primary mortgage guaranty insurer, if any, and which has been delivered to the
Trustee or, with respect to the Home Improvement Loans, the Custodian;
(cc) There are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been established
in an amount sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. The Servicer has not
advanced funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Obligor, directly or indirectly, for the payment of
any amount required by the Mortgage, except for interest accruing from the date
of the Note or date of disbursement of the Loan proceeds, whichever is greater,
to the day which precedes by one month the Due Date of the first installment of
principal and interest;
(dd) There is no proceeding pending or threatened for the total or
partial condemnation of the Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
(ee) Other than with respect to the FHA Loans, as to which no
representation is made, all of the improvements which were included for the
purpose of determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged Property unless
any such improvements are (except with respect to those Mortgage Loans with
original principal balances which were less than $15,000 or not originated by a
Originator) stated in the title insurance policy and affirmatively insured;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Obligor or the Obligor's credit standing that can be reasonably
expected to cause private institutional investors to regard the Loan as an
unacceptable investment, cause the Loan to become delinquent or adversely affect
the value or marketability of the Loan;
(gg) No improvement located on or being part of the Mortgaged Property
is in violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(hh) The proceeds of the 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 Loans were paid;
(ii) With respect to the Mortgage Loans, 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 Loan was, and no Subsequent 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 Obligor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Loan 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 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 Noteholders or the Certificateholders
to the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Obligor;
(oo) No Initial Loan has, and no Subsequent Loan will have, a shared
appreciation feature, or other contingent interest feature;
(pp) With respect to each 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;
(qq) With respect to each Mortgage Loan, either (i) no consent for the
Mortgage Loan is required by the holder of the related Prior Lien or (ii) such
consent has been obtained and is contained in the Loan File;
(rr) With respect to each Mortgage Loan that is not a first mortgage
loan, to the best of the Originator's knowledge, the related Prior Lien does not
provide for negative amortization;
(ss) With respect to each Mortgage Loan the maturity date of the
Mortgage Loan is prior to the maturity date of the related Prior Lien if such
Prior Lien provides for a balloon payment;
(tt) The Mortgaged Property is located in the state identified in the
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 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 (in the case of Mortgage Loans) or the state
wherein the Obligor resides (in the case of Unsecured Loans), 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 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, if
any, and the secured principal amount, as consolidated, bears a single interest
rate and single repayment term reflected on the Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Loan. The
Note does not permit or obligate the Servicer to make future advances to the
Obligor at the option of the Obligor;
(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 any Mortgage or 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 Note and the Mortgage, if any, had legal
capacity to execute the Note and the Mortgage, if any, and each Note and
Mortgage, if any, have been duly and properly executed by such parties;
(aaa) The Initial Loan was not, and the Subsequent Loan will not be,
selected for inclusion under this Agreement from its portfolio of comparable
loans, including, in the case of FHA Loans, comparable unsecured Title I loans,
on any basis which would have a material adverse effect on a Certificateholder
or Noteholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Loans have been deposited and all amounts received after the Subsequent
Cut-off Date with respect to the Subsequent Loans will be deposited into the
Principal and Interest Account and are, as of the Closing Date with respect to
the Initial Loans, in the Principal and Interest Account;
(ccc) Except for no more than 0.10% of the Loans (measured by
Principal Balance as of the Cut-Off Date), the proceeds of a Loan were not used
to facilitate the acquisition from an Originator of a mortgaged property that
was acquired by such Originator or any of its affiliates in foreclosure or by
deed in lieu of foreclosure;
(ddd) With respect to 55% or more of the Loans (measured by Principal
Balance as of the Cut-Off Date), either: (i) the Loan is not and has never been
secured by an interest in real property or any real estate mortgages, or (ii)
the Loan is secured by an interest in real property and/or real estate mortgages
and (x) the fair market value of the real property securing the Loan, after
reduction for the amount of any lien that is senior to the Loan and a
proportionate amount of any lien that is PARI PASSU with the Loan, was less than
80% of the amount of the Loan at the time the Loan was originated; (y) less than
66% of the net proceeds of the Loan were used to acquire, improve, or protect an
interest in real property that at the time of origination was the only security
for the Loan (disregarding any third party credit enhancements and loan
guarantees made by federal, state, local governments or agencies), and the
Originator has no knowledge or reason to believe that the net proceeds of the
Loan were used to refinance one or more loans the proceeds of which were used to
acquire, improve, or protect an interest in real property; and (z) the Loan has
not been modified significantly since its origination;
(eee) Approximately 17% of the Initial Loans (measured by outstanding
Principal Balance as of the Cut-Off Date), had a Debt-to-Income Ratio exceeding
45%. "Debt-to-Income Ratio" is that ratio, stated as a percentage, which results
from dividing an Obligor's monthly debt by his gross monthly income. With
respect to approximately 3.5% of the Initial Loans, no Debt-to-Income Ratio was
computed. "Monthly debt" includes (i) the monthly payment under the Prior Liens,
if any (which generally includes an escrow for real estate taxes), (ii) the
related Loan Monthly Payment, and (iii) other installment debt service payments,
including, in respect of revolving credit debt, the required monthly payment
thereon;
(fff) At the applicable dates of origination, each Loan had an
original term to maturity of no greater than 30 years;
(ggg) [Reserved];
(hhh) Except for not more than approximately 2% of the Initial Loans
that are adjustable rate loans, each Initial Loan bears, and each Subsequent
Mortgage 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,
a secured or unsecured 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 Co-Trustee's FHA Reserve Account within 180 days after the
Funding Period, and the Originators will give the Trustee, the Owner 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) All obligations of the seller or subcontractor under each Loan
have been completed in accordance with the terms of such 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 Loans after the
Closing Date. All improvements and other goods and services provided under each
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 Trustee's Loan File;
(ppp) To the best of Seller's knowledge, with respect to each Loan
that is a home improvement loan or retail installment sales contract for goods
or services, no Obligor has or will have a claim, counterclaim, right for
rescission, set-off or defense under any express or implied warranty or
otherwise with respect to goods or services provided under such Loan; and
(qqq) The Mortgage, if any, and the Note contain the entire agreement
of the parties and all obligations of the seller or subcontractor under the
related Loan, and no other agreement defines, modifies or expands the
obligations of the seller or subcontractor under the 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 Notes to the
Noteholders and the Certificates to the Certificateholders. Upon discovery by
the Representative, the Servicer, any Subservicer, the Custodian, the Trustee,
the Co-Trustee or upon a Responsible Officer of the Owner Trustee obtaining
actual knowledge of a breach of any of such representations and warranties which
materially and adversely affects the value of the Loans or the interest of the
Noteholders and the Certificateholders, or which materially and adversely
affects the interests of the Noteholders, or the Certificateholders in the
related Loan in the case of a representation and warranty relating to a
particular 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 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 Loan from
the Trust Account Property (in which case it shall become a Deleted Loan) and
substitute one or more Qualified Substitute Loans, provided such substitution is
effected not later than the date which is two years after the Closing Date or at
such later date, if the Trustee and the Owner Trustee receive an Opinion of
Counsel that such substitution would not result in a material adverse tax event
to the Noteholders or the Certificateholders.
As to any Deleted Loan for which the Representative substitutes a
Qualified Substitute Loan or Loans, the Servicer shall effect such substitution
by delivering to the Trustee (or, with respect to the Home Improvement Loans,
the Custodian) a certification in the form attached hereto as Exhibit G-1 or
Exhibit G-2, as applicable, executed by a Servicing Officer and the documents
constituting the Trustee's Loan File for such Qualified Substitute Loan or
Loans.
The Servicer shall deposit in the Principal and Interest Account all
payments received in connection with such Qualified Substitute Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Loans on or before the date of substitution will be
retained by the Representative on behalf of the related Originator. The Issuer
will own all payments received on the Deleted 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 Loan. The Servicer shall give written notice to the Trustee, the
Representative and the Owner Trustee that such substitution has taken place and
shall amend the applicable Loan Schedule to reflect the removal of such Deleted
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Loan. Upon such substitution, such Qualified Substitute 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 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 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 Issuer, the Trustee, the Co-Trustee, the Custodian, the
Noteholders, the Certificateholders, and the Owner Trustee in its individual
capacity 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 Loan and
to indemnify the Issuer, the Noteholders, the Certificateholders, the Trustee,
the Co-Trustee, the Custodian and the Owner Trustee in its individual capacity
as provided in Sections 2.05 and 3.03 constitute the sole remedies of the
Trustee, the Custodian, the Co-Trustee, the Noteholders and the Owner Trustee
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 Loan
upon (i) discovery of such breach by any party and notice thereof to the
Representative or notice thereof by the Representative to the Trustee (and, with
respect to the Home Improvement Loans, the Custodian), (ii) failure by the
Representative to cure such breach or purchase or substitute such Loan as
specified above, and (iii) demand upon the Representative by the Trustee (and,
with respect to the Home Improvement Loans, the Custodian) for all amounts
payable in respect of such Loan.
ARTICLE IV
ADMINISTRATION AND SERVICING OF LOANS
Section 4.01 DUTIES OF THE SERVICER.
(a) With respect to any Note released by the Trustee, Co-Trustee or
Custodian to the Servicer or to any Subservicer in accordance with the terms of
this Agreement, other than a release or satisfaction pursuant to Section 5.02,
prior to such release, the Trustee, Co-Trustee or Custodian shall (i) complete
all endorsements in blank so that the endorsement reads "Pay to the order of The
Bank of New York, as Trustee (or, with respect to the FHA Loans, "Pay to the
order of First Union Trust Company, National Association, as Co-Trustee") under
the Indenture dated as of November 30, 1997, Series 1997-II" and (ii) complete a
restrictive endorsement that reads "The Bank of New York is the holder of the
mortgage note for the benefit of the Noteholders and the Certificateholders
under the Indenture dated as of November 30, 1997, Series 1997-II" with respect
to those Notes (other than a Note relating to an FHA Loan) currently endorsed
"Pay to the order of holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the 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 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 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 Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Noteholders, the Certificateholders and the Owner Trustee for the
servicing and administering of the 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 Loans.
For purposes of this Agreement, the Servicer shall be deemed to have received
payments on 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 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, the Owner Trustee, the
Noteholders and the 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 4.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of a Servicer 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 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 Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Obligor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Noteholders or the Certificateholders; provided, however, that (unless the
Obligor is in default with respect to the Loan, or such default is, in the
judgment of the Servicer, imminent) the Servicer may not permit any modification
with respect to any Loan that would change the Loan Interest Rate, defer
(subject to Section 4.12), or forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Loan), or extend the
final maturity date on such Loan. No costs incurred by the Servicer or any
Subservicer in respect of Servicing Advances shall for the purposes of
distributions to the Noteholders or the Certificateholders be added to the
amount owing under the related Mortgage 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, each Noteholder 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 Loans and with respect to the Mortgaged Properties. If reasonably
required by the Servicer, the Owner 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 may grant a waiver or enter into a subordination
agreement with respect to the refinancing of the indebtedness secured by a Prior
Lien on the related Mortgaged Property, provided that, in the judgment of the
Servicer, the Obligor is in a better financial or cash flow position as a result
of such refinancing, which may include a reduction in the Obligor's scheduled
monthly payment on the indebtedness secured by such Prior Lien. The Servicer
shall notify the Issuer and the Trustee of any modification, waiver or amendment
of any provision of any Loan and the date thereof, and shall deliver to the
Trustee (or, with respect to the Home Improvement Loans, the Custodian) for
deposit in the related Trustee's Loan File, an original counterpart of the
agreement relating to such modification, waiver or amendment promptly following
the execution thereof.
The Servicer may, in a manner consistent with accepted servicing
practices, permit an Obligor who is selling his principal residence and
purchasing a new one to substitute the mortgaged property as collateral for the
related Mortgage Loan. In such circumstances, the Servicer acknowledges that it
intends to, consistent with its servicing practices, generally require such
Obligor to make a partial prepayment in reduction of the principal balance of
the Mortgage Loan to the extent that such Obligor has received proceeds from the
sale of the prior residence that will not be applied to the purchase of the new
residence.
The Servicer, in servicing and administering the 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 servicing practices (or, in the case of FHA
Loans, in accordance with accepted Title I servicing practices) of prudent
lending institutions and giving due consideration to the Noteholders' and
Certificateholders' reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 9.04, after
receipt of the Opinion of Counsel required pursuant to Section 9.04, the Trustee
or its designee shall assume all of the rights and obligations of the Servicer,
subject to Section 10.02 hereof. The Servicer shall, upon request of the Trustee
but at the expense of the Servicer, deliver to the Trustee (or, with respect to
the Home Improvement Loans, the Custodian) all documents and records (including
computer tapes and diskettes) relating to the Loans and an accounting of amounts
collected and held by the Servicer and otherwise use its best efforts to effect
the orderly and efficient transfer of servicing rights and obligations to the
assuming party.
(h) In the event that any tax is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the Holders of the GP
Interest.
(i) In addition to the duties of the Servicer set forth above, the
Servicer shall perform such calculations and shall prepare or shall cause the
preparation by other appropriate persons of, and shall execute on behalf of the
Trust or the Owner Trustee, all such documents, reports, filings, instruments,
certificates and opinions that it shall be the duty of the Trust or the Owner
Trustee to prepare, file or deliver pursuant to the Basic Documents, and at the
request of the Owner Trustee shall take all appropriate action that it is the
duty of the Trust or the Owner Trustee to take pursuant to the Basic Documents.
In furtherance thereof, the Owner Trustee shall, on behalf of itself and of the
Trust, execute and deliver to the Servicer and to each successor Servicer
appointed pursuant to the terms hereof, one or more powers of attorney
substantially in the form of Exhibit P hereto, appointing the Servicer the
attorney-in-fact of the Owner Trustee and the Trust for the purpose of
executing on behalf of the Owner Trustee and the Trust all such documents,
reports, filings, instruments, certificates and opinions. In accordance with the
directions of the Owner Trustee, the Servicer shall administer, perform or
supervise the performance of such other activities in connection with the Loans
(including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Owner Trustee and are
reasonably within the capability of the Servicer.
Section 4.02 LIQUIDATION OF LOANS.
In the event that any payment due under any Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Obligor fails to perform any other covenant or obligation under
the 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 Noteholders and the Certificateholders. The Servicer shall foreclose upon or
otherwise comparably effect the ownership in the name of the Trustee for the
benefit of the Noteholders and the Certificateholders, as the case may be, of
Mortgaged Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of delinquent payments in
accordance with the provisions of Section 4.10. 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 Loan has become a Liquidated Loan, the Servicer shall promptly
prepare and forward to the Trustee and the Owner Trustee, a Liquidation Report,
in the form attached hereto as Exhibit K , detailing the Liquidation Proceeds
received from the Liquidated Loan, expenses incurred with respect thereto, and
any Realized Loss incurred in connection therewith.
Section 4.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS;
DEPOSITS IN PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall cause to be established and maintained one or
more Principal and Interest Accounts, 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 Residential Asset Backed
Certificates and Asset Backed Notes, Series 1997-II, 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 B hereto.
A copy of such letter agreement shall be furnished to the Trustee and
the Owner Trustee.
(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 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 Loans;
(iii) all Net Liquidation Proceeds received with
respect to the Loans;
(iv) all Insurance Proceeds received with respect to
the Loans (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property, or to be released to the
Obligor in accordance with customary servicing procedures);
(v) all Released Mortgaged Property Proceeds
received with respect to the Loans;
(vi) any amounts paid in connection with the
purchase of any Loan, and the amount of any Substitution Adjustment
received with respect to the Loans paid, pursuant to Sections 2.05,
2.08 and 3.03;
(vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section 4.04, 4.08, 4.10,
4.15(c) or 11.01; and
(viii) the amount of any credit life insurance
premium refund which is not due to the related Obligor.
Also, for each Loan delivered on the Closing Date
that was originated after November 30, 1997, the Servicer shall
deposit in the Principal and Interest Account 30 days' interest on the
original principal balance of such Loan calculated at the applicable
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 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 5.01 and 5.03, 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 Principal and Interest Account
by the Servicer immediately following its monthly remittance of the 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 4.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNT.
The Servicer shall withdraw funds from the Principal and Interest
Account for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date
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 Note Distribution Account. For the purposes of this Section
4.04(a), the calculation of the Available Remittance Amounts shall be made
without reference to the actual deposit of funds in the Note Distribution
Account;
(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 Obligor or otherwise
relating to the 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 Loans generally, including Liquidation Proceeds, Released
Mortgaged Property Proceeds and Insurance Proceeds and any other amounts which
would otherwise be distributed to the holder of the GP Interest; PROVIDED,
HOWEVER, that the Servicer's right to such reimbursement pursuant hereto shall
be subordinate to the rights of the Noteholders and Certificateholders;
(c) to withdraw any amount received from an Obligor 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 4.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein or were deposited therein
in error;
(f) (i) to pay itself servicing compensation pursuant to Section 5.03
hereof;
(g) to withdraw amounts required to be deposited into the Servicing
Account pursuant to Section 7.11(b); and
(h) to clear and terminate each Principal and Interest Account upon
the termination of this Agreement and to pay any amounts remaining therein in
accordance with Section 11.01.
So long as no Servicer 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 4.03(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 Residential Asset Backed
Notes and Certificates, Series 1997-II." 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 4.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan which is a first Mortgage Loan, or
as to which the Servicer has advanced the outstanding principal balance of any
Prior Lien pursuant to Section 4.14 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 Obligor
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 Obligor at the time they first
become due. Notwithstanding anything contained herein to the contrary, the
Servicer may choose not to make the payments described above on a timely basis,
provided that collections on the related Mortgage Loan that are required to be
remitted to the Trust would not be reduced, as a result of such failure to
timely pay, from the amount that would otherwise be remitted to the Trust;
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
in any Mortgaged Property.
Section 4.06 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 4.07 MAINTENANCE OF HAZARD INSURANCE.
With respect to each Mortgage Loan, the Servicer shall cause to be
maintained, subject to the provisions of Section 4.08 hereof, fire and hazard
insurance with extended coverage customary in the area where the related
Mortgaged Property is located, in an amount which is at least equal to the least
of (a) the outstanding principal balance owing on the Mortgage Loan and any
Prior Lien, (b) the full insurable value of the premises securing the Mortgage
Loan and (c) the minimum amount required to compensate for damage or loss on a
replacement cost basis. If the Mortgaged Property is in an area identified in
the Federal Register by the Flood Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) the Servicer
will cause to be purchased a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan and any Prior Lien,
(ii) the full insurable value of the Mortgaged Property, or (iii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended. The Servicer shall also maintain, to the extent such insurance is
available, on REO Property, fire and hazard insurance in the amounts described
above, liability insurance and, to the extent required and available under the
National Flood Insurance Act of 1968, as amended, flood insurance in an amount
equal to that required above. Any amounts collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair of
the Mortgaged Property, or to be released to the Obligor in accordance with
customary servicing procedures) shall be deposited in the Principal and Interest
Account, subject to withdrawal pursuant to Section 4.04. It is understood and
agreed that no earthquake or other additional insurance need be required by the
Servicer of any Obligor 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 4.08 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against fire and hazards of extended coverage on all of the
Mortgage Loans, then, to the extent such policy names the Trustee on behalf of
the Noteholders and the Certificateholders as loss payee and provides coverage
in an amount equal to the aggregate unpaid principal balance on the Mortgage
Loans without co-insurance, and otherwise complies with the requirements of
Section 4.07, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
4.07, 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 4.07, 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 4.07 and the
amount paid under such blanket policy. Upon the request of the Owner Trustee or
the Trustee, the Servicer shall cause to be delivered to the Owner Trustee or
the Trustee, as the case may be, a certified true copy of such policy. The
current issuer of such policy is Lloyds of London.
Section 4.09 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 Loans
("Servicer Employees"). The fidelity bond shall insure the Owner Trustee, the
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 4.09 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 Owner Trustee or the Trustee, the Servicer
shall cause to be delivered to the Owner Trustee or the Trustee 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 4.10 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 Trust for the benefit of
the Noteholders and the Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders and 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 Noteholders and the Certificateholders.
The Servicer shall cause to be deposited in the 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 Noteholders and the 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 4.04, 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 Noteholders
and the Certificateholders, in accordance with Section 7.05 hereof.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel 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 the Issuer.
Section 4.11 [RESERVED]
Section 4.12 COLLECTION OF CERTAIN LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the 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 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 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 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 4.04(b) hereof.
Section 4.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE LOANS.
The Servicer shall provide to the Trustee, the Owner Trustee, the
Co-Trustee, and the Custodian access to the documentation regarding the 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 4.14 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 Trust'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. With respect to each Mortgage Loan, the Servicer must also notify
any superior lienholder in writing of the existence of the Mortgage Loan and
request notification of any action (as described below) to be taken against the
Obligor 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 Issuer, whatever actions are necessary to protect the interests of
the related Noteholders and the Certificateholders, and/or to preserve the
security of the related Mortgage Loan. The Servicer shall immediately notify the
Owner 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 Noteholders and the Certificateholders.
The Servicer shall thereafter take such action as is necessary to recover the
amount so advanced.
Section 4.15 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 FHA 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 FHA Loan. If the Claims Administrator
determines to file such a Claim, the Claims Administrator will notify the
Trustee and the Custodian no later than the Determination Date following such
determination by an Officer's Certificate in the form of Exhibit G-1 hereto and
shall request delivery of the related Trustee's Loan 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 Loan
File and the 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 Trustee. Within 120 days of its receipt of the related
Trustee's Loan 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 FHA Loan or, if the Claims Administrator determines not to file such
a Claim, return to the Custodian the related Trustee's Loan File.
(c) With respect to any 90 Day Delinquent FHA 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 4.04(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 FHA Loan; and (iii) any principal and interest
payments received with respect to a 90 Day Delinquent FHA 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 Loan File
is returned to the Custodian (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 FHA 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 FHA Loan, the Custodian 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 FHA
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).
ARTICLE V
GENERAL SERVICING PROCEDURE
Section 5.01 ASSUMPTION AGREEMENTS.
Subject to the provisions of the last paragraph of this Section 5.01,
when a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law or if such enforcement would
materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. In such event, the Servicer shall
enter into an assumption and modification agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Note and, unless prohibited by applicable law or the
Mortgage, the Obligor remains liable thereon. The Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original Obligor is released from liability and such person is
substituted as Obligor and becomes liable under the Note. The Servicer shall
notify the Trustee (and, with respect to the Home Improvement Loans, the
Custodian) that any such substitution or assumption agreement has been completed
by forwarding to the Trustee (and, with respect to the Home Improvement Loans,
the Custodian) the original of such substitution or assumption agreement, which
original shall be added by the Trustee (and, with respect to the Home
Improvement Loans, the Custodian) to the related Trustee's Loan File and shall,
for all purposes, be considered a part of such Trustee's Loan 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 5.01, the Servicer shall not change the 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 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
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. Further, the Servicer may, in a manner
consistent with its servicing practices, permit an Obligor who is selling his
principal residence and purchasing a new residence to substitute the new
mortgaged property as collateral for the related Mortgage Loan. In such
circumstances, the Servicer acknowledges that it intends to, consistent with its
servicing practices, generally require such Obligor to make a partial prepayment
in reduction of the principal balance of the Mortgage Loan to the extent that
such Obligor has received proceeds from the sale of the prior residence that
will not be applied to the purchase of the new residence.
Section 5.02 SATISFACTION OF MORTGAGES AND RELEASE OF LOAN 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 Noteholders or the
Certificateholders may have under the mortgage instruments, subject to Section
4.01 hereof. The Servicer shall maintain the Fidelity Bond as provided for in
Section 4.09 insuring the Servicer against any loss it may sustain with respect
to any Loan not satisfied in accordance with the procedures set forth herein.
Upon the payment in full of any Loan, or the receipt by the Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Servicer will immediately notify the Trustee or
Co-Trustee, as applicable (and, with respect to the Home Improvement Loans, the
Custodian), by an Officers' Certificate in the form of Exhibit G-1 or Exhibit
G-2 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 4.03 have been or will be so deposited) of a Servicing
Officer and shall request delivery to it of the Trustee's Loan File. Upon
receipt of such certification and request, the Trustee or Co-Trustee, as
applicable (and, with respect to the Home Improvement Loans, the Custodian)
shall promptly release the related Trustee's Loan File to the Servicer. The
Servicer shall prepare all required documents required to evidence such release
and the Trustee (or with respect to the Home Improvement Loans, the Custodian)
shall execute and deliver such documentation to the Servicer, but only to the
extent that the Servicer is unable to record such release acting solely in its
capacity as 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 any other Accounts.
From time to time and as appropriate for the servicing or foreclosure
of any Loan, including, for this purpose, collection under any primary mortgage
guaranty insurance policy, the Trustee (and, with respect to the Home
Improvement Loans, the Custodian) shall, upon request of the Servicer and
delivery to the Trustee (and, with respect to the Home Improvement Loans, the
Custodian) of a certification in the form of Exhibit G-1 or Exhibit G-2 attached
hereto signed by a Servicing Officer, release the related Trustee's Loan File to
the Servicer, and the Trustee (or, with respect to the Home Improvement Loans,
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 Loan File to the Trustee (or, with respect to the Home
Improvement Loans, the Custodian) when the need therefor by the Servicer no
longer exists, unless the Loan has been liquidated and the Liquidation Proceeds
relating to the Home Improvement Loan have been deposited in the Principal and
Interest Account or the Loan File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Trustee (and, with respect to the Home
Improvement Loans, the Custodian) a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Loan 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 Loan was
liquidated, the servicing receipt shall be released by the Trustee (or, with
respect to the Home Improvement Loans, the Custodian) to the Servicer.
The Trustee (or, with respect to the Home Improvement Loans, the
Custodian) 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 Obligor on the Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Note or Mortgage or otherwise available at law or in equity. Together with such
documents or pleadings, the Servicer shall deliver to the Trustee (or, with
respect to the Home Improvement Loans, the Custodian) a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
Trustee (or with respect to the Home Improvement Loans, the Custodian) and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee (or, with respect to the Home
Improvement Loans, the Custodian) will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale. The Trustee (or, with respect to the Home
Improvement Loans, the Custodian) shall, upon receipt of a written request from
a Servicing Officer, execute any document provided to the Trustee (or, with
respect to the Home Improvement Loans, the Custodian) by the Servicer or take
any other action requested in such request, that is, in the opinion of the
Servicer as evidenced by such request, required by any state or other
jurisdiction to discharge the lien of a Mortgage upon the satisfaction thereof
and the Trustee (or with respect to the Home Improvement Loans, the Custodian)
will sign and post, but will not guarantee receipt of, any such documents to the
Servicer, or such other party as the Servicer may direct, within five Business
Days of the Trustee's (or with respect to the Home Improvement Loans, the
Custodian's) receipt of such certificate or documents. Such certificate or
documents shall establish to the Trustee's (or with respect to the Home
Improvement Loans, the Custodian's) satisfaction that the related Loan has been
paid in full by or on behalf of the Obligor and that such payment has been
deposited in the Principal and Interest Account.
Section 5.03 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 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, and late payment charges shall be retained by or remitted to the
Servicer to the extent not required to be remitted to the Trustee for deposit in
the applicable 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 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 Principal and Interest
Account or to retain from interest payments on the Loans the successor
Servicer's Contingency Fee.
Section 5.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Owner Trustee, the Trustee and each
of the Rating Agencies, on or before March 31 of each year beginning March 31,
1999, an Officers' Certificate stating that (i) the Servicer has fully complied
with the provisions of Articles IV and V and the Claims Administrator has fully
complied with Section 4.15, (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 5.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year beginning March 31, 1999, 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 Owner
Trustee, the 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 5.06 TRUSTEE'S, CO-TRUSTEE'S AND OWNER TRUSTEE'S RIGHT TO
EXAMINE SERVICER RECORDS AND AUDIT OPERATIONS.
The Trustee, Co-Trustee and the Owner 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.
Section 5.07 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 4.03, the aggregate of
withdrawals from the Principal and Interest Account for each category of
withdrawal specified in Section 4.04, the aggregate amount of permitted
withdrawals not made in the related Due Period, and the amount of any Monthly
Advances or payments of Compensating Interest, in each case, for the related Due
Period.
ARTICLE VI
REPORTS TO BE PROVIDED BY SERVICER
Section 6.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Notes and the Certificates, Noteholders and the Certificateholders may request
that the Servicer make available to prospective Noteholders and the
Certificateholders annual audited financial statements of the Servicer for one
or more of the most recently completed five fiscal years for which such
statements are available, which request shall not be unreasonably denied.
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 7.01 NOTE DISTRIBUTION ACCOUNT.
(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 Residential Trust Note Distribution Account
1997-II," (the "Note Distribution Account"). The Trustee shall, promptly upon
receipt, deposit in the Note Distribution 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 Loan Remittance
Rates remitted to the Trustee by the Servicer;
(iii) [Reserved]; and
(iv) amounts required to be paid by the Servicer
pursuant to Section 7.08(e) in connection with losses on investments
of amounts in the Note Distribution Account.
(b) Amounts on deposit in the Note Distribution 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 7.03(a)(i);
(iii) by the Trustee, or the Paying Agent on its
behalf, to effect the applicable distributions described in Section
7.05(d);
and also, in no particular order of priority:
(iv) by the Trustee, to invest amounts on deposit in
the Note Distribution Account in Permitted Instruments pursuant to
Section 7.08;
(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 Note Distribution Account or deposited
therein in error; and
(vii) by the Trustee, to clear and terminate the
Note Distribution Account upon the termination of the Trust in
accordance with the terms of Section 11.01 hereof.
Section 7.02 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 "The Money Store Residential Trust
Pre-Funding Account 1997-II" (the "Pre-Funding Account"). The Trustee shall,
promptly upon receipt, deposit into the Pre-Funding Account and retain therein
the Original Pre-Funded Amount from the proceeds of the sale of the Notes.
(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 Loans (or, with
respect to the Low Interest Mortgage Loans, if any, an amount equal to the
product of the percentage set forth on Exhibit O attached hereto determined by
referring to the columns entitled "Coupon" and "Remaining Term" and the
aggregate Principal Balances of such Subsequent Loans) sold to the Issuer 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 Loans an amount in excess of the
Original Pre-Funded Amount.
(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 Note Distribution Account any Pre-Funded Amount then remaining in the
Pre-Funding Account.
(d) On the Remittance Dates occurring during the Funding Period, the
Trustee shall transfer from the Pre-Funding Account to the Note Distribution
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 "The Money Store Residential Trust
Capitalized Interest Account 1997-II" (the "Capitalized Interest Account"). The
Trustee shall, promptly upon receipt, deposit into the Capitalized Interest
Account $0. 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 holder of the GP Interest the amount set forth in such written
notification.
(f) On the Remittance Dates occurring during the Funding Period, the
Trustee shall transfer from the Capitalized Interest Account to the Note
Distribution Account the Capitalized Interest Requirement, if any, for such
Remittance Dates. Any amount remaining in the Capitalized Interest Account on
the Remittance Date immediately succeeding the last subsequent Transfer Date
shall be remitted to the holder of the GP Interest, and the Capitalized Interest
Account shall be closed.
Section 7.03 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 "The Money Store Residential Trust FHA Premium Account 1997-II"
(the "FHA Premium Account"). The FHA Premium Account shall not be available for
payment of Notes or 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 7.07 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 4.01 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 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 7.07, 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) 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 hereof.
Section 7.04 EXPENSE 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 "The Money Store Residential Trust Expense Account
1997-II" (the "Expense Account"). The Trustee shall deposit into the applicable
Expense Account:
(i) on each Remittance Date from the amounts on
deposit in the Note Distribution Account an amount equal to
one-twelfth of that portion of the Annual Expense Escrow Amount
relating to the Loans, subject to the provisions of Section 7.05(d);
and
(ii) upon receipt, amounts required to be paid by
the Servicer pursuant to Section 7.08(e) in connection with losses on
investments of amounts in the 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, the
Co-Trustee and the Owner Trustee then due, 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.
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, the Co-Trustee
or the Owner Trustee, as the case may be, pursuant to Section 7.05(d)(i), to the
extent of available funds in the Note Distribution Account.
(b) The Trustee may invest amounts on deposit in the Expense Account
in Permitted Instruments pursuant to Section 7.08 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee's, Co-Trustee's and Owner
Trustee's fees and expenses as described in Section 2.06 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 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 7.05 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS.
(a) The rights of the Noteholders and Certificateholders to receive
distributions from the proceeds of the Trust, and all ownership interests of the
Noteholders and Certificateholders in such distributions, shall be as set forth
in this Agreement and the Trust Agreement. In this regard, all rights of the
Certificateholders to receive distributions in respect of the Certificates, and
all ownership interests of the Certificateholders in and to such distributions,
shall be subject and subordinate to the preferential rights of the Noteholders
to receive distributions in respect of the Notes, as described herein. In
accordance with the foregoing, the ownership interests of the Certificateholders
in amounts deposited in the 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 Certificates in accordance with the terms of this Agreement
and the Trust Agreement. Notwithstanding anything contained in this Agreement to
the contrary, the Certificateholders shall not be required to refund any amount
properly distributed on the Certificates.
(b) [Reserved].
(c) [Reserved].
(d) On each Remittance Date, the Trustee shall withdraw from the Note
Distribution Account the portion of the Available Remittance Amount, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 4.04(f) and net of amounts deposited into the FHA Premium
Account pursuant to Section 7.01(b)(ii), and make distributions thereof in the
following order of priority (based solely upon information provided by the
Servicer):
(i) to the Expense Account, an amount equal to
one-twelfth of the Annual Expense Escrow Amount with respect to the
Loans, plus any amount required to be paid to the Trustee, the
Co-Trustee and the Owner Trustee pursuant to Section 7.04(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 Class A-1, Class A-2,
Class A-3 and Class A-4 Notes, pro rata to each Class of Class A Notes
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 Notes to the Class M-1
Noteholders; and
(B) the Current Interest Distribution
Requirement applicable to the Class M-2 Notes to the Class M-2
Noteholders;
(iv) after payment of the amounts specified in
clauses (i), (ii) and (iii) above, to pay the Current Interest
Distribution Requirement to the Class B Noteholders;
(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 Noteholders, the
Class A-2 Noteholders, the Class A-3 Noteholders and the Class A-4
Noteholders, in that order of priority, but in no event will any Class
of Class A Notes be paid more than is necessary to reduce the Class
Principal Balance of such Class to zero; PROVIDED, HOWEVER, that on
each Remittance Date on and after the Remittance Date on which the
Class Principal Balances of the Class M and Class B Notes have been
reduced to zero, amounts paid to the Class A Noteholders pursuant to
this clause (v) shall be paid pro rata to each Class of Class A Notes
based upon the Class Principal Balance of each such Class of Class A
Notes;
(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 Notes, but in no
event more than is necessary to reduce the Class Principal Balance of
the Class M-1 Notes 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 Notes, but in no
event more than is necessary to reduce the Class Principal Balance of
the Class M-2 Notes to zero;
(viii) after payment of the amounts specified in
clauses (i) through (vii) above, to pay the Class B Principal
Distribution Amount to the Holders of the Class B Notes, but in no
event more than is necessary to reduce the Class Principal Balance of
the Class B Notes to zero;
(ix) after payment of the amounts specified in
clauses (i) through (viii) above, to pay any Interest Shortfall
Carryforward Amounts applicable to the Class A Notes concurrently to
the Holders of the Class A-1, Class A-2, Class A-3 and Class A-4
Notes, pro rata to each Class of Class A Notes in accordance with
their respective Interest Shortfall Carryforward Amounts.
(x) after payment of the amounts specified in
clauses (i) through (ix) above, to pay the Interest Shortfall
Carryforward Amounts applicable to the Class M-1 Notes to the Holders
of the Class M-1 Notes;
(xi) after payment of the amounts specified in
clauses (i) through (x) above, to pay the Class M-1 Realized Loss
Amount to the Holders of the Class M-1 Notes;
(xii) after payment of the amounts specified in
clauses (i) through (xi) above, to pay the Interest Shortfall
Carryforward Amounts applicable to the Class M-2 Notes to the Holders
of the Class M-2 Notes;
(xiii) after payment of the amounts specified in
clauses (i) through (xii) above, to pay the Class M-2 Realized Loss
Amount to the Holders of the Class M-2 Notes;
(xiv) after payment of the amounts specified in
clauses (i) through (xiii) above, to pay the Interest Shortfall
Carryforward Amounts applicable to the Class B Notes to the Holders of
the Class B Notes;
(xv) after payment of the amounts specified in
clauses (i) through (xiv) above, to pay the Class B Realized Loss
Amount to the Holders of the Class B Notes;
(xvi) after payment of the amounts specified in
clauses (i) through (xv) 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; and
(xvii) after payment of the amounts specified in
clauses (i) through (xvi) above, then to the Owner Trustee (or the
Paying Agent under the Trust Agreement on its behalf) for deposit in
the Certificate Distribution Account, the Certificate Remittance
Amount.
(e) All distributions made to the Noteholders on each Remittance Date
will be made on a pro rata basis among the Noteholders of the respective Class
of record on the next preceding Record Date based on the Percentage Interest
represented by their respective Notes, and shall, except for the final payment
on such Notes, be made by wire transfer of immediately available funds to the
account of such Noteholder as shall appear on the Note Register without the
presentation or surrender of the Note or the making of any notation thereon, at
a bank or other entity having appropriate facilities therefor, at the expense of
each such Noteholder unless such Noteholder shall own of record Notes 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 7.06 AVAILABLE MAXIMUM SUBORDINATION AMOUNT; ALLOCATION OF
REALIZED LOSSES .
On and after the Remittance Date on which the Available Maximum
Subordination Amount has been reduced to zero, (i) no further Interest Shortfall
Carryforward Amounts or Class M-1, Class M-2 or Class B Unpaid Realized Loss
Amounts shall be carried forward to succeeding Remittance Dates or be created as
a result of shortfalls in the Available Remittance Amount, and (ii) interest
shall cease to accrue on all Interest Shortfall Carryforward Amounts remaining
outstanding at the time the Available Maximum Subordination Amount became zero.
If on any Remittance Date, after taking into account all Realized
Losses experienced during the prior Due Period and after taking into account the
distribution of principal (including the Accelerated Principal Distribution
Amount) with respect to the Notes on such Remittance Date, the aggregate Class
Principal Balance of the Notes exceeds the aggregate Principal Balance of the
Loans as of the end of the related Due Period and the Pre-Funded Amount, then
the Class Principal Balance of the Subordinated Notes will be reduced (in
effect, "written down") such that the level of the Spread Amount is zero, rather
than negative. The resulting Applied Realized Loss Amount will be applied as a
reduction in the Class Principal Balance of the related Subordinated Notes in
reverse order of seniority, I.E., first against the Class B Class Principal
Balance until it is reduced to zero, then against the Class M-2 Class Principal
Balance until it is reduced to zero and then against the Class M-l Class
Principal Balance until it is reduced to zero. In no event shall the Class
Principal Balance of any Class A Note be written down as a result of applying
Realized Losses.
Once the Class Principal Balance of a Class of Subordinated Notes has
been "written down," the amount of such write down will no longer bear interest,
nor will such amount thereafter be "reinstated" or "written up," although the
amount of such write down may, on future Remittance Dates, be paid to Holders of
the Subordinated Notes which experienced the write down, in direct order of
seniority as distributions on account of the related Class M-1, Class M-2 or
Class B Realized Loss Amounts.
Section 7.07 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 Noteholders, and the Owner Trustee 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 M (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, 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 Notes 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 Notes;
(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
Notes;
(iv) the Interest Shortfall Carryforward Amounts and
Realized Loss Amounts for the related Remittance Date (by Class and in
the aggregate);
(v) the Available Maximum Subordination Amount for
the related Remittance Date;
(vi) the number and Principal Balances of all 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 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 Note Distribution Account pursuant to Section
7.01(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 L;
(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;
(xiv) the Reimbursable Amounts and the GP Remittance
Amount payable with respect to the Remittance Date;
(xv) the Class Principal Balance for each Class of
Class A, Class M and Class B Notes and the Pool Balance after giving
effect to the distribution to be made on the Remittance Date and after
allocation of the Applied Realized Loss Amount made on such Remittance
Date;
(xvi) the calculation of the Trigger Event,
including the various components thereof;
(xvii) the Cumulative Realized Losses, with respect
to the Remittance Date;
(xviii) the amount, if any, by which the applicable
Formula Distribution Amount exceeds the applicable Class Distribution
Amount for such Remittance Date;
(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 4.04(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 Loan Interest Rate and
the weighted average Class Adjusted Loan Remittance Rates, in each
case for the related Remittance Date, and the weighted average Loan
Interest Rate for the prior three month period;
(xxiii) [Reserved];
(xxiv) the Spread Amount and the Specified
Subordinated Amount for such Remittance Date;
(xxv) the amount of any Applied Realized Loss
Amount, Realized Loss Amount and Unpaid Realized Loss Amount for each
Class as of the close of such Remittance Date;
(xxvi) the Accelerated Principal Distribution Amount
for such Remittance Date;
(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 7.03(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 Noteholders or
Certificateholders may reasonably require.
The Trustee shall forward such report to the Noteholders and the Owner
Trustee on the Remittance Date, together with a separate report indicating the
amount of funds deposited in the Note Distribution Account pursuant to Section
7.01(a)(iv); and the amounts which are reimbursable to the Servicer or the
Representative, as appropriate, pursuant to Sections 7.04(c)(i), 7.04(c)(ii) and
7.05(d)(xvii) (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 Note
per $1,000 original dollar amount as of the Cut-Off 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
Noteholder 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 Noteholder. 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, the Trustee shall forward to the Owner
Trustee, for distribution to the Holder of the GP Interest, a copy of the report
forwarded to the Noteholder in respect of such Remittance Date and a statement
setting forth the amounts actually distributed to the Holder of the GP Interest,
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, with a copy to the Owner
Trustee for distribution to each Person who at any time during the calendar year
was a Holder of the GP Interest 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 Holder of the GP Interest. 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 Noteholder which is a savings and
loan association, bank or insurance company certain reports and access to
information and documentation regarding the Loans sufficient to permit such
Class A, Class M and Class B Noteholder 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 Notes.
(e) The Servicer shall furnish to each Noteholder, 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 Noteholder, 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 Noteholder
may reasonably require; provided, that the Servicer shall be entitled to be
reimbursed by such Noteholder 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 7.08. INVESTMENT OF ACCOUNTS.
(a) So long as no default or Servicer 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
Note Distribution 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 Note
Distribution 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 the provisions of the Indenture, 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 7.09 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 Note Distribution Account
an amount (as indicated in the Servicer's Certificate prepared pursuant to
Section 7.07), to be distributed on the related Remittance Date pursuant to
Section 7.05, equal to the amount, if any, by which (a) the amount equal to 30
days' interest at the weighted average Class Adjusted Loan Remittance Rate on
the Pool 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 Loans (and, with respect to the Remittance Dates during the
Funding Period, the sum of (i) all funds to be transferred to the Note
Distribution Account from the Capitalized Interest Account for such Remittance
Date 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 4.04.
Notwithstanding anything herein to the contrary, no Monthly Advance
shall be required to be made if the Servicer determines that such Monthly
Advance would, if made, constitute a Nonrecoverable Advance.
Section 7.10 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest
for each Loan for any month during which a Principal Prepayment or Curtailment
is received on such Loan. Not later than the close of business on each
Determination Date, with respect to each 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 Note Distribution 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 7.07) equal to the difference between (a) 30 days' interest at the then
weighted average Class Adjusted Loan Remittance Rate on the Principal Balance of
each such Loan and (b) the amount of interest actually received on each such
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 7.11 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 Obligors for the payment of taxes, assessments, insurance
premiums, or comparable items as agent of the Obligors.
(b) The Deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Servicer or a Subservicer acting on its
own behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Instruments 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 7.12 NET DEPOSITS. As an administrative convenience, unless
the Servicer is required to remit collections within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of
collections on the Loans for or with respect to the Due Period net of
distributions to be made to the Servicer with respect to the Due Period. The
Servicer, however, will account to the Owner Trustee, the Trustee, the
Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
ARTICLE VIII
[RESERVED]
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the Co-
Trustee, the Owner Trustee, the Custodian, and each Noteholder and
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Co-Trustee, the Owner Trustee, the Custodian,
and any Noteholder and Certificateholder may sustain in any way related to the
failure of the Servicer and the Claims Administrator to perform its duties and
service the Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Trustee, the Co-Trustee, the Owner Trustee, the
Custodian, and each Noteholder and Certificateholder if a claim is made by a
third party with respect to this Agreement, and the Servicer shall assume (with
the consent of the Trustee) the defense of any such claim and pay all expenses
in connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Claims Administrator, the Trustee, the Co-Trustee, the Owner
Trustee, the Custodian, and/or Noteholder or Certificateholder in respect of
such claim. The Trustee may reimburse the Servicer from amounts otherwise
payable to the Holder of the GP Interest for all amounts advanced by it pursuant
to the preceding sentence except when the Claim relates directly to the failure
of the Servicer or the Claims Administrator to service and administer the Loans
in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Co-Trustee, the Owner Trustee, the Custodian, and each Noteholder and
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Co-Trustee, the Owner Trustee, the Custodian,
and any Noteholder or 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 Noteholders and the
Certificateholders. The Representative shall immediately notify the Trustee, the
Co-Trustee, the Owner Trustee, the Custodian, and each Noteholder and
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, the Owner Trustee, the Custodian,
and/or Noteholder or Certificateholder in respect of such claim. The Trustee may
reimburse the Representative from amounts otherwise payable to the Holder of the
GP Interest for all amounts advanced by it pursuant to the preceding sentence
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 Loans in compliance with the terms of this Agreement, or the
failure of the Representative to perform its duties in compliance with the terms
of this Agreement and in the best interests of the Noteholders and the
Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE, THE
SERVICER AND THE CLAIMS ADMINISTRATOR.
The Servicer, the Representative and the Claims Administrator will
each keep in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the 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 Issuer, the Owner
Trustee, 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 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 Owner Trustee
and the Trustee (and with respect to FHA Loans, the Co-Trustee), 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, and the Owner
Trustee (and with respect to FHA Loans, the Co-Trustee), which Opinion of
Counsel shall be in form and substance acceptable to the Trustee and the Owner
Trustee (and with respect to FHA Loans, the Co-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 Owner Trustee (and with respect to FHA Loans, the
Co-Trustee), the Noteholders and the Certificateholders in accordance with the
provisions of this Agreement.
Section 9.06 RIGHT OF MAJORITY SECURITYHOLDERS TO REPLACE SERVICER AND
CLAIMS ADMINISTRATOR.
From and after the occurrence of a Servicing Delinquency Trigger, the
Majority Securityholders may, upon written notice to the Trustee, the Owner
Trustee (and with respect to FHA Loans, the Co-Trustee) and the Rating Agencies,
replace the Servicer and/or the Claims Administrator with a successor. No such
replacement shall become effective until a successor has assumed the Servicer's
and/or the Claims Administrator's responsibilities and obligations hereunder in
accordance with Section 10.02.
ARTICLE X
DEFAULT
Section 10.01 SERVICER DEFAULT.
(a) In case one or more of the following Servicer Defaults 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 Noteholders or
the Certificateholders; (C) the failure by the Servicer to make any
required Monthly Advance; (D) the failure by the Servicer to remit any
Compensating Interest; (E) the failure by the Servicer to pay the FHA
Insurance Premium relating to any FHA Loan or (F) any failure by the
Servicer or the Claims Administrator to remit to Noteholders or the
Certificateholders, or to the Trustee for the benefit of the
Noteholders or 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 Noteholder or
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 Noteholder or 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, marshaling 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, marshaling 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 a Servicer
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 Servicer Default shall not have been remedied within 30 days after the
Servicer or the Claims Administrator has received notice of such Servicer
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 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 Holders of Notes evidencing not less than
a majority of the principal amount of the Notes then outstanding, or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance, as applicable, in the case of
any default which does not adversely affect the Noteholders, by notice in
writing to the Servicer and the Claims Administrator, may, in addition to
whatever rights such Noteholders or 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 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 such
Noteholders or Certificateholders, as the case may be, stating that they or it
intend to terminate the Servicer and the Claims Administrator as a result of
such Servicer Default, all authority and power of the Servicer and the Claims
Administrator under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall, subject to Section 10.02, pass to and be vested in the
Trustee or its designee and the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer and the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Loans and related
documents. The Servicer and the Claims Administrator agree to cooperate with the
Trustee in effecting the termination of the Servicer's and the Claims
Administrator's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or its designee for administration by it
of all amounts which shall at the time be credited by the Servicer to each
Principal and Interest Account or thereafter received with respect to the Loans.
Section 10.02 TRUSTEE AND CO-TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer or the Claims Administrator
receives a notice of termination pursuant to Section 10.01 or the Trustee
receives the resignation of the Servicer and the Claims Administrator evidenced
by an Opinion of Counsel pursuant to Section 9.04 or the Servicer and the Claims
Administrator are removed as servicer and claims administrator pursuant to this
Article X, the Trustee (or, with respect to the FHA Loans, the Co-Trustee) shall
be the successor in all respects to the Servicer in its capacity as servicer and
the Claims Administrator in its capacity as claims administrator under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer and the Claims Administrator by the terms and provisions
hereof, provided, however, that the Trustee and the Co-Trustee shall not be
liable for any actions of any servicer or claims administrator prior to it, and
that the Trustee and the Co-Trustee shall not be obligated to make advances or
payments pursuant to Sections 7.09, 7.10, 4.05, 4.10 or 4.14 or otherwise but
only to the extent the Trustee or the Co-Trustee, as the case may be, determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee or the Co-Trustee, as the
case may be. As compensation therefor, the Trustee (or, with respect to the FHA
Loans, the Co-Trustee) shall be entitled to all funds relating to the Loans
which the Servicer and Claims Administrator would have been entitled to receive
from the Principal and Interest Account pursuant to Section 4.04 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 5.01 and 5.03.
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
Holders of Notes evidencing not less than a majority of the principal amount of
the Notes then outstanding, 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 Co-Trustee is required to solicit bids as provided
herein, the Trustee or Co-Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer and claims administrator
shall be entitled to, with respect to the Loans each would be servicing, the
full amount of the aggregate Servicing Fees and Contingency Fee relating to such
Loans as servicing compensation, together with the other servicing compensation
in the form of assumption fees, late payment charges or otherwise. Within thirty
days after any such public announcement, the Trustee or Co-Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Trustee or Co-Trustee shall deduct from any sum received by
the Trustee or Co-Trustee from the successor to the Servicer and Claims
Administrator in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of
the servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee or Co-Trustee to the Servicer
and Claims Administrator at the time of such sale, transfer and assignment to
the Servicer's and Claims Administrator's successor. The Trustee or Co-Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. The Servicer and Claims
Administrator agree to cooperate with the Trustee or Co-Trustee and any
successor servicer and claims administrator in effecting the termination of the
Servicer's and Claims Administrator's servicing responsibilities and rights
hereunder and shall promptly provide the Trustee or Co-Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's and Claims Administrator's functions
hereunder and shall promptly also transfer to the Trustee or Co-Trustee or such
successor servicer and claims administrator, as applicable, all amounts which
then have been or should have been deposited in the Principal and Interest
Account by the Servicer and Claims Administrator or which are thereafter
received with respect to the 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 and the Co-Trustee to each Noteholder and 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 and the Co-Trustee may make such arrangements for the
compensation of such successor out of payments on 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 5.03 or
otherwise as provided in this Agreement. The Servicer, the Claims Administrator,
the Trustee, the Co-Trustee, the Owner 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 Holders of Notes evidencing not less than a majority of the
outstanding principal amount of the Notes, or the Holder of the Voting Interest
(as defined in the Trust Agreement), as applicable, in the case of any default
which does not adversely affect the Noteholders, may, on behalf of all
Noteholders and Certificateholders, waive any events permitting removal of the
Servicer and the Claims Administrator as servicer pursuant to this Article X,
provided, however, that such Noteholders or Holder of the Voting Interest, as
the case may be, may not waive a default in making a required distribution on a
Note or Certificate without the consent of the holder of such Note or
Certificate, as the case may be. 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 [RESERVED].
Section 10.05 CONTROL BY MAJORITY SECURITYHOLDERS.
The Majority Securityholders may, by written instruction, direct the
time, method and place of conducting any proceeding relating to the Owner Trust
Estate or for any remedy available to the Trustee or the Co-Trustee with respect
to the Owner Trust Estate or exercising any trust or power conferred on the
Trustee or the Co-Trustee with respect to the Owner Trust Estate and the
Trustee, by written instruction, may direct the time, method and place of
conducting any proceeding for any remedy available to the Owner Trustee with
respect to the Owner Trust Estate or exercising any trust or power conferred on
the Owner Trustee with respect to the Owner Trust Estate, PROVIDED THAT:
(a) such direction shall not be in conflict with any
rule of law or with this Agreement or the Trust Agreement and shall
contain a representation to such effect upon which the recipient of
such direction may rely;
(b) the Trustee, the Co-Trustee, or the Owner
Trustee, as the case may be, shall have been provided with indemnity
satisfactory to it; and
(c) the Trustee, the Co-Trustee, and the Owner
Trustee may take any other action deemed proper by the Trustee, the
Co-Trustee, and the Owner Trustee which is not inconsistent with such
direction; provided, however, that the Trustee, the Co-Trustee, and
the Owner Trustee need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Holders
not so directing.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION. (a) This Agreement shall terminate upon
notice to the Trustee of either: (a) the latter of the final payment or other
liquidation of the last Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Loan and the remittance of all
funds due thereunder, or (b) mutual consent of the Servicer, and all Noteholders
and all Certificateholders in writing.
(b) On the last day of any Due Period immediately preceding a
Determination Date as of which the then outstanding Pool Balance is 10% or less
of the sum of (i) the aggregate Principal Balance of the Initial Mortgage Loans
as of the Cut-off Date and (ii) the Original Pre-Funded Amount, the Servicer
shall have the option to purchase the Owner Trust Estate, other than the Trust
Accounts and the Certificate Distribution Account. To exercise such option, the
Servicer shall deposit pursuant to Section 4.03 in the Principal and Interest
Account an amount which, when added to the amounts on deposit in the Principal
and Interest Account for such Remittance Date, equals the aggregate Class
Principal Balance of the then outstanding Notes, plus accrued and unpaid
interest thereon.
(c) Upon any sale of the assets of the Trust pursuant to Section 9.2
of the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Principal and Interest Account. On the Remittance Date on which the Insolvency
Proceeds are deposited in the Principal and Interest Account (or, if such
proceeds are not so deposited on a Remittance Date, on the Remittance Date
immediately following such deposit), the Servicer shall instruct the Trustee to
make, and the Trustee shall distribute the Insolvency Proceeds (after the
application on such Remittance Date of the Available Remittance Amount pursuant
to Section 7.05) to the Noteholders in the same order and priority set forth in
Section 5.4 of the Indenture.
Any Insolvency Proceeds remaining after the deposits described above shall be
paid to the Certificateholders, pro rata in accordance with their Ownership
Percentage (as defined in the Trust Agreement).
(d) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trustee and the Rating Agencies as soon as
practicable after the Servicer has received notice thereof.
(e) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee or its designee will succeed to the rights of, and assume the
obligations of, the Trustee pursuant to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
Section 12.01 ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE AND DEPOSITORY AGREEMENTS.
The Servicer shall perform all its duties and the duties of the Issuer under the
Depository Agreement. In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of the Issuer
under the Indenture and the Depository Agreement. The Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee in writing when
action is necessary to comply with the Issuer's duties under the Indenture and
the Depository Agreement. The Servicer shall prepare for execution by the Issuer
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to the Indenture
and the Depository Agreement. In furtherance of the foregoing, the Servicer
shall take all appropriate action that is the duty of the Issuer to take
pursuant to the Indenture and the Depository Agreement.
(b) DUTIES WITH RESPECT TO THE ISSUER. (i) In addition to the duties
of the Servicer set forth in this Agreement or any of the Basic Documents, the
Servicer shall perform such calculations and shall prepare for execution by the
Issuer or the Owner Trustee or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner Trustee to prepare,
file or deliver pursuant to this Agreement or any of the Basic Documents, and at
the request of the Owner Trustee shall take all appropriate action that it is
the duty of the Issuer to take pursuant to this Agreement or any of the Basic
Documents. In accordance with the directions of the Owner Trustee, the Servicer
shall administer, perform or supervise the performance of such other activities
in connection with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Owner Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or
any of the Basic Documents to the contrary, the Servicer shall be
responsible for promptly notifying the Owner Trustee in writing in the
event that any withholding tax is imposed on the Issuer's payments (or
allocations of income) to an Owner (as defined in the Trust Agreement)
as contemplated in Section 5.2(c) of the Trust Agreement. Any such
notice shall specify the amount of any withholding tax required to be
withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or
the Basic Documents to the contrary, the Servicer shall be responsible
for performance of the duties of the Owner Trustee and the Holder of
the GP Interest set forth in Sections 6.2, 6.3, 6.4. 6.5 and 6.6 of
the Trust Agreement with respect to, among other things, accounting
and reports to Owners (as defined in the Trust Agreement); PROVIDED,
HOWEVER, that the Holder of the GP Interest shall retain
responsibility for the distribution of the Schedule K-1s necessary to
enable each Certificateholder to prepare its federal and state income
tax returns.
(iv) The Servicer shall perform the duties of the
Servicer specified in Section 10.2 of the Trust Agreement required to
be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed
by the Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of
its other obligations under this Agreement, the Servicer may enter
into transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer
and shall be, in the Servicer's opinion, no less favorable to the
Issuer in any material respect.
(c) TAX MATTERS. The Servicer shall prepare and file, on behalf of the
holder of the GP Interest, all tax returns, tax elections, financial statements
and such annual or other reports of the Issuer as are necessary for preparation
of tax reports as provided in Article V of the Trust Agreement, including
without limitation forms 1099 and 1066. All tax returns will be signed by the
holder of the GP Interest.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified in writing
the Owner Trustee and the Trustee of the proposed action and the Owner Trustee
and, with respect to items (A), (B), (C) and (D) below, the Trustee shall not
have withheld consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit brought by
or against the Issuer (other than in connection with the collection of
the Loans);
(C) the amendment, change or modification of this
Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent to
the assignment by the Note Registrar, Paying Agent or Trustee of its
obligations under the Indenture; and
(E) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Estate pursuant to Section 5.4 of
the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
Section 12.02 RECORDS. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer at any time during normal business hours.
Section 12.03 ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF NOTEHOLDERS AND CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever Noteholder
or 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 Noteholders and
Certificateholders if the Majority Securityholders agree to take such action or
give such consent or approval.
Section 13.02 AMENDMENT.
This Agreement may be amended by the Servicer and the Owner Trustee,
with the consent of the Trustee (which consent may not be unreasonably
withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Owner Trustee and the Trustee,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by the Servicer
and the Owner Trustee, with the consent of the Trustee and the consent of the
Majority Securityholders 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 Noteholders or the Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Loans or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance,
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and the Holders (as defined
in the Trust Agreement) of all the outstanding Certificates of each class
affected thereby.
Any amendment to this Agreement shall also require the consent of the
Custodian and/or the Co-Trustee if such proposed amendment affects any of their
respective rights, duties or obligations hereunder.
Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after the execution of any such
amendment or consent, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder and the
Trustee.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement. The Owner Trustee and the Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Trustee's, as applicable, own rights, duties or immunities under this
Agreement or otherwise.
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 Noteholders and the Certificateholders' expense on direction of
the Majority Securityholders, but only when accompanied by an Opinion of Counsel
to the effect that such recordation materially and beneficially affects the
interests of the Noteholders and the Certificateholders or is necessary for the
administration or servicing of the Mortgage Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 13.05 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer, the Claims Administrator, and each
Originator, The Money Store Inc., 3301 C Street, Sacramento, California 95816,
Attention: Executive Vice President, or such other addresses as may hereafter be
furnished to the Noteholders and 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 West, New York, New York 10286,
Attention: Corporate Trust Administration -MBS, (iii) in the case of the Issuer
or the Owner Trustee to The Money Store Residential Trust 1997-II, c/o Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Department, (iv) in the case of the Co-Trustee to
First Union Trust Company, National Association, One Rodney Square, Suite 100,
920 King Street, Wilmington, Delaware 19801, Attention: Corporate Trust
Department, (v) in the case of Fitch, to Fitch IBCA, Inc., One State Street
Plaza, New York, New York 10004, Attention: Structured Finance and (vi) in the
case of S&P, to Standard & Poor's Ratings Services, 25 Broadway, 12th Floor, New
York, New York 10004, Attention: High LTV Pool Monitoring. 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 Noteholders or 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 Issuer, the Trustee, the
Co-Trustee, the Owner Trustee, the Noteholders 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 ASSIGNMENT TO TRUSTEE. Each Originator hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Noteholders of all right, title and interest of the Issuer in, to
and under the Mortgage Loans and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Trustee.
Section 13.13 NONPETITION COVENANT. (a) Notwithstanding any prior
termination of this Agreement, the Servicer and the Originators shall not, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
parties hereto shall not, prior to the date that is one year and one day after
the termination of this Agreement with respect to Special Holdings, acquiesce
to, petition or otherwise invoke or cause Special Holdings to invoke the process
of any court or government authority for the purpose of commencing or sustaining
a case against Special Holdings under any federal or state bankruptcy,
insolvency or similar law, appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator, or other similar official of Special Holdings or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of Special Holdings.
Section 13.14 LIMITATION OF LIABILITY OF OWNER TRUSTEE, TRUSTEE,
CO-TRUSTEE AND CUSTODIAN. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed and countersigned by Chase Manhattan
Bank Delaware not in its individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall Chase Manhattan Bank Delaware in its
individual capacity or, except as expressly provided in the Trust Agreement, as
Owner Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer or the Owner Trustee hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto, as
to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Bank of New York not in its individual
capacity but solely as Trustee and in no event shall The Bank of New York have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
(c) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by First Union Trust Company, National Association,
not in its individual capacity but solely as Co-Trustee and in no event shall
First Union Trust Company, National Association have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
(d) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by First Union National Bank, not in its individual
capacity but solely as Custodian and in no event shall First Union National Bank
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
Section 13.15 INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
Section 13.16 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 Union National Bank), (3) any change of the Trustee
or the Servicer (4) any Servicer Default, and (5) the final payment of all the
Notes and the Certificates. The Servicer shall promptly deliver to the Rating
Agencies a copy of each of the Servicer's Certificates.
Section 13.17 THIRD PARTY RIGHTS.
The parties hereto agree that the Trustee, the Owner Trustee, the
Co-Trustee and the Custodian shall each be deemed a third party beneficiary of
the Agreement entitled to all rights and benefits set forth herein as fully as
if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
THE MONEY STORE RESIDENTIAL TRUST
1997-II
By: CHASE MANHATTAN BANK
DELAWARE, not in its individual
capacity but solely as Owner
Trustee on behalf of the Trust,
By:/s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
THE MONEY STORE INC., as Representative,
Servicer and Claims Administrator
By:/s/ Michael Benoff
Name: Michael Benoff
Title: Executive Vice President
TMS MORTGAGE INC.
THE MONEY STORE/D.C. INC.
THE MONEY STORE/MINNESOTA INC.
THE MONEY STORE HOME EQUITY CORP.
THE MONEY STORE/KENTUCKY INC.
By:/s/ Michael Benoff
Name: Michael Benoff
Title: Senior Vice President
<PAGE>
Acknowledged and Accepted:
The Bank of New York, not
in its individual capacity
but solely as Trustee,
By /s/ Robert P. Muller
Name: Robert P. Muller
Title: Assistant Treasurer
Acknowledged and Accepted:
Chase Manhattan Bank Delaware,
not in its individual capacity
but solely as Owner Trustee,
By /s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
<PAGE>
Acknowledged and Accepted:
First Union Trust Company, National Association,
not in its individual capacity but as Co-Trustee
By /s/ Robert Ashbaugh
Name: Robert Ashbaugh
Title: Vice President
<PAGE>
Acknowledged and Accepted:
First Union National Bank,
not in its individual capacity
but as Custodian
By /s/ Robert Ashbaugh
Name: Robert Ashbaugh
Title: 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.
By: /s/ Michael Benoff
Name: Michael Benoff
Title:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 30th day of December 1997 before me, a Notary Public in and for
said State, personally appeared Denis Kelley known to me to be an officer of
Chase Manhattan Bank Delaware, a Delaware banking corporation 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.
/s/ Steve Levitan
Notary Public
My Commission expires 2/16/98
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF UNION )
On the 30th day of December 1997 before me, a Notary Public in and for
the State of New Jersey, personally appeared Michael Benoff 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.
/s/ Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
STATE OF NEW JERSEY)
: ss.:
COUNTY OF UNION )
On the 30th day of December 1997 before me, a Notary Public in and for
the State of New Jersey, personally appeared Michael Benoff known to me to be
the Senior Vice President of each Originator listed on Exhibit F 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.
/s/ Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
EXHIBIT A
CONTENTS OF TRUSTEE'S LOAN FILE
With respect to each Loan, the Trustee's Loan File shall include the
documents set forth in Section 2.04 of the Sale and Servicing Agreement.
<PAGE>
EXHIBIT B
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
___________ __, 199_
To: _________________ (the "Depository")
As "Servicer" under the Sale and Servicing Agreement, dated as of
November 30, 1997, among The Money Store Residential Trust 1997-II, the
Originators listed therein and The Money Store Inc. (the "Agreement"), we hereby
authorize and request you to establish an account, as a Principal and Interest
Account pursuant to Section 4.03 of the Agreement, to be designated as "The
Money Store Inc., in trust for the registered holders of The Money Store
Residential Asset Backed Certificates and Asset-Backed Notes, Series 1997-II,
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:
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.
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF [TRUSTEE] [CUSTODIAN] INITIAL CERTIFICATION
____________, 199_
The Money Store Inc.
2840 Morris Avenue
Union, New Jersey 07083
TMS SPV, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Lehman Brothers Inc.
as Representative and Underwriter
Three World Financial Center
New York, New York 10285
Re: Sale and Servicing Agreement The Money Store Residential
Asset Backed Notes and Asset Backed Certificates,
Series 1997-II, dated as of November 30, 1997
among The Money Store Inc. as Representative,
Servicer and Claims Administrator, the Originators
and The Money Store Residential Trust 1997-II
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, if any (the "Loan Exception
Report"), it has received an Assignment of Mortgage, or a certified copy
thereof, and a Mortgage Note with respect to each [Initial] [Subsequent] [Loan]
[Home Improvement Loan] listed in the Mortgage Loan Schedule and the documents
contained therein appear to bear original signatures.
The [Trustee] [Custodian] has made no independent examination of any
such documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The [Trustee] [Custodian] makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any such documents or any of the [Loans] [Home Improvement
Loans] identified on the Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such [Loan] [Home Improvement
Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
[THE BANK OF NEW YORK,
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By:________________________
Name:
Title:
<PAGE>
EXHIBIT C-1
FORM OF [TRUSTEE] [CUSTODIAN] INTERIM CERTIFICATION
_______________, 199_
The Money Store Inc.
2840 Morris Avenue
Union, New Jersey 07083
TMS SPV, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Lehman Brothers Inc.
as Representative and Underwriter
Three World Financial Center
New York, New York 10285
Re: Sale and Servicing Agreement The Money Store Residential
Asset Backed Notes and Asset Backed Certificates,
Series 1997-II, dated as of November 30, 1997 among The
Money Store Inc. as Representative, Servicer and Claims
Administrator, the Originators and The Money Store Residential
Trust 1997-II
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-referenced Sale and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that as to each [Initial] [Subsequent] [Loan] [Home Improvement Loan] listed in
the Loan Schedule (other than any [Initial] [Subsequent] [Loan] [Home
Improvement Loan] paid in full or any [Initial] [Subsequent] [Loan] [Home
Improvement 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 Sale 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 [Loan] [Home Improvement 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]
[Loan] [Home Improvement Loan] is correct and (iv) each Note has been endorsed
as provided in Section 2.04 of the Sale and Servicing Agreement. Further,
[except for Mortgaged Properties relating to [Loans] [Home Improvement Loans]
identified on the 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 [Loan] [Home Improvement Loan], and for each [Loan] [Home Improvement
Loan] with an original principal balance in excess of $15,000 for which the
documents in the possession of the [Trustee] [Custodian] indicate that the
related Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with originating such [Loan] [Home
Improvement Loan], such [Loan] [Home Improvement Loan] (A) had an original
principal balance not in excess of $______, and (B) has a Loan-to-Value Ratio
less than __% (based solely on the LTV included on the 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 [Loan] [Home Improvement Loan]. The
[Trustee] [Custodian] has made no independent examination of such documents
beyond the review specifically required in the above-referenced Sale and
Servicing Agreement. The [Trustee] [Custodian] makes no representations as to:
(i) the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the [Loans] [Home Improvement Loans] identified on
the Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such [Loan] [Home Improvement Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
[THE BANK OF NEW YORK
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT D
FORM OF [TRUSTEE] [CUSTODIAN] FINAL CERTIFICATION
[date]
The Money Store Inc.
2840 Morris Avenue
Union, New Jersey 07083
TMS SPV, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Lehman Brothers Inc.
as Representative and Underwriter
Three World Financial Center
New York, New York 10285
Re: Sale and Servicing Agreement The Money Store Residential
Asset Backed Notes and Asset Backed Certificates,
Series 1997-II, dated as of November 30, 1997 among The Money
Store Inc. as Representative, Servicer and Claims
Administrator, the Originators and The Money Store Residential
Trust 1997-II
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, as to each [Loan] [Home
Improvement Loan] listed in the Mortgage Loan Schedule (other than any [Loan]
[Home Improvement 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 Sale 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 [Loan] [Home Improvement Loan],
(iii) based on its examination, and only as to the foregoing documents, the
information set forth in the Loan Schedule respecting such [Loan] [Home
Improvement Loan] is correct and (iv) each Note has been endorsed as provided in
Section 2.04 of the Sale and Servicing Agreement. The [Trustee] [Custodian] has
made no independent examination of such documents beyond the review specifically
required in the above-referenced Sale and Servicing Agreement. The [Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the [Loans] [Home Improvement Loans] identified on the Loan Schedule, or (ii)
the collectability, insurability, effectiveness or suitability of any such
[Loan] [Home Improvement Loan(s)].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
[THE BANK OF NEW YORK,
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By:______________________
Name:
Title:
<PAGE>
EXHIBIT E
LOAN SCHEDULE
The Loan Schedule is maintained with the Trustee and the Co-Trustee.
<PAGE>
EXHIBIT F
LIST OF ORIGINATORS
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
<PAGE>
EXHIBIT G
REQUEST FOR RELEASE OF DOCUMENTS
To: [The Bank of New York
as Trustee]
[First Union National Bank,
as Custodian]
Re: Sale and Servicing Agreement, The Money Store
Residential Asset Backed Notes and Asset Backed
Certificates, Series 1997-II, dated as of November 30, 1997
In connection with the administration of the pool of Loans held by you
as [Trustee] [Custodian] for the Noteholders and the Certificateholders, we
request the release, and acknowledge receipt, of the (Trustee's Loan
File/[specify document]) for the Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
____ 1. 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 Sale and Servicing Agreement.)
____ 2. 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
Sale and Servicing Agreement.)
____ 3. Loan in Foreclosure
_____4. Loan Purchased Pursuant to Section 11.01
of the Sale and Servicing Agreement.
_____5. Loan Repurchased or Substituted Pursuant to Article II or III of
the Sale 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 Sale and Servicing Agreement.)
_____6. Other (explain) ____________________________
_______________________________
If box 1 or 2 above is checked, and if all or part of the Trustee's
Loan 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 Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the
above documents to you as [Trustee] [Custodian], please acknowledge your receipt
by signing in the space indicated below, and returning this form.
THE MONEY STORE INC.
By:_____________________
Name:
Title:
Documents returned to [Trustee] [Custodian]:
[Trustee] [Custodian]
By:_______________________
Date:
<PAGE>
EXHIBIT G-1
REQUEST FOR RELEASE OF DOCUMENTS OF
90 DAY DELINQUENT FHA LOANS
[DATE]
To: First Union National Bank,
as Custodian
Re: Sale and Servicing Agreement, The Money Store Residential
Asset Backed Notes and Asset Backed Certificates, Series
1997-II, dated as of November 30, 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 Loan 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:
Title:
Documents returned to Custodian:
FIRST UNION NATIONAL BANK,
as Custodian
By:________________________
Name:
Title:
[Date:]
<PAGE>
EXHIBIT H
[RESERVED.]
<PAGE>
EXHIBIT I
FORM OF CUSTODIAL AGREEMENT
Dated __________, 199_
____________________, 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. ("TMS")
have entered into a Sale and Servicing Agreement dated as of ________ __, 199_
relating to The Money Store Residential Asset Backed Notes and Asset Backed
Certificates, Series 199_-_, (the "Sale and Servicing 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 home improvement loans identified in Exhibit E to the Sale and
Servicing Agreement (the "Home Improvement Loans"); and
WHEREAS, in connection with such transfer and assignment and pursuant
to the Sale and Servicing Agreement, the Trustee holds, directly or pursuant to
a custodial agreement, the Loan 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 Loan Files. The Custodian hereby acknowledges receipt of the
Notes, the Mortgages, the assignments and other documents relating to the Loans
referred to in Section 2.04, except for the items referred to in Section
2.04(d)(ii), of the Sale and Servicing 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 Sale and Servicing
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 _______________ 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 Loan
Files from all other mortgages and mortgage notes and similar records
in its possession, to identify the Trustee's Loan Files as being held
and to hold the Trustee's Loan Files for and on behalf of the Trustee
for the benefit of all present and future Noteholders and
Certificateholders, to maintain accurate records pertaining to each
Note and Mortgage in the Trustee's Loan Files as will enable the
Trustee to comply with the terms and conditions of the Sale and
Servicing Agreement, to maintain at all times a current inventory
thereof and to conduct periodic physical inspections of the Trustee's
Loan 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 Loan Files as herein provided and promptly take appropriate
action to remedy any such failure.
(b) RELEASE OF DOCUMENTS. To release any Note and
Mortgage in the Trustee's Loan Files as provided in the Sale and
Servicing Agreement.
(c) ADMINISTRATION; REPORTS. In general, to attend
to all non-discretionary details in connection with maintaining
custody of the Trustee's Loan Files on behalf of the Trustee. In
addition, the Custodian shall assist the Trustee generally in the
preparation of reports to Noteholders and to Certificateholders or to
regulatory bodies to the extent necessitated by the Custodian's
custody of the Trustee's Loan 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 4.13 of the Sale and Servicing Agreement to
inspect the Trustee's Loan 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 Sale and Servicing Agreement.
5. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to
have received proper instructions with respect to the Trustee's Loan 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 Loan 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 Loan 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 ____________.
10. NOTICES. Notices and other writings shall be
delivered or mailed, postage prepaid, to the Trustee at
____________________________________________,
Attention: ____________________________________, 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 ________ of the Sale and Servicing 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.
as Trustee under the Sale and
Servicing Agreement referred to above
By:___________________________
_____________________________, as
Custodian
By:__________________________
<PAGE>
EXHIBIT J
FORM OF HOME IMPROVEMENT LOAN CUSTODIAL AGREEMENT
(The Money Store Residential Asset Backed Notes and
Asset Backed Certificates, Series 199_-_)
Dated _____ __, 199_
_____________, a national banking association headquartered in
____________________, as co-trustee (the "Co-Trustee"), and
__________________________, a national banking association headquartered in
___________________, as custodian ("Custodian"), agree as follows:
WHEREAS, the Trustee, the Originators and The Money Store Inc. ("TMS")
have entered into a Sale and Servicing Agreement dated as of ________ __, 199_
(the "Sale and Servicing Agreement") relating to The Money Store Residential
Asset Backed Notes and Asset Backed Certificates, Series 199_-_, (the applicable
provisions of which Sale and Servicing Agreement have been accepted and agreed
to by the Co-Trustee and the Custodian in connection with The FHA Loans)
pursuant to which the Originators transferred, assigned, set-over and otherwise
conveyed to the Trustee (or, in connection with the FHA Loans, to the
Co-Trustee), without recourse, all of the Originator's right, title and interest
in and to the mortgage loans identified in Exhibit E to the Sale and Servicing
Agreement, including the FHA Loans; and
WHEREAS, the Co-Trustee wishes to appoint the Custodian to hold the
Trustee's Loan Files relating to the FHA 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 Trustee's Loan Files relating to the FHA Loans. The Custodian
hereby acknowledges that it has possession of the Trustee's Loan Files relating
to the FHA Loans, except as noted on the document exception listing previously
delivered to TMS or to be delivered to TMS and the Co-Trustee in accordance with
the Sale and Servicing 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 Loan Files relating to the FHA 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 Loan Files relating to the FHA 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 Loan Files relating to the FHA Loans as herein provided and
promptly take appropriate action to remedy any such failure.
(b) ACCESS TO TRUSTEE'S LOAN 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 TMS, the
Co-Trustee or the Servicer or any of their duly authorized representatives,
attorneys or auditors to inspect the Trustee's Loan Files relating to the FHA
Loans at such times as the Co-Trustee may reasonably request.
(c) RELEASE OF DOCUMENTS. The Custodian will
release any FHA Loan to the Servicer for servicing by the Servicer or to TMS for
purchase by TMS, all as provided in the Sale and Servicing Agreement.
(d) ADMINISTRATION; REPORTS. The Custodian
will, in general, attend to all non-discretionary details in connection with
maintaining custody of the Trustee's Loan Files relating to the FHA Loans on
behalf of the Co-Trustee. In addition, the Custodian shall assist TMS, the
Co-Trustee and the Servicer generally in the preparation of routine reports to
Noteholders and to Certificateholders or to regulatory bodies, if any, to the
extent necessitated by the Custodian's custody of the Trustee's Loan Files
relating to the FHA Loans.
4. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to
have received proper instructions with respect to the Trustee's Loan Files
relating to the FHA Loans upon its receipt of written instructions signed by a
Responsible Officer of the Co-Trustee. A certified copy of a resolution of the
Board of Directors of the Co-Trustee may be received and accepted by the
Custodian as conclusive evidence of the authority of any such officer to act and
may be considered as in full force and effect until receipt of written notice to
the contrary by the Co-Trustee. Such instructions may be general or specific in
terms.
5. CUSTODIAL FEE. For its services under this Agreement, the Custodian
shall be entitled to reasonable compensation out of the Co-Trustee's fees
received pursuant to the Sale and Servicing Agreement.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify
the Co-Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses, including attorneys' fees, of any kind whatsoever
which may be imposed on, incurred by or asserted against the Co-Trustee as the
result of any act or omission in any way relating to the maintenance and custody
by the Custodian of the Trustee's Loan Files relating to the FHA 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 TMS, 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 Loan Files relating to
the FHA 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
___________,_________________________________________, Attn: Corporate Trust
Department, or to the Custodian at __________________________,
________________________________ _______________, Attention:
____________________, 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 Sale and Servicing Agreement, the Co-Trustee and
the Custodian shall amend this Agreement to make said successor co-trustee the
successor to the Co-Trustee hereunder.
<PAGE>
12. TERMS. Capitalized terms not otherwise defined in this Agreement
shall have the respective meanings given to them in the Sale and Servicing
Agreement.
______________,
as Co-Trustee under the Sale and
Servicing Agreement referred to above
By:____________________________
Its:___________________________
By:_____________________________
Its:____________________________
___________________________
as Custodian under the Sale and
Servicing Agreement referred to above
By:____________________________
Its:___________________________
By:_____________________________
Its:____________________________
<PAGE>
EXHIBIT K
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
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
EXHIBIT L
<TABLE>
<CAPTION>
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
REO FORECLOSURES
------------------------------------------------------------------------
OUTSTANDING # OF # OF # OF OUTSTANDING # OF OUTSTANDING
INVESTOR DOLLARS ACCT RANGES AMOUNT ACCTS. PCT ACCTS DOLLARS % ACCTS DOLLARS %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 AND OVER
TOTALS
</TABLE>
<PAGE>
EXHIBIT M
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section
7.07 shall contain the following information for each Loan as of the related
Record Date:
1. Name of the Obligor, address of the Mortgaged Property, or
principal residence of Obligor, and Account Number.
2. The LTV as of the origination date of the Mortgage
Loan.
3. The Due Date.
4. The Loan Original Principal Balance.
5. The Loan 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 Monthly
Excess Spread); (b) Servicing Fee and Contingency
Fee; (c) Monthly Excess Spread; (d) The amount equal
to total interest received minus Servicing Fee,
Contingency Fee and Monthly Excess Spread;
(e) principal and Excess Payments received;
(f) Curtailments received; and (g) Principal Prepayments
received.
8. The Loan Principal Balance.
9. The Note maturity date.
10. A "Delinquency Flag" noting that the Loan is current or
delinquent. If delinquent, state the date on which the last
payment was received.
11. A "Foreclosure Flag" noting that the Loan is the subject of
foreclosure proceedings.
12. An "REO Flag" noting that the Loan is an REO Property.
13. A "Liquidated Loan Flag" noting that the Loan is a Liquidated
Loan and the Net Liquidation Proceeds received in connection
therewith.
14. Lifetime Cap.
15. Lifetime Floor.
16. Periodic Cap.
17. Net Funds Cap.
18. Any additional information reasonably requested by the
Trustee.
<PAGE>
EXHIBIT N
FORM OF SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the ____ day of
_____ 199_, 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 Trust are parties to that
certain Sale and Servicing Agreement dated and effective as of November 30, 1997
(the "Sale and Servicing Agreement").
3. Pursuant to the terms of the Sale and Servicing Agreement, each
Originator has transferred certain Loans (as defined in the Sale and Servicing
Agreement) to the Trustee or (in the case of the Home Improvement Loans,
Co-Trustee), for the benefit of Noteholders and Certificateholders (as defined
in the Sale and Servicing Agreement).
4. The Originators desire to convey to the Servicer the right to
service the Loans. As authorized by the Sale 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 Loans
transferred by it to the Trustee or (in the case of the Home Improvement Loans,
Co-Trustee), such subservicing functions to be rendered in compliance with the
terms of the Sale 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 Sale 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
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 Loans conveyed by each such
Originator to the Trustee (or, in the case of the Home Improvement Loans, to the
Co-Trustee), each such Originator to service and supervise such 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 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 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 Sale 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 Sale 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 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 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 Sale
and Servicing Agreement.
3. ORIGINATOR'S DUTIES. Until the principal, interest and any other
amounts due on each Loan are paid in full, each Originator shall:
A. Proceed diligently to collect all payments due
under the terms of each 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 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 Obligor fails to make a payment to an
Originator required to be made under the terms of any such 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
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 Sale 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
Loan serviced hereunder before such Originator has received the applicable
payment from any Obligor, or makes any other advance to protect the security of
a 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 Loan Interest Rate.
5. ORIGINATOR'S RECORDS; MONITORING OF PROPERTY. Each Originator will
during regular business hours make all of its records and files relating to
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 an Obligor which might impair ability to repay the Loan.
D. Any loss or damage in excess of $10,000 to any
such premises, in which event, in addition to notifying the Servicer,
an Originator shall see to it that the insurance companies concerned
are promptly notified. For losses or damages of $10,000 or less, the
Servicer hereby authorizes an Originator to endorse insurance checks
or drafts on behalf of the Servicer. For losses or damages in excess
of $10,000, an Originator shall make a report to the Servicer and the
Servicer retains the right to endorse any insurance drafts related to
such loss or damage.
E. Any lack of repair or any other deterioration or
waste suffered or committed in respect to the premises covered by any
mortgage.
It is understood and agreed, however, that no notice need be given to the
Servicer of any facts other than those of which an Originator has actual notice,
or those of which an Originator would, except for its negligence, have had
actual notice.
6 NO WAIVER, RELEASE OR CONSENT BY ORIGINATOR. An Originator will not
waive, modify, release or consent to postponement on the part of the mortgagor
of any term or provision of any 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 4.07 and 4.08 of the Sale and Servicing Agreement.
8. FORECLOSURE AND REAL ESTATE OWNED. An Originator will assist in the
foreclosure or other acquisition of the property securing any Loan and the
transfer of such property, pursuant to instruction of the Servicer given under
Section 4.10 of the Sale 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 Sale 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 Trustee or the
Co-Trustee on notice to an Originator, at any time after the Trustee or the Co-
Trustee, as the case may be, shall have become the successor servicer with
respect to the Loans or Home Improvement Loans, as the case may be, pursuant to
Sections 10.01 and 10.02 of the Sale 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 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 Loan.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Each Originator will
comply with, and will use all reasonable efforts to cause each Obligor 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 Sale 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 Servicer Default under Section
10.01 of the Sale and Servicing Agreement, then upon the occurrence of an Event
of Default, each Originator shall enter into an agreement with the Trustee (or,
in the case of the Home Improvement Loans, the Co-Trustee), which agreement
shall be in form and substance satisfactory to the Trustee (or, in the case of
the Home Improvement Loans, the Co-Trustee) and its counsel, which recognizes
the Trustee (or, in the case of the Home Improvement Loans, the Co-Trustee) as
the successor servicer of the Mortgage Loans as provided for by such Section
10.01, and shall continue to subservice the Mortgage Loans or shall convey such
subservicing at the election and upon the direction of the Trustee (or, in the
case of the Home Improvement Loans, the Co-Trustee).
13. DEFINED TERMS. All terms not otherwise defined herein shall have
the meanings ascribed to such terms in the Sale and Servicing Agreement.
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: ______________________________
Name:
Title:
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
ATTEST:
By: _______________________ By: ______________________________
Name:
Title:
<PAGE>
SCHEDULE A
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
<PAGE>
SCHEDULE B
Each Originator shall receive 25 basis points per annum of the
principal balance of each Loan serviced as compensation for servicing hereunder
as well as other servicing fees as permitted.
<PAGE>
SCHEDULE C
1. Make telephone contact with any Obligor whose account is either a first
payment default or delinquent 9-29 days.
2. Confirm telephone contacts as necessary.
3. Contact, in writing, each Obligor who can not be contacted.
4. Send a "default" letter to any Obligor 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.
<PAGE>
EXHIBIT O
PRICES FOR LOW INTEREST LOANS
[Not Applicable]
<PAGE>
EXHIBIT P
FORM OF POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that CHASE MANHATTAN BANK DELAWARE, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") for The Money Store Residential Trust 1997-II (the
"Trust"), does hereby make, constitute and appoint THE MONEY STORE INC., as
Representative, Servicer and Claims Administrator (the "Servicer"), under the
Sale and Servicing Agreement dated as of November 30, 1997 (the "Agreement"),
among the Trust, the Originators named therein and the Servicer, as the same may
be amended from time to time, and its agents and attorneys, as Attorneys-in-Fact
to execute on behalf of the Owner Trustee or the Trust any and all such
documents, reports, filings, instruments, certificates and opinions as it should
be the duty of the Owner Trustee or the Trust to prepare, file or deliver
pursuant to the Basic Documents, including, without limitation, to appear for
and represent the Owner Trustee and the Trust in connection with the
preparation, filing and audit of federal, state and local tax returns pertaining
to the Trust, if any, and with full power to perform any and all acts associated
with such returns and audits, if any, that the Owner Trustee could perform,
including without limitation, the right to distribute and receive confidential
information, defend and assert positions in response to audits, initiate and
defend litigation, and to execute waivers of restrictions on assessments of
deficiencies, consents to the extension of any statutory or regulatory time
limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed
by the Owner Trustee are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.
<PAGE>
EXECUTED this 30th of December, 1997.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee
_______________________
Name:
Title:
EXECUTION COPY
===============================================================
THE MONEY STORE RESIDENTIAL TRUST 1997-II
Class A-1 6.650% Notes
Class A-2 6.680% Notes
Class A-3 6.845% Notes
Class A-4 7.385% Notes
Class M-1 7.615% Notes
Class M-2 7.810% Notes
Class B 8.595% Notes
--------------------------------
INDENTURE
Dated as of November 30, 1997
--------------------------------
The Bank of New York,
as Trustee
================================================================
<PAGE>
CROSS REFERENCE TABLE1
TIA Indenture
Section Section
310 (a) (1) ................................... 6.11
(a) (2) ................................... 6.11
(a) (3) ................................... 6.10
(a) (4) ................................... N.A.2
(a) (5) ................................... 6.11
(b) ................................... 6.8; 6.11
(c) ................................... N.A.
311 (a) ................................... 6.12
(b) ................................... 6.12
(c) ................................... N.A.
312 (a) ................................... 7.1
(b) ................................... 7.2
(c) ................................... 7.2
(d) ................................... 7.4
313 (a) ................................... 7.4
(b) (1) ................................... 7.4
(b) (2) ................................... 11.5
(c) ................................... 7.4
(d) ................................... 7.3
314 (a) ................................... 3.9; 11.15
(b) ................................... 11.1
(c) (1) ................................... 11.1
(c) (2) ................................... 11.1
(c) (3) ................................... 11.1
(d) ................................... 11.1
(e) ................................... 11.1
(f) ................................... 11.1
315 (a) ................................... 6.1
(b) ................................... 6.5; 11.5
(c) ................................... 6.1
(d) ................................... 6.1
(e) ................................... 5.13
316 (a) (last sentence)........................... 2.7
(a) (1) (A)................................... 5.11
(a) (1) (B)................................... 5.12
(a) (2) ................................... N.A.
(b) ................................... 5.7
(c) ................................... N.A
317 (a) (1) ................................... 5.3
(a) (2) ................................... 5.32
(b) ................................... 3.3
318 (a) ................................... 11.7
- --------
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
2 N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions.......................................... 3
SECTION 1.2 Incorporation by Reference of Trust Indenture Act..... 10
SECTION 1.3 Rules of Construction................................ 11
ARTICLE II
The Notes
SECTION 2.1 Form.................................................. 11
SECTION 2.2 Execution, Authentication and Delivery................ 12
SECTION 2.3 Temporary Notes....................................... 12
SECTION 2.4 Registration; Registration of Transfer and Exchange... 13
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes............ 14
SECTION 2.6 Persons Deemed Owner.................................. 15
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest. 15
SECTION 2.8 Cancellation.......................................... 16
SECTION 2.9 Release of Collateral................................. 17
SECTION 2.10 Book-Entry Notes...................................... 17
SECTION 2.11 Notices to Clearing Agency............................ 18
SECTION 2.12 Definitive Notes...................................... 18
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest.................... 18
SECTION 3.2 Maintenance of Office or Agency...................... 19
SECTION 3.3 Money for Payments To Be Held in Trust............... 19
SECTION 3.4 Existence............................................ 20
SECTION 3.5 Protection of Trust Estate........................... 21
SECTION 3.6 Opinion as to Trust Estate........................... 21
SECTION 3.7 Performance of Obligations; Servicing of the Loans... 22
SECTION 3.8 Negative Covenants................................... 23
SECTION 3.9 Annual Statement as to Compliance.................... 24
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms... 24
SECTION 3.11 Successor or Transferee.............................. 26
SECTION 3.12 No Other Business.................................... 26
SECTION 3.13 No Borrowing......................................... 26
SECTION 3.14 Servicer's Obligations............................... 26
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.... 26
SECTION 3.16 Capital Expenditures................................. 27
SECTION 3.17 Compliance with Laws................................. 27
SECTION 3.18 Restricted Payments.................................. 27
SECTION 3.19 Notice of Events of Default.......................... 27
SECTION 3.20 Further Instruments and Acts......................... 27
SECTION 3.21 Income Tax Characterization.......................... 27
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture.............. 27
SECTION 4.2 Application of Trust Money........................... 29
SECTION 4.3 Repayment of Moneys Held by Paying Agent............. 29
SECTION 4.4 Notice............................................... 29
ARTICLE V
Remedies
SECTION 5.1 Events of Default.................................... 29
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment... 31
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee............................................ 32
SECTION 5.4 Remedies; Priorities................................. 34
SECTION 5.5 Optional Preservation of the Loans................... 35
SECTION 5.6 Limitation of Suits.................................. 36
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest............................... 36
SECTION 5.8 Restoration of Rights and Remedies................... 37
SECTION 5.9 Rights and Remedies Cumulative....................... 37
SECTION 5.10 Delay or Omission Not a Waiver....................... 37
SECTION 5.11 Control by Noteholders............................... 37
SECTION 5.12 Waiver of Past Defaults.............................. 38
SECTION 5.13 Undertaking for Costs................................ 38
SECTION 5.14 Waiver of Stay or Extension Laws..................... 38
SECTION 5.15 Action on Notes...................................... 39
SECTION 5.16 Performance and Enforcement of Certain Obligations... 39
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee................................... 39
SECTION 6.2 Rights of Trustee................................... 41
SECTION 6.3 Individual Rights of Trustee........................ 41
SECTION 6.4 Trustee's Disclaimer................................ 41
SECTION 6.5 Notice of Defaults.................................. 42
SECTION 6.6 Reports by Trustee to Holders....................... 42
SECTION 6.7 Compensation and Indemnity.......................... 42
SECTION 6.8 Replacement of Trustee.............................. 43
SECTION 6.9 Successor Trustee by Merger......................... 44
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee....... 45
SECTION 6.11 Eligibility; Disqualification....................... 46
SECTION 6.12 Preferential Collection of Claims Against Issuer.... 46
SECTION 6.13 Appointment of Custodians........................... 46
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of
Noteholders......................................... 47
SECTION 7.2 Preservation of Information; Communications to
Noteholders......................................... 47
SECTION 7.3 Reports by Issuer................................... 48
SECTION 7.4 Reports by Trustee.................................. 48
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money................................. 49
SECTION 8.2 Trust Accounts...................................... 49
SECTION 8.3 General Provisions Regarding Accounts............... 49
SECTION 8.4 Release of Trust Estate............................. 50
SECTION 8.5 Opinion of Counsel.................................. 50
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures without Consent of
Noteholders......................................... 51
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders......................................... 52
SECTION 9.3 Execution of Supplemental Indentures................ 54
SECTION 9.4 Effect of Supplemental Indenture.................... 54
SECTION 9.5 Conformity with Trust Indenture Act................. 54
SECTION 9.6 Reference in Notes to Supplemental Indentures....... 54
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption........................................... 54
SECTION 10.2 Form of Redemption Notice............................ 55
SECTION 10.3 Notes Payable on Redemption Date..................... 56
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc........... 56
SECTION 11.2 Form of Documents Delivered to Trustee.............. 58
SECTION 11.3 Acts of Noteholders................................. 58
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating
Agencies............................................ 59
SECTION 11.5 Notices to Noteholders; Waiver...................... 59
SECTION 11.6 Alternate Payment and Notice Provisions............. 60
SECTION 11.7 Conflict with Trust Indenture Act................... 60
SECTION 11.8 Effect of Headings and Table of Contents............ 61
SECTION 11.9 Successors and Assigns.............................. 61
SECTION 11.10 Separability........................................ 61
SECTION 11.11 Benefits of Indenture............................... 61
SECTION 11.12 Legal Holidays...................................... 61
SECTION 11.13 Governing Law....................................... 61
SECTION 11.14 Counterparts........................................ 61
SECTION 11.15 Recording of Indenture.............................. 61
SECTION 11.16 Trust Obligation.................................... 62
SECTION 11.17 No Petition......................................... 62
SECTION 11.18 Inspection.......................................... 62
SECTION 11.19 Usury............................................... 63
Testimonium, Signatures and Seals
Exhibit A Schedule of Loans
Exhibit B-1 Form of Class A Note
Exhibit B-2 Form of Class M Note
Exhibit B-3 Form of Class B Note
Exhibit C Form of Custodial Agreement
<PAGE>
INDENTURE dated as of November 30,
1997, between THE MONEY STORE RESIDENTIAL TRUST
1997-II, a Delaware business trust (the "Issuer"),
and The Bank of New York, a New York banking
corporation, as trustee and not in its individual
capacity (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the Holder of Class A-1 6.650% Notes (the "Class A-1 Notes"); Class A-2
6.680% Notes (the "Class A-2 Notes"); Class A-3 6.845% Notes (the "Class A-3
Notes"); Class A-4 7.385% Notes (the "Class A-4 Notes," and together with the
Class A-1, Class A-2 and Class A-3 Notes, the "Class A Notes"), Class M-1 7.615%
Notes (the "Class M-1 Notes"), Class M-2 7.810% Notes (the "Class M-2 Notes,"
and together with the Class M-1 Notes, the "Class M Notes"), and Class B 8.595%
Notes (the "Class B Notes," and together with the Class A Notes and Class M
Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee with respect to all Loans
except the FHA Loans and to the Co-Trustee with respect to the FHA Loans at the
Closing Date, as Trustee (or Co-Trustee with respect to the FHA Loans) for the
benefit of the Holders of the Notes, a security interest in and to all of the
Issuer's right, title and interest in and to (a) each Initial Loan identified in
the Loan Schedule delivered by the Issuer on the Closing Date; (b) the principal
collected and interest accrued on each such Initial Loan on or after the Cut-Off
Date; (c) the principal and interest received on such Initial Loan prior to the
Cut-Off Date that is due on or after the Cut-Off Date; (d) each Subsequent Loan
identified in the related Subsequent Loan Schedule delivered by the Issuer on
the related Subsequent Transfer Date; (e) the principal collected and interest
accrued on each such Subsequent Loan on or after the Subsequent Cut-Off Date;
(f) the principal and interest received thereon prior to the Subsequent Cut-Off
Date that is due on or after the Subsequent Cut-Off Date; (g) all prepayments,
proceeds of foreclosure proceedings, insurance proceeds, investment income
respecting the foregoing, (h) any Mortgaged Property which becomes an REO
Property; (i) the Issuer's rights and benefits, but none of its obligations or
burdens, under the Sale and Servicing Agreement; (j) all items contained in each
Trustee's Loan File; (k) all funds on deposit in any account maintained by the
Owner Trustee or the Servicer on behalf of the Issuer (including, without
limitation, the Pre-Funding Account and the Capitalized Interest Account); and
(l) all present and future claims, demands, causes and chooses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture; provided, however, that the Class M Notes are
subordinated to all amounts owing on the Class A Notes and the Class B Notes are
subordinate to all amounts owing on the Class A Notes and on the Class M Notes
as described herein or any other Basic Document.
The Trustee, as Trustee on behalf of the Holders of the Notes, (and,
with respect to the FHA Loans, the Co-Trustee, as Co-Trustee on behalf of the
Holders of the Notes), acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the Holders of the Notes may be adequately and
effectively protected.
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"ACT" has the meaning specified in Section 11.3(a).
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AUTHORIZED OFFICER" means, with respect to the Issuer and the
Servicer, any officer or agent acting under a power of attorney of the Owner
Trustee or the Servicer, as applicable, who is authorized to act for the Owner
Trustee or the Servicer, as applicable, in matters relating to the Issuer and
who is identified on the list of Authorized Officers delivered by each of the
Owner Trustee and the Servicer to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, this Indenture, the Depository Agreements and
other documents and certificates delivered in connection therewith.
"BOOK ENTRY NOTES" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions or trust companies in the States of New
York, Delaware or North Carolina are required or authorized by law to be closed.
"CERTIFICATE OF TRUST" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"CLAIMS ADMINISTRATOR" means The Money Store Inc., a New Jersey
Corporation, in its capacity as Claims Administrator under the Sale and
Servicing Agreement, and its successors and assigns thereunder.
"CLASS A NOTES" means the collective reference to the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.
"CLASS A-1 NOTES" means the Class A-1 6.650% Notes, substantially in
the form of Exhibit B-1.
"CLASS A-1 REMITTANCE RATE" means 6.650% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS A-2 NOTES" means the Class A-2 6.680% Notes, substantially in
the form of Exhibit B-1.
"CLASS A-2 REMITTANCE RATE" means 6.680% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS A-3 NOTES" means the Class A-3 6.845% Notes, substantially in
the form of Exhibit B-1.
"CLASS A-3 REMITTANCE RATE" means 6.845% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS A-4 NOTES" means the Class A-4 7.385% Notes, substantially in
the form of Exhibit B-1.
"CLASS A-4 REMITTANCE DATE" means 7.385% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS B NOTES" means the Class B 8.595% Notes, substantially in the
form of Exhibit B-3.
"CLASS B REMITTANCE RATE" means 8.595% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS M NOTES" means the collective reference to the Class M-1 Notes
and Class M-2 Notes.
"CLASS M-1 NOTES" means the Class M-1 7.615% Notes, substantially in
the form of Exhibit B-2.
"CLASS M-1 REMITTANCE RATE" means 7.615% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLASS M-2 NOTES" means the Class M-2 7.810% Notes, substantially in
the form of Exhibit B-2.
"CLASS M-2 REMITTANCE RATE" means 7.810% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Indenture is
located at 101 Barclay Street, 12th Floor East, New York, New York 10286,
Attention: Corporate Trust Asset Backed Unit (Telephone: (212) 815-7163;
Facsimile: (212) 815-5309 or at such other address as the Trustee may designate
from time to time by notice to the Noteholders, the Servicer and the Issuer, or
the principal corporate trust office of any successor Trustee (the address of
which the successor Trustee will notify the Noteholders and the Issuer).
"CO-TRUSTEE": First Union Trust Company, National Association, a
national banking association headquartered in Wilmington, Delaware.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" has the meaning specified in Section 2.10.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"GP INTEREST" shall have the meaning given to such term in the Trust
Agreement.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDENTURE" means this Indenture as amended and supplemented from time
to time.
"INDEPENDENT" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Representative and any Affiliate of any of the foregoing persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Representative or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Representative or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"ISSUER" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"LOAN SCHEDULE" means the listing of the Loans set forth in Exhibit A
(which Exhibit may be in the form of microfiche).
"NOTE" means a Class A Note, a Class M Note or a Class B Note.
"NOTE DEPOSITORY AGREEMENT" means the agreement among the Issuer, the
Trustee, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated one Business Day prior to Closing Date.
"NOTE OWNER" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.4.
"NOTES" means the collective reference to the Class A Notes, the Class
M Notes and the Class B Notes.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA ss. 314, and
delivered to the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Trustee as Trustee, shall comply
with any applicable requirements of Section 11.1, and shall be in form and
substance satisfactory to the Trustee.
"ORIGINATORS" shall have the meaning ascribed to such term in the Sale
and Servicing Agreement.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar
or delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision therefor, satisfactory to the Trustee); and
(iii) Notes in exchange for or in lieu of other
Notes which have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Trustee is presented that
any such Notes are held by a bona fide purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Representative or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the Trustee
either actually knows to be so owned or has received written notice thereof
shall be so disregarded. Notes so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Representative
or any Affiliate of any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
or class of Notes, as applicable, Outstanding at the date of determination.
"OWNER TRUSTEE" shall have the meaning given to such term in the Trust
Agreement.
"PAYING AGENT" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Principal and Interest Account and the Note Distribution Account, including
payment of principal of or interest on the Notes on behalf of the Issuer.
"PAYMENT DATE" means a Remittance Date.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"RECORD DATE" means, with respect to a Remittance Date or Redemption
Date, the close of business on the last day of the month immediately preceding
the month of the related Remittance Date or Redemption Date.
"REDEMPTION DATE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Remittance Date specified by the Servicer or the Issuer pursuant to
Section 10.1(a) or (b) as applicable.
"REDEMPTION PRICE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
the then Outstanding Notes plus accrued and unpaid interest thereon to but
excluding the Redemption Date, or (b) in the case of a payment made to
Noteholders pursuant to Section 10.1(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (a)
above.
"REMITTANCE RATE" means with respect to (i) the Class A-1 Notes, the
Class A-1 Remittance Rate, (ii) the Class A-2 Notes, the Class A-2 Remittance
Rate, (iii) the Class A-3 Notes, the Class A-3 Remittance Rate, (iv) the Class
A-4 Notes, the Class A-4 Remittance Rate, (v) the Class M-1 Notes, the Class M-1
Remittance Rate, (vi) the Class M-2 Notes, the Class M-2 Remittance Rate, and
(vii) the Class B Notes, the Class B Remittance Rate.
"REPRESENTATIVE" means The Money Store Inc., a New Jersey corporation,
as Representative of the Originators under the Sale and Servicing Agreement and
the Trust Agreement, and its successors and assigns as Representative
thereunder.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Department of the Trustee, including any Vice
President, Assistant Vice President, any Assistant Secretary, any trust officer
or any other officer of the 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.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of November 30, 1997, among the Issuer, the Representative, Servicer
and Claims Administrator and the Originators named therein, as the same may be
amended or supplemented from time to time.
"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.
"SUCCESSOR SERVICER" has the meaning specified in Section 3.7(e).
"TRUST AGREEMENT" means the Trust Agreement, dated as of November 30,
1997, among the Originators and Chase Manhattan Bank Delaware, as Owner Trustee.
"TRUST ESTATE" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trustee), including all proceeds thereof.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"TRUSTEE" means The Bank of New York, a New York banking corporation,
not in its individual capacity but as trustee under this Indenture, or any
successor trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(a) Except as otherwise specified herein, the following terms have the
respective meanings set forth in the Sale and Servicing Agreement, amended or
supplemented from time to time, for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms:
Section of Sale and
Term Servicing Agreement
Available Remittance Amount.................................. Section 1.01
Compensating Interest........................................ Section 1.01
Certificateholders........................................... Section 1.01
Closing Date ................................................ Section 1.01
Cut-Off Date................................................. Section 1.01
Deleted Loan................................................. Section 1.01
Depository Agreements........................................ Section 1.01
Due Period................................................... Section 1.01
Final Scheduled Maturity Date................................ Section 1.01
Final Scheduled Remittance Date.............................. Section 1.01
Interest Shortfall Carryforward Amount....................... Section 1.01
Liquidated Loan.............................................. Section 1.01
Monthly Advances............................................. Section 1.01
Loan......................................................... Section 1.01
Mortgaged Property........................................... Section 1.01
Note Distribution Account.................................... Section 1.01
Originator................................................... Section 1.01
Permitted Instruments........................................ Section 1.01
Person....................................................... Section 1.01
Pool Balance................................................. Section 1.01
Principal and Interest Account............................... Section 1.01
Rating Agency ............................................... Section 1.01
Rating Agency Condition...................................... Section 1.01
Remittance Date.............................................. Section 1.01
REO Property................................................. Section 1.01
Servicer Default............................................. Section 1.01
Servicer..................................................... Section 1.01
Subsequent Cut-Off Date...................................... Section 1.01
Subsequent Loan.............................................. Section 1.01
Subsequent Transfer Date..................................... Section 1.01
Trust Accounts............................................... Section 1.01
(b) Capitalized terms used herein and not otherwise defined herein or
in the Sale and Servicing Agreement have the meanings assigned to them in the
Trust Agreement.
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has
the meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
and
(v) words in the singular include the plural and
words in the plural include the singular.
ARTICLE II
THE NOTES
SECTION 2.1 FORM. Each class of Notes, together with the Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit B-1, B-2 or B-3, as applicable, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits B-1, B-2 and B-3 are part of the terms of this
Indenture.
SECTION 2.2 EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon Issuer Order authenticate and deliver Class A-1
Notes for original issue in an aggregate principal amount of $50,644,000, Class
A-2 Notes for original issue in an aggregate principal amount of $17,885,000,
Class A-3 Notes for original issue in an aggregate principal amount of
$12,315,000, Class A-4 Notes for original issue in an aggregate principal amount
of $16,693,000, Class M-1 Notes for original issue in an aggregate principal
amount of $13,837,000, Class M-2 Notes for original issue in an aggregate
principal amount of $13,837,000, and Class B Notes for original issue in an
aggregate principal amount of $9,789,000. The aggregate principal amount of
Notes outstanding at any time may not exceed such amounts except as provided in
Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof (except for one Note of each
class which may be issued in a denomination other than an integral multiple of
$1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 TEMPORARY NOTES. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes. SECTION 2.4 REGISTRATION;
REGISTRATION OF TRANSFER AND EXCHANGE. The Issuer shall cause to be kept a
register (the "Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of Notes and
the registration of transfers of Notes. The Trustee shall be "Note Registrar"
for the purpose of registering Notes and transfers of Notes as herein provided.
The Note Registrar may resign as such only upon written notice delivered to an
Authorized Officer of the Issuer, and upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and, upon one of its
Authorized Officers receiving written notice thereof, any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
applicable requirements of Article 8 of the UCC are met the Issuer shall execute
and upon its request the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the applicable
requirements of Article 8 of the UCC are met the Issuer shall execute and upon
its request the Trustee shall authenticate and the Noteholder shall obtain from
the Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 MUTILATED, DESTROYED, LOST OR STOLEN Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the applicable requirements
of Article 8 of the UCC are met, the Issuer shall execute and upon its request
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a replacement Note; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST. (a)
The Notes shall accrue interest as provided in the forms of the Class A Note,
the Class M Note and the Class B Note, set forth in Exhibits B-1, B-2 and B-3,
respectively, and such interest shall be payable on each Remittance Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Remittance Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a Remittance
Date or on the Final Scheduled Remittance Date (and except for the Redemption
Price for any Note called for redemption pursuant to Section 10.1(a)) which
shall be payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Remittance Date as set forth in the Sale and Servicing Agreement.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Trustee or the Holders
of the Notes representing not less than a majority of the Outstanding Amount of
the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2. In such event, all principal payments on the of
Notes shall be made first to the Noteholders of the Class A Notes (pro rata,
based upon the Outstanding Amount of each such class of Notes over the
Outstanding Amount of all Class A Notes, among the Holders of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes), second
to the Noteholders of the Class M-1 Notes, third to the Noteholders of the Class
M-2 Notes, and fourth to the Noteholders of the Class B Notes, to the extent
such class of Notes is entitled thereto. The Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Remittance Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be mailed or transmitted by facsimile prior to such final Remittance Date
and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.2.
(c) (i) The rights of the Holders of the Class M Notes to receive
distributions with respect to interest and principal shall be subordinated to
the prior rights of the Holders of the Class A Notes to receive all payments of
interest to which they are entitled and, after the Holders of the Class A Notes
have received the full amount of interest to which they are entitled, the rights
of the Holders of the Class M Notes to receive distributions with respect to
principal shall be subordinated to the prior rights of the Holders of the Class
A Notes to receive all payments of principal to which they are entitled; and
(ii) the rights of the Holders of the Class B Notes to receive distributions
with respect to interest and principal shall be subordinated to the prior rights
of the Holders of the Class A Notes and the Holders of the Class M Notes to
receive all payments of interest to which they are entitled and, after the
Holders of the Class A Notes and the Holders of the Class M Notes have received
the full amount of interest to which they are entitled, the rights of the
Holders of the Class B Notes to receive distributions with respect to principal
shall be subordinated to the prior rights of the Holders of the Class A Notes
and the Holders of the Class M Notes to receive all payments of principal to
which they are entitled.
(d) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Remittance Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder and the Trustee a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.]
SECTION 2.8 CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be returned to it; PROVIDED that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
SECTION 2.9 RELEASE OF COLLATERAL. Subject to Section 11.1, the
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss. 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Bank of New York, as agent for The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this
Section conflict with any other provisions of this Indenture, the
provisions of this Section shall control;
(iv) the rights of Note Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Note Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to
the Note Depository Agreement, unless and until Definitive Notes are
issued pursuant to Section 2.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the
Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of Holders
of Notes evidencing a specified percentage of the Outstanding Amount
of the Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to the Trustee.
SECTION 2.11 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 DEFINITIVE NOTES. If (i) the Servicer advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and the Servicer is
unable to locate a qualified successor, (ii) the Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Trustee through the Clearing Agency
in writing that the continuation of a book entry system through the Clearing
Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Trustee of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners requesting
the same. Upon surrender to the Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
ARTICLE III
COVENANTS
SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.2(c), the Issuer will cause to be distributed all amounts
on deposit in the Note Distribution Account on a Remittance Date deposited
therein pursuant to the Sale and Servicing Agreement (i) for the benefit of the
Class A Notes, to the Class A Noteholders, (ii) for the benefit of the Class M
Notes, to the Class M Noteholders, and (iii) for the benefit of the Class B
Notes, to the Class B Noteholders. Amounts properly withheld under the Code by
any Person from a payment to any Noteholder of interest and/or principal shall
be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2 MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Principal and
Interest Account and the Note Distribution Account pursuant to Section 8.2(c)
shall be made on behalf of the Issuer by the Trustee or by another Paying Agent,
and no amounts so withdrawn from the Principal and Interest Account and the Note
Distribution Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section.
On or before each Remittance Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Note Distribution Account an
aggregate sum sufficient to pay the amounts then becoming due under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Paying Agent is the Trustee) shall promptly notify the Trustee of
its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and
forthwith pay to the Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment;
and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Notes
of any applicable withholding taxes imposed thereon and with respect
to any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4 EXISTENCE. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 PROTECTION OF TRUST ESTATE. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security
interest and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate
and the rights of the Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section; it being understood that the
Trustee has no duty to determine whether any filing or recording is necessary
hereunder.
SECTION 3.6 OPINIONS AS TO TRUST ESTATE. (a) On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution and filing of
any financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cut-Off Date, the Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until January 30 in the following calendar
year.
SECTION 3.7 PERFORMANCE OF OBLIGATIONS; SERVICING OF THE LOANS. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee and the Rating Agencies thereof in accordance with Section 11.4, and
shall specify in such notice the action, if any, the Issuer is taking in respect
of such default. If a Servicer Default of which the Issuer has knowledge shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the Loans,
the Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) Upon any termination of the Servicer's or Claims Administrator's
rights and powers pursuant to Section 10.01 of the Sale and Servicing Agreement,
the Issuer shall promptly notify the Trustee. As soon as a successor to the
Servicer or Claims Administrator, as the case may be (other than the Trustee) is
appointed pursuant to Section 10.02 of the Sale and Servicing Agreement, the
Issuer shall notify the Trustee of such appointment, specifying in such notice
the name and address of such successor Servicer or Claims Administrator, as the
case may be.
(f) Upon an Authorized Officer of the Issuer acquiring actual
knowledge of any termination of the Servicer's rights and powers pursuant to the
Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee. As
soon as a Successor Servicer (other than the Trustee) is appointed, the Issuer
shall notify the Trustee of such appointment, specifying in such notice the name
and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it will not, without the prior written
consent of the Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or surrender,
or agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral or the Basic Documents, or waive
timely performance or observance by the Servicer, or the Representative under
the Sale and Servicing Agreement; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, distributions that are required to be made for the benefit of the
Noteholders, or (ii) reduce the aforesaid percentage of the Notes which are
required to consent to any such amendment, without the consent of the Holders of
all the Outstanding Notes. If any such amendment, modification, supplement or
waiver shall be so consented to by the Trustee or such Holders, the Issuer
agrees, promptly following a request by the Trustee to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as the Trustee may deem necessary or appropriate in
the circumstances.
SECTION 3.8 NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture
or the Basic Documents, sell, transfer, exchange or otherwise dispose
of any of the properties or assets of the Issuer, including those
included in the Trust Estate, unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from
the principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of
this Indenture to be impaired, or permit the lien of this Indenture to
be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in
each case on a Loan and arising solely as a result of an action or
omission of the related obligor, except as expressly permitted by the
Basic Documents) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.9 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year ending December 31, 1997), and otherwise in
compliance with the requirements of TIA Section 314(a)(4) an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
(i) a review of the activities of the Issuer during
such year and of performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout such year,
or, if there has been a default in the compliance of any such
condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
SECTION 3.10 ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by
or surviving such consolidation or merger shall be a Person organized
and existing under the laws of the United States of America or any
state and shall expressly assume, by an indenture supplement hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed
or observed, all as provided herein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Trustee) to
the effect that such transaction will not have any material adverse
federal or Delaware tax consequence to the Trust, any Noteholder or
any Certificateholder;
(v) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture comply
with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate, to
any Person, unless
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Issuer the conveyance or
transfer of which is hereby restricted shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States of America or any state, (B) expressly assume, by an
indenture supplement hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided
herein, (C) expressly agree by means of such supplemental indenture
that all right, title and interest so conveyed or transferred shall be
subject and subordinate to the rights of Holders of the Notes, (D)
unless otherwise provided in such supplemental indenture, expressly
agree to indemnify, defend and hold harmless the Issuer against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agree by means of such
supplemental indenture that such Person (or if a group of persons,
then one specified Person) shall prepare (or cause to be prepared) and
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Trustee) to
the effect that such transaction will not have any material adverse
tax consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
SECTION 3.11 SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10 (b), The Money Store Residential Trust
1997-II will be released from every covenant and agreement of this Indenture to
be observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Trustee stating that The
Money Store Residential Trust 1997-II is to be so released.
SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Loans in the manner contemplated by this Indenture and the Basic Documents and
activities incidental thereto.
SECTION 3.13 NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes and any other indebtedness permitted by or
arising under the Basic Documents.
SECTION 3.14 SERVICER'S OBLIGATIONS. The Issuer shall cause the
Servicer to comply with Sections 5.04, 5.05, 5.07 and 7.07 of the Sale and
Servicing Agreement.
SECTION 3.15 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
SECTION 3.18 RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
PROVIDED, HOWEVER, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee, the Holder of the GP Interest
and the Certificateholders as permitted by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement or Trust
Agreement. The Issuer will not, directly or indirectly, make payments to or
distributions from the Principal and Interest Account except in accordance with
this Indenture and the Basic Documents.
SECTION 3.19 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the
Representative of its obligations under the Sale and Servicing Agreement of
which an Authorized Officer of the Issuer acquires actual knowledge.
SECTION 3.20 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21 INCOME TAX CHARACTERIZATION. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness of the Issuer.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.21 and 11.16, (v) the rights, obligations and immunities of
the Trustee hereunder (including the rights of the Trustee under Section 6.7 and
the obligations of the Trustee under Section 4.2) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them, and the Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.5
and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.3) have been delivered to
the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the
Final Scheduled Remittance Date within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above,
has irrevocably deposited or caused to be irrevocably
deposited with the Trustee cash or direct obligations of or
obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered
to the Trustee for cancellation when due to the Final
Scheduled Remittance Date or Redemption Date (if Notes
shall have been called for redemption pursuant to
Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have
been complied with.
SECTION 4.2 APPLICATION OF TRUST MONEY. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3 REPAYMENT OF MONEYS HELD BY PAYING Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
SECTION 4.4 NOTICE. Upon the satisfaction and discharge of this
Indenture with respect to any class of Notes, the Trustee shall notify each
Rating Agency of such satisfaction and discharge.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any
Note (other than any Interest Shortfall Carryforward Amount, if
applicable) when the same becomes due and payable, and such default
shall continue for a period of five days; provided, however, that so
long as any Class A Notes remain Outstanding, the default in such
payment on a Class M Note or Class B Note shall not be deemed an Event
of Default, and so long as any Class M Notes remain Outstanding, the
default in such payment on a Class B Note shall not be deemed an Event
of Default; or
(ii) default in the payment of the principal of any
Note when the same becomes due and payable; provided, however, that so
long as any Class A Notes remain Outstanding, the default in such
payment on a Class M Note or Class B Note shall not be deemed an Event
of Default, and so long as any Class M Notes remain Outstanding, the
default in such payment on a Class B Note shall not be deemed an Event
of Default; or
(iii) default in the observance or performance of
any covenant or agreement of the Issuer made in this Indenture (other
than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section specifically dealt
with), which continues for a period of 30 days (or for such longer
period, not in excess of 90 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy
within 90 days or less and the Servicer on behalf of the Owner Trustee
delivers an Officer's Certificate to the Trustee to the effect that
the Issuer has commenced, or will promptly commence and diligently
pursue, all reasonable efforts to remedy such default) after notice
thereof shall have been given, by registered or certified mail, to the
Issuer by the Trustee or to the Issuer and the Trustee by the Holders
of at least 25% of the Outstanding Amount of the Notes, a written
notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(iv) any representation or warranty of the Issuer
made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have
been incorrect in any material respect as of the time when the same
shall have been made, and such breach is not cured within 30 days (or
for such longer period, not in excess of 90 days, as may be reasonably
necessary to remedy such default; provided that such default is
capable of remedy within 90 days or less and the Servicer on behalf of
the Owner Trustee delivers an Officer's Certificate to the Trustee to
the effect that the Issuer has commenced, or will promptly commence
and diligently pursue, all reasonable efforts to remedy such default)
after notice thereof after there shall have been given, by registered
or certified mail, to the Issuer by the Trustee or to the Issuer and
the Trustee by the Holders of at least 25% of the Outstanding Amount
of the Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(v) the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Issuer or
any substantial part of the Trust Estate in an involuntary case under
any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Trust
Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect
for a period of 30 consecutive days; or
(vi) the commencement by the Issuer of a voluntary
case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the
Issuer to the entry of an order for relief in an involuntary case
under any such law, or the consent by the Issuer to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by
the Issuer generally to pay its debts as such debts become due, or the
taking of action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event of which an Authorized Officer of the Issuer has acquired actual
knowledge which with the giving of notice and the lapse of time would become an
Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes may declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Trustee if given
by Noteholders), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of Notes representing a majority of the Outstanding Amount of the Notes, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the
Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Notes that has become due solely by
such acceleration, have been cured or waived as provided in Section
5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a proceeding for the collection of the sums so due and unpaid, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as the Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in respect of
the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence, bad faith or willful
misconduct) and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes in any election
of a trustee, a standby trustee or person performing similar functions
in any such proceedings;
(iii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
all amounts received with respect to the claims of the Noteholders and
of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the
claims of the Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(g) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 REMEDIES; PRIORITIES. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute proceedings in its own name and as
trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such Notes
moneys adjudged due;
(ii) institute proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under
the UCC and take any other appropriate action to protect and enforce
the rights and remedies of the Trustee and the Holders of the Notes;
and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.1(i) or (ii), unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the proceeds of such sale
or liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal and interest
or (C) the Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Trustee obtains the consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts including
amounts held on deposit in the Reserve Account) held as Collateral for the
benefit of the Noteholders in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to the Noteholders of the Class A Notes, pro rata
(based upon the Outstanding Amount of each class of Class A Notes over
the total Outstanding Amount of all Class A Notes), for amounts due and
unpaid on each class of Class A Notes for interest, ratably and without
preference or priority of any kind within each such class, according to
the amounts due and payable on each class of Class A Notes for
interest;
THIRD: to the Noteholders of the Class A Notes, pro rata
(based upon the Outstanding Amount of each class of Class A Notes over
the total Outstanding Amount of all Class A Notes), for amounts due and
unpaid on each class of Class A Notes for principal, ratably and
without preference or priority of any kind within each such class,
according to the amounts due and payable on each class of Class A Notes
for principal; and
FOURTH: to the Class M-1 Noteholders for amounts due
and unpaid on the Class M-1 Notes for interest, ratably
and without preference or priority of any kind within such class,
according to the amounts due and payable on the Class M-1 Notes for
interest;
FIFTH: to the Class M-1 Noteholders for amounts due
and unpaid on the Class M-1 Notes for principal, ratably
and without preference or priority of any kind within such
class, according to the amounts due and payable on the
Class M-1 Notes for principal;
SIXTH: to the Class M-2 Noteholders for amounts due
and unpaid on the Class M-2 Notes for interest, ratably
and without preference or priority of any kind within such
class, according to the amounts due and payable on the
Class M-2 Notes for interest;
SEVENTH: to the Class M-2 Noteholders for amounts due
and unpaid on the Class M-2 Notes for principal, ratably
and without preference or priority of any kind within
such class, according to the amounts due and payable on the
Class M-2 Notes for principal;
EIGHTH: to the Class B Noteholders for amounts due
and unpaid on the Class B Notes for interest, ratably and
without preference or priority of any kind within such
class, according to the amounts due and payable on the
Class B Notes for interest;
NINTH: to the Class B Noteholders for amounts due and
unpaid on the Class B Notes for principal, ratably and
without preference or priority of any kind within such
class, according to the amounts due and payable on the
Class B Notes for principal; and
TENTH: to the Issuer for distribution to the
Certificateholders.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 5.5 OPTIONAL PRESERVATION OF THE LOANS. If the Notes have been
declared to be due and payable under Section 5.2 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Trustee may, but need not, elect to maintain possession of the Trust Estate.
It is the desire of the parties hereto and the Noteholders that there be at all
times sufficient funds for the payment of principal of and interest on the
Notes, and the Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Estate. In determining
whether to maintain possession of the Trust Estate, the Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.6 LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the
Outstanding Amount of the Notes have made written request to the
Trustee to institute such proceeding in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such
request;
(iv) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such proceedings; and
(v) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Noteholder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.9 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
SECTION 5.11 CONTROL BY NOTEHOLDERS. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
with respect to the Notes or exercising any trust or power conferred on the
Trustee; PROVIDED that
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.4,
any direction to the Trustee to sell or liquidate the Trust Estate
shall be by the Holders of Notes representing not less than 100% of
the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5
have been satisfied and the Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the trustee by Holders
of Notes representing less than 100% of the Outstanding Amount of the
Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction;
PROVIDED, HOWEVER, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.15 ACTION ON NOTES. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.16 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS. (a)
Promptly following a written request from the Trustee to do so and at the
Servicer's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Representative, and the Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
the Representative or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Representative or the Servicer of each of their obligations under the Sale and
Servicing Agreement. (b) If an Event of Default has occurred and is continuing,
the Trustee may, and, at the direction (which direction shall be in writing or
by telephone (confirmed in writing promptly thereafter)) of the Holders of
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Representative
or the Servicer under or in connection with the Sale and Servicing Agreement,
including the right or power to take any action to compel or secure performance
or observance by the Representative or the Servicer of each of their obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale and Servicing Agreement, and any
right of the Issuer to take such action shall be suspended.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 DUTIES OF TRUSTEE. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in their exercise as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; however, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(h) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Sale and Servicing
Agreement.
(i) Whenever any action under the Basic Documents requires the
approval or disapproval of Certificateholders or the Holder of the Voting
Interest, the Trustee shall, in accordance with, and subject to, Section 2.11 of
the Trust Agreement and other provisions of the Trust Agreement concerning the
Holder of the Voting Interest, instruct the Holder of the Voting Interest to act
in accordance with written directions, received from Holders of a majority of
the Outstanding Amount of the Notes.
(j) The Trustee's appointment of the Co-Trustee and the Custodian
shall be deemed to have been made with due care and without negligence on the
part of the Trustee. The Trustee shall have no liability or responsibility in
connection with or arising out of any acts or omissions on the part of any
Co-Trustee or Custodian.
SECTION 6.2 RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) 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 or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Issuer's use of the proceeds
from the Notes, and it shall not be responsible for any statement of the Issuer
in the Indenture or in any document issued in connection with the sale of the
Notes or in the Notes other than the Trustee's certificate of authentication.
SECTION 6.5 NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence thereof
has been delivered to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Owner Trustee notice of the Default within 90
days after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall deliver
to each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 COMPENSATION AND INDEMNITY. The Issuer shall or shall
cause the Servicer to pay to the Trustee, the Co-Trustee and the Custodian (as
defined below) from time to time compensation for their services in accordance
with separate agreements between the Servicer and the Trustee, the Co-Trustee
and the Custodian, respectively, which compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall or shall
cause the Servicer to reimburse the Trustee, the Co-Trustee and the Custodian
for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee's, the Co-Trustee's or the Custodian's agents,
counsel, accountants and experts. The Issuer shall or shall cause the Servicer
to indemnify the Trustee, the Co-Trustee and the Custodian and their respective
officers, directors, employees and agents against any and all loss, liability or
expense (including attorneys' fees and expenses) incurred by any of them in
connection with the acceptance or the administration of this trust and the
performance of their respective duties hereunder and under the Sale and
Servicing Agreement and the Custodial Agreement. The Trustee, the Co-Trustee or
the Custodian shall notify the Issuer and the Servicer promptly of any claim for
which it may seek indemnity. Failure by the Trustee, the Co-Trustee or the
Custodian to so notify the Issuer and the Servicer shall not relieve the Issuer
of its obligations hereunder or the Servicer of its obligations under Article
XII of the Sale and Servicing Agreement. The Issuer shall or shall cause the
Servicer to defend the claim and the Trustee, the Co-Trustee or the Custodian
may have separate counsel and the Issuer shall or shall cause the Servicer to
pay the reasonable fees and expenses of such counsel. Neither the Issuer nor the
Servicer need reimburse any expense or indemnify against any loss, liability or
expense incurred by the Trustee, the Co-Trustee or the Custodian through the
Trustee's, the Co-Trustee's or Custodian's, as applicable, own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee, the Co-Trustee and
the Custodian pursuant to this Section shall survive the discharge of this
Indenture and the resignation or removal of the Trustee, the Co-Trustee or the
Custodian, as applicable, subject to a satisfaction of the Rating Agency
Condition. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.1(iv) or (v) with respect to the Issuer, the expenses are
intended to constitute expenses of administration under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
similar law. Notwithstanding anything else set forth in this Indenture or the
Basic Documents, the Trustee agrees that the obligations of the Issuer (but not
the Servicer) to the Trustee hereunder and under the Basic Documents shall be
recourse to the Trust Estate only and specifically shall not be recourse to the
assets of the Holder of the Voting Interest, the Representative, any Originator
or any Certificateholder.
SECTION 6.8 REPLACEMENT OF TRUSTEE. The Trustee may resign at any time
by so notifying the Issuer and the Representative. The Holders of a majority in
Outstanding Amount of the Notes may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Representative shall remove the
Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in
respect of the Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official)
for the Trustee or for any substantial part of the Trustee's property,
or ordering the winding-up or liquidation of the Trustee's affairs;
(iii) an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law is
commenced with respect to the Trustee and such case is not dismissed
within 60 days;
(iv) the Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar offical) for the
Trustee or for any substantial part of the Trustee's property, or
makes any assignment for the benefit of creditors or fails generally
to pay its debts as such debts become due or takes any corporate
action in furtherance of any of the foregoing; or
(v) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Representative shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer and the Representative.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture subject to satisfaction of the Rating
Agency Condition. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Representative
or the Holders of a majority in Outstanding Amount of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8 and payment of all fees and expenses owed to the
outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Servicer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.9 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) 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 (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed 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 or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder,
including acts or omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) 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 Indenture and the conditions
of this Article VI. 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 Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) 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
Indenture on its behalf and in its name. 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 invest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
(e) The Servicer and the Trustee hereby appoint First Union Trust
Company, National Association as Co-Trustee with respect to all FHA Loans that
constitute, or may in the future constitute, part of the Trust. Except as
otherwise specifically provided herein, whenever action, consent, approval or
delivery to or from the Trustee is required under this Indenture or the Sale and
Servicing Agreement in connection with an FHA 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 Loans shall be obligations of, and benefits,
protection and indemnities provided to, the Co-Trustee with respect to the FHA
Loans.
Notwithstanding any contrary provision contained herein or in the Sale
and Servicing Agreement, the Co-Trustee shall be responsible hereunder solely
for the express duties and functions specified for it herein and the Sale and
Servicing Agreement with respect to the acceptance, ownership, servicing
compliance oversight, substitution, sale, release and discharge of FHA Loans,
and shall not be responsible for, and shall incur no liability in connection
with, the actions, duties and functions of the Trustee, including without
limitation the payment of Notes or the oversight of servicing compliance for
Loans not constituting FHA Loans.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of at least BBB- by Standard & Poor's Ratings Services, a Division of the
McGraw Hill Companies, Inc. ("S&P") and BBB- by Fitch IBCA, Inc. ("Fitch"). The
Trustee shall comply with TIA ss. 310 (b), including the optional provision
permitted by the second sentence of TIA ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13 APPOINTMENT OF CUSTODIANS. (a) The Issuer and the Trustee
may appoint one or more custodians (a "Custodian") to hold all or a portion of
the mortgage files and documents relating to the Loans (a "File") as agent for
the Trustee and perform such other duties on behalf of the Trustee as set forth
in the Sale and Servicing Agreement, by entering into a custodial agreement (a
"Custodial Agreement"). Subject to this Article VI, the Trustee agrees to comply
with the terms of each such Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the Noteholders and
the Certificateholders. The Custodian's fees shall be payable solely from the
fees received by it pursuant to Section 6.7. Each Custodian 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
File.
(b) The Trustee and the Issuer hereby appoint First Union National
Bank as Custodian with respect to the Files relating to all of the Home
Improvement Loans (as defined in the Sale and Servicing Agreement) that
constitute, or may in the future constitute, part of the Collateral, and to
perform such other duties as set forth in the Sale and Servicing Agreement on
the terms and conditions set forth in the related Custodial Agreement, which
shall be substantially in the form of Exhibit C attached hereto and made a part
hereof. The Custodian shall be responsible hereunder solely for the express
duties and functions specified for it herein and in the Sale and Servicing
Agreement with respect to the custody, review and confirmation, safekeeping,
substitution and release of the Files relating to the Home Improvement Loans.
(c) The parties hereto agree that the Custodian shall be deemed a
third party beneficiary of this Indenture entitled to all rights and benefits
set forth herein as fully as if it were a party hereto.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Note Registrar,
no such list shall be required to be furnished.
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3 REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall
transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.3(a) as may be required by rules and regulations prescribed from
time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 REPORTS BY TRUSTEE. If required by TIA ss. 313(a), within
60 days after each June 30, beginning with June 30, 1998, the Trustee shall mail
to each Noteholder as required by TIA ss. 313(c) a brief report dated as of such
date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA
ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission, if required by the Exchange Act,
and each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
SECTION 8.2 TRUST ACCOUNTS. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 7.01 of the Sale and Servicing Agreement.
(b) On or before each Remittance Date, all funds required to be
deposited in the Principal and Interest Account, with respect to the preceding
Due Period, will be deposited in the Principal and Interest Account as provided
in Section 4.03 of the Sale and Servicing Agreement. On or before each
Remittance Date, the Available Remittance Amount (net of any Compensating
Interest or Monthly Advances) with respect to the preceding Due Period will be
transferred from the Principal and Interest Account to the Note Distribution
Account as provided in Sections 4.04(a) and 7.01 of the Sale and Servicing
Agreement.
(c) On each Remittance Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of each class of Notes, and to the Owner Trustee, or the
Paying Agent under the Trust Agreement on its behalf, for distribution to the
Holders of the Certificates in accordance with the provisions of Section 7.05 of
the Sale and Servicing Agreement.
SECTION 8.3 GENERAL PROVISIONS REGARDING Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Permitted
Instruments and reinvested by the Trustee upon Issuer Order, subject to the
provisions of Section 4.03 of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in the Trust Accounts shall be
deposited (or caused to be deposited) by the Trustee in the Principal and
Interest Account, and any loss resulting from such investments shall be charged
to such account. The Issuer will not direct the Trustee to make any investment
of any funds or to sell any investment held in any of the Trust Accounts unless
the security interest granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Trustee to make any such investment or sale, if requested by the Trustee,
the Issuer shall deliver to the Trustee an Opinion of Counsel, acceptable to the
Trustee, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Permitted
Instruments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable pursuant to Section 5.2, or, (iii) if such Notes shall
have been declared due and payable following an Event of Default but amounts
collected or receivable from the Trust Estate are being applied in accordance
with Section 5.5 as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Permitted Instruments.
SECTION 8.4 RELEASE OF TRUST ESTATE. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, the Trustee may, and when required by
the provisions of this Indenture shall, execute instruments to release property
from the lien of this Indenture, or convey the Trustee's interest in the same,
in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Trustee as provided in this Article VIII shall be bound to ascertain the
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Trustee shall, at such time as there are no Notes outstanding
and all sums due the Trustee pursuant to Section 6.7 have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.4(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements
of Section 11.1.
SECTION 8.5 OPINION OF COUNSEL. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and the
Trustee shall also require as a condition to such action, an Opinion of Counsel
(if required by the TIA), in form and substance satisfactory to the Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Trustee, the Issuer and the
Trustee, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or better
to assure, convey and confirm unto the Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with
the applicable provisions hereof, of another person to the Issuer, and
the assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge
any property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement
any provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; PROVIDED that such action shall not adversely affect in any
material respect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this Indenture
as shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions
of this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by the Issuer, as evidenced to the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Price with
respect thereto, change the provision of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(iii) reduce the percentage of the Outstanding
Amount of the Notes, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
(iv) modify or alter the provisions of the proviso
to the definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount
of the Notes required to direct the Trustee to direct the Issuer to
sell or liquidate the Trust Estate pursuant to Section 5.4;
(vi) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture
in such manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any Remittance
Date (including the calculation of any of the individual components of
such calculation) or to affect the rights of the Holders of Notes to
the benefit of any provisions for the mandatory redemption of the
Notes contained herein; or
(viii) permit the creation of any lien ranking prior
to or on a parity with the lien of this Indenture with respect to any
part of the Trust Estate or, except as otherwise permitted or
contemplated herein or in the Basic Documents, terminate the lien of
this Indenture on any property at any time subject hereto or deprive
the Holder of any Note of the security provided by the lien of this
Indenture.
The Trustee may determine whether or not any Notes would be affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise. The
Trustee shall provide copies of each such supplemental indenture to each of the
Rating Agencies.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 REDEMPTION. (a) The Notes are subject to redemption in
whole, but not in part, at the direction of the Representative pursuant to
Section 11.01 of the Sale and Servicing Agreement, on any Remittance Date on
which the Representative exercises its option to purchase the Trust Estate
pursuant to said Section 11.01. The purchase price for the Notes shall be equal
to the Redemption Price; PROVIDED, HOWEVER, that the Issuer has available funds
sufficient to pay the Redemption Price. The Servicer shall furnish the Rating
Agencies notice of such redemption. If the Notes are to be redeemed pursuant to
this Section 10.1(a) (i) or (ii), the Servicer shall furnish notice to the
Trustee not later than 25 days prior to the Redemption Date and the Issuer shall
deposit with the Trustee in the Note Distribution Account, on or before the
Redemption Date, the Redemption Price of the Notes to be redeemed whereupon all
such Notes shall be due and payable on the Redemption Date upon the furnishing
of a notice complying with Section 10.2 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer or the
Issuer shall, to the extent practicable, furnish notice of such event to the
Trustee not later than 25 days prior to the Redemption Date whereupon all such
amounts shall be payable on the Redemption Date.
SECTION 10.2 FORM OF REDEMPTION NOTICE. (a) Notice of redemption under
Section 10.1(a) shall be given by the Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed not less than five days in the case
of Section 10.1(a)(i) and Section 10.1(a)(ii) prior to the applicable Redemption
Date to each Holder of Notes, as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to
such Redemption Date is not applicable and that payments shall be made
only upon presentation and surrender of such Notes and the place where
such Notes are to be surrendered for payment of the Redemption Price
(which shall be the office or agency of the Issuer to be maintained as
provided in Section 3.2); and
(iv) that interest on the Notes shall cease to
accrue on the Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.1(b) is not required
to be given to Noteholders.
SECTION 10.3 NOTES PAYABLE ON REDEMPTION DATE. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, etc. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such covenant
or condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 11.1(a) or elsewhere in this
Indenture, furnish to the Trustee an Officer's Certificate certifying or stating
the opinion of each person signing such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to
the Trustee an Officer's Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (i) above,
the Issuer shall also deliver to the Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of
the securities to be so deposited and of all other such securities
made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to
any securities so deposited, if the fair value thereof to the Issuer
as set forth in the related Officer's Certificate is less than $25,000
or less than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any
Deleted Loans or Liquidated Loans, whenever any property or securities
are to be released from the lien of this Indenture, the Issuer shall
also furnish to the Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the
fair value (within 90 days of such release) of the property or
securities proposed to be released and stating that in the opinion of
such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to
the Trustee an Officer's Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Trustee an Independent
Certificate as to the same matters if the fair value of the property
or securities and of all other property other than Deleted Loans and
Liquidated Loans, or securities released from the lien of this
Indenture since the commencement of the then current calendar year, as
set forth in the certificates required by clause (iii) above and this
clause (iv), equals 10% or more of the Outstanding Amount of the
Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other
provision of this Section, the Issuer may (A) collect, liquidate, sell
or otherwise dispose of Loans and other Collateral as and to the
extent permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents.
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Representative or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Servicer, the
Representative or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.3 ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if personally delivered, delivered by overnight
courier or mailed certified mail, return receipt requested and shall be deemed
to have been duly given upon receipt to the Trustee at its Corporate Trust
Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be in writing
and sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Issuer addressed to: The
Money Store Residential Trust 1997-II, in care of the Owner Trustee, Attention:
Corporate Trust Administration at the address of the Owner Trustee's Corporate
Trust Office set forth in the Trust Agreement or at any other address previously
furnished in writing to the Trustee by Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Fitch, at the following address: Fitch IBCA,
Inc., One State Street Plaza, New York, New York 10004, Attention: Structured
Finance and (ii) in the case of S&P, at the following address: Standard & Poor's
Ratings Services, 26 Broadway (15th Floor), New York, New York 10004, Attention
of Asset Backed Surveillance Department; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.5 NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10 SEPARABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other person with an Ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 COUNTERPARTS. This Indenture 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.
SECTION 11.15 RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16 TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Representative,
the Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee on
the Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) the Representative, the
Servicer, the holder of the GP Interest, the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Representative, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Representative, the Servicer, the holder
of the GP Interest, the Owner Trustee or the Trustee or of any successor or
assign of the Representative, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Trustee and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement.
SECTION 11.17 NO PETITION. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time, prior to the date that is one year and a day
after the termination of the Indenture, institute against the Representative,
the holder of the GP Interest or the Trust, or join in any institution against
the Representative, the holder of the GP Interest or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18 INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
Obligations hereunder.
SECTION 11.19 USURY. The amount of interest payable or paid on any
Note under the terms of this Indenture shall be limited to an amount which shall
not exceed the maximum non usurious rate of interest allowed by the State of New
York or Delaware (whichever shall permit the lower rate) which could lawfully be
contracted for, charged or received (the "Highest Lawful Rate"). If any payment
of interest on any Note exceeds the Highest Lawful Rate, the Issuer stipulates
that such excess amount will be deemed to have been paid as a result of an error
on the part of both the Trustee, acting on behalf of the Holder of such Note,
and the Issuer, and the Noteholder receiving such excess payment shall promptly,
upon discovery of such error or upon notice thereof from the Issuer or the
Trustee, refund the amount of such excess and, at the option of the Trustee,
apply the excess to the payment of principal of such Note, if any, remaining
unpaid.
[THIS SPACE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
THE MONEY STORE RESIDENTIAL TRUST
1997-II,
By: CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By: /s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
THE BANK OF NEW YORK
not in its individual capacity
but solely as Trustee,
By: /s/ Robert P. Muller
Name: Robert P. Muller
Title: Assistant Secretary
<PAGE>
Acceptance of Co-Trustee
First Union Trust Company, National Association, a national banking
association, hereby accepts its appointment pursuant to Section 6.10(e) of the
within instrument to serve as Co-Trustee with respect to the FHA Loans. In
connection therewith, First Union Trust Company, National Association agrees to
be bound by all applicable provisions of the Indenture and the Sale and
Servicing Agreement.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Co-Trustee
By: /s/ Robert Ashbaugh
Name: Robert Ashbaugh
Title: Vice President
<PAGE>
Acceptance of Custodian
First Union National Bank, a national banking association
headquartered in Charlotte, North Carolina, hereby accepts its appointment
pursuant to Section 6.13(b) of the within instrument to serve as Custodian with
respect to the Home Improvement Loans. The Files relating to the Home
Improvement Loans initially will be kept in our offices located in Ijamsville,
Maryland. In connection therewith, First Union National Bank agrees to be bound
by all applicable provisions of the Indenture, the Sale and Servicing Agreement
and the related Custodial Agreement.
FIRST UNION NATIONAL BANK, as Custodian
By: /s/ Robin M. Belanger
Name: Robin M. Belanger
Title: Vice President
<PAGE>
EXHIBIT A
Schedule of Loans
[Provided to Trustee and Co-Trustee]
<PAGE>
[Form of Class A Note] EXHIBIT B-1
REGISTERED $
No. ___
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
THE MONEY STORE RESIDENTIAL TRUST 1997-II
Class A-__% NOTES
The Money Store Residential Trust 1997-II, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [_____________] DOLLARS payable on each
Remittance Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE]
and the denominator of which is $___________ by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class A-__ Notes (the "Notes") pursuant to Section 3.1 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of __________ (the "Class A-_ Final Maturity
Date") and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii)
or Section 10.1(b) of the Indenture. The Issuer will pay interest on this Note
at the rate per annum shown above (the "Remittance Rate") on each Remittance
Date commencing in January 1998 until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Remittance Date (after giving effect to all payments of principal made
on the preceding Remittance Date). Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS B NOTES ARE
SUBORDINATED IN PRIORITY OF PAYMENT TO DISTRIBUTIONS OF INTEREST AND PRINCIPAL
ON THE CLASS A NOTES AND CLASS M NOTES, AND DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS M NOTES ARE SUBORDINATED IN PRIORITY OF PAYMENT TO
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS A NOTES, AS DESCRIBED IN
THE SALE AND SERVICING AGREEMENT.
Distributions of principal of this Note will made in the manner
described in the Sale and Servicing Agreement until the principal balance of
this Note is reduced to zero.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: December __, 1997 THE MONEY STORE RESIDENTIAL TRUST 1997-II,
By: CHASE MANHATTAN BANK DELAWARE,
National Association, not in its individual
capacity but solely as Owner Trustee under
the Trust Agreement,
By:_______________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-__ __% Asset Backed Notes of The Money
Store Residential Trust 1997-II designated above and referred to in the
within-mentioned Indenture.
Date: December __, 1997 THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By: _________________________
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-__ __% Notes (herein called the "Class A Notes"), all
issued under an Indenture dated as of November 30, 1997 (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and The Bank of New York, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A Notes, Class M Notes and Class B Notes are and will be
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A Notes will be payable on each Remittance Date
in an amount described on the face hereof. "Remittance Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-__ Final Maturity Date
and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. All
principal payments on the Class A Notes shall be made pro rata to the Class A
Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Remittance
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Remittance
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Remittance Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Remittance Date by notice mailed
prior to such Remittance Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office or at the office of the Trustee's agent
appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A Remittance Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Representative, on any Remittance Date on or
after the date on which the Pool Balance is less than ten percent of the
Original Collateral Amount.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Representative, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Representative, the Servicer, the
holder of the GP Interest, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Representative,
the Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee or
of any successor or assign of the Representative, the Servicer, the holder of
the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Representative, the holder of the GP Interest or the
Issuer, or join in any institution against the Representative, the holder of the
GP Interest or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, The Bank of New York in its individual capacity, any owner
of a beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications of the Issuer have been made for the sole
purposes of binding the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto ________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________ _______________________3
Signature Guaranteed:
3 NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE>
[Form of Class M Note] EXHIBIT B-2
REGISTERED $
No. ___
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
THE MONEY STORE RESIDENTIAL TRUST 1997-II
Class M-__% NOTES
The Money Store Residential Trust 1997-II, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [_____________] DOLLARS payable on each
Remittance Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE]
and the denominator of which is $___________ by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class M-__ Notes (the "Notes") pursuant to Section 3.1 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of __________ (the "Class M-_ Final Maturity
Date") and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii)
or Section 10.1(b) of the Indenture. The Issuer will pay interest on this Note
at the rate per annum shown above (the "Remittance Rate") on each Remittance
Date commencing in January 1998 until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Remittance Date (after giving effect to all payments of principal made
on the preceding Remittance Date). Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS B NOTES ARE
SUBORDINATED IN PRIORITY OF PAYMENT TO DISTRIBUTIONS OF INTEREST AND PRINCIPAL
ON THE CLASS A NOTES AND CLASS M NOTES, AND DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS M NOTES ARE SUBORDINATED IN PRIORITY OF PAYMENT TO
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS A NOTES, AS DESCRIBED IN
THE SALE AND SERVICING AGREEMENT.
Distributions of principal on this Note will made in the manner
described in the Sale and Servicing Agreement until the principal balance of
this Note is reduced to zero.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: December __, 1997 THE MONEY STORE RESIDENTIAL TRUST 1997-II,
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement,
By:_______________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class M-__ __% Asset Backed Notes of The Money
Store Residential Trust 1997-II designated above and referred to in the
within-mentioned Indenture.
Date: December __, 1997 THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By: _________________________
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class M-__ __% Notes (herein called the "Class M Notes"), all
issued under an Indenture dated as of November 30, 1997 (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and The Bank of New York, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A Notes, Class M Notes and Class B Notes are and will be
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class M Notes will be payable on each Remittance Date
in an amount described on the face hereof. "Remittance Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class M-__ Final Maturity Date
and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. All
principal payments on the Class M Notes shall be made pro rata to the Class M
Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Remittance
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Remittance
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Remittance Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Remittance Date by notice mailed
prior to such Remittance Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office or at the office of the Trustee's agent
appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class M Remittance Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Representative, on any Remittance Date on or
after the date on which the Pool Balance is less than ten percent of the
Original Collateral Amount.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Representative, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Representative, the Servicer, the
holder of the GP Interest, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Representative,
the Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee or
of any successor or assign of the Representative, the Servicer, the holder of
the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Representative, the holder of the GP Interest or the
Issuer, or join in any institution against the Representative, the holder of the
GP Interest or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, The Bank of New York in its individual capacity, any owner
of a beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications of the Issuer have been made for the sole
purposes of binding the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto ________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________ _______________________1
Signature Guaranteed:
- --------
1 NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE>
[Form of Class B Note] EXHIBIT B-3
REGISTERED $
No. ___
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
THE MONEY STORE RESIDENTIAL TRUST 1997-II
Class B-__% NOTES
The Money Store Residential Trust 1997-II, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [_____________] DOLLARS payable on each
Remittance Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE]
and the denominator of which is $___________ by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class B-__ Notes (the "Notes") pursuant to Section 3.1 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of __________ (the "Class B Final Maturity Date")
and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) of the Indenture. The Issuer will pay interest on this Note at
the rate per annum shown above (the "Remittance Rate") on each Remittance Date
commencing in January 1998 until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Remittance Date (after giving effect to all payments of principal made
on the preceding Remittance Date). Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS B NOTES ARE
SUBORDINATED IN PRIORITY OF PAYMENT TO DISTRIBUTIONS OF INTEREST AND PRINCIPAL
ON THE CLASS A NOTES AND CLASS M NOTES, AND DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS M NOTES ARE SUBORDINATED IN PRIORITY OF PAYMENT TO
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS A NOTES, AS DESCRIBED IN
THE SALE AND SERVICING AGREEMENT.
Distributions of principal on this Note will made in the manner
described in the Sale and Servicing Agreement until the principal balance of
this Note is reduced to zero.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: December __, 1997 THE MONEY STORE RESIDENTIAL TRUST 1997-II,
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee under the Trust
Agreement,
By:_______________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__ __% Asset Backed Notes of The Money
Store Residential Trust 1997-II designated above and referred to in the
within-mentioned Indenture.
Date: December __, 1997 THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By: _________________________
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class B-__ __% Notes (herein called the "Class B Notes"), all
issued under an Indenture dated as of November 30, 1997 (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and The Bank of New York, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A Notes, Class M Notes and Class B Notes are and will be
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class B Notes will be payable on each Remittance Date
in an amount described on the face hereof. "Remittance Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class B Final Maturity Date and
the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or Section
10.1(b) of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class B Notes shall be made pro rata to the Class B Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Remittance
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Remittance
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Remittance Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Remittance Date by notice mailed
prior to such Remittance Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office or at the office of the Trustee's agent
appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class B Remittance Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Representative, on any Remittance Date on or
after the date on which the Pool Balance is less than ten percent of the
Original Collateral Amount.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Representative, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Representative, the Servicer, the
holder of the GP Interest, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Representative,
the Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee or
of any successor or assign of the Representative, the Servicer, the holder of
the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Representative, the holder of the GP Interest or the
Issuer, or join in any institution against the Representative, the holder of the
GP Interest or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, The Bank of New York in its individual capacity, any owner
of a beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications of the Issuer have been made for the sole
purposes of binding the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto ________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________ _______________________5
Signature Guaranteed:
- --------
5 NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
Custodial Agreement
See Exhibits C and C-1 to the Sale and Servicing Agreement.
EXECUTION COPY
THE MONEY STORE RESIDENTIAL TRUST 1997-II
TRUST AGREEMENT
among
THE ORIGINATORS LISTED HEREIN
Originators
and
CHASE MANHATTAN BANK DELAWARE
Owner Trustee
Dated as of November 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS
SECTION 1.1. Capitalized Terms..........................................1
SECTION 1.2. Other Definitional Provisions..............................4
ARTICLE II - ORGANIZATION
SECTION 2.1. Name.......................................................5
SECTION 2.2. Office.....................................................5
SECTION 2.3. Purposes and Powers........................................5
SECTION 2.4. Appointment of Owner Trustee...............................6
SECTION 2.5. Initial Capital Contribution of Trust Estate...............6
SECTION 2.6. Declaration of Trust.......................................6
SECTION 2.7. Transfer of Interest to the Holder of the GP Interest;
Liability of the Holder of the GP Interest...............6
SECTION 2.8. Title to Trust Property....................................7
SECTION 2.9. Situs of Trust.............................................8
SECTION 2.10. Representations and Warranties of the Originators..........8
SECTION 2.11. Voting Interest............................................8
SECTION 2.12. Federal Income Tax Allocations.............................9
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership..........................................9
SECTION 3.2. The Trust Certificates....................................10
SECTION 3.3. Authentication of Trust Certificates......................10
SECTION 3.4. Registration of Transfer and Exchange of
Trust Certificates......................................11
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust
Certificates............................................11
SECTION 3.6. Persons Deemed Certificateholders.........................12
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses...........................................12
SECTION 3.8. Appointment of Authenticating Agent.......................12
SECTION 3.9. Appointment of Paying Agent...............................13
SECTION 3.10. Restrictions on Transfer..................................13
SECTION 3.11. [Reserved]................................................15
SECTION 3.12. Disposition by the Holder of the GP Interest..............15
ARTICLE IV - ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Owners with Respect to Certain
Matters.................................................15
SECTION 4.2. Action by Holder of the Voting Interest with Respect
to Certain Matters......................................16
SECTION 4.3. Action by Holder of Voting Interest with Respect
to Bankruptcy...........................................16
SECTION 4.4. Restrictions on Power.....................................16
SECTION 4.5. Control by Holder of the Voting Interest..................17
SECTION 4.6. Execution of Documents....................................17
ARTICLE V - APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account.........18
SECTION 5.2. Application of Funds in Certificate Distribution
Account.................................................18
SECTION 5.3. [Reserved.]...............................................19
SECTION 5.4. Method of Payment.........................................19
SECTION 5.5. No Segregation of Monies; No Interest.....................19
SECTION 5.6. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue
Service and Others......................................19
SECTION 5.7. Signature on Returns; Tax Matters Partner.................20
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority.........................................20
SECTION 6.2. Action upon Instruction...................................21
SECTION 6.3. No Duties Except as Specified in this Agreement or in
Instructions............................................22
SECTION 6.4. No Action Except under Specified Documents or
Instructions............................................23
SECTION 6.5. Restrictions..............................................23
SECTION 6.6. Notice of Default Under Indenture.........................23
ARTICLE VII - CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties...........................23
SECTION 7.2. Furnishing of Documents...................................25
SECTION 7.3. Representations and Warranties............................25
SECTION 7.4. Reliance; Advice of Counsel...............................25
SECTION 7.5. Not Acting in Individual Capacity.........................26
SECTION 7.6. Owner Trustee Not Liable for Trust Certificates
or Loans................................................26
SECTION 7.7. Owner Trustee May Own Trust Certificates and Series
1997-II Notes...........................................27
SECTION 7.8. Payments from Owner Trust Estate..........................27
SECTION 7.9. Doing Business in Other Jurisdictions.....................27
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses.........................28
SECTION 8.2. Indemnification...........................................28
SECTION 8.3. Payments to the Owner Trustee.............................28
SECTION 8.4. Non-recourse Obligations..................................29
ARTICLE IX - DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1. Termination of Trust Agreement............................29
SECTION 9.2. Dissolution upon Bankruptcy of the Holder of the
GP Interest.............................................30
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee................31
SECTION 10.2. Resignation or Removal of Owner Trustee...................31
SECTION 10.3. Successor Owner Trustee...................................32
SECTION 10.4. Merger or Consolidation of Owner Trustee..................33
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.............33
ARTICLE XI - MISCELLANEOUS
SECTION 11.1. Supplements and Amendments................................35
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders......................................36
SECTION 11.3. Limitations on Rights of Others...........................36
SECTION 11.4. Notices...................................................36
SECTION 11.5. Severability..............................................37
SECTION 11.6. Separate Counterparts.....................................37
SECTION 11.7. Successors and Assigns....................................37
SECTION 11.8. [Reserved.]...............................................37
SECTION 11.9. No Petition...............................................37
SECTION 11.10.No Recourse...............................................37
SECTION 11.11.Headings .................................................38
SECTION 11.12.Governing Law.............................................38
SECTION 11.13.[Reserved.]...............................................38
SECTION 11.14.Servicer .................................................38
EXHIBITS
Exhibit A Form of Trust Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Investment Letter
Annex I List of Originators
<PAGE>
TRUST AGREEMENT dated as of November
30, 1997 among the Originators listed on
Annex I hereto, and Chase Manhattan Bank
Delaware, as Owner Trustee.
ARTICLE I.
DEFINITIONS
SECTION 1.1. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Authenticating Agent" shall mean any authenticating agent or
co-authenticating agent appointed pursuant to Section 3.8 and shall initially be
The Chase Manhattan Bank.
"Bank" shall mean Chase Manhattan Bank Delaware, or any successor
thereto, in its individual capacity.
"Basic Documents" shall mean the Sale and Servicing Agreement, the
Indenture, the Note Depository Agreement, the Certificate of Trust, this Trust
Agreement and the other documents and certificates delivered in connection
therewith.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 DEL. CODE ss. 3801 ET SEQ., as the same may be amended from
time to time.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Trust, substantially in the form of Exhibit A
attached hereto.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
1201 Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust
Administration; or at such other address as the Owner Trustee may designate by
notice to the Certificateholders and the Representative, or the principal
corporate trust office of any successor Owner Trustee (the address of which the
successor owner trustee will notify the Certificateholders and the
Representative).
"Delaware Trustee" shall have the meaning assigned to such term in
Section 10.1.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"GP Interest" shall have the meaning assigned to such term in Section
2.7.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Trust Certificate is registered on the Certificate Register and the Holder of
the GP Interest.
"Holder of the GP Interest" shall mean TMS SPV, Inc., a Delaware
special purpose corporation and an Affiliate of The Money Store. Inc.
"Holder of the Voting Interest" shall mean First Union Bank of
Delaware, and any permitted successor, assignee or transferee thereof.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of November 30, 1997
between the Trust and the Bank of New York, as Indenture Trustee, as the same
may be amended or supplemented from time to time.
"Note Depository Agreement" shall mean the agreement among the Trust,
the Trustee, the Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated as of one Business Day prior to the Closing Date,
relating to the Series 1997-II Notes, as the same may be amended or supplemented
from time to time.
"Originator" shall mean each entity listed on Annex I attached hereto.
"Ownership Percentage" shall mean with respect to any
Certificateholder, the proportion (expressed as a percentage) of the aggregate
beneficial ownership interests in the Trust held of record by such
Certificateholder, as evidenced by such Holder's Certificates.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and the Certificate Distribution Account and all
other property of the Trust from time to time, including any rights of the Trust
pursuant to the Sale and Servicing Agreement.
"Owner Trustee" shall mean Chase Manhattan Bank Delaware, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and shall initially be The Chase Manhattan
Bank.
"Record Date" shall mean, 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.
"Representative" shall mean The Money Store Inc., a New Jersey
corporation, as Representative of the Originators, and, its successors and
assigns.
"Responsible Officer" shall mean, when used with respect to the Owner
Trustee, any officer assigned to the Corporate Trust Office of the Owner
Trustee, including any Vice President, any Assistant Vice President, any
Assistant Secretary, any trust officer or any other officer of the Owner Trustee
customarily performing functions similar to those performed by any of the above
designated officers or any agent acting under a power of attorney from the Owner
Trustee, having responsibility for the administration of this Trust Agreement,
as the case may be, and also, with respect to a particular matter relating to
the Trust, any other officer of the Owner Trustee to whom such matter is
referred because of such officer's knowledge of and familiarity with such
matter. Any notice given to the Owner Trustee at the address and in the manner
specified in Section 11.4 hereof shall be deemed to be given to a Responsible
Officer.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of November 30, 1997, among the Trust, the Originators
listed therein and The Money Store Inc., as Representative, Servicer and Claims
Administrator, as the same may be amended and supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Series 1997-II Notes" shall mean The Money Store Residential Loan
Notes, Series 1997-II, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1,
Class M-2 and Class B.
"Servicer" means The Money Store Inc., a New Jersey corporation, or
any successor servicer under the Sale and Servicing Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
"Trustee" shall mean The Bank of New York, as indenture trustee under
the Indenture, or any successor thereto.
"Voting Interest" shall have the meaning assigned to such term in
Section 2.11.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used and not otherwise defined herein have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II.
ORGANIZATION
SECTION 2.1. NAME. The name of the Trust created hereby shall be "The
Money Store Residential Trust 1997-II", in which name the Owner Trustee, on
behalf of the Trust, shall have power and authority, and is hereby authorized
and empowered, to engage in the transactions contemplated hereby, conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Originators.
SECTION 2.3. PURPOSES AND POWERS. (a) The purpose of the Trust is, and
the Trust shall have the power and authority, and the Owner Trustee shall have
power and authority, and is hereby authorized and empowered in the name and on
behalf of the Trust, to do or cause to be done all acts and things necessary,
appropriate or convenient to cause the Trust to engage in the following
activities:
(i) to execute, deliver and issue the Series 1997-II
Notes pursuant to the Indenture and to authorize, execute,
authenticate, issue and deliver the Trust Certificates, the GP
Interest and the Voting Interest pursuant to this Agreement, and to
sell the Series 1997-II Notes, the Trust Certificates, the GP Interest
and the Voting Interest;
(ii) with the proceeds of the sale of the Series
1997-II Notes and the Trust Certificates, to fund the Pre-Funding
Account and the Capitalized Interest Account, to pay the
organizational, start-up and transactional expenses of the Trust and
to pay the balance to the Originators pursuant to the Sale and
Servicing Agreement;
(iii) to acquire, receive and accept from time to
time the Owner Trust Estate, and to assign, grant, transfer, pledge,
mortgage and convey the Trust Estate (including the Collateral)
pursuant to the Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Sale and Servicing
Agreement any portion of the Owner Trust Estate released from the lien
of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into, execute, deliver, file and
perform its obligations under the Basic Documents;
(v) to engage in those activities, including
entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Basic Documents
to which the Trust is a party, to engage in such other activities as
may be required in connection with conservation of the Owner Trust
Estate and the making of distributions to the Certificateholders and
the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE. The Originators hereby
appoint the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers, authority, authorization and duties set
forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Originators hereby sell, assign, transfer, convey and set over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Originators, as of the date hereof, of
the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Originators shall pay all organizational expenses of the Trust as they may
arise.
SECTION 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents to which the
Trust is a party. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership. The parties agree that,
unless otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers, authority and authorization set forth herein and to the extent
not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7. TRANSFER OF INTEREST TO THE HOLDER OF THE GP INTEREST;
LIABILITY OF THE HOLDER OF THE GP INTEREST. (a) TMS SPV, Inc., as holder of no
less than 1% Ownership Percentage in the Trust (the "GP Interest"), shall pay,
to the extent not paid by the Originators, organizational expenses of the Trust
as they may arise or shall, upon the request of the Owner Trustee, promptly
reimburse the Owner Trustee for any such expenses paid by the Owner Trustee. The
Holder of the GP Interest shall also be liable directly to and will indemnify
the injured party for all losses, claims, damages, liabilities and expenses of
the Trust (including Expenses, to the extent not paid out of the Owner Trust
Estate) to the extent that the Holder of the GP Interest would be liable if the
Trust were a partnership under the Delaware Revised Uniform Limited Partnership
Act in which the Holder of the GP Interest were a general partner; PROVIDED,
HOWEVER, that the Holder of the GP Interest shall not be liable for any losses
incurred by a Certificateholder in the capacity of an investor in the Trust
Certificates or a Noteholder in the capacity of an investor in the Series
1997-II Notes. In addition, any third party creditors of the Trust (other than
in connection with the obligations described in the preceding sentence for which
the Holder of the GP Interest shall not be liable) shall be deemed third party
beneficiaries of this paragraph. The obligations of the Holder of the GP
Interest under this paragraph shall be evidenced by the Trust Certificate
representing a 1% Ownership Percentage issued to the Holder of the GP Interest
as described in Section 3.12, which for purposes of the Business Trust Statute
shall be deemed to be a separate class of Trust Certificates from all other
Trust Certificates issued by the Trust. For purposes of the Business Trust
Statute, the GP Interest shall be deemed a separate class of beneficial
ownership interest in the Trust from all other beneficial ownership interests in
the Trust, and the Holder of the GP Interest, as such, shall be deemed a
separate class of beneficial owner of the Trust from all other beneficial owners
of the Trust.
(b) No Holder or Holder of the Voting Interest, other than to the
extent set forth in clause (a), shall have any personal liability for any
liability or obligation of the Trust.
(c) The Holder of the GP Interest shall at all times have a net worth
of at least $1,000,000.
SECTION 2.8. TITLE TO TRUST PROPERTY. (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) No Holder shall have legal title to any part of the Owner Trust
Estate. The Holders shall be entitled to receive distributions with respect to
their undivided beneficial ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest by any Certificateholder of its beneficial ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 2.9. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the States of Delaware, North
Carolina or New York. Payments will be received by the Trust only in Delaware,
New York or North Carolina, and payments will be made by the Trust only from
Delaware, New York or North Carolina. The only office of the Trust will be at
the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATORS. Each
of the Originators hereby represents and warrants, as to itself, to the Owner
Trustee, as of the Closing Date, that:
(a) It is duly organized and validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own its
properties and to conduct its business as such properties are
currently owned and such business presently conducted.
(b) It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(c) It has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms and the
execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action.
(d) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under its articles of incorporation or bylaws, or any
material indenture, agreement or other material instrument to which it
is a party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of its knowledge, any order, rule or regulation applicable to it of
any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
it or its properties.
SECTION 2.11. VOTING INTEREST. By executing this Agreement, First
Union Bank of Delaware (the "Holder of the Voting Interest") shall acquire a
100% voting interest in the Trust (the "Voting Interest") and shall be deemed to
have agreed to be bound by the terms and conditions set forth herein concerning
the Voting Interest. Except as otherwise provided herein, the Holder of the
Voting Interest shall have the sole power and authority to approve or disapprove
actions requiring the approval or disapproval of Certificateholders. Except as
otherwise provided herein, any action requiring the consent, approval or vote of
Certificateholders shall be taken only upon the written consent, approval or
vote of the Holder of the Voting Interest. In exercising such power and
authority to give or withhold such consent, approval or vote, the Holder of the
Voting Interest shall act only in accordance with and upon receipt of written
instructions delivered to it by the Trustee (on which the Holder of the Voting
Interest shall be fully protected in relying). The Holder of the Voting Interest
shall have no obligation other than to exercise such power and authority in
accordance with such instructions; provided, however, that no action may be
taken that would increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on Loans or distributions
required to be made for the benefit of Certificateholders, or would adversely
affect the Federal or state tax consequences to the Certificateholders, without
the consent of all Certificateholders affected thereby. Notwithstanding any
provision herein or in any other document to the contrary, the Holder of the
Voting Interest shall not have any personal liability for any liability or
obligation of the Trust, any action taken or omitted pursuant to any written
instructions of the Trustee, or otherwise relating to the Trust or its serving
as the Holder of the Voting Interest. The Holder of the Voting Interest may not
sell, transfer, assign, pledge or otherwise convey, directly or indirectly, all
or any part of the Voting Interest without the prior written consent of the
Holder of the GP Interest. The Holder of the Voting Interest shall have no right
to receive any amounts hereunder or under any other Basic Document or any other
economic rights as a beneficial owner of the Trust, and, except as otherwise
expressly set forth herein, the Voting Interest shall not be deemed a
Certificate and the Holder of the Voting Interest shall not be deemed a Holder
(except as to benefit afforded Holders). For purposes of the Business Trust
Statute, the Voting Interest shall be deemed a separate class of beneficial
ownership interest in the Trust from all other beneficial ownership interests in
the Trust, and the Holder of the Voting Interest, as such, shall be deemed a
separate class of beneficial owner of the Trust from all other beneficial owners
of the Trust. The Voting Interest shall not be represented by a certificate.
SECTION 2.12. FEDERAL INCOME TAX ALLOCATIONS. Net income of the Trust
for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated to the Certificateholders pro rata based upon their Ownership
Percentage.
ARTICLE III.
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Originators pursuant to Section 2.5 and until the issuance
of the Trust Certificates and the Voting Interest, the Originators shall be the
sole beneficial owners of the Trust. Upon such issuance of the Trust
Certificates and the Voting Interest, the Originators shall cease to be
beneficial owners of the Trust, and their respective beneficial interests in the
Trust shall be and shall be deemed cancelled, void, and of no further force and
effect.
SECTION 3.2. THE TRUST CERTIFICATES. Subject to Section 3.3, the Trust
Certificates shall be issued in minimum denominations corresponding to an
Ownership Percentage of 10% and integral multiples of 1% in excess thereof;
PROVIDED, HOWEVER, that Trust Certificates may be issued to the Holder of the GP
Interest in minimum denominations corresponding to an Ownership Percentage of
1%. The Trust Certificates shall be executed in the name and on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee, and the Owner Trustee shall have power and authority and is hereby
authorized and empowered, in the name and on behalf of the Trust, to authorize,
execute, authenticate, issue and deliver Trust Certificates, the GP Interest and
the Voting Interest. Trust Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefits of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust Certificates. A
transferee of a Trust Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon due registration of such Trust Certificate in such transferee's
name pursuant to Section 3.4.
SECTION 3.3. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently with
the initial contribution of the Loans to the Trust pursuant to the Sale and
Servicing Agreement, and without further action by the Originators, the Owner
Trustee, or the Authenticating Agent at the direction of the Owner Trustee, in
the name and on behalf of the Trust, shall cause, and shall have power and
authority and is hereby authorized and empowered to cause, the GP Interest
(which shall include a 1% Ownership Percentage) and a Trust Certificate therefor
and the Voting Interest to be issued to, and registered on the Certificate
Register in the name of, the Holder of the GP Interest and the Holder of the
Voting Interest, respectively, and the balance of the Trust Certificates to be
executed by an Authorized Officer of the Owner Trustee, or the Authenticating
Agent at the direction of the Owner Trustee, and authenticated, issued and
delivered to and in the names of, and registered on the Certificate Register in
the names of, the following: 99% of the Ownership Percentage to TMS SPV, Inc.
Thereupon, all such Certificates, the GP Interest, and the Voting Interest shall
be validly issued and entitled to the benefits of this Agreement. No Trust
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Trust
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee, or the Authenticating Agent at the
direction of the Owner Trustee, by manual signature; such authentication shall
constitute conclusive evidence that such Trust Certificate shall have been duly
executed, authenticated, authorized, issued and delivered hereunder. All Trust
Certificates shall be dated the date of their authentication.
SECTION 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at its
offices located at 450 West 33rd Street, New York, New York 10001, or such other
office, the address of which the Certificate Registrar shall provide in writing
to the Owner Trustee and the Holders, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Certificate Registrar
shall provide for the registration of Trust Certificates and of transfers and
exchanges of Trust Certificates as herein provided. The Chase Manhattan Bank
shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at such office and, upon satisfaction of the conditions set forth below, the
Owner Trustee, in the name and on behalf of the Trust, shall execute,
authenticate, issue and deliver, in the name of the designated transferee or
transferees, one or more new Trust Certificates of a like Ownership Percentage
dated the date of authentication by the Owner Trustee or any authenticating
agent. At the option of a Holder, Trust Certificates may be exchanged for other
Trust Certificates of a like Ownership Percentage upon surrender of the Trust
Certificates to be exchanged at such office.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements may include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Trust Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Certificate Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may, but shall not be obligated to, 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 Trust Certificates.
SECTION 3.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.
If (a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee or
the Authenticating Agent such security or indemnity as may be required by them
to save each of them harmless, then in the absence of actual knowledge by a
Responsible Officer of the Owner Trustee or the Authenticating Agent that such
Trust Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee, or the Authenticating Agent at the direction of the Owner Trustee, in
the name and on behalf of the Trust shall execute, authenticate, issue and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Trust Certificate, a new Trust Certificate of like class, tenor and
Ownership Percentage. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee, or the Authenticating Agent
at the direction of the Owner Trustee, or the Certificate Registrar may, but
shall not be obligated to, require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Certificate issued pursuant to this Section shall be duly
authorized, validly issued and entitled to the benefits of this Agreement, and
shall constitute conclusive evidence of a beneficial ownership interest in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
SECTION 3.6. PERSONS DEEMED CERTIFICATEHOLDERS. Every Person by virtue
of becoming a Certificateholder in accordance with this Agreement shall be
deemed to be bound by the terms of this Agreement. Prior to due presentation of
a Trust Certificate for registration of transfer, the Owner Trustee, or the
Authenticating Agent at the direction of the Owner Trustee, and the Certificate
Registrar may treat the Person in whose name any Trust Certificate shall be
registered in the Certificate Register as the Holder of such Trust Certificate
for the purpose of receiving distributions pursuant to Section 5.2 and for all
other purposes whatsoever, and neither the Owner Trustee, or the Authenticating
Agent if acting at the direction of the Owner Trustee, nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.7. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Certificate Registrar shall furnish or cause to be furnished to
the Servicer, the Representative, and the Holder of the GP Interest, within 15
days after receipt by the Certificate Registrar of a request therefor from the
Servicer, the Representative, or the Holder of the GP Interest in writing, a
list, in such form as the Servicer, the Representative, or the Holder of the GP
Interest may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more Holders
of Trust Certificates or one or more Holders of Trust Certificates evidencing
not less than 25% of the aggregate Ownership Percentage apply in writing to the
Certificate Registrar, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Trust Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five Business Days after
the receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not to
hold either the Representative, the Certificate Registrar, the Owner Trustee, or
the Bank accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8. APPOINTMENT OF AUTHENTICATING AGENT. The Authenticating
Agent shall, at the direction of the Owner Trustee, execute and deliver such
Trust Certificates on behalf of the Trust as are to be issued by the Trust in
accordance with the terms of this Agreement. The Chase Manhattan Bank shall be
the initial Authenticating Agent.
SECTION 3.9. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be The Chase
Manhattan Bank, and any co-paying agent chosen by the Owner Trustee and
Certificate Registrar and acceptable to the Servicer. The Paying Agent shall be
permitted to resign upon 30 days' written notice to the Owner Trustee and the
Servicer. In the event that The Chase Manhattan Bank shall no longer be the
Paying Agent, the Owner Trustee shall appoint a successor to act as Paying Agent
(which shall be a bank or trust company). The Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the Owner
Trustee to execute and deliver to the Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Owner
Trustee that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. The Paying
Agent shall return all unclaimed funds to the Owner Trustee and upon removal of
a Paying Agent such Paying Agent shall also return all funds in its possession
to the Owner Trustee. The provisions of Articles VII and VIII shall apply to The
Chase Manhattan Bank also in its roles as Paying Agent, Authenticating Agent and
Certificate Registrar and in any other capacities under the Basic Documents and,
to the extent applicable, to any other paying agent or certificate registrar
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
SECTION 3.10. RESTRICTIONS ON TRANSFER. (a) Except for the initial
issuance of Trust Certificates to TMS SPV, Inc. and The Money Store Inc., the
Trust Certificates may not be offered or sold except to institutional
"accredited investors" (as defined in Rule 501(a)(1)-(3) under the Securities
Act of 1933, as amended, who are United States persons (as defined in Section
7701(a)(30) of the Code) in reliance on an exemption from the registration
requirements of the Securities Act. No offer, sale, transfer or other
disposition (including pledge) of Trust Certificates shall be made to any Person
unless such Person executes and delivers to the Certificate Registrar, the Owner
Trustee and the Holder of the GP Interest an Investment Letter substantially in
the form set forth as Exhibit C hereto.
(b) No offer, sale, transfer or other disposition (including pledge)
of the Trust Certificates shall be made to any Person which is, or is purchasing
for, or on behalf of (1) an employee benefit plan, retirement arrangement,
individual retirement account or Keogh plan subject to either Title I of the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended, or (2) an entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of any such plan's arrangements or account's investment in any such
entity.
(c) Each Certificateholder must be a United States person as defined
in Section 7701(a)(30) of the Code.
(d) Each Trust Certificate will bear a legend substantially to the
following effect.
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TRUST CERTIFICATE,
AGREES THAT THIS TRUST CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND (1)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3) UNDER THE ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR,
OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1)
EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS
OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
THIS TRUST CERTIFICATE HAS NO PRINCIPAL BALANCE.
SECTION 3.11. [Reserved.]
SECTION 3.12. DISPOSITION BY THE HOLDER OF THE GP INTEREST. On and
after the Closing Date, the Holder of the GP Interest shall retain beneficial
and record ownership of Trust Certificates representing at least 1% of the
Ownership Percentage, including the GP Interest. Any attempted transfer of any
Trust Certificate that would reduce such interest of the Holder of the GP
Interest below 1% of the Ownership Percentage shall be void. The Trust
Certificate representing the 1% GP Interest issued to the Holder of the GP
Interest shall contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
ARTICLE IV.
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders and the Holder of the Voting Interest
in writing of the proposed action and the Holder of the Voting Interest shall
not have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that it has withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
except claims or lawsuits brought in connection with the collection of the Loans
and the compromise of any material action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or lawsuits
for collection of the Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(e) the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders.
SECTION 4.2. ACTION BY HOLDER OF THE VOTING INTEREST WITH RESPECT TO
CERTAIN MATTERS. The Owner Trustee shall not have the power, except upon the
direction of the Holder of Voting Interest, to (a) remove the Servicer under the
Sale and Servicing Agreement pursuant to Section 10.01 thereof or (b) except as
expressly provided in the Basic Documents sell the Loans after the termination
of the Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the Holder of Voting
Interest.
SECTION 4.3. ACTION BY HOLDER OF VOTING INTEREST WITH RESPECT TO
BANKRUPTCY. The Owner Trustee shall not have the power to, and shall not,
commence a voluntary proceeding in bankruptcy relating to the Trust without the
prior written approval of the Holder of the Voting Interest and the delivery to
the Owner Trustee by the Holder of the Voting Interest of a certificate
certifying that it reasonably believes that the Trust is insolvent.
SECTION 4.4. RESTRICTIONS ON POWER. (a) The Holder of the Voting
Interest shall not direct the Owner Trustee to take or refrain from taking any
action if such action or inaction would be contrary to any obligation of the
Trust or the Owner Trustee under this Agreement or any of the Basic Documents or
would be contrary to Section 2.3 nor shall the Owner Trustee be obligated to
determine if the Holder of the Voting Interest's direction violates this Section
4.4 or to follow any such direction, if given. Further, the Holder of the Voting
Interest shall not direct the Owner Trustee to take or refrain from taking any
action if such action or inaction would increase or reduce in any manner the
amount of, or accelerate or delay the timing of collections of payments on Loans
or distributions required to be made for the benefit of Certificateholders, or
would adversely affect the Federal or state tax consequences to the
Certificateholders, without the consent of all Certificateholders affected
thereby.
(b) The Holder of the Voting Interest shall not have any right by
virtue or by availing itself of any provisions of this Agreement to institute
any suit, action, or proceeding in equity or at law upon or under or with
respect to this Agreement or any Basic Document unless the Holder of the Voting
Interest previously shall have given to the Owner Trustee a written notice of
default and of the continuance thereof, as provided in this Agreement, or unless
Certificateholders evidencing not less than 25% of the aggregate Ownership
Percentage shall have made written request upon the Owner Trustee to institute
such action, suit or proceeding in its own name as Owner Trustee under this
Agreement and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall have neglected or refused to
institute any such action, suit, or proceeding, and during such 30-day period no
request or waiver inconsistent with such written request has been given to the
Owner Trustee pursuant to and in compliance with this Section; it being
understood and intended, and being expressly covenanted by the Holder of the
Voting Interest and each Certificateholder with every other Certificateholder,
the Holder of the Voting Interest and the Owner Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder, the Holder of the Voting
Interest and the Owner Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 4.5. CONTROL BY HOLDER OF THE VOTING INTEREST. Except as
otherwise specifically provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holder of the Voting
Interest. Except as otherwise specifically provided herein, any written notice
to the Certificateholders delivered pursuant to this Agreement shall be
effective if written evidence is received that Holders of Certificates
evidencing not less than a majority of the aggregate Ownership Percentage have
been delivered of such notice.
SECTION 4.6. EXECUTION OF DOCUMENTS. Notwithstanding anything herein
to the contrary, the Owner Trustee shall have power and authority and hereby is
authorized, empowered and directed, in the name and on behalf of the Trust, to
execute, deliver, issue and authenticate the Certificates, to execute, deliver
and issue the Series 1997-II Notes, and to execute and deliver each Basic
Document to which the Trust or the Owner Trustee is or is to be a party and any
other document, instrument, certificate or other writing that may be necessary,
convenient or incidental thereto. Any such execution, delivery, issuance and
authentication is hereby ratified and confirmed in all respects and does not and
will be deemed not to conflict with, constitute or result in a breach or
violation of, or a default under, any provision of or any duty under this Trust
Agreement.
ARTICLE V.
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. (a)
The Owner Trustee, for the benefit of the Certificateholders, shall establish
and maintain at a Designated Depository Institution in the name of the Trust an
eligible deposit account (the "Certificate Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders. Except as otherwise provided herein, the
Certificate Distribution Account shall be under the sole dominion and control of
the Owner Trustee for the benefit of the Certificateholders.
(b) The Trust shall possess all right, title and interest in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof. If, at any time, the Certificate Distribution Account ceases
to be held in an account with a Designated Depository Institution, the Owner
Trustee shall within five Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) after a Responsible
Officer of the Owner Trustee obtains actual knowledge thereof, establish a new
Certificate Distribution Account to be held in an account with a Designated
Depository Institution, and shall transfer any cash and/or any investments to
such new Certificate Distribution Account.
(c) All amounts held in the Certificate Distribution Account shall, to
the extent permitted by applicable laws, rules and regulations, be invested, by
the Owner Trustee at the Servicer's written direction, in Permitted Instruments
that mature not later than one Business Day prior to the Remittance Date for the
Due Period to which such amounts relate. Investments in Permitted Instruments
shall be made in the name of the Trust, and such investments shall not be sold
or disposed of prior to their maturity. Subject to the other provisions hereof,
the Owner Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Owner Trustee. All
investment earnings on funds in the Certificate Distribution Account shall be
distributed on the next Remittance Date pursuant to Section 7.05 of the Sale and
Servicing Agreement.
SECTION 5.2. APPLICATION OF FUNDS IN CERTIFICATE DISTRIBUTION ACCOUNT.
(a) On each Remittance Date, the Paying Agent will, based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 7.07 of the Sale and Servicing Agreement, distribute to
Certificateholders, pro rata, based on Ownership Percentage, to the extent of
the funds available, amounts deposited in the Certificate Distribution Account
pursuant to Section 7.05 of the Sale and Servicing Agreement on such Remittance
Date.
(b) On each Remittance Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 7.07 of the Sale and Servicing Agreement on such Remittance
Date.
(c) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to the Certificateholder in accordance with this
Section. The Paying Agent is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee or the Paying Agent from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-US Certificateholder), the Paying Agent may in its
sole discretion withhold such amounts in accordance with this clause (c). In the
event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Owner Trustee and the Paying Agent shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee and the Paying Agent for
any out-of-pocket expenses incurred. The Servicer shall facilitate compliance
with this Section 5.2(c) by performance of its duties under Section 12.01 of the
Sale and Servicing Agreement.
SECTION 5.3. [Reserved.]
SECTION 5.4. METHOD OF PAYMENT. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Remittance Date
shall be made by the Paying Agent on each Remittance Date to each
Certificateholder of record as shown on the Certificate Register on the
preceding Record Date either (a) by wire transfer, in immediately available
funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if (i) such Certificateholder shall have
provided to the Paying Agent appropriate written instructions at least five
Business Days prior to such Remittance Date and such Holder's Trust Certificates
in the aggregate evidence an Ownership Percentage of not less than 20% or (ii)
such Certificateholder is the Holder of the GP Interest, or has been identified
to the Owner Trustee and Paying Agent in writing as an Affiliate thereof, or,
(b) if not, by check mailed to such Certificateholder at the address of such
holder appearing in the Certificate Register.
SECTION 5.5. NO SEGREGATION OF MONIES; NO INTEREST. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. Neither the
Paying Agent nor the Owner Trustee shall be liable for any interest thereon.
SECTION 5.6. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. Subject to Sections
12.01(b)(iii) and 12.01(c) of the Sale and Servicing Agreement, the Holder of
the GP Interest shall (a) maintain (or cause to be maintained) the books of the
Trust on a calendar year basis on the accrual method of accounting, (b) deliver
(or cause to be delivered) to each Certificateholder, as may be required by the
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable each Certificateholder to prepare its Federal
and state income tax returns, (c) prepare or cause to be prepared, and file or
cause to be filed, all tax returns relating to the Trust (including a
partnership information return, Form 1065), and direct the Owner Trustee in
writing to make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes and (d) collect or cause to be collected any
withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Certificateholders. The Owner Trustee
shall make all elections pursuant to this Section as directed in writing by the
Holder of the GP Interest. The Owner Trustee shall sign all tax information
returns furnished to it in execution form by the Holder of the GP Interest and
any other returns as may be required by law and so furnished to it by the Holder
of the GP Interest, and in doing so shall be entitled to, and shall be fully
protected if it shall, rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Holder of the GP
Interest. The Owner Trustee shall cause the Trust to elect under Section 1278 of
the Code to include in income currently any market discount that accrues with
respect to the Loans, as directed in writing by the Holder of the GP Interest.
SECTION 5.7. SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a)
Notwithstanding the provisions of Section 5.6, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust furnished to it in execution
form by the Holder of the GP Interest, unless applicable law requires a
Certificateholder or an Owner to sign such documents, in which case such
documents shall be signed by the Holder of the GP Interest.
(b) The Holder of the GP Interest shall be the "tax matters partner"
of the Trust pursuant to the Code.
ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. GENERAL AUTHORITY. The Owner Trustee shall have power and
authority and hereby is authorized, empowered and directed to execute and
deliver the Basic Documents to which the Trust is named as a party and each
certificate or other document attached as an exhibit to or contemplated by the
Basic Documents to which the Trust is named as a party and any amendment
thereto, in each case, in such form as the Representative shall approve as
evidenced conclusively by the Owner Trustee's execution thereof, and on behalf
of the Trust, to direct the Trustee to authenticate and deliver Class A-1 Notes
in the aggregate principal amount of $50,644,000, Class A-2 Notes in the
aggregate principal amount of $17,885,000 Class A-3 Notes in the aggregate
principal amount of $12,315,000, Class A-4 Notes in the aggregate principal
amount of $16,693,000 Class M-1 Notes in the aggregate principal amount of
$13,837,000, Class M-2 Notes in the aggregate principal amount of $13,837,000
and Class B Notes in the aggregate principal amount of $9,789,000. In addition
to the foregoing, the Owner Trustee shall have power and authority and hereby is
authorized and empowered but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Owner Trustee further
shall have power and authority and hereby is authorized and empowered from time
to time to take such action as the Servicer recommends to it in writing with
respect to the Basic Documents.
It shall be the duty of the Owner Trustee, and the Owner Trustee shall
have power and authority and is hereby authorized and empowered, to discharge
(or cause to be discharged) all of its responsibilities pursuant to the terms of
this Agreement and the Sale and Servicing Agreement and to administer the Trust
in the interest of the Certificateholders, subject to the Basic Documents and in
accordance with the provisions of this Agreement. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent the
Servicer has agreed in the Sale and Servicing Agreement, or the Holder of the GP
Interest has agreed hereunder or thereunder, to perform any act or to discharge
any duty of the Owner Trustee hereunder or of the Trust under any Basic
Document, and the Owner Trustee shall not be liable for the default or failure
of the Servicer or the Holder of the GP Interest to carry out its obligations
hereunder or thereunder.
SECTION 6.2. ACTION UPON INSTRUCTION. (a) In accordance with Section
10.05 of the Sale and Servicing Agreement, the Majority Securityholders, the
Trustee and (subject to Article IV) the Holder of the Voting Interest, may, by
written instruction, direct the Owner Trustee in the management of the Trust,
and the Owner Trustee shall have power and authority, and is hereby authorized
and empowered, to follow, and shall be fully protected in following, any such
instruction.
(b) Notwithstanding any provisions hereof to the contrary, the Owner
Trustee shall not be required to take any action hereunder or under any Basic
Document if the Owner Trustee shall have reasonably determined, or shall have
been advised by counsel, that such action is likely to result in liability on
the part of the Owner Trustee or is contrary to the terms hereof or of any Basic
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders and the
Holder of the Voting Interest requesting instruction as to the course of action
to be adopted, and to the extent the Owner Trustee acts in good faith in
accordance with any written instruction of the Holder of the Voting Interest
received, the Owner Trustee shall not be liable on account of such action to any
Person. If the Owner Trustee shall not have received appropriate written
instruction within ten days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders and the Holder of the Voting Interest requesting instruction
and, to the extent that the Owner Trustee acts or refrains from acting in good
faith in accordance with any written instruction received from the Holder of the
Voting Interest, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate written instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
SECTION 6.3. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Trust or the Owner Trustee is a party, except as expressly provided
by the terms of this Agreement or in any direction or written instruction
received by the Owner Trustee pursuant to Section 6.2; and no implied duties or
obligations shall be read into this Agreement or any Basic Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation or termination statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security interest
or lien granted to it hereunder or to prepare or file any Securities and
Exchange Commission filing for the Trust or to record this Agreement or any
Basic Document. The Bank nevertheless agrees that it will, at its own cost and
expense, promptly take all action as may be necessary to discharge any Liens on
any part of the Owner Trust Estate that result from actions by, or claims
against, the Bank that are not related to the ownership or the administration of
the Owner Trust Estate or the Owner Trustee's serving as owner trustee of the
Trust.
SECTION 6.4. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any direction or instruction delivered to the Owner
Trustee pursuant to Section 6.2.
SECTION 6.5. RESTRICTIONS. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of a Responsible Officer of the Owner
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. Neither the Holder of the Voting Interest nor the
Certificateholders shall direct the Owner Trustee to take action that would
violate the provisions of this Section.
SECTION 6.6. NOTICE OF DEFAULT UNDER INDENTURE. Within 5 days of
receipt of a written notice of Default under the Indenture from the Trustee, the
Owner Trustee shall provide notice thereof to each Certificateholder by letter.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Bank shall not be answerable or accountable hereunder or under
any Basic Document under any circumstances, except to the Trust and the
Certificateholders (i) for its own willful misconduct, bad faith or gross
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Bank. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Bank shall not be liable for any error of judgment made by a
Responsible Officer of the Owner Trustee;
(b) the Bank shall not be liable with respect to any action taken or
omitted to be taken by the Owner Trustee in accordance with the instructions of
the Trustee, the Servicer, the Holder of the GP Interest, the Holder of the
Voting Interest, Majority Securityholders, or any Certificateholder or in
reliance on any provision of this Agreement;
(c) no provision of this Agreement or any Basic Document shall require
the Bank to expend or risk funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder or under any Basic
Document if the Bank shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Bank be liable for the
Certificates or any amount due and owing thereon, any other interest in or
indebtedness of the Trust, or indebtedness evidenced by or arising under any of
the Basic Documents, including the principal of and interest on the Series
1997-II Notes;
(e) the Bank shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by any
other party hereto, or for the form, character, genuineness, sufficiency, value
or validity of any of the Owner Trust Estate or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Bank shall in no event assume
or incur any liability, duty or obligation to any Noteholder or to any
Certificateholder or other Person, other than as expressly provided for herein;
(f) the Bank shall not be liable for the default or misconduct of the
Trustee or the Servicer or the Holder of the GP Interest or the Originators or
the Representative or the Holder of the Voting Interest or the Holders or the
Certificate Registrar (if not the Owner Trustee) or the Paying Agent (if not the
Owner Trustee) under any of the Basic Documents or otherwise and the Bank shall
have no obligation or liability to monitor or insure compliance by the Trustee
or the Servicer or the Holder of the GP Interest or the Originators or the
Representative or the Holder of the Voting Interest or the Holders or the
Certificate Registrar (if not the Owner Trustee) or the Paying Agent (if not the
Owner Trustee) with any agreement to which it is a party or to perform the
obligations of the Trust under this Agreement or the Basic Documents that are
required to be performed by the Trustee under the Indenture or the Servicer
under the Sale and Servicing Agreement or the Holder of the GP Interest under
this Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Trustee, the Certificateholders or Majority Securityholders or the Holder of
the Voting Interest, unless such Trustee, Certificateholders, Majority
Securityholders or Holder of the Voting Interest have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and, except
as otherwise provided in the third sentence of this Section 7.1, the Bank shall
not be answerable in the performance of any such act.
SECTION 7.2. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES. The Bank hereby
represents and warrants to the Representative, and for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has its principal
office within the State of Delaware. It has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party or other entity as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer,
secretary or other authorized officers of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled Persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the opinion or advice of any such counsel,
accountants or other such persons.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article VII, in accepting the trusts hereby created Chase Manhattan Bank
Delaware acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES OR LOANS.
The recitals contained herein and in the Trust Certificates (other than the
signature and authentication of the Owner Trustee on the Trust Certificates)
shall be taken as the statements of the Representative and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations or warranties as to the validity or sufficiency of this
Agreement, of any Basic Document or of the Trust Certificates (other than the
signature and authentication of the Owner Trustee on the Trust Certificates) or
the Series 1997-II Notes, or of any Loan or related documents. The Owner Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Note, or the perfection and
priority of any security interest created by any Loan in any Mortgaged Property
or the maintenance of any such perfection and priority, or for or with respect
to the sufficiency of the Owner Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any Mortgaged Property; the existence and
enforceability of any insurance thereon; the existence and contents of any Loan
on any computer or other record thereof; the validity of the assignment of any
Loan to the Trust or of any intervening assignment; the completeness of any
Loan; the performance or enforcement of any Loan; the compliance by the
Representative, or the Servicer with any warranty or representation made under
any Basic Document or in any related document or the accuracy of any such
warranty or representation or any action of the Trustee or the Servicer or any
subservicer taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND SERIES
1997-II NOTES. The Owner Trustee in its individual or any other capacity may
become the owner or pledgee of Trust Certificates or Series 1997-II Notes and
may deal with the Trustee and the Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.
SECTION 7.8. PAYMENTS FROM OWNER TRUST ESTATE. All payments to be made
by the Owner Trustee under this Agreement or any of the Basic Documents to which
the Trust or the Owner Trustee is a party shall be made only from the income and
proceeds of the Owner Trust Estate and only to the extent that the Owner Trustee
shall have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Chase Manhattan Bank Delaware, or
any successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Basic Documents to which the
Trust or the Owner Trustee is a party.
SECTION 7.9. DOING BUSINESS IN OTHER JURISDICTIONS. Notwithstanding
anything contained to the contrary, neither Chase Manhattan Bank Delaware or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Chase Manhattan Bank Delaware (or any successor
thereto); or (iii) subject Chase Manhattan Bank Delaware (or any successor
thereto) to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by Chase Manhattan Bank Delaware (or any successor thereto) or
the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. OWNER TRUSTEE'S FEES AND EXPENSES. To the extent not
received by the Owner Trustee pursuant to Section 7.04(b) of the Sale and
Servicing Agreement, the Owner Trustee and the Holder of the Voting Interest
shall receive from the Representative as compensation for their respective
services hereunder such fees as have been separately agreed upon before the date
hereof between the Representative and the Owner Trustee or the Holder of the
Voting Interest, as applicable, and the Owner Trustee and the Holder of the
Voting Interest shall be entitled to be reimbursed by the Representative for
their respective other reasonable expenses hereunder and under the Basic
Documents, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Owner Trustee or the
Holder of the Voting Interest, as applicable, may employ in connection with the
exercise and performance of their respective rights and duties hereunder.
SECTION 8.2. INDEMNIFICATION. The Representative shall be liable as
primary obligor for, and shall indemnify, defend and hold harmless the Bank and
the Holder of the Voting Interest and their respective successors, assigns,
directors, officers, employees, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee or the Holder of the
Voting Interest hereunder, except only that the Representative shall not be
liable for or required to indemnify the Owner Trustee from and against Expenses
arising or resulting from any of the matters described in the third sentence of
Section 7.1. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section, the Owner Trustee's choice of legal
counsel shall be subject to the approval of the Representative, which approval
shall not be unreasonably withheld.
SECTION 8.3. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4. NON-RECOURSE OBLIGATIONS. Notwithstanding anything in
this Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Originator, the Representative, any
Certificateholder.
ARTICLE IX.
DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1. TERMINATION OF TRUST AGREEMENT. (a) This Agreement (other
than Article VIII) and the Trust shall terminate and be of no further force or
effect, (i) upon the final distribution by the Paying Agent and/or Owner Trustee
of all moneys or other property or proceeds of the Owner Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article V or (ii) at the time provided in Section 9.2; PROVIDED, HOWEVER, that
the rights to indemnification under Section 8.2 and other rights and protections
of the Owner Trustee and the Bank shall survive the termination of the Trust.
The Servicer shall promptly notify the Owner Trustee of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder or Owner, other than
the Holder of the GP Interest as described in Section 9.2, shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's or Owner's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Representative, nor
the Holder of the GP Interest nor any Certificateholder shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Remittance
Date upon which the Certificateholders shall surrender their Trust Certificates
to the Paying Agent for payment of the final distribution and cancellation,
shall be given by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termination from the
Servicer given pursuant to Section 11.01 of the Sale and Servicing Agreement,
stating as set forth in such notice from the Servicer (i) the Remittance Date
upon or with respect to which final payment of the Trust Certificates shall be
made upon presentation and surrender of the Trust Certificates at the office of
the Paying Agent 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 the
Trust Certificates at the office of the Paying Agent therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to Certificateholders. Upon presentation and surrender
of the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Remittance Date pursuant to
Section 5.2.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed, subject to
applicable escheat laws, by the Owner Trustee to the Holder of the GP Interest.
Certificateholders shall thereafter look solely to the Holder of the GP Interest
as general unsecured creditors.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Holder of the GP Interest.
(e) Upon termination and completion of the winding up of the Trust,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute and thereupon the Trust
and this Agreement shall terminate. The Owner Trustee shall furnish notice of
such filing to each Rating Agency.
SECTION 9.2. DISSOLUTION UPON BANKRUPTCY OF THE HOLDER OF THE GP
INTEREST. In the event that an Insolvency Event shall occur with respect to the
Holder of the GP Interest, the Trust shall dissolve and this Agreement shall be
terminated in accordance with Section 9.1 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from the Holder of the Voting
Interest to the effect that each such party disapproves of the liquidation of
the Loans and dissolution of the Trust. Promptly after the occurrence of any
Insolvency Event with respect to the Holder of the GP Interest, (i) the Holder
of the GP Interest shall give the Trustee and the Owner Trustee written notice
of such Insolvency Event and (ii) the Owner Trustee shall, upon the receipt of
such written notice from the Holder of the GP Interest, give prompt written
notice to the Certificateholders and the Trustee of the occurrence of such
event; PROVIDED, HOWEVER, that any failure to give a notice required by this
sentence shall not prevent or delay, in any manner, a termination of the Trust
pursuant to the first sentence of this Section 9.2. Upon a termination pursuant
to this Section, the Owner Trustee on behalf of the Trust shall direct the
Trustee promptly to sell the assets of the Owner Trust Estate in a commercially
reasonable manner and on commercially reasonable terms. The proceeds of such a
sale of the assets of the Trust shall be treated as collections under the Sale
and Servicing Agreement and shall be distributed in accordance with Section
11.01(c) thereof.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation or association (i) authorized to
exercise corporate trust powers; and (ii) having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
state authorities; PROVIDED that with respect to the initial Owner Trustee (but
not any successor trustee) the combined capital and surplus of the parent
organization of such banking association shall be included in the determination
of the combined capital and surplus of such banking association. If such
association shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Owner Trustee shall resign immediately in the manner and with
the effect specified in Section 10.2. In addition, at all times (i) the Owner
Trustee or a co-trustee shall be a person that satisfies the requirements of
Section 3807(a) of the Business Trust Statute (the "Delaware Trustee") and (ii)
in the event that First Union Trust Company, National Association is not the
Co-Trustee under the Indenture, the Owner Trustee or a co-trustee shall hold a
valid Contract of Insurance from the FHA relating to the FHA Title I loan
program.
SECTION 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation (or after removal pursuant to the following paragraph), the Owner
Trustee so resigning or being removed may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Owner Trustee. If the Servicer
shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee along with payment of all fees and other amounts, if any, owed to
the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Servicer and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses and any
other amounts due to it hereunder deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Servicer and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Trustee, the Noteholders and the Rating
Agencies. If the Servicer shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation or association into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from or surviving any merger, conversion or consolidation
to which the Owner Trustee shall be a party, or any corporation or association
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation or association shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger, sale,
conversion or consolidation to the Rating Agencies.
SECTION 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power,
authority and authorization to, and shall execute and deliver all instruments to
appoint one or more Persons approved by the Owner Trustee to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of all
or any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Owner Trust Estate, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Servicer and the Owner 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, the
Owner Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 10.1 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are
to be performed, the Owner 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 Owner Trust Estate or any portion thereof in
any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(iii) the Servicer and the Owner Trustee acting
jointly may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner 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. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
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. 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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS. (a) This Agreement may be
amended by the Representative and the Owner Trustee, with prior written notice
to the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder or the Holder of the Voting Interest.
(b) This Agreement may also be amended from time to time by the
Representative and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders of Series 1997-II Notes evidencing not
less than a majority of the Outstanding Amount of the Series 1997-II Notes and,
to the extent the Certificates or the rights, benefits or duties of the Holder
of the Voting Interest are affected thereby, the consent of the Holder of the
Voting Interest 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 Noteholders or the Certificateholders; PROVIDED,
HOWEVER, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Loans or distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (ii) reduce the aforesaid percentage of
the Outstanding Amount of the Series 1997-II Notes and the Ownership Percentage
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Series 1997-II Notes and Holders of all outstanding
Certificates. Promptly after the execution of any such amendment or its receipt
of any such consent, the Owner Trustee shall furnish written notification of the
substance of such amendment or its receipt of any consent to each
Certificateholder, the Trustee and each of the Rating Agencies.
(c) It shall not be necessary for the consent of the Holder of the
Voting Interest, the Certificateholders, the Noteholders or the Trustee pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of the
Holder of the Voting Interest and the Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(d) Promptly after the execution of any amendment to the Certificate
of Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(e) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Owner Trustee shall furnish copies of any such
amendments to this Agreement to each Rating Agency.
SECTION 11.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3. LIMITATIONS ON RIGHTS OF OTHERS. Except for Sections 2.7
and 8.2, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Bank, the Representative, the Certificateholders, the
Servicer and, to the extent expressly provided herein, the Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
personally delivered, delivered by overnight courier or mailed certified mail,
return receipt requested or telecopied and shall be deemed to have been duly
given upon receipt, if to the Trust, addressed to the Owner Trustee at the
Corporate Trust Office; if to the Owner Trustee, addressed to the Corporate
Trust Office; if to the Originators, the Representative or the Holder of the GP
Interest, addressed to The Money Store Inc., 3301 C Street, Sacramento,
California 95816, Attention: Executive Vice President; if to the Holder of the
Voting Interest, addressed to First Union Bank of Delaware, One Rodney Square,
Suite 100, 920 King Street, Wilmington, Delaware 19801, Attention: Corporate
Trust Administration; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(a) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Representative, the Holder of the GP Interest, the Owner Trustee and its
successors, each Certificateholder and its successors and permitted assigns and
the Holder of the Voting Interest and its successors and permitted assigns., all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 11.8. [Reserved.]
SECTION 11.9. NO PETITION. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, the Holder of the Voting
Interest and the Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenants and agrees that they will not at any time institute
against the Holder of the GP Interest, or join in any institution against the
Holder of the GP Interest of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Series 1997-II Notes, this
Agreement or any of the Basic Documents.
SECTION 11.10. NO RECOURSE. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial ownership interests in the Trust only and do not represent
interests in or obligations of the Representative, the Originators, the
Servicer, the Holder of the GP Interest, the Holder of the Voting Interest, the
Owner Trustee, the Bank, the Trustee or any Affiliate thereof and no recourse by
such Certificateholder may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the Trust
Certificates or the Basic Documents.
SECTION 11.11. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.13. [Reserved.]
SECTION 11.14. SERVICER. The Servicer is authorized and empowered to
execute, prepare, file and/or deliver in the name and on behalf of the Trust all
such documents, reports, filings, tax returns, instruments, certificates and
opinions as it shall be the duty of the Trust to prepare, file or deliver
pursuant to the Basic Documents. Upon written request of the Servicer, the Owner
Trustee on behalf of the Trust shall execute and deliver to the Servicer a power
of attorney appointing the Servicer the Trust's agent and attorney-in-fact to
execute, prepare, file and deliver all such documents, reports, filings, tax
returns, instruments, certificates and opinions.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
CHASE MANHATTAN BANK DELAWARE, as Owner
Trustee
By: /s/ Denis Kelly
Name: Denis Kelly
Title: Trust Officer
ORIGINATORS
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Sr. Vice President
ACCEPTED AND AGREED:
TMS SPV, INC., Holder of the GP Interest
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Sr. Vice President
<PAGE>
FIRST UNION BANK OF DELAWARE,
Holder of The Voting Interest
By: /s/ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
THE MONEY STORE INC.,
Representative
By: /s/ Michael H. Benoff
Name: Michael H. Benoff
Title: Executive Vice President
<PAGE>
EXHIBIT A
NUMBER
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TRUST
CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3) UNDER THE ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED
INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY
TO (1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT
ACCOUNTS OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
THIS TRUST CERTIFICATE HAS NO PRINCIPAL BALANCE.
[THIS TRUST CERTIFICATE IS NOT TRANSFERABLE]1
- -------------
1 To be inserted on the Certificate to be held by the Holder of the GP
Interest.
<PAGE>
THE MONEY STORE RESIDENTIAL TRUST 1997-II
TRUST CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of Loans
contributed to the Trust by the Originators.
(THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
MONEY STORE INC. OR ANY OF ITS AFFILIATES.)
THIS CERTIFIES THAT ________________ is the registered owner of ____%
of the aggregate Ownership Percentage as a nonassessable, fully-paid, beneficial
ownership interest in The Money Store Residential Trust 1997-II (the "Trust")
formed by the entities listed on Annex I attached to the Trust Agreement (each
an "Originator").
The Trust was created pursuant to that certain Trust Agreement dated
as of November 30, 1997 (the "Trust Agreement") between the Originators, and
Chase Manhattan Bank Delaware, not in its individual capacity but solely as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of the duly authorized Trust Certificates
(herein called the "Trust Certificates"). Also issued under the Indenture dated
as of November 30, 1997, between the Trust and The Bank of New York, as trustee,
are Series 1997-II Asset Backed Notes (collectively, the "Series 1997-II
Notes"). This Trust Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Trust Certificate by virtue of the acceptance hereof assents and
by which such holder is bound. The property of the Trust includes a portfolio of
residential loans contributed by the Originators (the "Loans"), all monies
received on the Loans on or after the Cut-Off Date with respect to Initial
Loans, or the Subsequent Cut-Off Date with respect to Subsequent Loans, security
interests in certain bank accounts and the proceeds thereof, proceeds from
claims on certain insurance policies and certain other rights under the Trust
Agreement and the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the
15th day of each month or, if such 15th day is not a Business Day, the next
Business Day (the "Remittance Date"), commencing in January 15, 1998, to the
Person in whose name this Trust Certificate is registered at the close of
business on the day immediately preceding the Remittance Date (the "Record
Date") such Certificateholder's fractional undivided interest in the amount to
be distributed to Certificateholders on such Remittance Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Representative, Servicer, the Originators, the
Holder of the GP Interest and Certificateholders that, for purposes of Federal
income taxes, the Trust will be treated as a partnership and the
Certificateholders (including the Holder of the GP Interest) will be treated as
partners in that partnership. The Holder of the GP Interest and the other
Certificateholders by acceptance of a Trust Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Trust Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust or the Holder of the GP Interest, or join in any institution
against the Trust or the Holder of the GP Interest of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Series 1997-II Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Paying Agent by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, in the name and on behalf of
the Trust and not in its individual capacity, has caused this Trust Certificate
to be duly executed.
Date: December ___, 1997
THE MONEY STORE RESIDENTIAL TRUST 1997-II
By: CHASE MANHATTAN BANK DELAWARE
solely as Owner Trustee and not in its
individual capacity
[or THE CHASE MANHATTAN BANK, as Authenticating
Agent and not in its individual capacity]
By: __________________________________________
Authorized Signatory
OWNER TRUSTEE'S [OR AUTHENTICATING AGENT'S] CERTIFICATE
OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
Date: December ___, 1997
[CHASE MANHATTAN BANK DELAWARE,
solely as Owner Trustee and not in its individual
capacity]
or [THE CHASE MANHATTAN BANK, as Authenticating
Agent and not in its individual capacity]
By:_____________________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________ Attorney to transfer said Trust
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
Signature Guaranteed:
*
- --------------------------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
THE MONEY STORE RESIDENTIAL TRUST 1997-II
THIS Certificate of Trust of The Money Store Residential Trust 1997-II
(the "Trust"), is being duly executed and filed by Chase Manhattan Bank
Delaware, a Delaware banking corporation, not in its individual capacity but
solely as trustee, to form a business trust under the Delaware Business Trust
Act (12 DEL. CODE, ss. 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is THE MONEY
STORE RESIDENTIAL TRUST 1997-II.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust which has its principal place of business in the State of Delaware is
Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust.
CHASE MANHATTAN BANK DELAWARE
not in its individual capacity but
solely as owner trustee of the Trust.
By:______________________________________
Name:
Title:
<PAGE>
EXHIBIT C
INVESTMENT LETTER
The Money Store, Inc.
TMS SPV, Inc.
2840 Morris Avenue
Union, New Jersey 07083
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attn: Corporate Trust Administration
Re: THE MONEY STORE RESIDENTIAL TRUST 1997-II
Ladies and Gentlemen:
In connection with its purchase of certain Trust Certificates (the
"Certificates") of The Money Store Residential Trust 1997-II (the "Issuer"), the
purchaser named below (the "Purchaser") or, if an investment adviser is
executing this Investment Letter on the Purchaser's behalf, such investment
adviser represents, warrants and certifies that:
(i) it understands that the Certificates are not being and will
not be registered under the Securities Act of 1933, as
amended (the "1933 Act"), and are not being registered or
qualified under any state securities or "blue sky" laws and
are being sold to the Purchaser in a transaction that is
exempt from the registration requirements of the 1933 Act.
The Purchaser is an "accredited investor" as defined in Rule
501(a)(1)-(3) of the 1933 Act and a sophisticated
institutional investor that is experienced in purchasing
securities similar to the Certificates. The Purchaser is
able to bear the economic risk of investment in the
Certificates;
(ii) any information it desired concerning the Certificates, the
issuer thereof or any other matter it deemed relevant to its
decision to purchase the Certificates has been made
available to it. In this regard, it has carefully reviewed
with its counsel and understands the terms of the Trust
Agreement pursuant to which the Issuer was formed and agrees
to be bound by all the terms thereof, including those
relating to restrictions on transfer;
(iii) the Purchaser's purchase of the Certificates would not cause
it to fail to comply fully with all applicable requirements
of each regulatory body having supervisory or other
authority over its operations or over its purchase of the
Certificates. In reaching its decision to purchase the
Certificates, it has conducted, with its experts and
counsel, an independent analysis of the economic and
regulatory effects of the transaction on the Purchaser based
on the Purchaser's circumstances and has concluded that the
purchase of the Certificates is appropriate for the
Purchaser's circumstances;
(iv) the Purchaser has independently confirmed the federal, state
and local tax consequences of owning the Certificates;
(v) the Purchaser is acquiring the Certificates for its own
account, not as nominee for any other person, and not with a
present view to any distribution or other disposition of the
Certificates in violation of the provisions of the 1933 Act;
(vi) the Purchaser agrees the Certificates must be held
indefinitely by it (and may not be sold, pledged,
hypothecated or in any way disposed of) unless subsequently
registered under the 1933 Act or an exemption from the
registration requirements of the 1933 Act is available and
such transaction is exempt from all applicable state
securities or "blue sky" laws;
(vii) the Purchaser agrees that in the event that at some future
time it wishes to dispose of or exchange the Certificates
(such disposition or exchange not being currently foreseen
or contemplated), it will not transfer or exchange the
Certificates unless:
(A) (1) a letter to substantially the same effect as
this letter is executed and delivered by the purchaser
before the transfer or exchange is consummated, and (2) all
offers or solicitations in connection with the sale, whether
directly or through any agent acting on the Purchaser's
behalf, are limited only to Eligible Purchasers and are not
made by means of any form of general solicitation or general
advertising whatsoever; and
(B) the Certificates are sold in any other transaction
that does not require registration under the 1933 Act and a
satisfactory opinion of counsel is furnished to such effect;
(viii) the Purchaser is not, and is not purchasing for, or on
behalf of, (1) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh Plan
subject to either Title I of the Employee Retirement Income
Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986, as amended, or (2) an entity
(including an insurance company general account) whose
underlying assets include plan assets by reason of any such
plan's arrangements or account's investment in any such
entity.
(ix) the Purchaser understands that the Certificates bear, and
will continue to bear, a legend to substantially the
following effect:
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TRUST CERTIFICATE,
AGREES THAT THIS TRUST CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND (1)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3) UNDER THE ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR,
OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1)
EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS
OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which it has reasonable grounds to believe and does believe can make
representations with respect to itself to substantially the same effect as the
representations set forth herein.
Terms not otherwise defined shall have the meanings assigned to them
in the Trust Agreement.
Very truly yours,
---------------------------
By: ________________________
(Authorized Officer)
<PAGE>
ANNEX I
LIST OF ORIGINATORS
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Minnesota Inc.
The Money Store Home Equity Corp.
The Money Store/Kentucky Inc.
