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) SEPTEMBER 29, 1998
The Money Store Trust 1998-C and the Originators as listed below under a
Sale and Servicing Agreement dated as of August 31, 1998, providing for
the issuance of The Money Store Asset Backed Notes,
Series 1998-C.
The Money Store Trust 1998-C
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)
707 THIRD STREET, WEST SACRAMENTO, CALIFORNIA 95605
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (916) 617-1000
N/A
(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
1.1 Underwriting Agreement, dated September 23, 1998, among The Money Store
Inc., the Originators, The Money Store Trust 1998-C (the "Trust"), and
First Union Capital Markets, a division of Wheat First Securities, Inc.
as representative of the Underwriters (the "Underwriters").
1.2 Pricing Agreement, dated September 23, 1998, among The Money Store
Inc., the Originators, the Trust and the Underwriters.
4.1 Sale and Servicing Agreement, dated as of August 31, 1998, among The
Money Store Inc., the Originators, and the Trust.
4.2 Trust Agreement, dated as of August 31, 1998, between the Originators
and Chase Manhattan Bank Delaware, Owner
Trustee.
4.3 Indenture, dated as of August 31, 1998, between the Trust and The Bank
of New York, as Trustee.
4.4 Spread Account Agreement, dated as of September 29, 1998,
between First Union National Bank and The Bank of New
York.
<PAGE>
Schedule A
State of IRS Employer
Registrant Incorporation ID Number
TMS Mortgage Inc. New Jersey 22-3217781
The Money Store/D.C. Inc. D.C. 22-2133027
The Money Store/Kentucky Inc. Kentucky 22-2459832
The Money Store Home Equity Corp. Kentucky 22-2522232
The Money Store/Minnesota Inc. Minnesota 22-3003495
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TMS MORTGAGE INC.
THE MONEY STORE/D.C. INC.
THE MONEY STORE/KENTUCKY INC.
THE MONEY STORE HOME EQUITY CORP.
THE MONEY STORE/MINNESOTA INC.
By: /S/ WILLIAM S. TEMPLETON
----------------------------
Name: William S. Templeton
Title: President
Dated: September 29, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBITS
1.1 Underwriting Agreement, dated September 23, 1998, among The Money Store
Inc., the Originators, The Money Store Trust 1998-C (the "Trust"), and
First Union Capital Markets, a division of Wheat First Securities, Inc.
as representative of the Underwriters (the "Underwriters").
1.2 Pricing Agreement, dated September 23, 1998, among The Money Store
Inc., the Originators, the Trust and the Underwriters.
4.1 Sale and Servicing Agreement, dated as of August 31, 1998, among The
Money Store Inc., the Originators, and the Trust.
4.2 Trust Agreement, dated as of August 31, 1998, between the Originators
and Chase Manhattan Bank Delaware, Owner
Trustee.
4.3 Indenture, dated as of August 31, 1998, between the Trust and The Bank
of New York, as Trustee.
4.4 Spread Account Agreement, dated as of September 29, 1998,
between First Union National Bank and The Bank of New
York.
EXHIBIT 1.1
$401,250,000 Class AF-1 Adjustable Rate Notes
$133,750,000 Class AF-2 Auction Rate Notes
$360,000,000 Class AV Adjustable Rate Notes
THE MONEY STORE INC.
The Money Store Trust 1998-C
UNDERWRITING AGREEMENT
September 23, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc., as
Representative of the Several
Underwriters named herein
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), on
behalf 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 Trust 1998-C (the "Trust") to issue: Class AF-1 Adjustable Rate
Notes in the aggregate original principal amount of $401,250,000 (the "Class
AF-1 Notes"), Class AF-2 Auction Rate Notes in the aggregate original principal
amount of $133,750,000 (the "Class AF-2 Notes" and together with the Class AF-1
Notes, the "Class AF Notes") and Class AV Adjustable Rate Notes in the aggregate
original principal amount of $360,000,000 (the "Class AV Notes" and together
with the Class AF Notes, the "Notes") and, the Company, the Originators and the
Trust hereby confirm their agreement with First Union Capital Markets, a
division of Wheat First Securities, Inc. ("First Union" 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 August 31, 1998 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 August 31,
1998, among the Trust and The Bank of New York, as trustee (the "Indenture
Trustee"). The primary assets of the Trust will consist of two separate cross-
supported pools ("Pool I" and "Pool II," respectively, and collectively, the
"Pools") of loans (the "Loans") having the characteristics described in the
Prospectus Supplement (as defined below).
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 Trust 1998-C 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.
On or prior to the date of issuance of the Notes, the Company will
obtain from MBIA Insurance Corporation ("MBIA") financial guaranty insurance
policies (the "MBIA Policies") on behalf of the Indenture Trustee for the
benefit of the holders of the Notes.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Sale and Servicing Agreement (the
"Sale and Servicing Agreement") dated as of August 31, 1998, among the Trust,
the Company and the Originators.
Prior to the delivery of the Notes by the Trust, and the public
offering thereof by the Underwriters, the 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. 333-60771) including a
prospectus, and such amendments thereto as may have been required to
the date hereof, relating to the Notes 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 Notes
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 Notes
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 the 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, in the case of the Company, the Indemnification
Agreement (as defined below) and (B) there have been no transactions
entered into by the Company or the Originators or any of their
subsidiaries, other than those in the ordinary course of business,
which would have a material adverse effect on the ability of the
Company and the Originators to perform their obligations under this
Agreement, the Pricing Agreement, the Sale and Servicing Agreement,
the Indenture, the Trust Agreement, and the Insurance Agreement dated
as of September 1, 1998 among the Company, the Originators, the
Custodian, the Indenture Trustee and MBIA (the "Insurance Agreement"),
as applicable (this Agreement, the Pricing Agreement, the Sale and
Servicing Agreement, the Indenture, the Trust Agreement and the
Insurance Agreement being herein referred to, collectively, as the
"Basic Documents") and the Indemnification Agreement to be dated as of
September 28, 1998 (the "Indemnification Agreement") among the
Company, MBIA and the Underwriters.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of New Jersey with all requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Basic Documents to which it is a party and the Indemnification
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse
effect on, (A) the Company's ability to perform its obligations under
the Basic Documents and the Indemnification Agreement, or (B) the
business, properties, financial position, operations or results of
operations of the Company.
(v) Each Originator has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with all requisite power and authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its
obligations under the Basic Documents 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) Any person who signs the Indemnification Agreement on
behalf of the Company, will be, as of the time of such signing and
delivery, duly elected or appointed, qualified and acting, and the
Indemnification Agreement, as so executed, will have been duly and
validly authorized, and, when executed, will constitute the valid,
legal and binding agreement of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(viii) Each of the Basic Documents and the Indemnification
Agreement 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 and the MBIA Policies conform in all material respects to
the statements relating thereto contained in the Prospectus.
(ix) 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.
(x) 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 and, in the case of the Company, the Indemnification Agreement
nor the execution and delivery by the Company and the Originators of
the Basic Documents to which it is a party and, in the case of the
Company, the Indemnification Agreement nor the fulfillment of the
terms of each Basic Document to which it is a party and, in the case
of the Company, the Indemnification Agreement will result in the
breach of any term or provision of the charter or by-laws of the
Company and the Originators, and the Company and the Originators are
not in breach or violation of or in default (nor has an event occurred
which with notice or lapse of time or both would constitute a default)
under the terms of (A) any material obligation, agreement, covenant or
condition contained in any material contract, indenture, loan
agreement, note, lease or other material instrument to which the
Company or the Originators are a party or by which it may be bound, or
to which any of the property or assets of the Company or the
Originators are subject, or (B) any law, decree, order, rule or
regulation applicable to the Company and the Originators of any court
or supervisory, regulatory, administrative or governmental agency,
body or authority, or arbitrator having jurisdiction over the Company
or the Originators or their properties, the default in or the breach
or violation of which would have a material adverse effect on the
Company or the Originators or the ability of the Company and the
Originators to perform their obligations under the Basic Documents to
which it is a party and, in the case of the Company, the
Indemnification Agreement; 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 and, in the case
of the Company, the Indemnification Agreement will result in such a
breach, violation or default which would have such a material adverse
effect.
(xi) Except as described in the Prospectus, there is no
action, suit or proceeding against or investigation of the Company or
any Originator, now pending, or, to the knowledge of the Company and
the Originators, threatened against the Company or any Originator,
before any court, governmental agency or body (A) which is required to
be disclosed in the Prospectus (other than as disclosed therein) or
(B) (1) asserting the invalidity of any Basic Document, the
Indemnification Agreement, the Notes or the Certificates, (2) seeking
to prevent the issuance of the Notes or the Certificates, or the
consummation of any of the transactions contemplated by the Basic
Documents, (3) which would materially and adversely affect the
performance by the Company or any Originator of its obligations under
the Basic Documents to which it is a party, or the validity or
enforceability of any Basic Document or the Notes or the Certificates
and, in the case of the Company, the Indemnification Agreement, or (4)
seeking to adversely affect the federal income tax attributes of the
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 and, in the case of the Company, the Indemnification Agreement.
(xii) The Company and each of the Originators possess such
licenses, certificates, authorities or permits issued by the
appropriate state or federal regulatory agencies or governmental
bodies necessary to conduct the businesses now conducted by them
(except where the failure to possess any such license, certificate,
authority or permit would not materially and adversely affect the
holders of the 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 and the Indemnification Agreement.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the 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.
(xiv) At the time of execution and delivery of the Sale and
Servicing Agreement, 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.
(xv) The transfer of the Loans to the Trust at The Closing
Date will be treated by the Company and the Originators for financial
accounting and reporting purposes as a sale of assets and not as a
pledge of assets to secure debt.
(xvi) 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 Sale
and Servicing Agreement.
(xvii) Any taxes, fees and other governmental charges that
are assessed and due in connection with the execution, delivery and
issuance of the Basic Documents, the Indemnification Agreement and the
Securities which have become due or will become due on or prior to The
Closing Date shall have been paid at or prior to The Closing Date.
(xviii) 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 Company,
on behalf of the Originators, agrees 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 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 Notes 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 September 29, 1998, 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 the "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 Indenture.
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 the
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 Notes 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 Notes as the Representative may reasonably
request from time to time.
Section 4. PAYMENT OF EXPENSES. The Company and the Originators will
pay all expenses incident to the performance of their obligations under this
Agreement, including (i) the printing (or other reproducing) and filing of the
Registration Statement as originally filed and of each amendment thereto (other
than amendments relating to the filing of Computational Materials pursuant to
Section 11); (ii) the reproducing of the Basic Documents and the Indemnification
Agreement; (iii) the preparation, printing, issuance and delivery of the
certificates for the DTC Notes to the Underwriters; (iv) the fees and
disbursements of () the Company's counsel, () the Underwriters' counsel, () KPMG
Peat Marwick, accountants for the Company and issuer of the comfort letters, ()
the Owner Trustee and its counsel, () the Indenture Trustee and its counsel, and
() DTC in connection with the book-entry registration of the DTC Notes; (iv) 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; (v) 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; (vi) the fees charged by any of Moody's Investors Service,
Inc. ("Moody's) or Standard & Poor's Ratings Services ("Standard & Poor's") for
rating the Notes; and (vii) 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, on the
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) On the Closing Date, the Representative, as representative of the
Underwriters, shall have received:
(i) The favorable opinion, dated as of the Closing Date,
of Stroock & Stroock & Lavan LLP, counsel for the Company and the
Originators, 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, the Sale and Servicing Agreement, the Insurance
Agreement and the MBIA Policies summarizes fairly such
provisions.
(D) The information in the Prospectus under "Summary of
Terms - Federal Income Tax Consequences," "Summary of Terms
- ERISA Considerations," "Certain Legal Aspects of the
Mortgage Loans," "Federal Income Tax Consequences," "ERISA
Considerations" and "Risk Factors - The Status of the
Mortgage Loans in the Event of Bankruptcy of The
Representative or an Originator" and in the Prospectus
Supplement under "Summary of Terms - Tax Status," "Summary
of Terms - ERISA Considerations," "Federal Income Tax
Consequences," and "ERISA Considerations," to the extent
that they constitute matters of federal, New York or
California law, summaries of legal matters, documents or
proceedings or legal conclusions, has been reviewed by them
and is correct in all material respects.
(E) TMS Special Holdings, Inc. has been duly
incorporated and is validly existing and in good standing
under the laws of the State of Delaware. TMS Mortgage Inc.
is qualified to transact business as a foreign corporation
in, and is in good standing under the laws of, the States of
California, Florida and New York.
(F) Assuming due authorization, execution and delivery
by the other parties thereto (including but not limited to
the Originators), (i) the Sale and Servicing Agreement, the
Pricing Agreement, the Notes, the Certificates, the
Insurance Agreement, the Indemnification 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, the Notes, the Certificates, the
Insurance Agreement, the Indemnification 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, the Insurance Agreement, the
Indemnification 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, the Insurance Agreement, the Indemnification
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 this
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 Indenture
Trustee, authentication and delivery in accordance with the
Indenture, and delivery and payment therefore pursuant to
this 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.
(M) For federal income tax purposes, the Notes will be
characterized as debt, and the Trust will not be
characterized as an association (or a publicly traded
partnership) taxable as a corporation.
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 the 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 under 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, the Pricing
Agreement, the Trust Agreement, and have all requisite
power, authority and legal right to execute and deliver this
Agreement, the Sale and Servicing Agreement, the Insurance
Agreement, the Indemnification Agreement, the Pricing
Agreement, 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, the Insurance Agreement, the
Indemnification Agreement, the Notes and the Certificates
each have been duly authorized, executed and delivered by
the Company; this Agreement, the Trust Agreement, the
Insurance Agreement, the Indemnification 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, the Insurance Agreement, the
Indemnification Agreement, the Pricing Agreement, 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, the Trust Agreement, the Sale and Servicing
Agreement, the Insurance Agreement, the Indemnification
Agreement or the Pricing 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 Sale and Servicing
Agreement, the Pricing Agreement, the Insurance Agreement,
the Indemnification Agreement, 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.
(G) The delivery by TMS Mortgage Inc. of each Mortgage
Note and Mortgage secured by real property located in New
Jersey as and in the manner contemplated by the Sale and
Servicing Agreement is sufficient fully to transfer to the
Trust all right, title and interest of TMS Mortgage Inc. in
and to each such Loan including, without limitation, the
right to enforce each such Loan in accordance with its terms
to the extent enforceable by TMS Mortgage Inc. at the time
of such delivery.
(iii) The favorable opinion, dated as of the Closing Date,
of Emmitt, Marvin & Martin LLP, counsel for the Indenture Trustee, in
form and substance satisfactory to counsel for the Underwriters.
(iv) The favorable opinion, dated as of the Closing Date, of
Kilpatrick Stockton LLP, counsel for the Underwriters.
(v) The favorable opinion, dated as of the Closing Date, of
Richards, Layton & Finger, counsel for the Owner Trustee, 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, 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, the Indenture or the Sale and Servicing
Agreement, as applicable.
(H) The execution, delivery and performance by the
Owner Trustee of the Trust Agreement and, on behalf of the
Trust, of the Indenture and the Sale and Servicing 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 Owner 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 Business Trust Statute.
(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.
(vi) The favorable opinion, dated as of the Closing Date, of
Bruce Hurwitz, Senior Corporate Counsel to the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect
that, 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 Indenture, the Notes, the Trust Agreement, the
Certificates, the Insurance Agreement, the Indemnification 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, the
Insurance Agreement or the Sale and Servicing Agreement, the Pricing
Agreement, the Indemnification Agreement, the Indenture, the Notes,
the Trust Agreement or the Certificates.
(vii) The favorable opinion, dated as of the Closing Date,
of Kutak Rock, special counsel for MBIA, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(A) MBIA is a stock insurance corporation, duly
incorporated and validly existing under the laws of the
State of New York. MBIA is validly licensed and authorized
to issue the MBIA Policies and perform its obligations under
the MBIA Policies in accordance with the terms thereof,
under the laws of the State of New York.
(B) The execution and delivery by MBIA of the MBIA
Policies, the Insurance Agreement and the Indemnification
Agreement are within the corporate power of MBIA and have
been authorized by all necessary corporate action on the
part of MBIA; the MBIA Policies have been duly executed and
are the valid and binding obligations of MBIA enforceable in
accordance with its terms, except that the enforcement of
the MBIA Policies may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors'
rights generally and by general principles of equity.
(C) MBIA is authorized to deliver the Insurance
Agreement and the Indemnification Agreement, and the
Insurance Agreement and the Indemnification Agreement have
been duly executed and are the valid and binding obligations
of MBIA enforceable in accordance with their respective
terms except that the enforcement of the Insurance Agreement
and the Indemnification Agreement may be limited by laws
relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of
equity and by public policy considerations relating to
indemnification for securities law violations.
(D) No consent, approval, authorization or order of any
state or federal court or governmental agency or body is
required on the part of MBIA, the lack of which would
adversely affect the validity or enforceability of the MBIA
Policies; to the extent required by applicable legal
requirements that would adversely affect the validity or
enforceability of the MBIA Policies, the form of the MBIA
Policies has been filed with, and approved by, all
governmental authorities having jurisdiction over MBIA in
connection with such MBIA Policies.
(E) To the extent any of the MBIA Policies constitutes
a security within the meaning of Section 2(l) of the
Securities Act of 1933, as amended (the "Act"), it is a
security that is exempt from the registration requirements
of the Act.
(F) The information set forth under the caption "The
MBIA Policies and MBIA" in the Prospectus Supplement,
relating to the offer and sale of the Notes, to the
Prospectus, insofar as such statements constitute a
description of the MBIA Policies, accurately summarizes the
MBIA Policies.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Company, the Indenture
Trustee, MBIA and public officials. Such opinion may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the MBIA.
(viii) The favorable opinion, dated as of the Closing Time,
of counsel for First Union National Bank, Trust Department, as the
Custodian, in form and substance satisfactory to counsel for the
Underwriters.
(c) On the Closing Date, the Representative, as representative of the
Underwriters, shall have received from Stroock & Stroock & Lavan LLP a letter,
dated as of The Closing Date, authorizing the Representative, as representative
of the Underwriters, to rely upon each opinion delivered by Stroock & Stroock &
Lavan LLP to either of Moody'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) On the 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
the 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 the 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 the 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 the 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,
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) On the Closing Date, the Representative, as representative of the
Underwriters, shall have received from the Indenture Trustee a certificate
signed by one or more duly authorized officers of the Indenture Trustee, dated
as of The 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) On the Closing Date, the Representative, as representative of the
Underwriters, shall have received a certificate signed by one or more duly
authorized officers of MBIA, dated as of the Closing Date, to the effect that
the information contained under the caption "The MBIA Policies and MBIA" in the
Prospectus Supplement and the information incorporated by reference therein is
true and accurate in all material respects and such other matters as the
Representative, as representative of the Underwriters, shall request.
(h) On the 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 The
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 Pools" 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 Trust on the 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 or the Indemnification Agreement;
(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, (d) the
Insurance Agreement, (e) the Indemnification Agreement, or (f) any
other document delivered prior hereto or on the date hereof in
connection with the purchase described in this Agreement and the 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
Notes;
(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) On the Closing Date, each of the Class AF-1 Notes, Class AF-2
Notes and Class AV Notes shall have been rated "AAA" by Standard & Poor's and
"Aaa" by Moody's.
(j) On the 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
of 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 with aggregate
outstanding principal balances as of the Cut-Off Date of at least
[$895,000,000].
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 The 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 Supplement (discussing the plan of
distribution), (x) the second sentence of the seventh paragraph on the inside
cover of the Prospectus Supplement (discussing the risk of a lack of secondary
trading), (y) the second paragraph under the heading "Underwriting" in the
Prospectus Supplement 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 Notes 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 the 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 or MBIA which, in the reasonable judgment of the Representative, as
representative of the Underwriters, materially impairs the investment quality of
the Notes; (ii) if there has occurred any downgrading in the rating of the debt
securities of MBIA by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the 1933 Act) which,
in the reasonable judgment of the Representative, as representative of the
Underwriters, materially impairs the investment quality or marketability of any
of the Notes or if any debt security of MBIA has been put on the "watch list" of
any such rating organization with negative implications; (iii) if there has
occurred any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any setting of minimum prices for trading on such
exchange or by any governmental authority; (iv) if any banking moratorium has
been declared by Federal or New York authorities; or (v) if there has occurred
any outbreak or escalation of major hostilities in which the United States of
America is involved, any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the judgment
of the Representative, as representative of the Underwriter, the effects of any
such outbreak, escalation, declaration, calamity, or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and payment
for the Notes.
(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 on the 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 The 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 Notes 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 First Union, as representative of the
Underwriters, One First Union TW-8, Charlotte, North Carolina 28288, Attention:
Patrick J. Tadie (Fax: (704) 383-6382); 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 Notes 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/ William S. Templeton
-----------------------------
Name: William S. Templeton
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/ William S. Templeton
--------------------------------
Name: William S. Templeton
Title: President
THE MONEY STORE
TRUST 1998-C
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:
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /s/ William W. Ingram
------------------------
Name: William W. Ingram
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>
<TABLE>
<CAPTION>
ANNEX B
First Union
Capital Markets
a division of
Wheat First Prudential Lehman Morgan Salomon Bear, Barclays
Securities, Securities Brothers Stanley & Co. Smith Barney Stearns & Capital
Inc. Incorporated Inc. Incorporated Inc. Co., Inc. Inc. Total
- -----------------------------------------------------------------------------------------------------------------------------------
POOL I NOTES
- -------------
<S> <C> <C> <C> <C> <C> <C>
Class AF-1 $87,250,000 $88,000,000 $88,000,000 - $88,000,000 - $50,000,000 $401,250,000
Class AF-2 $133,750,000 - - - - - - $133,750,000
POOL II NOTES - - - - - - - -
- -------------
Class AV $180,000,000 - - $90,000,000 - $90,000,000 - $360,000,000
Total $401,000,000 $88,000,000 $88,000,000 $90,000,000 $88,000,000 $90,000,000 $50,000,000 $895,000,000
</TABLE>
EXHIBIT 1.2
THE MONEY STORE INC.
$401,250,000 Class AF-1 Adjustable Rate Notes
$133,750,000 Class AF-2 Auction Rate Notes
$360,000,000 Class AV Adjustable Rate Notes
THE MONEY STORE TRUST 1998-C
PRICING AGREEMENT
September 23, 1998
First Union Capital Markets, a division
of Wheat First Securities, Inc., as
Representative of the Several
Underwriters named in
the Underwriting Agreement
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated September 23,
1998 (the "Underwriting Agreement"), relating to: Class AF-1 Adjustable Rate
Notes in the aggregate original principal amount of $401,250,000 (the "Class
AF-1 Notes"), Class AF-2 Auction Rate Notes in the aggregate original principal
amount of $133,750,000 (the "Class AF-2 Notes" and together with the Class AF-1
Notes, the "Class AF Notes") and Class AV Adjustable Rate Notes in the aggregate
original principal amount of $360,000,000 (the "Class AV Notes" and together
with the Class AF Notes, the "Notes") and all issued by the Money Store Trust
1998-C (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 purchase price for the Class AF Notes shall be 99.775%% of the
aggregate initial principal amount of the Class AF Notes, plus accrued
interest on the aggregate initial principal amount at the weighted
average Remittance Rate of the Class AF Notes, from September 1, 1998
to but not including the Closing Date.
(2) The purchase price for the Class AV Notes shall be 99.775% of the
aggregate initial principal amount of the Class AV Notes, plus accrued
interest on the aggregate initial principal amount at the weighted
average Remittance Rate of the Class AV Notes, from September 1, 1998
to but not including the Closing Date.
(3) 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/ William S. Templeton
-----------------------------
Name: William S. Templeton
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/ William S. Templeton
-------------------------------
Name: William S. Templeton
Title: President
THE MONEY STORE
TRUST 1998-C
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:
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /s/ William W. Ingram
--------------------------
Name: William W. Ingram
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.
EXHIBIT 4.1
Execution Copy
SALE AND SERVICING
AGREEMENT
among
THE MONEY STORE TRUST 1998-C
Issuer,
THE ORIGINATORS LISTED HEREIN
Originators
and
THE MONEY STORE INC.
Representative and Servicer
Dated as of August 31, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions............................................1
Section 1.02 Other Definitional Provisions.........................29
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST
Section 2.01 Contribution and Conveyance of Trust Account
Property. Priority and Subordination of
Ownership Interests...................................30
Section 2.02 Possession of Loan Files..............................30
Section 2.03 Books and Records.....................................31
Section 2.04 Delivery of Mortgage Loan Documents...................31
Section 2.05 Acceptance of the Trust Fund; Certain Substitutions;
Certification by Indenture Trustee and Custodian......33
Section 2.06 Fees and Expenses of the Indenture Trustee,
Owner Trustee, Trust Administrator and Custodian......35
Section 2.07 [Reserved]............................................36
Section 2.08 Optional Repurchase of Defaulted Loans................36
Section 2.09 Assignment Event......................................36
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of Representative,
Servicer and Originators..............................37
Section 3.02 Individual Loans......................................43
Section 3.03 Purchase and Substitution.............................51
ARTICLE IV
ADMINISTRATION AND SERVICING OF LOANS
Section 4.01 Duties of the Servicer................................53
Section 4.02 Liquidation of Loans..................................56
Section 4.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Account............57
Section 4.04 Permitted Withdrawals From the Principal
and Interest Accounts.................................58
Section 4.05 Payment of Taxes, Insurance and Other Charges.........60
Section 4.06 Transfer of Accounts..................................61
Section 4.07 Maintenance of Hazard Insurance.......................61
Section 4.08 Maintenance of Mortgage Impairment Insurance Policy...62
Section 4.09 Fidelity Bond.........................................62
Section 4.10 Title, Management and Disposition of REO Property.....62
Section 4.11 [RESERVED]............................................63
Section 4.12 Collection of Certain Loan Payments...................64
Section 4.13 Access to Certain Documentation and Information
Regarding the Loans...................................64
Section 4.14 Superior Liens........................................64
Section 4.15 [RESERVED]............................................65
ARTICLE V
GENERAL SERVICING PROCEDURES
Section 5.01 Assumption Agreements................................65
Section 5.02 Satisfaction of Mortgages and Release of Loan Files..66
Section 5.03 Servicing Compensation and Contingency Fee...........67
Section 5.04 Annual Statement as to Compliance....................68
Section 5.05 Annual Independent Public Accountants'
Servicing Report.....................................68
Section 5.06 Indenture Trustee's and Owner Trustee's Right to
Examine Servicer Records and Audit Operations........68
Section 5.07 Reports to the Indenture Trustee; Principal and
Interest Account Statements..........................69
ARTICLE VI
[RESERVED]
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 7.01 Note Distribution Accounts...........................69
Section 7.02 Rounding Account71
Section 7.03 Establishment of Expense Accounts; Deposits in
Expense Accounts; Permitted Withdrawals from
Expense Accounts.....................................72
Section 7.04 Establishment of Insurance Accounts; Deposits in
Insurance Accounts; Permitted Withdrawals from Insurance
Accounts.............................................73
Section 7.05 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account...75
Section 7.06 [RESERVED]...........................................76
Section 7.07 Investment of Accounts...............................76
Section 7.08 Priority and Subordination of Distributions..........77
Section 7.09 Allocation of Realized Losses........................81
Section 7.10 Statements...........................................82
Section 7.11 Advances by the Servicer.............................86
Section 7.12 Compensating Interest................................87
Section 7.13 Reports of Foreclosure and Abandonment of
Mortgaged Property...................................87
Section 7.14 Allocation of Total Monthly Excess Cashflow..........88
Section 7.15 Establishment of Servicing Accounts; Collection of
Taxes, Assessments and Similar Items.................89
Section 7.16 Net Deposits.........................................89
ARTICLE VIII
[RESERVED]
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims..................90
Section 9.02 Merger or Consolidation of the Representative and
the Servicer.........................................91
Section 9.03 Limitation on Liability of the Servicer and Others...91
Section 9.04 Servicer Not to Resign...............................92
Section 9.05 [RESERVED]...........................................92
Section 9.06 Right of Majority Securityholders to Replace
Servicer.............................................92
Section 9.07 Appointment of Trust Administrator...................92
ARTICLE X
DEFAULT
Section 10.01 Servicer Default.....................................93
Section 10.02 Indenture Trustee to Act; Appointment of Successor...94
Section 10.03 Waiver of Defaults...................................96
Section 10.04 [RESERVED]...........................................96
Section 10.05 Control by Majority Securityholders..................97
ARTICLE XI
TERMINATION
Section 11.01 Termination..........................................97
ARTICLE XII
ADMINISTRATIVE DUTIES OF TRUST ADMINISTRATOR
Section 12.01 Administrative Duties................................98
Section 12.02 Records..............................................101
Section 12.03 Additional Information To Be Furnished to the
Issuer...............................................101
Section 12.04 Calculation of LIBOR.................................101
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Noteholders and Certificateholders...........102
Section 13.02 Amendment............................................102
Section 13.03 Recordation of Agreement.............................103
Section 13.04 Duration of Agreement................................104
Section 13.05 Governing Law........................................104
Section 13.06 Notices..............................................104
Section 13.07 Severability of Provisions...........................105
Section 13.08 No Partnership.......................................105
Section 13.09 Counterparts.........................................105
Section 13.10 Successors and Assigns...............................105
Section 13.11 Headings.............................................105
Section 13.12 Assignment to Indenture Trustee......................105
Section 13.13 Nonpetition Covenant.................................106
Section 13.14 Limitation of Liability of Owner Trustee,
Indenture Trustee and Custodian.....................106
Section 13.15 Independence of the Servicer.........................107
Section 13.16 Notification to Rating Agencies......................107
Section 13.17 Third Party Rights...................................107
Section 13.18 The Note Insurer.....................................107
<PAGE>
EXHIBITS
SCHEDULE I Description of Certain Litigation
EXHIBIT A Contents of Indenture Trustee's Loan File
EXHIBIT B Principal and Interest Account Letter Agreement
EXHIBIT C Form of Custodian Initial Certification
EXHIBIT C-1 Form of Custodian Interim Certification
EXHIBIT D Form of Custodian Final Certification
EXHIBIT E-1 Loan Schedule (Pool I)
EXHIBIT E-2 Loan Schedule (Pool II)
EXHIBIT F List of Originators
EXHIBIT G Request for Release of Documents
EXHIBIT H Form of Notice Under Guaranty Insurance Policy
Relating to the Pool I Notes
EXHIBIT I Form of Notice Under Guaranty Insurance Policy
Relating to the Pool II Notes
EXHIBIT J 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 August 31, 1998, among The
Money Store Trust 1998-C, 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") and Servicer (the "Servicer").
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;
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:
ACCOUNT: The Certificate Distribution Account, Note Distribution
Account, Expense Account, Spread Account, Insurance Account, Rounding Account,
the Principal and Interest Account and Servicing Account (including any
sub-accounts of any of the foregoing).
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
applicable Annual Expense Escrow Amount, (ii) the premiums payable to the Note
Insurer as set forth in the Insurance Agreement, (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: With respect to each Pool, an amount
equal to the product of (i) 0.01125% per annum (in the case of Pool I) or
0.01475% per annum (in the case of Pool II) and (ii) the sum of the Class
Principal Balances of the Notes of the applicable Pool, which is computed and
payable on a monthly basis and represents the estimated annual fees and expenses
of the Indenture Trustee, Owner Trustee and Trust Administrator and in the case
of Pool I, the Remarketing Agent.
ASSIGNMENT EVENT: The occurrence of any of the following (unless
otherwise waived by the Note Insurer): (i) a Servicer Default occurs and
continues for 30 days; (ii) FUNB's long-term unsecured debt rating is reduced
below A2 by Moody's or A by S&P; (iii) the suspension, termination or withdrawal
of FUNB's long-term unsecured debt rating by Moody's and S&P's; (iv) (a) the
Representative's stockholders' equity reported in accordance with generally
accepted accounting principles is less than $5,000,000 as of the end of any
fiscal quarter beginning September 30, 1998; or (b) the Representative is in
default of any material financial obligation; (v) a lease agreement acceptable
to the Note Insurer (the "Lease") between the Custodian, as lessee and the
Representative, as lessor with respect to the space on the Representative's
premises where the Custodian holds the Indenture Trustee's Loan Files (the
"On-Site Custodial Space") is not executed within 21 days following the Closing
Date; (vi) any of the facts set forth in the Officer's Certificate of the
Custodian and the Representative dated as of September 29, 1998, describing the
initial custodial arrangement with respect to the Indenture Trustee's Loan Files
(the "On-Site Custodial Arrangement") become untrue in a material and adverse
manner; (vii) the rating on the Pool I and Pool II Notes (without regard to the
Note Insurance Policies) is downgraded below BBB by S&P or Baa2 by Moody's;
(viii) so long as the Custodian holds any of the Indenture Trustee's Loan Files
at the on-site custodial space, any event of default shall have occurred and is
continuing under the Lease, the Lease is not in effect, or the Lease is deemed
unenforceable against either party thereto or (ix) FUNB is no longer acting as
Custodian.
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.
AUCTION PROCEDURES: The procedures set forth in Schedule I to the
Indenture by which the Auction Rate is determined for the Class AF-2 Notes.
AUCTION RATE: The rate of interest per annum that results from
implementation of the Auction Procedures.
BASIC DOCUMENTS: The Certificate of Trust, the Trust Agreement, the
Indenture, the Depository Agreement, this Sale and Servicing Agreement, the
Insurance Agreement, the Spread Account 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 in the States of California, New York, North
Carolina or Delaware are required or authorized by law to be closed.
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 Special
Interest.
CERTIFICATE REMITTANCE AMOUNT: As of any Remittance Date, an amount
equal to the sum of (i) the Pool Remaining Amount Available, net of
reimbursements to the Servicer or the Representative of Reimbursable Amounts
pursuant to Section 4.04(b), and (ii) the Supplemental Interest Excess for such
Remittance Date.
CHANGE DATE: The date on which the Loan Interest Rate of each Pool II
Loan is subject to adjustment, which date is the Due Date set forth in the
related Mortgage Note and each first, third, sixth or twelfth Due Date
thereafter, as set forth in the related Mortgage Note.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
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
for the applicable Pool, (ii) the applicable Annual Expense Escrow Amount and
(iii) the applicable per annum rate relating to premiums payable to the Note
Insurer as set forth in the Insurance Agreement.
CLASS AF-1 NOTE: A Note denominated as a Class AF-1 Note.
CLASS AF-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-1 Noteholders, which shall be equal to 5.65672% for the first
Remittance Date. Thereafter, the Class AF-1 Remittance Date shall be equal to
the lesser of (i) LIBOR plus 0.27% (or plus 0.54% for each Remittance Date
occurring after the Optional Servicer Termination Date) and (ii) the applicable
Net Funds Cap (but in no event exceeding 14.00% per annum).
CLASS AF-2 NOTE: A Note denominated as a Class AF-2 Note.
CLASS AF-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-2 Noteholders, which shall be equal to 5.50% for the first Remittance
Date. Thereafter, the Class AF-2 Remittance Date shall be equal to the annual
rate of interest determined according to the Auction Procedures, subject to the
applicable Net Funds Cap (but in no event exceeding 14.0% per annum).
CLASS AV NOTE: A Note denominated as a Class AV Note.
CLASS AV REMITTANCE RATE: The annual rate of interest payable to the
Class AV Noteholders, which shall be equal to 5.64672% for the first Remittance
Date. Thereafter, the Class AV Remittance Date shall be equal to the lesser of
(i) LIBOR plus 0.26% (or plus 0.52% for each Remittance Date occurring after the
Optional Servicer Termination Date) and (ii) the applicable Net Funds Cap (but
in no event exceeding 14.0% per annum).
CLASS POOL FACTOR: With respect to each Class of 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 Notes, as of
any date of determination, the Original Principal Balance of such Class less (i)
the sum of all amounts (including the principal portion of any related Insured
Payments) previously distributed to the Noteholders of such Class in respect of
principal pursuant to Section 7.05(d), and (ii) any actual loss of principal
suffered by the related Noteholders due to the failure of the Note Insurer to
perform its obligations under the related Note Insurance Policy.
CLASS REMITTANCE RATE: With respect to a Class of 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 AF-1
Remittance Rate, Class AF-2 Remittance Rate and Class AV Remittance Rate.
CLOSING DATE: September 29, 1998.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 7.12.
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, (iii)
Insurance Proceeds or (iv) Released Mortgaged Property Proceeds collected by the
Servicer, or as otherwise provided in Section 4.04.
CROSS-OVER DATE: The date on which the Subordinated Amount for Pool I
and Pool II have been reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses with respect to the applicable Pool of Loans
since the Closing Date.
CURRENT INTEREST REQUIREMENT: For each Class of Notes, and with
respect to each Remittance Date, an amount equal to interest based on the actual
number of days since the last Remittance Date (or in the case of the first
Remittance Date, from the Closing Date) up to but not including the upcoming
Remittance Date at the applicable Remittance Rate on the Class Principal Balance
for such Class outstanding immediately prior to such Remittance Date. The
Current Interest Requirement for a Class of Notes shall not include any
Noteholders' Interest Carryover.
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. The
initial Custodian for the Pool I and Pool II Loans shall be the Trust Department
of FUNB; provided, however, that following the occurrence of an Assignment
Event, the Indenture Trustee (or such other Person acceptable to the Note
Insurer) shall be the successor Custodian for the Pool I and Pool II Loans.
CUT-OFF DATE: August 31, 1998; provided, however, that for purposes of
determining characteristics of the Loans as of the Cut-Off Date, the Cut-Off
Date for those Loans originated after August 31, 1998 shall be deemed to be the
date of the applicable Mortgage 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).
DEFAULTED LOAN: Means any Loan as to which the related Obligor has
failed to pay in full of three or more consecutive Monthly Payments.
DEFICIENCY AMOUNT: With respect to any Remittance Date and with
respect to the Pool I or Pool II Notes, (i) the excess, if any, of (a) the
Current Interest Requirement for such Pool over (b) the sum of the Pool
Available Remittance Amount for such Pool (minus amounts withdrawn to pay
required premiums to the Note Insurer and the amount required to be deposited in
the Expense Account pursuant to Section 7.03(a)(i)), the Excess Spread
applicable to such Pool for such Remittance Date, the Supplemental Interest
Payments, if any, for such Remittance Date and the amount on deposit in the
Spread Account, plus (ii) the excess, if any, of (a) the Class Principal Balance
of the Notes of the related Pool, after taking into account all distributions to
be made on such Remittance Date (other than amounts payable with respect to
principal by the Note Insurer under the applicable Note Insurance Policy)
exceeds (b) the aggregate principal balances of the related Pool of Loans as of
the close of business on the last day of the related Due Period plus the amount,
if any, in the Spread Account on such date and allocated to such Pool of Loans
(after application of clause (i) above).
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 as defined in the
Indenture.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short-term rating by Moody's, and which is either
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i)
the third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds 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.
EVENT OF EXCESSIVE POOL LOSS: Means, with respect to Pool I or Pool II,
(a) until the 36th Remittance Date, any event that causes Cumulative Realized
Losses with respect to the related Pool to equal or exceed 1.25% of the Pool
Principal Balance of the related Pool as of the Closing Date, (b) from the 36th
until the 42nd Remittance Dates, any event that causes
Cumulative Realized Losses with respect to the related Pool to equal or exceed
1.75% of the Pool Principal Balance of the related Pool as of the Closing Date,
(c) from the 42nd until the 48th Remittance Dates, any event that causes
Cumulative Realized Losses with respect to the related Pool to equal or exceed
2.25% of the Pool Principal Balance of the related Pool as of the Closing Date
and (d) thereafter, any event that causes Cumulative Realized Losses with
respect to the related Pool to equal or exceed 2.75% of the Pool Principal
Balance of the related Pool as of the Closing Date.
EVENT OF NONPAYMENT: An event of nonpayment with respect to Pool I or
Pool II shall occur with respect to any Remittance Date if the amounts remitted
by the Servicer to the Indenture Trustee pursuant to Sections 4.04(a), 7.07(e),
7.11 and 7.12 for deposit in the Note Distribution Accounts with respect to Pool
I and Pool II (minus the amount to be withdrawn from the applicable Note
Distribution Account for deposit in the applicable Insurance Account pursuant to
Section 7.01(b)(i)), plus any amount transferred from the Spread Account to the
applicable Note Distribution Account pursuant to Section 7.05(b)(ii) and any
Supplemental Interest Payments will not, taken together, be sufficient to pay
all of the Pool Remittance Amounts for each such Pool (exclusive of any Pool
Carry-Forward Amounts representing amounts previously paid to the Noteholders of
the applicable Pool as Insured Payments and exclusive of any amount described in
clause (iv) of the definition of Pool Principal Distribution Amounts with
respect to such applicable Pool which have not been paid by the Originators) in
respect of such Remittance Date.
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 for the applicable Pool; 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.
EXCESS SPREAD: With respect to any Remittance Date and Pool of Loans,
an amount equal to the excess of (A) the product of (i) the aggregate Principal
Balances of the applicable Pool of Loans as of the first day of the immediately
preceding Due Period and (ii) one-twelfth of the weighted average Loan Interest
Rate for the applicable Pool of Loans, as the case may be, as of the first day
of the related Due Period over (B) the sum of (i) the aggregate Current Interest
Requirements for the applicable Pool of Notes for such Remittance Date, (ii)
amounts to be deposited into the applicable Expense Account and Insurance
Account on such Remittance Date pursuant to Sections 7.03(a)(i) and 7.04(a)(i),
respectively, and (iii) the Servicing Fee and Contingency Fee for the applicable
Pool of Mortgage Loans with respect to such Remittance Date.
EXPENSE ACCOUNT: The expense account established and maintained by the
Indenture Trustee in accordance with Section 7.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHA: The Federal Housing Administrator, and its successors in
interest.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 4.09.
FINAL MATURITY DATE: With respect to (i) the Class AF-1 Notes, October
15, 2038 (ii) the Class AF-2 Notes, October 15, 2038 and (iii) the Class AV
Notes, November 15, 2028.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FUNB: First Union National Bank, a national banking association
headquartered in Charlotte, North Carolina, and any successor thereto.
GROSS MARGIN: With respect to each Pool II Loan, the number of basis
points set forth in the related Mortgage Note which is added to the LIBOR Index
or the Treasury Index, as the case may be, to determine the Loan Interest Rate
on the related Change Date, subject to the applicable Periodic Rate Cap and the
applicable Lifetime Cap and Lifetime Floor.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or
more in which individual fee title is held to the interior space only and all
other elements of the structure and land are held in undivided common ownership.
HOLDER OF THE SPECIAL INTEREST: The Person holding the Special
Interest.
HUD: The United States Department of Housing and Urban Development,
and its successor in interest.
INDENTURE: The Indenture dated as of August 31, 1998, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
INDENTURE TRUSTEE: The Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
INDENTURE TRUSTEE'S LOAN FILE: The documents delivered to the
Indenture Trustee or the Custodian pursuant to Section 2.04.
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.
INDEX: Either the LIBOR Index or the Treasury Index, as the case may
be.
INSURANCE ACCOUNTS: The insurance accounts established and maintained
by the Indenture Trustee in accordance with Section 7.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of September 1, 1998 by
and among the Note Insurer, The Money Store Inc., the Custodian, the Originators
and the Indenture Trustee, as amended from time to time by the parties thereto.
INSURANCE PAYING AGENT: With respect to any Pool I or Pool II Loan,
The Bank of New York or any successor as appointed herein.
INSURANCE PROCEEDS: Proceeds 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.
INSURED PAYMENT: means (i) as of any Remittance Date, any Deficiency
Amount and (ii) any Preference Amount.
INSURER REIMBURSABLE AMOUNTS: As described in Section 7.14(a)(ii).
INTEREST DETERMINATION DATE: With respect to any Interest Period after
the initial Interest Period, the second LIBOR Determination Date prior to such
Interest Period.
INTEREST PERIOD: With respect to the first Remittance Date, the period
commencing on the Closing Date and ending on October 14, 1998. Thereafter, the
period commencing on a Remittance Date and ending on the day immediately
preceding the next Remittance Date.
INTEREST RATE: Means, for each Class of Notes, the applicable Class
Remittance Rate for such Class.
INTEREST RATE SERVICES AGREEMENT: That certain Interest Rate Services
Agreement dated as of September 29, 1998 between the Indenture Trustee and the
Remarketing Agent, as amended or supplemented.
ISSUER: Means The Money Store Trust 1998-C.
LEASE: shall have the meaning assigned thereto in the Insurance
Agreement.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.04 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a
London Banking Day prior to the commencement of each related Interest Period.
LIBOR INDEX: The applicable London interbank offered rate for
one-month, six-month or one year U.S. dollar deposits, as specified in the
related Mortgage Note.
LIFETIME CAP: The provision in the Mortgage Note for each Pool II
Loan, which limits the maximum Loan Interest Rate over the life of such Pool II
Loan to the rate set forth in the applicable Mortgage Note.
LIFETIME FLOOR: The provision in the Mortgage Note for each Pool II
Loan, which limits the minimum Loan Interest Rate over the life of such Pool II
Loan to the rate set forth in the applicable Mortgage Note.
LIQUIDATED LOAN: 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.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
any REO Disposition, amounts required to be deposited in the applicable
Principal and Interest Account pursuant to Section 4.10 hereof, and any other
amounts 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 Indenture Trustee
pursuant to this Agreement, 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 delivered to
the Custodian and the Indenture Trustee as Exhibits E-1 and E-2. 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 Exhibits
E-1 and E-2), 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. Each of the Loans is a Mortgage Loan.
LOAN FILE: The documents delivered to the Custodian on behalf of the
Indenture Trustee pursuant to Section 2.04.
LOAN INTEREST RATE: The fixed or adjustable rate of interest borne by
a Mortgage Note, as shown on the applicable Loan Schedule.
LOAN SCHEDULE: The separate schedules of Pool I and Pool II Loans
delivered to the Custodian on behalf of the Indenture Trustee, such schedules
identifying each Loan by 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) 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 Mortgage Note, (x) the remaining number of months to maturity as of
the Cut-Off Date and (xi) with respect to Pool II, the Periodic Rate Cap,
Lifetime Cap and Lifetime Floor.
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.
LONDON BANKING DAY: Any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
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 (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.
MARGIN: With respect to (i) the Class AF-1 Notes, the rate per annum
of 0.27% (or for each Remittance Date occurring after the Optional Servicer
Termination Date, 0.54%) and (ii) the Class AV Notes, the rate per annum of
0.26% (or for each Remittance Date occurring after the Optional Servicer
Termination Date, 0.52%), that is added to LIBOR to determine the Class AF-1
Remittance Date or Class AV Remittance Rate, respectively.
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
7.11 hereof.
MONTHLY EXCESS SPREAD: As of any Remittance Date and for any Pool of
Loans, an amount equal to the product of (i) the amount calculated pursuant to
the definition of Excess Spread with respect to such Remittance Date for such
Pool of Loans and (ii) the then applicable Monthly Excess Spread Percentage.
MONTHLY EXCESS SPREAD PERCENTAGE: As to any Remittance Date, 100%.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Loan, as set forth in
the related Mortgage Note.
MONTHLY PREMIUM: With respect to Pool I and Pool II, the monthly
premium payable to the Note Insurer equal to the product of (i) the applicable
percentage set forth in the Insurance Agreement and (ii) the applicable then
outstanding Pool Principal Balance, rounded to the nearest thousand dollars.
MOODY'S: Moody's Investors Service, Inc., or any successor thereto.
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.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing
the indebtedness of an Obligor under a Loan.
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.
MORTGAGED PROPERTY STATES: Any one of the 50 states and the District
of Columbia and Puerto Rico, where the Mortgaged Properties are located.
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 FUNDS CAP: For a Class of Notes on any Remittance Date will be the
per annum rate determined on an actual 360 basis pursuant to the following
formula:
Net Funds Cap = (A X B) + C
-----------
A
Where:
A = The Class Principal Balance for the applicable Class of Notes
immediately prior to such Remittance Date.
B = The difference between (x) the weighted average Loan Interest
Rate for the Loans of the related Pool and (y) the sum of the
percentages used in determining (i) the Servicing Fee, (ii) the
Contingency Fee, (iii) the premium due the Note Insurer for the
related Pool, (iv) the fees due the Owner Trustee, the Indenture
Trustee and the Trust Administrator for the related Pool, (v)
commencing with the Remittance Date in May 1999, 0.50% and (vi)
with respect to the Class AF-2 Notes, the fee due the Remarketing
Agent.
C = With respect to the Class AF-1 and Class AF-2 Notes, the
amount, if any, of Supplemental Interest Payments allocated to
such Class for such Remittance Date.
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.
NET MONTHLY EXCESS CASHFLOW: As defined in Section 7.14(b) hereof.
1933 ACT: The Securities Act of 1933, as amended.
NONRECOVERABLE ADVANCES: With respect to any Loan, (i) any Monthly
Advance previously made and not reimbursed pursuant to Section 4.04 or 7.11, 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 7.11.
NOTE: Any Class AF-1 Note, Class AF-2 Note or Class AV Note.
NOTE DISTRIBUTION ACCOUNT: The account designated as such, established
and maintained pursuant to Section 7.01.
NOTE INSURANCE POLICIES: Collectively, the Note guaranty insurance
policies relating to the Pool I Notes and Pool II Notes, each dated the Closing
Date, and each issued by the Note Insurer for the benefit of the Holders of the
Notes of the related Pool, pursuant to which the Note Insurer guarantees Insured
Payments.
NOTE INSURER: MBIA Insurance Corporation, a New York stock insurance
corporation, or any successor thereof, as issuer of the Note Insurance Policies.
NOTEHOLDERS' INTEREST CARRYOVER: For any Remittance Date on which the
Remittance Rate for a Class of Notes is based upon the applicable Net Funds Cap,
the excess of (i) the amount of interest such Class of Notes would be entitled
to receive on such Remittance Date had interest been calculated at a rate equal
to LIBOR plus the applicable Margin or the Auction Rate, as the case may be,
(but in no event exceeding 14.00% per annum), over (ii) the amount of interest
such Class will receive on such Remittance Date at the applicable Net Funds Cap,
together with the unpaid portion of any such excess from prior Remittance Dates
(and interest thereon at the then applicable Remittance Rate, without giving
effect to the Net Funds Cap, but in no event exceeding 14.00% per annum). No
Certificateholders' Interest Carryover shall be paid on a Class of Notes after
the Class Principal Balance of such Class is reduced to zero.
NOTIONAL AMOUNT: With respect to any Remittance Date, the amount
designated as such in the Rate Agreement.
OBLIGOR: The obligor on a Mortgage 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 or the Servicer, as required by
this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative and the Servicer, reasonably
acceptable to the Indenture Trustee and the Note Insurer and experienced in
matters relating thereto.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01(b)
hereof.
ORIGINAL CLASS AF-1 PRINCIPAL BALANCE: $401,250,000.
ORIGINAL CLASS AF-2 PRINCIPAL BALANCE: $133,750,000.
ORIGINAL CLASS AV PRINCIPAL BALANCE: $360,000,000.
ORIGINAL COLLATERAL AMOUNT: The aggregate Principal Balance of the
Loans as of the Cut-Off Date.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Notes, the
amount set forth for such Class under the definitions of Original Class AF-1
Principal Balance, Original Class AF-2 Principal Balance and Original Class AV
Principal Balance, as the case may be.
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.
PERCENTAGE INTEREST: With respect to a Note, the portion of the
respective Class evidenced by such Note, expressed as a percentage, the
numerator of which is the denomination represented by such Note and the
denominator of which is the Original Principal Balance of such Class. The Notes
are issuable only in the minimum Percentage Interest corresponding to a minimum
denomination of $25,000.00 and integral multiples of $1,000 in excess thereof.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
include the following:
(i) direct general obligations of, or obligations
fully and unconditionally guaranteed as to the timely payment
of principal and interest by, the United States or any agency
or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, FHA
debentures, FHLMC senior debt obligations, Federal Home Loan
Bank consolidated senior debt obligations, and FNMA senior
debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption;
(ii) federal funds, certificates of deposit, time
deposits and banker's acceptances (having original maturities
of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state
thereof, provided that the short-term debt obligations of such
bank or trust company at the date of acquisition thereof have
been rated "A-1" or better by S&P and Prime-1 or better by
Moody's;
(iii) deposits of any bank or savings and loan
association which has combined capital, surplus and undivided
profits of at least $3,000,000 which deposits are held only up
to the limits insured by the BIF or SAIF administered by the
FDIC, provided that the unsecured long-term debt obligations
of such bank or savings and loan association have been rated
"BBB" or better by S&P and Baa3 or better by Moody's;
(iv) commercial paper (having original maturities of
not more than 365 days) rated "A-1" or better by S&P and
Prime-1 or better by Moody's;
(v) debt obligations rated "AAA" by S&P and Aaa by
Moody's (other than any such obligations that do not have a
fixed par value and/or whose terms do not promise a fixed
dollar amount at maturity or call date);
(vi) investments in money market funds (including
those funds managed or advised by the Owner Trustee or
Indenture Trustee or any affiliate thereof) rated "AAAm" or
better by S&P or "Aaa" or better by Moody's, the assets of
which are invested solely in instruments described in clauses
(i)-(v) above;
(vii) guaranteed investment contracts or surety bonds
issued by or reasonably acceptable to the Note Insurer
providing for the investment of funds in an account or
insuring a minimum rate of return on investments of such
funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or
other corporation whose debt obligations or
insurance financial strength or claims
paying ability are rated "AAA" by S&P and
"Aaa" by Moody's; and
(b) provide that the Indenture Trustee may
exercise all of the rights of the
Representative under such contract or surety
bond without the necessity of the taking of
any action by the Representative;
(viii) A repurchase agreement that satisfies the
following criteria and is acceptable to the Note Insurer:
(a) Must be between the Indenture Trustee and a
dealer bank or securities firm described
in 1. or 2. below:
1. Primary dealers on the Federal Reserve
reporting dealer list which are rated
"A" or better by S&P and Moody's, or
2. Banks rated "A" or above by S&P and
Moody's;
(b) The written repurchase agreement must
include the following:
1. Securities which are acceptable for
the transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the
full faith and credit of the U.S.
government (and FNMA & FHLMC)
2. the term of the repurchase agreement
may be up to 60 days
3. the collateral must be delivered to
the Indenture Trustee or third party
custodian acting as agent for the
Indenture Trustee by appropriate book
entries and confirmation statements,
with a copy to the Note Insurer, must
have been delivered before or
simultaneous with payment (perfection
by possession of certificated
securities)
4. Valuation of collateral
A. The securities must be valued
weekly, marked-to-market at current
market price plus accrued interest.
B. The value of the collateral must
be equal to at least 104% of the
amount of cash transferred by the
Indenture Trustee or custodian for
the Indenture 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 Indenture Trustee plus
accrued interest, then additional
cash and/or acceptable securities
must be transferred. If, however,
the securities used as collateral
are FNMA or FHLMC, then the value of
collateral must equal at least 105%;
and
(ix) any other investment acceptable to the Note
Insurer and the Rating Agencies, written confirmation of which shall be
furnished by the Note Insurer to the Indenture Trustee.
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 AVAILABLE AMOUNT: With respect to any Pool and each Remittance
Date, an amount equal to the sum of (i) the Pool Available Remittance Amount for
such Pool (net of the amount of Monthly Advances and Compensating Interest
deposited pursuant to Section 7.01(a)(ii)), (ii) any amount of Monthly Excess
Spread to be applied to the Notes of such Pool on such Remittance Date, (iii)
the Compensating Interest, (iv) the portion of the Monthly Advance based on the
Class Adjusted Loan Remittance Rates for the Classes of Pool I Notes, in the
case of Pool I, and the Class Adjusted Loan Remittance Rate for the Pool II
Notes, in the case of Pool II, (v) amounts transferred from the Spread Account,
if any, pursuant to Section 7.05(b), (vi) Supplemental Interest Payments, (vii)
Insured Payments, if any, made by the Note Insurer with respect to Pool I and
Pool II, respectively, and (viii) amounts required to be paid by the Servicer
pursuant to Section 7.08(c) in connection with losses on investments of amounts
in the applicable Note Distribution Account (minus (a) the amounts withdrawn
from the applicable Note Distribution Account for Pool I and Pool II, pursuant
to Section 7.01(b)(i), to deposit amounts related to required premiums in the
applicable Insurance Account and (b) amounts subject to withdrawal from the
applicable Note Distribution Account under Section 7.01(a)(v) through (viii),
inclusive).
POOL AVAILABLE REMITTANCE AMOUNT: With respect to any Pool and any
Remittance Date, (i) the sum of all amounts relating to the Loans of such Pool
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 Excess Spread relating to the Loans of
such Pool, any amounts withdrawn by the Servicer with respect to the Loans in
such Pool pursuant to Section 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 in such Pool 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
applicable Note Distribution Account as of the Determination Date, plus (ii) the
amount of any Monthly Advances and Compensating Interest payments relating to
the Loans of such Pool, remitted by the Servicer for such Remittance Date, less
(iii) those amounts withdrawable from the applicable Note Distribution Account
pursuant to Section 7.01(b)(vi). The "Pool Available Remittance Amount" does not
include (i) funds in the applicable Principal and Interest Account and available
to be withdrawn pursuant to Section 4.04(d)(ii), (ii) funds in the applicable
Note Distribution Account and available to be withdrawn pursuant to Section
7.01(b)(vi), (iii) funds in the applicable Note Distribution Account that cannot
be distributed by the Indenture 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.) and (iv) Insured Payments.
POOL AVAILABLE REMITTANCE AMOUNT SHORTFALL: With respect to Pool I or
Pool II and any Remittance Date, the excess, if any, of (i) the Pool Remittance
Amount for such Pool over (ii) the Pool Available Remittance Amount for such
Pool (net of the amount to be withdrawn from the applicable Note Distribution
Account pursuant to Section 7.01(b)(i) and one-twelfth of the Annual Expense
Escrow Amount with respect to such Pool).
POOL CARRY-FORWARD AMOUNT: With respect to Pool I or Pool II and any
Remittance Date, the sum of (i) the amounts, if any, by which (x) the Pool
Remittance Amount for such Pool as of the immediately preceding Remittance Date
exceeded (y) the amount of the actual distribution to the Holders of the Notes
of such Pool (including to the Note Insurer, as provided in Section 7.08),
pursuant to Section 7.08 on the immediately preceding Remittance Date, exclusive
of any Insured Payment to the Holders of the Notes of such Pool made pursuant to
Section 7.08 hereof on such immediately preceding Remittance Date, and (ii)
interest on the amounts, if any, described in clause (i) above, at one-twelfth
of the weighted average Remittance Rates of the Notes of such Pool from such
immediately preceding Remittance Date; provided, however, that only the Note
Insurer shall be entitled to interest on the principal portion of the Pool
Carry-Forward Amount.
POOL CURRENT INTEREST REQUIREMENT: For each Pool, the sum of the Class
Current Interest Requirements of the Notes of such Pool.
POOL MAXIMUM COLLATERAL AMOUNT: For each Pool, the aggregate Principal
Balances as of the Cut-Off Date of all Loans in such Pool.
POOL ORIGINAL COLLATERAL AMOUNT: For each Pool the aggregate Principal
Balances of the related Loans as of the Cut-Off Date.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Notes of such Pool.
POOL PRINCIPAL DISTRIBUTION AMOUNT: For each Pool, on any Remittance
Date, the sum, without duplication, of the following:
(i) each payment of principal received by the
Servicer or any Subservicer (exclusive of Curtailments,
Principal Prepayments and amounts described in clause (iii)
hereof) during the related Due Period with respect to the
Loans of the related
Pool,
(ii) all Curtailments and all Principal Prepayments
received by the Servicer or any Subservicer during the related
Due Period with respect to the Loans of the related Pool,
(iii) the principal portion of all Insurance
Proceeds, Released Mortgaged Property Proceeds and Net
Liquidation Proceeds received by the Servicer or any
Subservicer during the related Due Period with respect to the
Loans of the related Pool,
(iv) that portion of the purchase price (as indicated
in Section 2.05(b)) for any repurchased Loan (including
Defaulted Loans) from the related Pool which represents
principal and any Substitution Adjustments deposited in the
applicable Principal and Interest Account with respect to such
Loans of the related Pool and transferred to the applicable
Note Distribution Account as of the related Determination
Date,
(v) any proceeds representing principal on the Loans
of the related Pool received by the Indenture Trustee in
connection with the liquidation of the Loans of the related
Pool or the termination of the Trust, and
(vi) the amount of any Realized Loss related to a
Pool I or Pool II Loan, as the case may be, that became a
Liquidated Loan during the related Due Period.
POOL REMAINING AMOUNT AVAILABLE: With respect to any Pool and as of
any Remittance Date the greater of (x) zero dollars and (y)(i) the Pool
Available Amount for the related Pool minus (ii) the sum of payments made with
respect to the applicable Pool pursuant to Section 7.08(d)(i), (ii) and (iii).
POOL REMITTANCE AMOUNT: As to Pool I or Pool II and any Remittance
Date, the amount required to be distributed on such Remittance Date to the
Holders of the Notes of such Pool, such amount being equal to the sum of (i) the
Pool Current Interest Requirement for the related Pool, (ii) the Pool Principal
Distribution Amount for the related Pool, (iii) the Pool Carry-Forward Amount
for the related Pool and (iv) any amount received by the Indenture Trustee from
the Servicer or the Originator and paid to the Holders of the Notes of the
related Pool that constitutes a Monthly Advance and that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code, as amended from time to time (11
U.S.C.), in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above
constitute Insured Payments or any portion thereof, payment of such amounts
shall be disbursed to the trustee in bankruptcy named in the final order of the
court exercising jurisdiction and not directly to any Noteholder of the Notes of
such Pool unless such Noteholder has returned principal or interest paid on the
Notes of such Pool to such trustee in bankruptcy, in which case payment shall be
disbursed to such Noteholder.
POOL I LOAN: A Loan listed on Exhibit E-1 delivered to the Custodian
on behalf of the Indenture Trustee, as such Exhibit may be amended from time to
time.
POOL I NOTE: A Class AF-1 or Class AF-2 Note.
POOL I TRANSACTION FEES: For any Remittance Date, the sum of the
portion of the Servicing Fee, the Contingency Fee, the Annual Expense Escrow
Amount and the Monthly Premium payable to the Note Insurer allocable to Pool I.
POOL II LOAN: A Loan listed on Exhibit E-2 delivered to the Custodian
on behalf of the Indenture Trustee, as such Exhibit may be amended from time to
time.
POOL II NOTE: A Class AV Note.
POOL II TRANSACTION FEES: For any Remittance Date, the sum of the
portion of the Servicing Fee, the Contingency Fee, the Annual Expense Escrow
Amount and the Monthly Premium payable to the Note Insurer allocable to Pool II.
PREFERENCE AMOUNT: means any amount previously distributed to a holder
of a Pool I or Pool II Note (other than the Trust Fund) that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time
to time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
PREMIUM DEPOSIT AMOUNT: As of any Remittance Date, an amount equal to
the Monthly Premium for such Remittance Date.
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 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 7.08 on any previous 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 (or, in the case of a Pool II Loan, a Gross Margin and Index) of
not less than (and not more than two percentage points more than) the Loan
Interest Rate (or, in the case of a Pool II Loan, a Gross Margin and Index) for
the Deleted Loan; (ii) 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) has or have a Loan-to-Value Ratio or Loan-to-Value Ratios at
the time of such substitution no higher than the Loan-to-Value Ratio of the
Deleted Mortgage Loan at such time; (v) has or have a principal balance or
principal balances (after application of all payments received on or prior to
the date of substitution) equal to or less than the Principal Balance (prior to
the occurrence of Realized Losses) of the Deleted Loan as of such date; (vi)
with respect to each Deleted Loan that is a first lien mortgage loan, is a first
lien 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.
RATE AGREEMENT: The interest rate agreement dated September 17, 1998
between Merrill Lynch Derivative Products AG and TMS, which was assigned to the
Trust on the Closing Date, pursuant to which Supplemental Interest Payments are
required to be paid, as amended from time to time by the parties thereto.
RATE AGREEMENT PAYMENT DATE: With respect to any Remittance Date, the
first London Banking Day immediately preceding such Remittance Date.
RATE AGREEMENT PROVIDER: Merrill Lynch Derivative Products AG, and its
permitted successors and assigns.
RATING AGENCIES: S&P and Moody's.
RATING AGENCY CONDITION: With respect to any action, that each of the
Rating Agencies shall have notified the Servicer, the Note Insurer, the Owner
Trustee and the Indenture 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.
REALIZED LOSS: With respect to each Liquidated Loan, 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 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 an Obligor 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 4.04(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.
REFERENCE BANKS: Leading banks selected by the Trust Administrator and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) which have been
designated by the Trust Administrator to the Representative, the Servicer and
the Note Insurer and (iii) which are not affiliates of the Representative.
REGISTRATION STATEMENT: The registration statement (File No.
333-60771) 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 September 28, 1998 and the
Prospectus Supplement dated September 28, 1998.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer and/or Representative with respect to (i) the Monthly
Advances and Servicing Advances reimbursable pursuant to Section 4.04(b), (ii)
any advances reimbursable pursuant to Section 4.04 and not previously
reimbursed, and (iii) any other amounts reimbursable to the Servicer or the
Representative pursuant to this Agreement.
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.
REMARKETING AGENT: First Union Capital Markets, a division of Wheat
First Securities, Inc., and its successors and assigns.
REMARKETING AGENT FEE: The meaning set forth in the Interest Rate
Services Agreement.
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
October 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.
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 Indenture Trustee
or the Custodian (a) 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 and (b) who
shall have direct responsibility for the administration of this Agreement. 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.
ROUNDING ACCOUNT: The account established and maintained by the
Indenture Trustee in accordance with Section 7.02 hereof.
ROW HOUSE: A single family dwelling unit attached to another dwelling
unit by common walls.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
and any successor thereto.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SERIES: 1998-C
SERIES 1998-C NOTES: The Money Store Asset Backed Notes, Series
1998-C, Class AF-1, Class AF-2 and Class AV.
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.
SERVICING ACCOUNT: The Servicing Account established and maintained by
the Servicer in accordance with Section 7.15 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 applicable 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 September 30, 2002, if the Total
Expected Losses (as defined below) of the Pool I and Pool II Loans exceed 9.00%
and 13.25% of the aggregate Principal Balances of the Pool I and Pool II Loans,
respectively, as of the Cut-Off Date and (ii) after September 30, 2002, but on
or prior to September 30, 2007, if the Total Expected Losses of the Pool I and
Pool II Loans exceed 13.50% and 19.875%, respectively, of the aggregate
Principal Balances of the Pool I and Pool II Loans, respectively, as of the
Cut-Off Date.
For purposes of the foregoing definition, the "Total Expected Losses"
of the Pool I and Pool II Loans on any date of determination shall equal the sum
of (i) the Cumulative Realized Losses on the Pool I and Pool II 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 Pool I and Pool II
Loans 30-59 days delinquent multiplied by 10.75% and 10.75%,
respectively;
(ii) the Principal Balance of all Pool I and Pool II
Loans 60-89 days delinquent multiplied by 21.50% and 21.50%,
respectively; and
(iii) the Principal Balance of all Pool I and Pool II
Loans 90 days or more delinquent multiplied by 43.00% and 43.00%,
respectively;
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 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 Indenture
Trustee by the Servicer, as such list may from time to time be amended.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not
attached in any way to any other unit.
SINGLE FAMILY LOANS: 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 INTEREST: The 1% interest in the Trust held by FUNB pursuant
to the Trust Agreement.
SPECIFIED SPREAD ACCOUNT REQUIREMENT: As to any Pool and as of any
date of determination, the amount calculated as such in accordance with the
Insurance Agreement.
SPREAD ACCOUNT: The Spread Account established in accordance with the
terms of the Spread Account Agreement and pledged to the Indenture Trustee for
distribution in accordance with the provisions of Section 7.05 hereof.
SPREAD ACCOUNT AGREEMENT: The Agreement dated as of August 31, 1998 by
and among the Spread Account Depositor and the Indenture Trustee, as amended
from time to time by the parties thereto.
SPREAD ACCOUNT DEPOSITOR: FUNB.
SPREAD ACCOUNT PORTION: As of any Pool and as of any date of
determination, an amount equal to the product of (i) the amount on deposit in
the Spread Account immediately prior to such date and (ii) a fraction the
numerator of which is the Specified Spread Account Requirement for such Pool and
the denominator of which is the aggregate Specified Spread Account Requirement
for Pool I and Pool II.
SPREAD BALANCE: As of any date of determination, the aggregate amount
then on deposit in the Spread Account, less the aggregate investment earnings on
such amount.
SUBORDINATED AMOUNT: As to any Pool and any date of determination, the
amount calculated as such in accordance with the Insurance 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 Indenture Trustee and the Note Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
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 and (ii) the interest portion of any unreimbursed Insured Payments
made by the Note Insurer related to such Loan.
SUPPLEMENTAL INTEREST AMOUNT: As to any Remittance Date, the excess,
if any, of (i) the amount of interest accrued on the Class AF-1 and Class AF-2
Notes for the related Interest Period at the applicable Class Remittance Rates
(without giving effect to the applicable Net Funds Cap) and (ii) the amount of
interest so accrued on such Classes of Notes based upon the applicable Net Funds
Cap without giving effect to Supplemental Interest Payments.
SUPPLEMENTAL INTEREST EXCESS: As to any Remittance Date on which the
Notional Amount for such Remittance Date exceeds the aggregate Class Principal
Balance of the Pool I Notes immediately prior to such Remittance Date, an amount
equal to the excess of (x) the product of (i) the Supplemental Interest Payments
with respect to such Remittance Date and (ii) a fraction, the numerator of which
is the excess of (a) the Notional Amount over (b) the Class Principal Balance of
the Pool I Notes, and the denominator of which is the Notional Amount over (Y)
the portion, if any, of the amount calculated pursuant to (x) above applied to
payment of the Current Interest Requirements or such Remittance Date.
SUPPLEMENTAL INTEREST PAYMENTS: As to any Remittance Date, the amount
owed by the Rate Agreement Provider on such Remittance Date pursuant to the
terms of the Rate Agreement.
TELERATE PAGE 3750: The display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: The price defined in Section 11.01 hereof.
TREASURY INDEX: The applicable One-Year Constant Maturity Treasury
Index as published by the Federal Reserve Board in the applicable Federal
Reserve Board Statistical Release No. H.15.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one
roof.
TMS: The Money Store Inc., a New Jersey Corporation.
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), the Rate Agreement, and all proceeds of the foregoing.
TRUST ACCOUNTS: Means the Note Distribution Accounts, the Certificate
Distribution Account, the Expense Accounts, the Insurance Accounts, the
Principal and Interest Accounts and the Rounding Account.
TRUST ADMINISTRATOR: FUNB, or its successor in interest.
TRUST ADMINISTRATOR FEE: As to each Mortgage Loan, the annual fee
payable to the Trust Administrator. Such fee shall be calculated and payable
monthly and shall accrue at the rate of .0085% per annum, in the case of the
Pool I Mortgage Loans, and .0110% per annum, in the case of the Pool II Mortgage
Loans, and shall be computed on the basis of the same principal amount and for
the period respecting which any related interest payment on such Mortgage Loan
is computed.
TRUST ADMINISTRATOR'S CERTIFICATE: The certificate as defined in
Section 7.10.
TRUST AGREEMENT: Trust Agreement dated as of August 31, 1998, among
the Originators and the Owner Trustee, as the same may be amended and
supplemented from time to time.
TWO FAMILY HOUSE: Two dwelling units under one roof.
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 applicable Weighted
Average Remittance Rate, (ii) the applicable Annual Expense Escrow Amount and
(iii) the percentage used in calculating the applicable Monthly Premium.
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 for each Pool, the average of
the Interest Rate for each outstanding Class of Notes of such Pool, 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 Loans and
all other assets included or to be included in the Trust Account Property. The
Representative, on behalf of the Originators, does 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 Representative in
and to the Rate Agreement. The Loans have an aggregate Principal Balance as of
the Cut-Off Date of $895,000,031.80.
Section 2.02 POSSESSION OF LOAN FILES.
(a) Upon the issuance of the Series 1998-C Notes, the
ownership of each Mortgage Note, the Mortgage and the contents of the related
Loan File relating to the Loans is vested in the Issuer for the benefit of the
Noteholders, the Certificateholders and the Note Insurer, as the case may be.
(b) Pursuant to Section 2.04, the Originators have delivered
or caused to be delivered each Indenture Trustee's Loan File relating to the
Loans to the Custodian on behalf of the Indenture Trustee.
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. 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 Custodian each of the
following documents for each Loan:
(a)The original Mortgage Note, endorsed "Pay to the order of
holder" or "Pay to the order of __________________" and signed, by facsimile or
manual signature, in the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of
recording thereon, (ii) a copy of the Mortgage certified as a true copy by a
Responsible Officer where the original has been transmitted for recording until
such time as the original is returned by the public recording office or (iii) a
copy of the Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(c)Either: (i) the original Assignment of Mortgage from the
Person delivering such Assignment to "The Bank of New York, as Indenture Trustee
for The Money Store Trust 1998-C" 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) (also provided, however, that the Person delivering
such Assignment shall not be required to record an assignment of a Mortgage if,
except as set forth in the next sentence, an Assignment Event has not occurred);
or (iii) a copy of such Assignment of Mortgage certified as a true copy by a
Responsible Officer of the Originator where the original has been transmitted
for recording (provided, however, that where the original Assignment of Mortgage
is not being delivered, each such Responsible Officer of the Originator 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). Notwithstanding the foregoing, the Custodian or the Representative
shall cause to be recorded each Assignment or Mortgage relating to the Loans
upon the earliest to occur of (a) the Note Insurer delivering a written request
to the Representative and the Custodian to record the Assignments of Mortgage
with respect to such Loans, with such request specifying that the Note Insurer
is making such request because the Note Insurer has determined, in its
reasonable judgment, that such recordation is necessary to protect the Note
Insurer's interest with respect to such Loans because (I) a material adverse
change has occurred with respect to the Representative or (II) the Note Insurer
has been so advised by its counsel as a result of a change that occurred after
the Closing Date in applicable law or the interpretation thereof or (b) with
respect to a particular Loan, the insolvency of the related Obligor;
(d)(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;
(e) With respect to any intervening assignments, if
applicable, 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 of the Originator 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) Original of all assumption and modification agreements,
if any; and
(g) Except with respect to certain Mortgage Loans with
original principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Mortgage Loan with photographs of
the subject property and of comparable properties (if available), constituting
evidence sufficient to indicate that the Mortgaged Property relates to a
Residential Dwelling (or, with respect to Multifamily Loans, a Multifamily
Property) and identifying the type thereof.
The Originator shall, within five Business Days after the receipt
thereof, and in any event, within one year of the Closing Date, deliver or cause
to be delivered to the Custodian: (a) the original recorded Mortgage in those
instances where a copy thereof certified by a Responsible Officer of the
Originator was delivered to the Custodian; (b) if required pursuant to Section
2.04(c), the original recorded Assignment of Mortgage to the Indenture Trustee,
which, together with any intervening assignments of Mortgage, evidences a
complete chain of title from the Originator to the Indenture Trustee in those
instances where copies thereof certified by a Responsible Officer of the
Originator were delivered to the Custodian; (c) any intervening assignments of
Mortgage in those instances where copies thereof certified by a Responsible
Officer of the Originator were delivered to the Custodian; and (d) 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 Custodian of a copy of such Mortgage,
Assignment of Mortgage or assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof. From time
to time the Originator may forward or cause to be forwarded to the Custodian
additional original documents evidencing an assumption or modification of a
Mortgage Loan. All Loan documents held by the Indenture Trustee or the Custodian
on behalf of the Indenture Trustee as to each Loan are referred to herein as the
"Indenture Trustee's Loan File."
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
The Originators also shall deliver a copy of the stamped UCC financing
statement relating to the Loans and notice of publication regarding the sale of
the Loans by the Originators to the Issuer obtained pursuant to Section
3440.1(h) of the California Civil Code.
Section 2.05 ACCEPTANCE OF THE TRUST FUND; CERTAIN SUBSTITUTIONS;
CERTIFICATION BY INDENTURE TRUSTEE AND CUSTODIAN.
(a) The Custodian, on behalf of the Indenture Trustee,
agrees to execute and deliver (with a copy to the Note Insurer) on the Closing
Date with respect to the Mortgage Loans an acknowledgment of receipt of, for
each Mortgage Loan, an Assignment of Mortgage or certified copy thereof, and a
Mortgage Note, in the form attached as Exhibit C hereto. The Custodian declares
that it, through its corporate trust department, will hold such documents and
any amendments, replacements or supplements thereto, as well as any other assets
included in the definition of the Trust Fund and delivered to the Custodian in
trust upon and subject to the conditions set forth herein solely as bailee for
the Indenture Trustee. The Custodian agrees, for the benefit of the Noteholders
and the Certificateholders, to review each Indenture Trustee's Loan File
relating to the applicable Pool of Mortgage Loans within 60 days after the
Closing Date (or, with respect to any Qualified Substitute Mortgage Loan, within
45 days after the assignment thereof) and, on each such date, to deliver to the
Representative, the Servicer and the Note Insurer, a certification in the form
attached hereto as Exhibit C-1 to the effect that, as to each Mortgage Loan
listed in the applicable Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as not
covered by such certification), with such exceptions, if any, as identified
therein (i) all documents required to be delivered pursuant to this Agreement
are in its possession (other than items listed in Section 2.04(d)(ii)), (ii)
such documents (other than items listed in Section 2.04(d)(ii)) have been
reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Mortgage Loan, (iii) based on its
examination and only as to the foregoing documents, the information set forth on
the applicable Loan Schedule accurately reflects the information set forth in
the Indenture Trustee's Loan File with respect to clauses (ii), (iii), (v), (vi)
(with respect to the Pool I Loans), (vii), (viii) (which, with respect to the
Pool II Loans, shall only be with respect to the initial Monthly Payment), (ix)
and (xi) (with respect to the Pool II Loans) of the definition of Loan Schedule,
and (iv) each Mortgage Note has been endorsed as provided in Section 2.04 of
this Agreement. The Custodian shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face. Within 375 days after the Closing Date, the Custodian shall deliver to the
Servicer, the Representative and the Note Insurer and any Noteholder or
Certificateholder who requests a copy a final certification in the form attached
hereto as Exhibit D evidencing, if such be the case, the completeness of the
Indenture Trustee's Loan Files (other than items listed in Section 2.04(d)(ii)).
In no event shall the Indenture Trustee have any liability or responsibility for
reviewing any of the Indenture Trustee's Loan Files or any of the documents
contained therein or for the Custodian's failure to perform any of its
obligations hereunder to conduct any such review.
(b) If the Note Insurer or the Custodian during the process
of reviewing the Indenture Trustee's Loan Files finds any document constituting
a part of an Indenture Trustee's Loan File which is not properly executed, has
not been received, is unrelated to a Mortgage 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
Note Insurer or the Custodian shall promptly so notify the Servicer, the
Representative, the Custodian and the Note Insurer. In performing any such
review, the Custodian may conclusively rely on the related Originator as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Custodian's review of the Indenture Trustee's
Loan Files is limited solely to confirming that the documents listed in Section
2.04 (other than the items listed in Section 2.04(d)(ii)) appear on their face
to have been executed and received and to relate to the Mortgage Loans
identified in the Loan Schedule, and to verify that each Mortgaged Property
appears from the information contained in the Indenture 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. If, however, within 60 days after 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 or
Certificateholders in the related Mortgage Loan or the interests of the Note
Insurer, the Representative will (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Loan in the manner and subject to the conditions set forth
in Section 3.03 or (ii) purchase such Mortgage Loan at a purchase price equal to
the Principal Balance of the Mortgage Loan as of the date of purchase, before
the occurrence of Realized Losses, if any, plus interest based on the actual
number of days during the related Interest Period on such Principal Balance,
computed at the weighted average Class Adjusted Loan Remittance Rates for the
applicable Pool as of the next succeeding Determination Date, plus any accrued
unpaid Servicing Fees, Contingency Fees, Monthly Advances and Servicing Advances
reimbursable to the Servicer, plus the interest portion of any unreimbursed
Insured Payments made by the Note Insurer related to Mortgage Loan, which
purchase price shall be deposited in the applicable Principal and Interest
Account on the next succeeding Determination Date except for the amount
described above relating to unreimbursed Insured Payments on a Pool I or Pool II
Mortgage Loan, which shall be paid directly by the Representative to the Note
Insurer.
(c) Upon receipt by the Custodian of a certification of a
Servicing Officer of the Servicer of such substitution or purchase and the
deposit of the amounts described above in the applicable Principal and Interest
Account (which certification shall be in the form of Exhibit G hereto), the
Custodian shall release to the Servicer for release to the Representative the
related Indenture Trustee's Loan File and the Custodian shall execute, without
recourse, and deliver such instruments of transfer necessary to transfer such
Mortgage Loan to the Representative. All costs of any such transfer shall be
borne by the Servicer.
If requested by either the Representative, the Servicer or
the Note Insurer, on the Remittance Date in June of each year, commencing 1999,
the Custodian shall deliver to the Representative, the Servicer and the Note
Insurer a certification detailing all transactions with respect to the Mortgage
Loans for which the Custodian holds an Indenture Trustee's Loan File pursuant to
this Agreement during the prior calendar year. Such certification shall list all
Indenture Trustee's Loan Files which were released by or returned to 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 Indenture
Trustee's Loan File was released or the person who returned the Indenture
Trustee's Loan File.
Section 2.06 FEES AND EXPENSES OF THE INDENTURE TRUSTEE, OWNER
TRUSTEE, TRUST ADMINISTRATOR AND CUSTODIAN.
The fees and expenses of the Indenture Trustee, Owner Trustee and
Trust Administrator shall be paid from the Expense Accounts in the manner set
forth in Section 7.03 hereof; PROVIDED, HOWEVER, that the Representative shall
be liable for any expenses of the Trust incurred prior to the Closing Date. The
Custodian agrees to perform its duties hereunder without charge to the Trust.
Any fees or expenses payable to the Custodian shall be paid by the Servicer. The
parties hereto hereby covenant with the Noteholders and the Certificateholders
that every material contract or other material agreement entered into by the
applicable party, on behalf of the Trust shall expressly state therein that no
Noteholder or Certificateholder shall be personally liable in its capacity as
such in connection with such contract or agreement.
Section 2.07 [Reserved.]
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 accrued
interest (whether through payments by the applicable Obligor, Monthly Advances
or otherwise) on such Principal Balance, computed at the applicable Loan
Interest Rate (net of the per annum rate used in calculating the Servicing Fee
and the Contingency Fee) 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. Any
such repurchase shall be accomplished in the manner specified in Section
2.05(b). In no event shall the aggregate Principal Balance of all Defaulted
Loans purchased pursuant to this Section 2.10 exceed 5% of the Original
Collateral Amount .
Section 2.09 ASSIGNMENT EVENT.
Immediately upon the occurrence of any Assignment Event, the
Representative or the Servicer shall notify the Note Insurer and the Indenture
Trustee of such occurrence or the Note Insurer shall notify the Representative,
the Servicer and the Indenture Trustee. Thereafter, the Custodian shall (i)
begin transferring all Indenture Trustee's Loan Files in its possession to the
Indenture Trustee (or such other Person acceptable to the Note Insurer) and (ii)
either cause proper assignments of each Pool I and Pool II Mortgage to be
recorded in the relevant real property recording office for each such Mortgage
or to deliver assignments of the Mortgages, in recordable form, to the Indenture
Trustee, together with an opinion of counsel, addressed to and acceptable to the
Note Insurer, to the effect that recordation of such assignments is not
necessary to perfect the interest of the Indenture Trustee in such Mortgages.
The Custodian shall undertake such transfer and recording in a manner that will
result in the completion of the transfer of all such Indenture Trustee's Loan
Files to the Indenture Trustee and the recording of such assignments of mortgage
(or delivery of such opinion of counsel) within 30 days following the occurrence
of an Assignment Event. From and after the occurrence of an Assignment Event,
and the delivery of the Indenture Trustee's Loan Files to the Indenture Trustee,
the Indenture Trustee shall act as custodian or it may engage the services of
another Person approved by the Note Insurer to act as Custodian. The Custodian
hereby acknowledges that it is bailee of the Indenture Trustee and is holding
all of the Indenture Trustee's Loan Files delivered to it solely in trust for
the Indenture Trustee.
From time to time following delivery of the Indenture Trustee's Loan
Files to the Indenture Trustee pursuant to this Section 2.09, the Indenture
Trustee may appoint a Custodian who is acceptable to the Note Insurer and the
Trust Administrator. The Trust Administrator shall notify the Rating Agencies of
any appointment of a successor Custodian.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE,
SERVICER AND ORIGINATORS.
(a) The Representative and the Servicer (for the purposes of this
Section 3.01(a), "The Money Store Inc.") hereby represent and warrant to the
Indenture 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
Loans;
(xi)No Originator contributed any interest in any 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;
(xiii) No Noteholder or Certificateholder is subject to
state licensing requirements solely by virtue of holding the Notes or
the Certificates; and
(xiv)The Servicer's computer and other systems used in
servicing the Mortgage Loans will be modified and maintained to
operate in a manner such that at all times, including on and after
January 1, 2000, the Servicer can service the Loans in accordance with
the terms of this Agreement.
(b) Each Originator hereby represents and warrants to the Noteholders,
the Certificateholders, the Indenture 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 Indenture Trustee's Loan
File by the Custodian under this Agreement, the Trust 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 Mortgage Note
and Mortgage relating to the Loans have been in all material respects
legal, proper, prudent and customary in the second mortgage
origination and servicing business;
(xii) Each Loan was selected from among the existing loans
in the respective Originator's portfolio at the date hereof 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 in exchange for the contribution of the
Loans;
(xv) Such Originator did 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; and
(xviii)The Subservicing Agreement to which the Originator is
a party conforms to the requirements for a Subservicing Agreement
contained in this Agreement.
Section 3.02 INDIVIDUAL LOANS.
Each Originator hereby represents and warrants to the Issuer, with
respect to each Loan, as of the Closing 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 Custodian on the Closing 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 Loan has been originated and underwritten, or
purchased and re-underwritten, by an Originator in accordance with the
Representative's underwriting criteria set forth in the Registration Statement
and each Loan is being serviced by the Servicer or one or more Subservicers and,
with respect to each Loan originated by an Originator, there is only one
originally executed Mortgage Note not stamped as a duplicate copy with respect
to each such Loan;
(f) The Mortgage Note with respect to each Pool I Loan bears
a fixed Loan Interest Rate and the Mortgage Note with respect to each Pool II
Loan bears an adjustable Loan Interest Rate;
(g) (i) Except with respect to 2.66% of the Pool I Loans,
each Mortgage Note relating to the Pool I Loans will provide for a schedule of
substantially level and equal Monthly Payments which are, if timely paid,
sufficient to fully amortize the principal balance of such Mortgage Note on or
before its maturity date and (ii) each Mortgage Note relating to the Pool II
Loans will provide for a schedule of Monthly Payments which are, if timely paid
as adjusted, sufficient to fully amortize the principal balance of such Mortgage
Note on or before its maturity date;
(h) Each Mortgage is, with respect to the Loans, a valid and
subsisting lien of record on the Mortgaged Property (with 80.08% and 100.00% of
the Pool I and Pool II Loans, respectively (measured by Principal Balances as of
the Cut-Off Date) being secured by first 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 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 Loan is 60 days or more
delinquent in payment and, except as provided in the next sentence, no Loan has
been delinquent more than 60 days or more as measured at the end of any month
during the 12 months immediately preceding the Cut-Off Date. Approximately 3.04%
of the Pool I Loans and 5.12% of the Pool II Loans were 60 days or more
delinquent as measured at the end of any month during the 12 months immediately
preceding the Cut-Off Date;
(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 Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(m) There is no mechanics' lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien prior to, or
equal with, the lien of such Mortgage except those which are insured against by
the title insurance policy referred to in Section 3.02(o) below;
(n) Each 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, a lender's title insurance policy, issued in
standard American Land Title Association, California Land Title Association, New
York Board of Title Underwriters form, or other form acceptable in a particular
jurisdiction, by a title insurance company authorized to transact business in
the state in which the related Mortgaged Property is situated, together with a
condominium endorsement, if applicable, in an amount at least equal to the
original principal balance of such Mortgage Loan insuring the mortgagee's
interest under the related Mortgage Loan as the holder of a valid first or
second 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, 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 Mortgage Note is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), none of
which will prevent the ultimate realization of the security provided by the
Mortgage, and all parties to each 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 Indenture 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 Indenture Trustee;
(t) No more than 0.02% and 0.06% of the Principal Balances
of the Pool I and Pool II Loans, respectively, are secured by Mortgaged
Properties located within any single zip code area;
(u) Each original Mortgage was recorded, and all subsequent
assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Originator (or, subject to Section 2.04 hereof, are
in the process of being recorded);
(v) Each 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) All of the Loans are Mortgage Loans;
(y) All of the Pool I and Pool II Loans are Single-Family
Loans. None of the Pool I and Pool II Loans are secured by a mobile home or a
co-op;
(z) With respect to each Multifamily Loan, no less than
approximately 90% of the related Mortgaged Property, measured by square footage,
number of units and projected rent, is allocated to residential units;
(aa) The terms of the Mortgage Note and the Mortgage have
not been impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest of the
Certificateholders and Noteholders and which has been delivered to 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
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 Mortgage 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) 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) 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 Loan was originated under a buydown plan;
(kk) 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 Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the 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) 1No Loan has a shared appreciation feature, or other
contingent interest feature;
(pp) With respect to each Mortgage Loan that is not a first
mortgage loan, the related Prior Lien requires equal monthly payments, or if it
bears an adjustable interest rate, the monthly payments for the related Prior
Lien may be adjusted no more frequently than monthly; at the time of origination
of the Mortgage Loan, the related Prior Lien was not 30 or more days delinquent;
(qq) With respect to each Mortgage Loan that is not a first
mortgage loan, either (i) no consent for the Mortgage Loan is required by the
holder of the related Prior Lien or (ii) such consent has been obtained and is
contained in the 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 that is not a first
mortgage loan, the maturity date of the Mortgage Loan is prior to the maturity
date of the related Prior Lien if such Prior Lien provides for a balloon
payment;
(tt) The Mortgaged Property is located in the state
identified in the 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, 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 Mortgage Note does not permit or obligate the Servicer to make
future advances to the Obligor at the option of the Obligor;
(xx) 1The 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 Obligor 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 Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and neither the Servicer nor the Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage, if
any, had legal capacity to execute the Mortgage Note and the Mortgage, if any,
and each Mortgage Note and Mortgage, if any, have been duly and properly
executed by such parties;
(aaa) The Loan was not selected for inclusion under this
Agreement from its portfolio of comparable 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 Loans have been deposited into the applicable Principal and
Interest Account and are, as of the Closing Date, in the Principal and Interest
Account;
(ccc) With respect to each Mortgage Loan originated by an
Originator with an original principal balance in excess of $15,000 for which the
Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with the origination thereof, such deposited
Mortgage Loan (i) had an original principal balance not in excess of $35,000,
and (ii) has a Loan-to-Value Ratio less than 50% and/or an appraisal on
FNMA/FHLMC Form 1004 was performed by the related Originator within one year
prior to the origination of such Mortgage Loan; and
(ddd) At the applicable dates of origination of the Mortgage
Loans, none of the Pool I or Pool II Loans had a Loan-to-Value Ratio which
exceeded 100% and 100%, respectively;
(eee) No more than approximately 21.65% of the Pool I Loans
and 26.92% of the Pool II Loans, respectively (measured by outstanding principal
balance as of the Cut-Off Date), had a Debt-to-Income Ratio exceeding 44.0%.
"Debt-to-Income Ratio" is that ratio, stated as a percentage, which results from
dividing an Obligor's monthly debt by his gross monthly income. "Monthly debt"
includes (i) the monthly payment under the Prior Liens (which generally includes
an escrow for real estate taxes), (ii) the related Mortgage Loan Monthly Payment
(which, with respect to the Pool II Loans, is calculated with interest based on
a rate equal to the Lifetime Cap), (iii) other installment debt service
payments, including, in respect of revolving credit debt, the required monthly
payment thereon, or, if no such payment is specified, 5.0% of the balance as of
the date of calculation. "Monthly debt" does not include any of the debt (other
than revolving credit debt) described above that matures within less than 10
months from the date of the calculation. No more than approximately 5% of the
Pool I Mortgage Loans were originated without verifying the Obligor's income;
(fff) At the applicable dates of origination, each Pool I
and Pool II Loan had an original term to maturity of no greater than 40 and 30
years, respectively;
(ggg) Each Mortgage Loan has a first Due Date no later than
November 15, 1998 in the case of the Pool I Loans and December 1, 1998 in the
case of the Pool II Loans.
(hhh) [Reserved];
(iii) As of the Cut-off Date, for each Pool II Loan, the
related Mortgage Note does not provide for negative amortization, limits in the
amount of monthly payments or a conversion feature, the Loan Interest Rate is
subject to adjustment on each Change Date to equal the sum of the LIBOR Index,
or Treasury Index, as the case may be, plus the applicable Gross Margin, subject
to rounding, the Periodic Rate Cap, the applicable Lifetime Floor and the
applicable Lifetime Cap on each Change Date, the Obligor's new monthly payment
will be adjusted to an amount equal to the payment which, when paid in
substantially equal installments during the then remaining term of the Pool II
Loan, would amortize fully the unpaid principal balance of such Initial Pool II
Loan, at the then applicable Loan Interest Rate without extension of the
original maturity date which maturity date is not more than 360 months after the
original Due Date therefor; and
(jjj) With respect to each Pool II Loan, all of the terms of
the Mortgage and Mortgage Note pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note.
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 Note
Insurer or upon a Responsible Officer of the Owner Trustee or the Indenture
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 or the Note Insurer 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 Indenture Trustee, the Note Insurer 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 Custodian a certification in the form attached hereto as
Exhibit G, executed by a Servicing Officer and the documents constituting the
Indenture Trustee's Loan File for such Qualified Substitute Loan or Loans.
The Servicer shall deposit in the applicable 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 Indenture
Trustee, the Representative, the Owner Trustee, the Custodian and the Note
Insurer 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 applicable Principal and Interest Account
an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in
Section 2.05 and this Section 3.03, the Representative shall indemnify and hold
harmless the Issuer, the Indenture Trustee, the Trust Administrator, the
Custodian, the Noteholders, the Certificateholders, the Note Insurer 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 Indenture Trustee, the Trust Administrator, the
Custodian, the Note Insurer and the Owner Trustee in its individual capacity as
provided in Sections 2.05 and 3.03 constitute the sole remedies of the Indenture
Trustee, the Trust Administrator, the Custodian, the Noteholders, the Note
Insurer 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 Indenture Trustee,
(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
Indenture Trustee 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 Mortgage Note released by the
Custodian, on behalf of the Indenture Trustee, to the Servicer or to any
Subservicer in accordance with the terms of this Agreement, other than a release
or satisfaction pursuant to Section 5.02, prior to such release, the Indenture
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 Indenture
Trustee under the Indenture dated as of August 31, 1998, Series 1998-C" 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 August 31, 1998, Series
1998-C" with respect to those Mortgage Notes currently endorsed "Pay to the
order of holder."
(b) The Servicer, as independent contract servicer, shall
service and administer the 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. The Servicer shall notify the Note Insurer of
the appointment of any subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement. The Servicer
shall be entitled to terminate any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and to either itself
directly service the related 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
Indenture Trustee, the Noteholders, the Certificateholders, the Note Insurer 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 Indenture 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 Indenture
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 Indenture Trustee
is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms. The Indenture Trustee, its designee or the successor
servicer for the Indenture 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 Indenture 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 and the Servicer obtains the written
consent of the Note Insurer) 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, and
subject to the consent of the Note Insurer, the Servicer shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of the
Indenture 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, 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 of prudent lending
institutions and giving due consideration to the Noteholders', Note Insurer's
and Certificateholders' reliance on the Servicer.
(g) On and after such time as the Indenture 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 Indenture 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 Indenture Trustee but at the expense of the
Servicer, deliver to the Indenture Trustee or 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 Certificates.
(i) Notwithstanding any provision of Article XII to the
contrary, the Servicer or the Trust Administrator (as agreed to by such parties)
shall (i) assume and perform the obligations of the Trust Administrator set
forth under Article XII and (ii) 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, the Note Insurer and the Certificateholders. The Servicer shall
foreclose upon or otherwise comparably effect the ownership in the name of the
Indenture 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; provided, however, that the Servicer shall
not take title to any Mortgaged Property in the name of the Indenture Trustee
with respect to any such Mortgaged Property if the Servicer has actual knowledge
or reasonably believes that any such environmental substance or waste exists and
it determines that it would not be commercially reasonable to foreclose on such
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 Indenture Trustee, the Note Insurer 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 Asset
Backed Certificates and Asset Backed Notes, Series 1998-C, and various
Obligors"; provided, however, that for so long as (i) (A) the Servicer remains
an affiliate of FUNB, (B) no Event of Default shall have occurred and be
continuing and (C) FUNB maintains a short-term rating of at least A-1 by S&P and
P-1 by Moody's, and for five Business Days following any reduction, suspension,
termination or withdrawal in either such rating, or (ii) following the
occurrence and continuation of any event described in subclause (i) of this
paragraph, an arrangement is established that is satisfactory to the Rating
Agencies and the Note Insurer which does not in itself result in (I) any
reduction of any rating issued in respect of the Notes or (II) any reduction
below investment grade of the Notes without the benefit of the Note Insurance
Policies, the Servicer, notwithstanding anything to the contrary herein
provided, may establish and maintain the Principal and Interest Account as a
deposit account with FUNB. 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
Indenture Trustee, the Note Insurer 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;
(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 and 3.03;
(vii) any amount required to be deposited in the applicable
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 on or after September 1, 1998, 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 applicable Principal
and Interest Account by the Servicer immediately following its monthly
remittance of the Pool Available Remittance Amount for the related Pool to the
Indenture 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
ACCOUNTS.
The Servicer shall withdraw funds from the Principal and
Interest Accounts for the following purposes:
(a) to effect the remittance to the Indenture Trustee on
each Determination Date as follows: the portion of the Excess Spread relating to
the Mortgage Loans of the related Pool and the portion of the Pool Available
Remittance Amount, that is net of Compensating Interest and Monthly Advances for
the related Pool for the related Remittance Date to the Indenture Trustee for
deposit in the Note Distribution Account. For the purposes of this Section
4.04(a), the calculation of the Pool 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 holders of the
Certificates; PROVIDED, HOWEVER, that the Servicer's right to such reimbursement
pursuant hereto shall be subordinate to the rights of the Noteholders, the Note
Insurer 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 applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable
Principal and Interest Account that were not required to be deposited therein or
were deposited therein in error;
(f) to pay itself servicing compensation pursuant to Section
5.03 hereof;
(g) to withdraw amounts required to be deposited into the
Servicing Account pursuant to Section 7.15(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 Asset Backed Notes and
Certificates, Series 1998-C." 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 Indenture Trustee
and the Note Insurer, transfer the Principal and Interest Account to a different
Designated Depository Institution.
Section 4.07 MAINTENANCE OF HAZARD INSURANCE.
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 Indenture 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,
the Note Insurer or the Indenture Trustee, the Servicer shall cause to be
delivered to the Owner Trustee, the Note Insurer or the Indenture 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
Indenture 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, the Note Insurer or the
Indenture Trustee, the Servicer shall cause to be delivered to the Owner
Trustee, the Note Insurer or the Indenture 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, the Note Insurer and the
Certificateholders. The Servicer shall cause to be deposited in the applicable
Principal and Interest Account, no later than five Business Days after the
receipt thereof, all revenues received with respect to the conservation and
disposition of the related REO Property net of funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
at such price, and upon such terms and conditions, as the Servicer deems to be
in the best interest of the Noteholders, the Note Insurer 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 Mortgage Note for a period (with
respect to each payment as to which the due date is extended) not greater than
125 days after the initially scheduled due date for such payment provided that
the Servicer determines such extension would not be considered a new mortgage
loan for federal income tax purposes. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Mortgage Note, the Servicer
shall nonetheless make payment of any required Monthly Advance with respect to
the payments so extended to the same extent as if such installment were due,
owing and delinquent and had not been deferred, and shall be entitled to
reimbursement therefor in accordance with Section 4.04(b) hereof.
Section 4.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE LOANS.
The Servicer shall provide to the Indenture Trustee, the Owner
Trustee, the Note Insurer 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 [Reserved]
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 Obligor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law or if such enforcement
would materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. In such event, the Servicer shall
enter into an assumption and modification agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Obligor remains liable thereon. The Servicer is also
authorized, with the consent of the Note Insurer, 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 Mortgage Note. The Servicer shall notify the Indenture Trustee
and the Note Insurer that any such substitution or assumption agreement has been
completed by forwarding to the Custodian the original of such substitution or
assumption agreement, and a duplicate thereof to the Note Insurer, which
original shall be added by the Custodian to the Indenture Trustee's Loan File
and shall, for all purposes, be considered a part of such Indenture 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, 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.
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 Custodian and the
Indenture Trustee, by an Officers' Certificate in the form of Exhibit G attached
hereto (which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the applicable Principal and Interest Account
pursuant to Section 4.03 have been or will be so deposited) of a Servicing
Officer and shall request delivery to it of the Indenture Trustee's Loan File.
Upon receipt of such certification and request, the Custodian, shall promptly
release the related Indenture Trustee's Loan File to the Servicer. The Servicer
shall prepare all required documents required to evidence such release and the
Indenture Trustee shall upon receipt of such documents from the Servicer 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 Custodian shall, upon request of the Servicer and
delivery to the Custodian of a certification in the form of Exhibit G attached
hereto signed by a Servicing Officer, release the related Indenture Trustee's
Loan File to the Servicer, and the Custodian shall execute such documents as
shall be necessary to the prosecution of any such proceedings. Such servicing
receipt shall obligate the Servicer to return the Loan File to 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 applicable 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 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 Custodian to the Servicer.
The Indenture Trustee, upon the request of the Servicer and receipt of
the applicable documents by the Custodian, shall execute upon request of the
Servicer and delivery to the Indenture Trustee 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 Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Together
with such documents or pleadings, the Servicer shall deliver to the Indenture
Trustee a certificate of a Servicing Officer requesting that such pleadings or
documents be executed by the Indenture Trustee and certifying as to the reason
such documents or pleadings are required and that the execution and delivery
thereof by the Indenture Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale. The Indenture Trustee shall, upon receipt
of a written request from a Servicing Officer, execute any document provided to
the Indenture Trustee by the Servicer or take any other action requested in such
request, that is, in the opinion of the Servicer as evidenced by such request,
required by any state or other jurisdiction to discharge the lien of a Mortgage
upon the satisfaction thereof and the Indenture Trustee will sign and post, but
will not guarantee receipt of, any such documents to the Servicer, or such other
party as the Servicer may direct, within five Business Days of the Indenture
Trustee's receipt of such certificate or documents. Such certificate or
documents shall establish to the Indenture Trustee'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 applicable 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 applicable 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
Indenture 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 Indenture Trustee,
the Note Insurer and each of the Rating Agencies, on or before May 31 of each
year beginning May 31, 1999, an Officers' Certificate stating that (i) the
Servicer has fully complied with the provisions of Articles IV and V, (ii) a
review of the activities of the Servicer 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 ,
as applicable, to cure such default.
Section 5.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before May 31 of each year beginning May 31, 1999, the Servicer,
at its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Indenture Trustee and the Note Insurer to furnish a letter or
letters to the Owner Trustee, the Indenture Trustee, the Note Insurer 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 INDENTURE TRUSTEE'S, NOTE INSURER'S AND OWNER TRUSTEE'S
RIGHT TO EXAMINE SERVICER RECORDS AND AUDIT OPERATIONS.
The Indenture Trustee, the Note Insurer 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, whether held by the Servicer or by
another on behalf of the Servicer, which may be relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement. The Note Insurer shall have the right upon reasonable prior notice,
during normal business hours and as often as reasonably required to perform
ongoing diligence of the Servicer's operations through loans reviews,
reappraisals or other reasonable review of Servicer operations. No amounts
payable in respect of the foregoing shall be paid for the Trust.
Section 5.07 REPORTS TO THE INDENTURE TRUSTEE AND THE NOTE INSURER;
PRINCIPAL AND INTEREST ACCOUNT STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement, certified by a Servicing Officer,
setting forth the status of each Principal and Interest Account as of the close
of business on the preceding Record Date and showing, for the period covered by
such statement, the aggregate of deposits into each Principal and Interest
Account for each category of deposit specified in Section 4.03, the aggregate of
withdrawals from each 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. The Servicer shall also forward a copy of such report containing such
information for Pool I and Pool II to the Note Insurer. In addition, the
Servicer shall deliver to the Note Insurer on a quarterly basis, beginning in
December 1998, a computer diskette containing a quarterly summary of the
information provided in the statement forwarded to the Note Insurer pursuant to
the previous sentence, and also containing information similar to the
information provided in the Loan Schedule.
ARTICLE VI
[RESERVED]
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 7.01 NOTE DISTRIBUTION ACCOUNTS..
(a) No later than the Closing Date, the Indenture Trustee will
establish and maintain with itself in its trust department two separate trust
accounts, which shall not be interest-bearing, titled "TMS Note Distribution
Account 1998-C-I" and "TMS Note Distribution Account 1998-C-II (each a "Note
Distribution Account" and together, the "Note Distribution Accounts"). The
Indenture Trustee shall, promptly upon receipt, deposit in the applicable Note
Distribution Account and retain therein:
(i) the Pool Available Remittance Amount of the
related Pool (net of the amount of Monthly Advances and
Compensating Interest deposited pursuant to subclause (ii)
below) plus the Excess Spread with respect to the Mortgage
Loans of the related Pool remitted to the Indenture Trustee by
the Servicer;
(ii) the Compensating Interest and the portion of the
Monthly Advance based on the Class Adjusted Loan Remittance
Rates for the Classes of Pool I Notes, in the case of Pool I
and the Class Adjusted Loan Remittance Rates for the Pool II
Notes, in the case of Pool II, remitted to the Indenture
Trustee by the Servicer;
(iii) amounts transferred from the Spread Account
pursuant to Section 7.05(b)(ii), Supplemental Interest
Payments received by the Indenture Trustee and Insured
Payments received by the Indenture Trustee after a claim
pursuant to Section 7.08(c);
(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 applicable Note Distribution
Account; and
(v) amounts received from the Rounding Account
pursuant to Section 7.02(b)(i).
(b) Amounts on deposit in each Note Distribution Account shall
be withdrawn on each Remittance Date by the following parties in the following
order of priority:
(i) by the Indenture Trustee, to make deposits
in the applicable Insurance Account pursuant to
Section 7.04(a)(i);
(ii) [Reserved];
(iii)[Reserved];
(iv) by the applicable Indenture Trustee, or the
applicable Paying Agent on its behalf, to effect the
applicable distributions described in Section 7.08(d);
and also, in no particular order of priority:
(v) by the Indenture Trustee, to invest amounts on
deposit in the applicable Note Distribution Account in
Permitted Instruments pursuant to Section
7.07;
(vi) by the Indenture Trustee, to pay on a monthly
basis to the Servicer as additional servicing compensation
interest paid and earnings realized on Permitted Instruments;
(vii) by the Indenture Trustee, to withdraw any
amount not required to be deposited in the applicable Note
Distribution Account or deposited therein in error; and
(viii) by the Indenture Trustee, to clear and
terminate the applicable Note Distribution Account upon the
termination of the Trust in accordance with the terms of
Section 11.01 hereof.
Section 7.02 ROUNDING ACCOUNT.
(a) No later than the Closing Date, the Indenture Trustee will
establish with itself in its trust department a trust account, which shall not
be interest-bearing, titled "TMS Rounding Account 1998-C" (the "Rounding
Account"). The Indenture Trustee shall deposit into the Rounding Account:
(i) on the Closing Date, from FUNB an amount
equal to $2,000;
(ii) on each Remittance Date, amounts received from
the applicable Note Distribution Account pursuant to Section
7.08(g); and
(iii) 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 Rounding Account.
(b) The Indenture Trustee shall invest amounts on deposit in the
Rounding Account in Permitted Instruments pursuant to Section 7.07 hereof, and
the Indenture Trustee shall withdraw amounts on deposit in the Rounding Account
to:
(i) deposit in the applicable Note Distribution
Account on each Remittance Date the amount required to be
transferred pursuant to Section 7.08(G);
(ii) withdraw any amounts not required to be
deposited in the Rounding Account or deposited therein in
error; and
(iii) distribute to the Owner Trustee (or the Paying
Agent under the Trust Agreement on its behalf) for
distribution to the Certificateholders any amounts remaining
in the Rounding Account upon the termination of this Agreement
in accordance with Section 11.01 hereof.
Section 7.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, the Indenture Trustee will
establish with itself in its trust department two separate trust accounts, which
shall not be interest-bearing, titled "TMS Expense Account 1998-C-I" and "TMS
Expense Account 1998-C-II" (each, an "Expense Account" and together the "Expense
Accounts"). The Indenture Trustee shall deposit into the applicable Expense
Account:
(i) on each Remittance Date from the amounts on
deposit in the applicable Note Distribution Account an amount
equal to one-twelfth of that portion of the Annual Expense
Escrow Amount (as determined by the Servicer or the Trust
Administrator) relating to the Pool I or Pool II Mortgage
Loans, as the case may be, subject to the provisions of
Section 7.08(d); and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 7.07(e) in connection with losses
on investments of amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Accounts
shall be insufficient to pay in full the fees and expenses of the Indenture
Trustee, the Owner Trustee, the Remarketing Agent and the Trust Administrator
(as calculated by the Servicer) then due with respect to the Trust, the
Indenture Trustee, the Owner Trustee, the Remarketing Agent or Trust
Administrator, as the case may be, shall make demand on the Servicer to advance
the amount of such insufficiency, and the Servicer shall promptly advance such
amount to the Indenture Trustee for deposit in the applicable Expense Accounts.
Thereafter, the Servicer shall be entitled to reimbursement from the applicable
Expense Account for the amount of any such advance from any excess funds
available pursuant to subclause (c)(ii) below. Without limiting the obligation
of the Servicer to advance such insufficiency, in the event the Servicer does
not advance the full amount of such insufficiency by the Business Day
immediately preceding the Determination Date, the amount of such insufficiency
shall be deposited into the applicable Expense Account for payment to the
Indenture Trustee, the Owner Trustee, the Remarketing Agent or the Trust
Administrator, as the case may be, pursuant to Section 7.08(d)(i), to the extent
of available funds in the applicable Note Distribution Account.
(b) The Indenture Trustee shall invest amounts on deposit in each
Expense Account in Permitted Instruments pursuant to Section 7.07 hereof, and
the Indenture Trustee shall withdraw amounts on deposit in the applicable
Expense Account to:
(i) pay the fees and expenses of the Indenture
Trustee, the Owner Trustee, the Remarketing Agent and the
Trust Administrator with respect to the Trust in accordance
with written instructions provided by the Servicer or the
Trust Administrator;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) to withdraw any amounts not required to be
deposited in the applicable Expense Account or deposited
therein in error; and
(iv) to clear and terminate the applicable Expense
Account upon the termination of the Trust Fund in accordance
with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on
each twelfth Remittance Date thereafter, the Indenture Trustee shall determine
that all payments required to be made during the prior twelve month period
pursuant to subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and,
if all such payments have been made, from the amounts remaining in the
applicable Expense Account, the Indenture 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 any Expense Account
after payments made pursuant to subclauses (b)(i), (b)(ii),
(b)(iii), (c)(i) and (c)(ii), above.
Section 7.04 ESTABLISHMENT OF INSURANCE ACCOUNTS; DEPOSITS IN
INSURANCE ACCOUNTS; PERMITTED WITHDRAWALS FROM INSURANCE ACCOUNTS.
(a) No later than the Closing Date, the Indenture Trustee will
establish with itself in its trust department two separate trust accounts for
the benefit of the Note Insurer, titled "TMS MBIA Insurance Account 1998-C-I"
and "TMS MBIA Insurance Account 1998-C-II" (each an "Insurance Account, and
together, the "Insurance Accounts"). The Indenture Trustee shall deposit into
the applicable Insurance Account:
(i) on each Remittance Date, prior to making the
remittances required pursuant to Section 7.08(d), from the
applicable Note Distribution Account an amount equal to the
Premium Deposit Amount relating to the Pool I or Pool II
Notes, as the case may be; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 7.07(e) in connection with losses
on investments of amounts in the applicable Insurance Account.
If at any time that a Monthly Premium is due, the aggregate amount then on
deposit in the Insurance Accounts is insufficient to pay in full the Monthly
Premium then due with respect to the Pool I and Pool II Notes pursuant to the
terms of the Insurance Agreement, the Servicer shall notify the Note Insurer to
that effect and the Note Insurer shall make demand on the Servicer to advance
the amount of such insufficiency, and the Servicer shall promptly advance such
amount to the Indenture Trustee for deposit in the Insurance Accounts, pro rata
in accordance with the amounts then on deposit in each such Insurance Account.
Thereafter, the Servicer shall be entitled to reimbursement from the applicable
Insurance Account for the amount of any such advance from moneys on deposit
therein not related to the Premium Deposit Amount necessary to make timely
payment of the next Monthly Premium.
(b) The Indenture Trustee shall invest amounts on deposit in each
Insurance Account in Permitted Instruments pursuant to Section 7.07, and the
Indenture Trustee shall withdraw amounts on deposit in the applicable Insurance
Account to:
(i) remit on a monthly basis sufficient funds to the
Insurance Paying Agent to pay the Note Insurer the Monthly
Premium with respect to the Pool I or Pool II Notes, as the
case may be, on each Remittance Date commencing in October
1998 as required by the Insurance Agreement;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the applicable Insurance Account or deposited therein in
error; and
(iv) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above to the
extent such funds are not needed to pay the Monthly Premium.
If sufficient funds are available in the Insurance Account to timely
pay the Monthly Premium, the Indenture Trustee has received from the Servicer
any information necessary to determine the amount of the Monthly Premium and the
Indenture Trustee and the Insurance Paying Agent (if the Insurance Paying Agent
and the Indenture Trustee are the same party) fail to timely remit the Monthly
Premium to the Note Insurer from funds on deposit in the Insurance Account in
accordance with subsections (a) and (b) above, the Indenture Trustee shall,
contemporaneous with the payment of the Monthly Premium, pay to the Note Insurer
from its own funds, for which reimbursement shall not be available, interest on
the Monthly Premium at the Prime Rate published in the most recent Wall Street
Journal plus 3.0% for each day that the Monthly Premium is not paid to the Note
Insurer.
Section 7.05 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD
ACCOUNT; PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) No later than the Closing Date, FUNB, as initial holder of the
Certificates, shall establish, in accordance with the terms of the Spread
Account Agreement, an account titled "The Bank of New York--TMS Spread Account
1998-C" (the "Spread Account"). The Spread Account shall not constitute part of
the Trust but is being pledged to the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer. The Spread Account shall be the property of
FUNB, as Spread Account Depositor, subject to the terms hereof and of the Spread
Account Agreement. The Spread Account shall be a deposit account maintained with
FUNB for so long as (i)(A) the Servicer remains an affiliate of FUNB, (B) no
Servicer Default shall have occurred and be continuing, (C) FUNB maintains a
short-term debt rating of at least A-1 by S&P and P-1 by Moody's, and for five
Business Days following any reduction, suspension, termination or withdrawal in
either such rating, (D) FUNB maintains a long-term debt rating of at least A by
S&P and A2 by Moody's, and for five Business Days following any reduction,
suspension, termination or withdrawal in either such rating, (E) there has been
no (X) material adverse change in the financial condition of FUNB or (Y) event
which, in the reasonable judgment of the Note Insurer, could result in a
material adverse change in the financial condition of FUNB and (F) no change in
facts or circumstances exist which, in the reasonable judgment of the Note
Insurer, could result in the Indenture Trustee not being entitled to the
benefits of the Spread Account, or (ii) following the occurrence and
continuation of any event described in subclause (i) of this paragraph, an
arrangement is established that is satisfactory to the Note Insurer which does
not in itself result in (I) any reduction of any rating issued in respect of the
Notes or (II) any reduction below investment grade of the Notes without the
benefit of the Note Insurance Policies. If the foregoing conditions are no
longer satisfied, the Indenture Trustee shall withdraw all funds on deposit in
or credited to the Spread Account, including investments therein, and transfer
all such funds to a Designated Depository Institution as instructed in writing
by the Note Insurer. The Indenture Trustee shall, promptly upon receipt, deposit
in the Spread Account, amounts received pursuant to Section 7.14(b)(i).
(b) Amounts on deposit in the Spread Account shall be invested
pursuant to Section 7.07, and the Indenture Trustee shall or, so long as the
Spread Account is maintained with FUNB, FUNB shall withdraw amounts on deposit
in the Spread Account to:
(i) [Reserved];
(ii) deposit in the applicable Note Distribution
Account on any Remittance Date an amount equal to the amount
of any Insured Payment otherwise required with respect to such
Remittance Date;
(iii) on any Remittance Date for which the Spread
Balance exceeds the Specified Spread Account Requirement for
such Remittance Date, after giving effect to clause (ii)
above, distribute the excess, if any, to the Owner Trustee (or
the Paying Agent under the Trust Agreement on its behalf) for
deposit in the Certificate Distribution Account.
(iv) distribute to the Owner Trustee (or the Paying
Agent under the Trust Agreement on its behalf) for
distribution to the Certificateholders' such amounts then
remaining on deposit in the Spread Account as the Note Insurer
may consent to in writing;
(v) withdraw any amounts not required to be deposited
in the Spread Account or deposited therein in error; and
(vi) distribute to the Owner Trustee (or the Paying
Agent under the Trust Agreement on its behalf) for
distribution to the Certificateholders any amounts remaining
in the Spread Account upon the termination of this Agreement
in accordance with Section 11.01 hereof.
Section 7.06 [Reserved]
Section 7.07 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Servicer of Default shall have occurred
and be continuing, and consistent with any requirements of the Code, all or a
portion of any Account held by the Indenture Trustee shall be invested and
reinvested by the Indenture Trustee as directed in writing by the Servicer, in
one or more Permitted Instruments bearing interest or sold at a discount. So
long as the Spread Account is maintained at FUNB, amounts on such Account may be
invested, at the option of FUNB, in Permitted Instruments or other investments
not satisfying the definition of Permitted Instruments. No such investment in
the Note Distribution Accounts shall mature later than the Business Day
immediately preceding the next Remittance Date and no such investment in the
Insurance Accounts, Expense Accounts, Rounding Account or Spread Account shall
mature later than the Business Day immediately preceding the date such funds
will be needed to pay fees or premiums or be transferred to the applicable Note
Distribution Account, as the case may be; PROVIDED, HOWEVER, the Indenture
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
Indenture 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 Indenture Trustee and sufficient uninvested funds are not available to
make such disbursement, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. The Indenture Trustee shall not be liable for any investment loss or
other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Indenture Trustee shall not
in any way be held liable by reason of any insufficiency in any Account held by
the Indenture Trustees resulting from any investment loss on any Permitted
Instrument included therein (except to the extent that the Indenture Trustee is
the obligor thereon).
(d) The Indenture Trustee shall invest and reinvest funds in the
Accounts held by them 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 Indenture Trustee shall be deposited in such Account, immediately on
receipt, and the Indenture 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 Indenture
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. So long as the Spread Account is maintained at FUNB, FUNB shall
remit to the Spread Account, from its own funds, the amount of any loss
resulting from investments, without reimbursement therefor, by the next
Determination Date following such loss.
Section 7.08 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 applicable Principal and Interest Account or in any
Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the 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) As soon as possible, and in no event later than 10:00 a.m. New
York time on the Business Day immediately preceding each Remittance Date, the
Indenture Trustee shall furnish the Note Insurer and the Servicer with a
completed notice in the form set forth as Exhibit H or Exhibit I (the "Notice")
hereto, as the case may be, which will be based upon the information set forth
in the Trust Administrator's Certificate, in the event that an Event of
Nonpayment will occur with respect to such Remittance Date. The Notice shall
specify the total amount of the Insured Payment to be paid on the applicable
Remittance Date, stated separately for each Class of Pool I or Pool II Notes, as
applicable, and shall constitute a claim for an Insured Payment pursuant to the
applicable Note Insurance Policy. The Note Insurer shall remit or cause to be
remitted to the Insurance Paying Agent the amount of the Insured Payment. Upon
receipt of such Insured Payment by the Insurance Paying Agent on behalf of the
Holders of the respective Class of Pool I or Pool II Notes under the applicable
Note Insurance Policy, it shall remit such amounts to the Indenture Trustee who
shall deposit such Insured Payment in the applicable Note Distribution Account
and shall distribute such Insured Payment in accordance with Sections 7.08(d)
and (e) hereof.
Notwithstanding the foregoing, if an Event of Nonpayment with respect
to Pool I or Pool II will occur with respect to a Remittance Date and funds are
on deposit in the Spread Account, the amount of the Insured Payment shall be
reduced up to the amount then on deposit in the Spread Account. Pursuant to
Section 7.05(b)(ii), the Indenture Trustee shall, on such Remittance Date,
transfer such amount to the applicable Note Distribution Account from the Spread
Account.
The Indenture Trustee shall serve as Insurance Paying Agent hereunder
for so long as a Note Insurance Policy shall remain in effect; PROVIDED,
HOWEVER, that the Insurance Paying Agent may be located in another jurisdiction
with the written consent of the Note Insurer. The Insurance Paying Agent shall
act as the agent of the Indenture Trustee and shall (i) pay amounts required by
Section 7.04(b)(i) hereof to the Note Insurer, (ii) pay Insured Payments
received from the Note Insurer as the Indenture Trustee shall direct and (iii)
take such other actions with respect to the Note Insurer and the Note Insurance
Policies as the Indenture Trustee shall direct.
The Indenture Trustee shall receive through the Insurance Paying
Agent, as attorney-in-fact of each Holder of Pool I or Pool II Notes, any
Insured Payment from the Note Insurer and disburse the same to each Holder of
Pool I or Pool II Notes in accordance with the provisions of this Section 7.08.
Insured Payments disbursed by the Indenture Trustee from proceeds of the Note
Insurance Policies shall not be considered payment by the Trust nor shall such
payments discharge the obligation of the Trust with respect to such Pool I or
Pool II Notes, and the Note Insurer shall become the owner of such unpaid
amounts of Insured Payments due from the Trust in respect of such Notes. The
Indenture Trustee hereby agrees on behalf of each Holder of Pool I or Pool II
Notes for the benefit of the Note Insurer that it recognizes that to the extent
the Note Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Insurance Paying Agent), to the Pool I or Pool II
Noteholders, the Note Insurer will be subrogated to the rights of the such Pool
I or Pool II Noteholders with respect to such Insured Payment, shall be deemed
to the extent of the payments so made to be a registered Noteholder of the
related Class, and shall receive the Pool Carry-Forward Amounts of the related
Pools in accordance with Section 7.08(d)(I)(A) and (B), in the case of Pool I,
and Section 7.08(d) (II)(A) and (B), in the case of Pool II, below until all
such Insured Payments by the Note Insurer have been fully reimbursed. To
evidence such subrogation, the Indenture Trustee shall, or shall cause the Note
Registrar to, note the Note Insurer's rights as subrogee on the registration
books maintained by the Indenture Trustee or the Note Registrar upon receipt
from the Note Insurer of proof of payment of any Insured Payment.
Each Pool I or Pool II Noteholder shall promptly (i) notify the
Indenture Trustee in writing upon the receipt of a court order to the effect
that any amounts described in Clause (iv) of the definition of Pool Remittance
Amount constitute a voidable preference pursuant to the United States Bankruptcy
Code and (ii) shall enclose a certified copy of such order with such notice to
the Indenture Trustee.
(d) On each Remittance Date, and after making the allocations set
forth in Section 7.14, the Indenture Trustee shall withdraw from the applicable
Note Distribution Account the Pool Available Amount for each such Pool and make
distributions thereof in the following order of priority (based solely upon
information received from the Trust Administrator):
(i) to the Expense Account relating to Pool I or Pool
II, an amount equal to one-twelfth of the Annual Expense
Escrow Amount with respect to the Loans of the related Pool,
plus any amount required to be paid to the Indenture Trustee,
the Owner Trustee, the Remarketing Agent or the Trust
Administrator pursuant to Section 7.03(a) resulting from
insufficiencies in the applicable Expense Account;
(ii) then to the Noteholders of each such Pool, the
lesser of the Pool Available Amount for the related Pool less
the amount applied under clause (i) with respect to such Pool
and the Pool Remittance Amount for the related Pool first in
payment of the applicable Current Interest Requirements and
then in reduction of the applicable Class Principal Balances
of the applicable Notes;
(iii) then to the Servicer and/or the Representative,
an amount, if any, equal to the Reimbursable Amounts with
respect to the applicable Pool to the extent the Servicer has
not previously netted such amounts from Monthly Payments;
(iv) [Reserved]; and
(v) 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.
(I) On each Remittance Date, the amount to be distributed to the Pool
I Notes pursuant to clause (ii) above, along with amounts transferred from the
Rounding Account pursuant to Section 7.08(g), will be allocated in the following
order of priority:
(A) first, concurrently to the Noteholders of each Class of Pool I
Notes, the applicable Current Interest Requirement for such Remittance Date, pro
rata in accordance with such Current Interest Requirements; and
(B) second, concurrently to the Class AF-1 and Class AF-2 Notes, pro
rata based upon their respective Class Principal Balance, the excess, if any, of
the amount to be distributed to the Pool I Notes on such Remittance Date over
the amount distributed pursuant to (A) above and reimbursement to the Rounding
Account as described below, until the Class Principal Balance of each such Class
is reduced to zero and such Noteholders have received an amount equal to the
amount described in clause (iv) of the definition of Pool Remittance Amount that
is recovered from such Noteholders.
(II) On each Remittance Date, the amount to be distributed to the Pool
II Notes pursuant to clause (ii) above will be allocated in the following order
of priority:
(A) first, to the Holders of the Class AV Notes, the Current Interest
Requirement for the Class AV Notes for such Remittance Date; and
(B) second, to the Class AV Noteholders, the excess, if any, of the
amount to be distributed to the Pool II Notes on such Remittance Date over the
amount distributed pursuant to (A) above, until the Class Principal Balance of
such Class is reduced to zero and such Noteholders have received an amount equal
to the amount described in clause (iv) of the definition of Pool Remittance
Amount that is recovered from such Noteholders.
(e) Except as described in clause (f) below, 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.
(f) Notwithstanding the foregoing, the amount being distributed to the
Class AF-2 Notes on each Remittance Date pursuant to Section 7.08(d)(I)(B) will
be allocated as principal to the specific Notes of such Class selected no later
than 5 Business Days prior to the related Remittance Date by lot or such other
manner as may be determined, which allocations will be made only in amounts
equal to $1,000 and integral multiples of $1,000 in excess thereof.
(g) On each Remittance Date, the holders of the Class AF-1 and Class
AF-2 Notes also will receive amounts transferred from the Rounding Account
pursuant to Section 7.02(b)(i). Principal payments distributed to the holders of
the Class AF-1 and Class AF-2 Notes shall be made in integral multiples of
$1,000. If on any Remittance Date the amount of principal to be distributed to
the holders of Class AF-1 or Class AF-2 is not an even multiple of $1,000, such
holders will receive from the Rounding Account the amount of such difference.
The Rounding Account will be reimbursed, to the extent funds are available, on
the next Remittance Date prior to principal being paid to the holders of the
Class AF-1 and Class AF-2 Notes.
Section 7.09 ALLOCATION OF REALIZED LOSSES.
Prior to each Determination Date, the Servicer shall determine the
total amount of Realized Losses, if any, that occurred in the related Due
Period. The amount of each Realized Loss shall be evidenced by an Officers'
Certificate, stated separately for the Pool I and Pool II Loans, and, to the
extent paid by the Note Insurer as an Insured Payment, shall constitute a
Carry-Forward Amount for the related Pool. Any Realized Losses relating to the
Pool I and Pool II Loans occurring after the Cross-Over Date shall be allocated
to the Pool I and Pool II Notes, respectively, but only if and to the extent
that the Pool I or Pool II Notes, as the case may be, did not receive Insured
Payments in connection with such Realized Loss. Any allocation of Realized
Losses relating to a Pool I Loan shall be allocated between the Class AF-1 and
Class AF-2 Notes, pro rata based upon then outstanding Class Principal Balances.
Further, any allocation of Realized Losses among a Class of Notes shall be made
on a pro rata basis among the Noteholders of record of such Class on the next
preceding Record Date based on the Percentage Interest represented by their
respective Notes by reducing their respective principal balances by the amount
so allocated, which allocation shall be deemed to have occurred on the related
Remittance Date.
Section 7.10 STATEMENTS.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Trust Administrator shall deliver to the Note Insurer
and to the Indenture 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 to be delivered on the Business Day following the Determination Date, a
certificate signed by an officer of the Trust Administrator (a "Trust
Administrator's Certificate") stating the date (day, month and year), the Series
number of the Notes, the date of this Agreement, and the following:
(i) the Pool Available Remittance Amounts for
each Pool for the related Remittance Date;
(ii) the Class Principal Balances for each Class of
Pool I and Pool II Notes as reported in the prior Trust
Administrator's Certificate pursuant to subclause (xv) below,
or, in the case of the first Determination Date, the Original
Principal Balance for each Class of Pool I and Pool II Notes;
(iii) the Pool Principal Distribution Amounts for
each Pool for the related Remittance Date, in the aggregate
and listed separately for the portions relating to each Class
of Pool I and Pool II Notes;
(iv) the amount of any Insured Payments in the
aggregate and listed separately by Pool;
(v) the Current Interest Requirements for each Class
of Notes for the related Remittance Date;
(vi) the number and Principal Balances of all
Mortgage Loans in each Pool which were the subject of
Principal Prepayments during the Due Period;
(vii) the amount of all Curtailments which were
received during the Due Period, stated separately for each
Pool;
(viii) the aggregate amount of all Excess Payments
and the amounts of Monthly Payments in respect of principal
received during the Due Period, stated separately for each
Pool;
(ix) the amount of interest received on the Mortgage
Loans, stated separately for each Pool;
(x) the amount of the Monthly Advances to be made on
the Determination Date, the portion of the Monthly Advances to
be deposited in the Note Distribution Accounts pursuant to
Section 7.01(a)(ii), and the Compensating Interest payment to
be made on the Determination Date, in each case stated
separately for each Pool;
(xi) the delinquency and foreclosure information set
forth in the form attached hereto as Exhibit L, stated
separately for each Pool;
(xii) the amount of any Realized Losses incurred
during the related Due Period, stated separately for each
Pool;
(xiii) the Pool Remittance Amounts for Pool I and
Pool II and in the aggregate and by component and listed
separately for the portions relating to each Class of Notes in
the related Pool;
(xiv) the Reimbursable Amounts and the
Certificate Remittance Amount with respect to the
Remittance Date;
(xv) the Class Principal Balance for each Class of
Notes and the Pool Principal Balance for each Pool after
giving effect to the distribution to be made on the Remittance
Date and after allocation of Realized Losses made on such
Remittance Date;
(xvi) the Excess Spread (in the aggregate and stated
separately for each Pool);
(xvii) the Cumulative Realized Losses, stated
separately for each Pool, with respect to the Remittance
Date;
(xviii) the weighted average maturity and weighted
average Loan Interest Rate, stated separately for each Pool;
(xix) the Servicing Fees, the Contingency Fees, and
amounts to be deposited to the Expense Accounts and the
Insurance Accounts, in each case, as applicable, stated
separately for each Pool;
(xx) the amount of all payments and reimbursements to
the Servicer pursuant to Section 4.04(b), (c), (d)(ii), (e)
and (f), stated separately with respect to each Pool;
(xxi) the Class Pool Factor for each Class determined
using the balances in subclause (xv) above;
(xxii) the weighted average Loan Interest Rate and
Adjusted Loan Interest Rate of the Mortgage Loans for each
Pool and the weighted average Class Adjusted Loan Remittance
Rates for each Pool, in each case for the related Remittance
Date, and the weighted average Loan Interest Rate for the
prior three month period;
(xxiii) the Class Remittance Rate for each Class of
Notes with respect to the Remittance Date and if the Class
Remittance Rate for any Class of Notes was based on the
applicable Net Funds Cap, what it would have been if based on
LIBOR plus the applicable Margin or the Auction Rate, as the
case may be;
(xxiv) the rate of LIBOR and the Auction Rate with
respect to the Remittance Date;
(xxv) if the Remittance Rate for any Class of Notes
for such Remittance Date is based on the applicable Net Funds
Cap, the Net Funds Cap for such Class of Notes with respect to
the Remittance Date;
(xxvi) if the Remittance Rate for any Class of Notes
for such Remittance Date is based on the applicable Net Funds
Cap, the amount of any Noteholders' Interest Carryover for
such Class for such Remittance Date;
(xxvii) the amount of the distribution, if any,
allocable to Noteholders' Interest Carryover and the amount of
any Noteholders' Interest Carryover for all prior Remittance
Dates after giving effect to such distribution (in each case,
stated separately by Class and in the aggregate);
(xxviii) the Supplemental Interest Amount,
Supplemental Interest Payments and Supplemental Interest
Excess, if any, for such Remittance Date;
(xxix) the number and Principal Balance of all
Defaulted Loans purchased during the Due Period, stated
separately for each Pool;
(xxx) the Spread Balance, the Specified Spread
Account Requirement for such Remittance Date and the portion
of the amounts on deposit on the Spread Account that
constitute investment earnings; and
(xxxi) such other information as the Note Insurer and
the Indenture Trustee may reasonably require.
The Indenture Trustee shall forward such report to the Noteholders of
the applicable Pool, the Note Insurer and the Owner Trustee on the Remittance
Date, together, if requested by a Noteholder, with a separate report indicating
the amount of funds deposited in each 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 7.03(c)(i),
7.03(c)(ii), 7.04(b)(iv) and 7.08(d)(iii) (all reports prepared by the Indenture
Trustee of such withdrawals and deposits will be based in whole or in part upon
the information provided to the Indenture Trustee by the Servicer or the Trust
Administrator).
To the extent that there are inconsistencies between the telecopy of
the Trust Administrator's Certificate and the hard copy thereof, the Indenture
Trustee shall be entitled to rely upon the telecopy. In the discretion of the
Trust Administrator, in the case of certain information furnished pursuant to
the above provisions, the amounts shall be expressed in a separate section of
the report as a dollar amount for each Class per $25,000 original dollar amount
as of the Cut-Off Date.
Each month, not later than the third Business Day prior to the
Determination Date occurring in such month, the Servicer shall deliver to the
Trust Administrator the Servicer's Monthly Computer Tape in the form attached
hereto as Exhibit R (both in hard copy and in computer tape form). The Trust
Administrator may rely fully upon and shall have no liability with respect to
any such information provided to it by the Servicer. The Trust Administrator
shall not be obligated to verify, recompute, reconcile or confirm any
information contained in the Servicer's Monthly Computer Tape or otherwise
provided by the Servicer.
In making any payments or distributions required to be made by them
pursuant to any of the provisions hereof, the Indenture Trustee shall make such
payments and distributions based solely upon the information contained in the
applicable Trust Administrator's Certificate or, if such information is not
included in the applicable Trust Administrator's Certificate, upon written
instructions of the Servicer or the Trust Administrator. The Indenture Trustee
may rely fully upon and shall have no liability with respect to any such
information provided to it by the Servicer or the Trust Administrator. The
Indenture Trustee shall not be obligated to verify, recompute, reconcile or
confirm any information contained in any Trust Administrator's Certificate or
otherwise provided by the Trust Administrator or the Servicer.
(a) Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to the Indenture Trustee for
distribution to each Person who at any time during the calendar year was a
Noteholder of the applicable Pool the amount of interest and principal
distributed with respect to each Class of Notes plus such other customary
information as the Trust Administrator determines to be necessary and/or
required by the Internal Revenue Service to enable the Noteholders to prepare
their tax returns for such calendar year. Such obligation of the Trust
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trust
Administrator pursuant to any requirements of the Code as from time to time are
in force.
(b) On each Remittance Date, the Indenture Trustee shall forward to
the Owner Trustee, for distribution to the Certificateholders, a copy of the
report forwarded to the Noteholders of each Pool in respect of such Remittance
Date, as the case may be, and a statement, prepared by the Servicer or the Trust
Administrator, setting forth the amounts actually distributed to the
Certificateholders on such Remittance Date together with such other information
as the Servicer or Trust Administrator provides and deems necessary or
appropriate.
(c) Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to the Indenture Trustee, with a
copy to the Owner Trustee for distribution to each Person who at any time during
the calendar year was a Certificateholder such information as is reasonably
necessary to provide to such Person a statement containing the information
provided pursuant to the previous paragraph aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder, as
applicable. Such obligation of the Trust Administrator shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trust Administrator 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 Noteholder which is a savings and loan association, bank or
insurance company certain reports and access to information and documentation
regarding the Mortgage Loans sufficient to permit such Noteholder to comply with
applicable regulations of the Office of Thrift Supervision or other regulatory
authorities with respect to investment in the Notes.
(e) The Servicer shall furnish to each Noteholder and the Note
Insurer, during the term of this Agreement, such periodic, special, or other
reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Noteholder or the Note
Insurer, or otherwise with respect to the purposes of this Agreement, all such
reports or information to be provided by and in accordance with such applicable
instructions and directions as the Noteholder or the Note Insurer may reasonably
require; provided, that the Servicer shall be entitled to be reimbursed by such
Noteholder or the Note Insurer for the Servicer's actual expenses incurred in
providing such reports if such reports are not producible in the ordinary course
of the Servicer's business.
Section 7.11 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Indenture Trustee for deposit in the applicable Note
Distribution Account an amount (as indicated in the Trust Administrator's
Certificate prepared pursuant to Section 7.10), to be distributed on the related
Remittance Date pursuant to Section 7.08, equal to the amount, if any, by which
(a) the sum of (i) interest on the actual number of days since the last
Remittance Date (or, in the case of the October 1998 Remittance Date, from
September 29, 1998) up to but not including the upcoming Remittance Date at the
weighted average Class Adjusted Loan Remittance Rates for the applicable Pool on
the related Pool Principal Balance immediately prior to the related Remittance
Date plus (ii) the Monthly Excess Spread relating to the Mortgage Loans of the
related Pool with respect to such Remittance Date exceeds (b) the amount
received by the Servicer as of the related Record Date in respect of interest on
the Mortgage Loans of the related Pool. The sum of such excess calculated for
each Pool is defined herein as the "Monthly Advance." The Servicer may reimburse
itself for Monthly Advances made pursuant to Section 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 7.12 COMPENSATING INTEREST.
The Noteholders shall be entitled to a full month's interest for each
Mortgage Loan for any month during which a Principal Prepayment or Curtailment
is received on such Mortgage Loan. Not later than the close of business on each
Determination Date, with respect to each Mortgage Loan for which a Principal
Prepayment or Curtailment was received during the related Due Period, the
Servicer shall remit to the Indenture Trustee for deposit in the applicable Note
Distribution Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Indenture
Trustee is referred to herein as "Compensating Interest") (as indicated in the
Trust Administrator's Certificate prepared pursuant to Section 7.10) equal to
the difference between (a) interest on the actual number of days since the last
Remittance Date (or, in the case of the first Remittance Date, from September
29, 1998) to but not including the upcoming Remittance Date at the then weighted
average Class Adjusted Loan Remittance Rates for the applicable Pool on the
Principal Balance of each such Mortgage Loan and (b) the amount of interest
actually received on each such Mortgage Loan for such Due Period as of the
beginning of the Due Period applicable to the Remittance Date on which such
amount will be distributed.
Section 7.13 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED
PROPERTY.
Each year the Indenture Trustee shall execute upon receipt from the
Servicer and return to the Servicer for filing the reports of foreclosures and
abandonments of any Mortgaged Property of the applicable Pool prepared by the
Servicer required by Section 6050J of the Code. In order to facilitate this
reporting process, the Servicer, on or before January 15th of each year, shall
provide to the Indenture Trustee and the Note Insurer reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust acquires an interest in a Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of
the Mortgage Loan, or (ii) knows or has reason to know that a Mortgaged Property
has been abandoned. The reports from the Servicer shall be in form and substance
sufficient to enable the Indenture Trustee to meet the reporting requirements
imposed by such Section 6050J.
Section 7.14 ALLOCATION OF TOTAL MONTHLY EXCESS CASHFLOW.
(a) On each Remittance Date, for each Pool of Mortgage Loans the
Indenture Trustee shall, based solely upon information provided in the related
Trust Administrator's Certificate delivered pursuant to Section 7.10, allocate
an amount equal to the Monthly Excess Spread with respect to each such Pool and
Remittance Date in the following order of priority:
(i) FIRST, to the related Pool in an amount up to (A)
the Pool Available Remittance Amount Shortfall for such Pool
and (B) the excess of (x) the sum of the aggregate Current
Interest Requirements for the Certificates of such respective
Pool, over (y) the Pool Available Amount for the respective
Pool calculated without giving effect to the addition of any
Monthly Excess Spread pursuant to clause (ii) of the
definition of Pool Available Amount;
(ii) SECOND, to the Note Insurer in respect of
amounts owed on account of any Insured Payments theretofore
made with respect to the related Pool of Mortgage Loans (any
such amount so owed to the Note Insurer and not theretofore
paid, together with accrued interest thereon, the "Insurer
Reimbursable Amount" with respect to the related Pool of
Mortgage Loans); and
(iii) THIRD, to the Note Insurer in respect of any
Insurer Reimbursable Amount with respect to the other Pool;
(b) The amount, if any, of the Monthly Excess Spread with respect to a
Pool of Mortgage Loans on a Remittance Date remaining after the allocations
described in (a) above is the "Net Monthly Excess Cashflow" with respect to such
Pool for such Remittance Date; such amount is required to be applied in the
following order of priority:
(i) FIRST, to reduce the Pool Carry-Forward
Amount;
(ii) SECOND, for deposit in the Spread Account until
the amount on deposit therein equals the Specified Spread
Account Requirement;
(iii) THIRD, to the Servicer to the extent of any
unreimbursed Servicing Advances and accrued and unpaid
Servicing Fees;
(iv) FOURTH, to provide funds to the other Pool to
cover current Realized Losses;
(v) FIFTH, to the Noteholders any Noteholders'
Interest Carryover owing for such Remittance Date and all
prior Remittance Dates (to the extent such Net Monthly Excess
Cashflow is attributable to Loans of the applicable Pool); and
(vi) SIXTH, any excess to the Owner Trustee (or the
Paying Agent under the Trust Agreement on its behalf) for
distribution to the Certificateholders.
Section 7.15 ESTABLISHMENT OF SERVICING ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.
(a) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Servicing Accounts. The Servicer will
deposit and retain, or cause to be deposited and retained, therein all
collections from the 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
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Obligors any sums as may be determined to be overages,
to pay interest, if required, to Obligors 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 7.16 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 (other
than with respect to Nonrecoverable Advances). The Servicer, however, will
account to the Owner Trustee, the Indenture 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 Indenture Trustee,
the Owner Trustee, the Trust Administrator, the Custodian, the Note Insurer 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 Indenture Trustee, the Owner
Trustee, the Trust Administrator, the Custodian, the Note Insurer, and any
Noteholder and Certificateholder may sustain in any way related to the failure
of the Servicer to perform its duties and service the Loans in compliance with
the terms of this Agreement. The Servicer shall immediately notify the Indenture
Trustee, the Owner Trustee, the Trust Administrator, the Custodian, the Note
Insurer 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 Indenture 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 Indenture Trustee, the Owner Trustee, the Trust
Administrator, the Custodian, the Note Insurer and/or Noteholder or
Certificateholder in respect of such claim. The Indenture Trustee shall
reimburse the Servicer from amounts otherwise payable to the Certificateholders
for all amounts advanced by it pursuant to the preceding sentence except when
the Claim relates directly to the failure of the Servicer to service and
administer the Loans in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Indenture
Trustee, the Owner Trustee, the Trust Administrator, the Custodian, the Note
Insurer 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 Indenture Trustee,
the Owner Trustee, the Trust Administrator, the Custodian, the Note Insurer 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 Indenture
Trustee, the Owner Trustee, the Trust Administrator, the Custodian, the Note
Insurer 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 Indenture 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 Indenture Trustee, the Owner
Trustee, the Trust Administrator, the Custodian, the Note Insurer and/or
Noteholder or Certificateholder in respect of such claim. The Indenture Trustee
shall reimburse the Representative from amounts otherwise payable to the
Certificateholders 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, the Note Insurer and the Certificateholders.
(c) The Servicer also acknowledges its indemnification obligations
under Section 6.7 of the Indenture.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE AND THE
SERVICER.
The Servicer and the Representative 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 and the Representative shall be a party, or
any Person succeeding to the business of the Servicer and the Representative,
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 and the Representative, 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 and the Representative shall send notice of any such merger or
consolidation to the Issuer, the Owner Trustee, the Note Insurer and the
Indenture Trustee.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the
Servicer 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 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 NOT TO RESIGN.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Owner Trustee, the Note Insurer and the Indenture Trustee, or upon
the determination that the Servicer's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by a written Opinion of Counsel (who may be counsel for the Servicer) to such
effect delivered to the Indenture Trustee, the Note Insurer and the Owner
Trustee, which Opinion of Counsel shall be in form and substance acceptable to
the Indenture Trustee, the Note Insurer and the Owner Trustee. No such
resignation shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 10.02.
Section 9.05 [Reserved]
Section 9.06 RIGHT OF NOTE INSURER TO REPLACE SERVICER.
From and after the occurrence of a Servicing Delinquency Trigger, the
Note Insurer may, upon written notice to the Indenture Trustee, the Owner
Trustee and the Rating Agencies, replace the Servicer with a successor. No such
replacement shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 10.02.
Section 9.07 APPOINTMENT OF TRUST ADMINISTRATOR.
The Representative and Servicer hereby appoint First Union National
Bank, a national banking association, as Trust Administrator and, in such
capacity, the Trust Administrator shall have all the rights, powers, obligations
and duties respecting the Trust Administrator set forth herein and in the other
Basic Documents.
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) an Event of Nonpayment; (B) the failure by
the Servicer to make any required Servicing Advance, to the
extent such failure materially and adversely affects the
interests of the Noteholders, the Note Insurer or the
Certificateholders; (C) the failure by the Servicer to make any
required Monthly Advance; (D) the failure by the Servicer to
remit any Compensating Interest; or (E) any failure by the
Servicer to remit to Noteholders or the Certificateholders, or to
the Indenture Trustee for the benefit of the Noteholders or the
Certificateholders, any payment required to be made under the
terms of this Agreement which 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
Indenture Trustee or to the Servicer and the Indenture Trustee by
any Noteholder, the Note Insurer or Certificateholder; or
(ii) failure by the Servicer or the Representative
duly to observe or perform, in any material respect, any other
covenants, obligations or agreements of the Servicer 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 or the
Representative, as the case may be, by the Indenture Trustee or
to the Servicer or the Representative, as the case may be, and
the Indenture Trustee by any Noteholder, the Note Insurer 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 and such
decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
(iv) the Servicer 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 of or
relating to all or substantially all of the Servicer's property;
or
(v) the Servicer 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)), if such Servicer Default shall not have been
remedied within 30 days after the Servicer 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
Indenture Trustee shall give immediate telephonic notice of such failure to a
Servicing Officer of the Servicer, as the case may be, and, unless such failure
is cured, either by receipt of payment or receipt of evidence satisfactory to
the Note Insurer (E.G., a wire reference number communicated by the sending
bank) that such funds have been sent, by 12:00 Noon New York time on the
following Business Day, the Indenture Trustee shall immediately assume, pursuant
to Section 10.02 hereof, the duties of a successor Servicer; and (y) in the case
of clauses (i)(A), (i)(B), (i)(D), (i)(E), (ii), (iii), (iv) and (v), the Note
Insurer or the Majority Securityholders then outstanding, subject to the prior
written consent of the Note Insurer, which consent may not be unreasonably
withheld, by notice in writing to the Servicer, may, in addition to whatever
rights such Noteholders or Note Insurer may have at law or equity including
damages, injunctive relief and specific performance, in each case commence
termination of all the rights and obligations of the Servicer under this
Agreement and in and to the Loans and the proceeds thereof, as Servicer. Upon
receipt by the Servicer of a second written notice from the Note Insurer or such
Noteholders, as the case may be, stating that they or it intend to terminate the
Servicer as a result of such Servicer Default, all authority and power of the
Servicer 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
Indenture Trustee or its designee and the Indenture Trustee or its designee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, 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 agrees to cooperate with the Indenture Trustee
in effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Indenture 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 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 10.01 or the Indenture Trustee receives the resignation of
the Servicer evidenced by an Opinion of Counsel pursuant to Section 9.04 or the
Servicer are removed as servicer pursuant to this Article X, the Indenture
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer 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 by the terms and provisions hereof,
provided, however, that the Indenture Trustee shall not be liable for any
actions of any servicer prior to it, and that the Indenture Trustee shall not be
obligated to make advances or payments pursuant to Sections 7.11, 7.12, 4.05,
4.10 or 4.14 or otherwise but only to the extent the Indenture 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 Indenture Trustee, as
the case may be. As compensation therefor, the Indenture Trustee shall be
entitled to all funds relating to the Loans which the Servicer 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 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 Indenture Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Securityholders or the Note Insurer, so request in writing to the Indenture
Trustee, appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution acceptable to the Note Insurer,
which acceptance shall not be unreasonably withheld, that has a net worth of not
less than $15,000,000 and which is approved as a servicer by FNMA and FHLMC as
the successor to the Servicer hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. Any
collections received by the Servicer after removal or resignation shall be
endorsed by it to the Indenture Trustee and remitted directly to the Indenture
Trustee or, at the direction of the Indenture Trustee, to the successor
servicer. The compensation of any successor servicer (including, without
limitation, the Indenture 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
Indenture Trustee is required to solicit bids as provided herein, the Indenture
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 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 Indenture
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 Indenture Trustee shall deduct from
any sum received by the Indenture Trustee from the successor to the Servicer 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 Indenture Trustee to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Indenture
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The Servicer
agrees to cooperate with the Indenture Trustee and any successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Indenture Trustee or such
successor servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Servicer's functions hereunder and
shall promptly also transfer to the Indenture Trustee or such successor
servicer, as applicable, all amounts which then have been or should have been
deposited in the Principal and Interest Account by the Servicer or which are
thereafter received with respect to the Loans. Neither the Indenture Trustee nor
any other successor servicer 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 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 hereunder. No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Indenture Trustee to each Noteholder, the Note Insurer and each
Certificateholder, and the Note Insurer and the Indenture Trustee shall have
consented thereto. The Indenture Trustee shall not resign as servicer until a
successor servicer has been appointed.
Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture 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 pursuant to
Section 5.03 or otherwise as provided in this Agreement. The Servicer, the
Indenture 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 Note Insurer or the Majority Securityholders, may, on behalf of
all Noteholders and Certificateholders, and subject to the consent of the Note
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer as servicer pursuant to this Article X,
provided, however, that such Noteholders or the Note Insurer 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 Servicer
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 Note Insurer or the Majority Securityholders with the consent of
the Note Insurer, which consent may not be unreasonably withheld, 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
Indenture Trustee with respect to the Owner Trust Estate or exercising any trust
or power conferred on the Indenture Trustee with respect to the Owner Trust
Estate and the Indenture 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 Indenture Trustee, or the Owner Trustee, as the
case may be, shall have been provided with indemnity satisfactory to
it; and
(c) the Indenture Trustee, and the Owner Trustee may
take any other action deemed proper by the Indenture Trustee, and the
Owner Trustee which is not inconsistent with such direction; provided,
however, that the Indenture 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 Indenture
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, the Note Insurer and all
Noteholders and all Certificateholders in writing.
(b) The Servicer may, at its option, and in the absence of the
exercise thereof by the Servicer, the Note Insurer may, at its option, on any
date on which the aggregate Principal Balances of the Mortgage Loans are less
than five (5) percent of the aggregate Principal Balances of the Mortgage Loans
as of the Cut-Off Date (such date, the "Optional Servicer Termination Date"),
purchase on the next succeeding Remittance Date, all of the Mortgage Loans and
any related REO Properties at a price equal to the sum of (x) 100% of the
Principal Balances of the Mortgage Loans before the occurrence of Realized
Losses, and any related REO Property, (y) accrued but unpaid interest thereon
(whether through payments by the applicable Obligor, Monthly Advances or
otherwise) at the weighted average Class AF-1 and Class AF-2 Remittance Rates in
the case of the Pool I Mortgage Loans and the Class AV Remittance Rate in the
case of the Pool II Mortgage Loans, and (z) the interest portion of any
unreimbursed Insured Payments made by the Note Insurer (the "Termination
Price").
On any Remittance Date on or after the Cross-Over Date when Pool I
and/or Pool II Mortgage Loans with aggregate original Principal Balances that
equal or exceed 25% of the aggregate Principal Balance of the Mortgage Loans as
of the Cut-Off Date have become Liquidated Mortgage Loans, the Note Insurer may
determine to purchase and may cause the purchase from the Trust of all Mortgage
Loans and REO Properties at a price equal to the sum of the Termination Price
with respect to the Trust and the outstanding and unpaid fees and expenses of
the Indenture Trustee, the Owner Trustee, the Remarketing Agent, the Custodian
and the Servicer. In connection with such purchase, the Servicer shall remit to
the Indenture Trustee all amounts then on deposit in the applicable Principal
and Interest Account for deposit to the Note Distribution Account, which deposit
shall be deemed to have occurred immediately preceding such purchase.
(c) [Reserved]
(d) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Indenture Trustee, the Note Insurer 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 Indenture Trustee pursuant to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE TRUST ADMINISTRATOR
Section 12.01 ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE AND DEPOSITORY AGREEMENTS.
The Trust Administrator shall perform all the duties of the Issuer under the
Depository Agreement. In addition, the Trust Administrator shall consult with
the Owner Trustee as the Trust Administrator deems appropriate regarding the
duties of the Issuer under the Indenture and the Depository Agreement. The Trust
Administrator 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 Trust Administrator
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 Trust Administrator shall take all appropriate
action that is the duty of the Issuer to take pursuant to the Indenture and the
Depository Agreement. The Owner Trustee shall not be responsible for monitoring
or supervising the activities of the Trust Administrator; provided, however, the
Owner Trustee shall remain liable for performing its services hereunder and
under the other Basic Documents. The Owner Trustee shall incur no liability for
the default or misconduct of the Trust Administrator.
(b) DUTIES WITH RESPECT TO THE ISSUER. (i) The Trust Administrator
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 Trust
Administrator 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 Trust Administrator. In furtherance thereof, the Owner Trustee
shall, on behalf of itself and the Trust, execute and deliver to the Trust
Administrator, one or more powers of attorney substantially in the form of
Exhibit P hereto, appointing the Trust Administrator 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 any and all documents and taking any and all actions
necessary in connection with the performance by the Trust Administrator of its
obligations under this Agreement.
(ii) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Trust Administrator shall be
responsible for promptly notifying the Owner Trustee and the Note
Insurer 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 Trust Administrator shall be
responsible for performance of the duties of the Owner Trustee and the
Holder of the Special 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 Spread 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 Trust Administrator 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 Trust Administrator 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 Trust Administrator 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 Trust Administrator's opinion, no less favorable
to the Issuer in any material respect.
(c) TAX MATTERS. The Trust Administrator shall prepare and file, on
behalf of the Holder of the Special 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 Special Interest.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Trust Administrator are non-ministerial, the Trust
Administrator shall not take any action pursuant to this Article X unless within
a reasonable time before the taking of such action, the Trust Administrator
shall have notified in writing the Owner Trustee, the Note Insurer and the
Indenture Trustee of the proposed action and the Owner Trustee and, with respect
to items (A), (B), (C) and (D) below, the Note Insurer 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 Indenture Trustees pursuant to
the Indenture or the appointment of Successor Servicers or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Trust Administrator, 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 Trust Administrator 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 Trust Administrator shall furnish to the Issuer from time to time
such additional information available to the Trust Administrator regarding the
Owner Trust Estate as the Issuer shall reasonably request.
Section 12.04. CALCULATION OF LIBOR.
(a) On each Interest Determination Date, the Trust Administrator will
determine LIBOR based on the rate for one-month U.S. dollar deposits (the "One
Month Index Maturity") which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date in determining the Class Remittance Rates for the
Remittance Date in the following month. If such LIBOR rate does not appear on
Telerate Page 3750, the LIBOR rate for that day will be determined on the basis
of the rates at which deposits in United States dollars, having the One-Month
Index Maturity and in a principal amount of not less than U.S. $1,000,000, are
offered at approximately 11:00 a.m., London time, on that day to prime banks in
the London interbank market by the Reference Banks. The Trust Administrator will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that day will be the arithmetic mean of the quotations. If fewer than two
quotations are provided, the rate for that day will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Trust
Administrator, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks having a One-Month
Index Maturity and in a principal amount equal to an amount of not less than
U.S. $1,000,000; provided that if the banks selected as aforesaid are not
quoting as mentioned in this sentence, LIBOR in effect for the applicable
Interest Period will be LIBOR in effect for the previous Interest Period.
Neither the Representative, Servicer nor the Indenture Trustee shall
have any liability or responsibility to any Person for the selection of any
Reference Bank for the purpose of determining LIBOR. In determining LIBOR and
the Class Remittance Rates the Trust Administrator may conclusively rely and
shall be protected in relying upon the rates appearing on Telerate Page 3750 or
the offered quotations (whether written, oral or on Telerate Page 3750) from
Reference Banks, as appropriate, in effect from time to time. Neither of the
Representative, the Servicer, the Note Insurer nor the Indenture Trustee shall
have liability or responsibility to any Person for (i) the Trust Administrator's
selection of Reference Banks for purposes of determining LIBOR or (ii) the Trust
Administrator's or the Servicer's inability, as applicable, following a
good-faith reasonable effort, to obtain such quotations from Reference Banks or
such New York City banks or to determine such arithmetic mean, all as provided
for in this Section 12.15.
The establishment of LIBOR and the Class Remittance Rates by the Trust
Administrator shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Note, the Representative and the Servicer.
The Trust Administrator is not responsible for determining (or for the
failure of the Servicer to determine) the Net Funds Cap.
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 Indenture Trustee (which consent may not be unreasonably
withheld), and with the consent of the Note Insurer, 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 Indenture 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 Indenture Trustee and the Note
Insurer 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
of each Class and the Holders (as defined in the Trust Agreement) of all the
outstanding Certificates affected thereby.
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
Indenture 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 Indenture 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 Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Owner Trustee's or the Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
Any amendment to this Agreement shall also require the consent of the
Custodian and/or the Trust Administrator, if such proposed amendment affects any
of their respective rights, duties or obligations hereunder.
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, and each Originator, The Money
Store Inc., 707 Third Street, West Sacramento, California 95605, 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 Indenture 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 Owner Trustee to
The Money Store Trust 1998-C, c/o Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Department, (iv)
in the case of Moody's, to 99 Church Street, New York, New York 10007,
Attention: Structured Finance, (v) in the case of S&P, to Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., 25 Broadway, 12th Floor, New York,
New York 10004, Attention: Residential Mortgages, (vi) in the case of the
Custodian, First Union National Bank, Trust Department, 9639 Doctor Perry Road,
Suite 124, Ijamsville, Maryland 21754, Attention: Robin Belanger, (vii) in the
case of the Trust Administrator, First Union National Bank, 230 South Tryon
Street, 9th Floor, Charlotte, NC 28288, Attention: The Money Store Series
1998-C, or (viii) in the case of the Note Insurer, MBIA Insurance Corporation,
113 King Street, Armonk, New York, 10504, Attention: IPM-SF (Mortgage-Backed)
(The Money Store, Trust 1998-C), or to such other address as such party may
hereafter specify in writing.
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 Indenture
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 INDENTURE TRUSTEE.
Each Originator hereby acknowledges and consents to any mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture 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 Indenture Trustee.
Section 13.13 NONPETITION COVENANT.
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.
Section 13.14 LIMITATION OF LIABILITY OF OWNER TRUSTEE, INDENTURE
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 Indenture 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 National Bank, not in its individual
capacity but solely as Custodian and Trust Administrator, 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 Indenture 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
Indenture 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 Trust Administrator's
Certificates. Further, the Representative shall give prompt notice to the Rating
Agencies if the Representative or any of its affiliates acquire any Notes, which
notice shall acknowledge that the Representative, or such affiliate understands
that such Notes so acquired will not be entitled to the benefits of the Note
Insurance Policy and, accordingly, will not be rated by the Rating Agencies so
long as such Notes are owned by the Representative or any such affiliate.
Section 13.17 THIRD PARTY RIGHTS.
The parties hereto agree that the Indenture Trustee, the Owner
Trustee, the Note Insurer, the Trust Administrator 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.
Section 13.18 THE NOTE INSURER.
Any right conferred to the Note Insurer shall be suspended during any
period in which the Note Insurer is in default in its payment obligations under
a Note Insurance Policy. At such time as the Notes are no longer outstanding
hereunder, and no amounts owed to the Note Insurer hereunder remain unpaid, the
Note Insurer's rights hereunder shall terminate. The notice address of the Note
Insurer is MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: Insured Portfolio Management-SF (Mortgage-Backed) (The Money Store
Trust 1998-C).
<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 TRUST 1998-C
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 and Servicer
By: /s/ William S. Templeton
-------------------------------
Name: William S. Templeton
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/ William S. Templeton
------------------------------
Name: William S. Templeton
Title: President
<PAGE>
Acknowledged and Accepted:
The Bank of New York, not
in its individual capacity
but solely as Indenture Trustee,
By: /s/ Robert P. Muller
----------------------------
Name: Robert P. Muller
Title: Assistant Vice President
<PAGE>
Acknowledged and Accepted:
First Union National Bank,
not in its individual capacity
but as Custodian and Trust Administrator
By: /s/ Daniel Ober
------------------------
Name: Daniel Ober
Title: Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of September 1998 before me, a Notary Public in and
for said State, personally appeared Denis Kelly, 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/ Maria K. Montgomery
------------------------
Notary Public
My Commission expires April 4, 2000
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF YOLO )
On the 29th day of September 1998 before me, a Notary Public in and
for the State of California, personally appeared William S. Templeton, 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/ Shannon E. Krebs
-----------------------
Notary Public
My Commission expires Feb. 6, 2002
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF YOLO )
On the 29th day of September 1998 before me, a Notary Public in and
for the State of California, personally appeared William S. Templeton, known to
me to be the 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/ Shannon E. Krebs
---------------------------
Notary Public
My Commission expires Feb. 6, 2002
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
EXHIBIT A
CONTENTS OF INDENTURE TRUSTEE'S LOAN FILE
With respect to each Loan, the Indenture 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
September __, 1998
To: _________________ (the "Depository")
As "Servicer" under the Sale and Servicing Agreement, dated as of
August 31, 1998, among The Money Store Trust 1998-C, 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 Asset Backed
Certificates and Asset-Backed Notes, Series 1998-C, and various Obligors." 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 CUSTODIAN INITIAL CERTIFICATION
September ___, 1998
The Money Store Inc. MBIA Insurance Corporation
707 Third Street 113 King Street
West Sacramento, CA 95605 Armonk, New York 10504
First Union Capital Markets, a The Bank of New York, as
division of Indenture Trustee
Wheat First Securities, Inc., 101 Barclay Street
as Representative and Underwriter New York, New York 10286
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Re: Sale and Servicing Agreement, The Money
Store Asset Backed Notes and Asset
Backed Certificates, Series 1998-C,
dated as of August 31, 1998 among The
Money Store Inc. as Representative and
Servicer, the Originators and
The Money Store Trust 1998-C
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, if any (the "Loan Exception Report"),
it has received an Assignment of Mortgage, or a certified copy thereof, and a
Mortgage Note with respect to each Pool [ ] Loan listed in the Loan Schedule and
the documents contained therein appear to bear original signatures.
The undersigned has made no independent examination of any such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of Pool [ ] Loans identified on the Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Pool [ ]
Loan.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
FIRST UNION NATIONAL BANK,
as Custodian
By:
Name:
Title:
<PAGE>
EXHIBIT C-1
FORM OF CUSTODIAN INTERIM CERTIFICATION
[Date]
The Money Store Inc. MBIA Insurance Corporation
707 Third Street 113 King Street
West Sacramento, CA 95605 Armonk, New York 10504
First Union Capital Markets, a The Bank of New York, as
division of Indenture Trustee
Wheat First Securities, Inc., 101 Barclay Street
as Representative and Underwriter New York, New York 10286
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Re: Sale and Servicing Agreement, The Money
Store Asset Backed Notes and Asset
Backed Certificates, Series 1998-C,
dated as of August 31, 1998 among The
Money Store Inc. as Representative and
Servicer, the Originators and
The Money Store Trust 1998-C
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-referenced Sale and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that as to
each Pool [ ] Loan listed in the Loan Schedule (other than any Pool [ ] Loan
paid in full or any Pool [ ] 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 Pool [ ] Loan, (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Loan Schedule respecting such Pool [ ] Loan with respect to clauses
(ii), (iii), (v), (vi) (with respect to the Pool I Loans), (vii), (viii) (which,
with respect to the Pool II Loans, shall only be with respect to the initial
Monthly Payment), (ix) and (xi) (with respect to the Pool II Loans) of the
definition thereof is correct and (iv) each Mortgage Note has been endorsed as
provided in Section 2.04 of the Sale and Servicing Agreement.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
FIRST UNION NATIONAL BANK,
as Custodian
By
Name:
Title:
<PAGE>
EXHIBIT D
FORM OF CUSTODIAN FINAL CERTIFICATION
[Date]
The Money Store Inc. MBIA Insurance Corporation
707 Third Street 113 King Street
West Sacramento, CA 95605 Armonk, New York 10504
First Union Capital Markets, a The Bank of New York, as
division of Indenture Trustee
Wheat First Securities, Inc., 101 Barclay Street
as Representative and Underwriter New York, New York 10286
One First Union Center
301 South College Street, DC-8
Charlotte, North Carolina 28288-0600
Re: Sale and Servicing Agreement, The Money
Store Asset Backed Notes and Asset
Backed Certificates, Series 1998-C,
dated as of August 31, 1998 among The
Money Store Inc. as Representative and
Servicer, the Originators and
The Money Store Trust 1998-C
Ladies and Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Pool [ ] Loan listed in the
Loan Schedule (other than any Pool [ ] 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 Pool
[ ] Loan, (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Loan Schedule respecting such Pool [
] Loan with respect to clauses (ii), (iii) (v), (vi) (with respect to the Pool I
Loans), (vii), (viii) (which, with respect to the Pool II Loans, shall only be
with respect to the initial Monthly Payment), (ix) and (xi) (with respect to the
Pool II Loans) of the definition thereof is correct and (iv) each Mortgage Note
has been endorsed as provided in Section 2.04 of the Sale and Servicing
Agreement. The undersigned has made no independent examination of such documents
beyond the review specifically required in the above-referenced Sale and
Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Pool [ ] Loan identified on the Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Pool [ ] Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
FIRST UNION NATIONAL BANK,
as Custodian
By:
Name:
Title:
<PAGE>
EXHIBIT E-1
POOL I LOAN SCHEDULE
The Pool I Loan Schedule is maintained with the Indenture Trustee.
<PAGE>
EXHIBIT E-2
POOL II LOAN SCHEDULE
The Pool II Loan Schedule is maintained with the Indenture 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: [First Union National Bank,
as Custodian]
Re: Sale and Servicing Agreement, The Money Store
Asset Backed Notes and Asset Backed
Certificates, Series 1998-C, dated as of August 31, 1998
In connection with the administration of the Pool of Loans held by you
as Custodian for the Noteholders and the Certificateholders, we request the
release, and acknowledge receipt, of the (Indenture Trustee's Loan File/[specify
document]) for the Loan described below, for the reason indicated.
OBLIGOR'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
Indenture Trustee for deposit into the applicable
Note Distribution 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 Indenture
Trustee for deposit into the applicable Note
Distribution 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
Indenture Trustee for deposit into the applicable
Note Distribution 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 Indenture
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 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 Custodian:
Custodian
By:
Date:
<PAGE>
EXHIBIT H
FORM OF NOTICE UNDER NOTE GUARANTY INSURANCE
POLICY RELATING TO THE POOL I NOTES
<PAGE>
EXHIBIT I
FORM OF NOTICE UNDER NOTE GUARANTY INSURANCE
POLICY RELATING TO THE CLASS AV NOTES
<PAGE>
EXHIBIT J
FORM OF CUSTODIAL AGREEMENT
Dated _______________________
The Bank of New York, a New York Banking Corporation, as indenture
trustee (the "Indenture Trustee") and ___________________________,
________________________ (the "Custodian"), agree as follows:
WHEREAS, The Money Store Trust 1998-C, the Originators and The Money
Store Inc. ("TMS") have entered into a Sale and Servicing Agreement dated as of
August 31, 1998 relating to The Money Store Asset Backed Notes and Asset Backed
Certificates, Series 1998-C (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 certain Loans
to the Trust; and
WHEREAS, in connection with such transfer and assignment and pursuant
to the Sale and Servicing Agreement, the Indenture Trustee holds, directly or
pursuant to a custodial agreement, the Indenture Trustee's Loan Files:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Custodian and the Indenture Trustee agree as follows:
1. APPOINTMENT AS CUSTODIAN; ACKNOWLEDGMENT OF Receipt. Subject to the
terms and conditions herein, the Indenture Trustee hereby appoints the
Custodian, and the Custodian hereby accepts such appointment, as its Custodian
to maintain custody of the Indenture Trustee's Loan Files. The Custodian hereby
acknowledges receipt of the Mortgage 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 Servicer shall be liable for all of the Custodian's fees under
this Agreement.
2. MAINTENANCE OF OFFICE. The Custodian agrees to maintain each
Indenture 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 Indenture Trustee and the Note Insurer 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 Indenture Trustee's
Loan Files from all other mortgages and mortgage notes and
similar records in its possession, to identify the Indenture
Trustee's Loan Files as being held and to hold the Indenture
Trustee's Loan Files for and on behalf of the Indenture
Trustee for the benefit of all present and future Noteholders
and Certificateholders and the Note Insurer, to maintain
accurate records pertaining to each Mortgage Note and Mortgage
in the Indenture Trustee's Loan Files as will enable the
Indenture 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 Indenture Trustee's Loan Files held by it
under this Agreement in such a manner as shall enable the
Indenture Trustee and the Custodian to verify the accuracy of
such record-keeping, inventory and physical possession. The
Custodian will promptly report to the Indenture Trustee any
failure on its part to hold the Indenture Trustee's Loan Files
as herein provided and promptly take appropriate action to
remedy any such failure.
(b) RELEASE OF DOCUMENTS. To release any Mortgage
Note and Mortgage in the Indenture 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 Indenture Trustee's Loan Files on behalf of the
Indenture Trustee, the Noteholders, the Certificateholders and
the Note Insurer. In addition, the Custodian shall assist the
Indenture 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
Indenture Trustee's Loan Files.
4. ACCESS TO RECORDS. The Custodian shall permit the Indenture 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 Indenture 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 Indenture Trustee's Loan
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee or the Servicer. A certified copy of a resolution of
the Board of Directors of the Indenture 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 Indenture Trustee. Such instructions may be
general or specific in terms.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify
the Indenture 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 Indenture Trustee
as the result of any act or omission in any way relating to the maintenance and
custody by the Custodian of the Indenture 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
Indenture Trustee.
7. ADVICE OF COUNSEL. The Custodian and the Indenture 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 Indenture Trustee's Loan Files
to the Indenture Trustee at such place as the Indenture Trustee may reasonably
designate. In connection with the administration of this Agreement, the
Custodian and the Indenture Trustee may agree from time to time upon the
interpretation of the provisions of this Agreement as may in their opinion by
consistent with the general tenor and purposes of this Agreement, any such
interpretation to be signed and annexed hereto.
9. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
10. NOTICES. Notices and other writings shall be delivered or mailed,
postage prepaid, to the Indenture Trustee at
_________________________________________________________, Attention:
____________________________________, or to the Custodian at
_________________________________________, Attention: __________; to the Note
Insurer: MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: (PM-SF (Mortgage-Backed) (The Money Store Trust 1998-C), or to such
other address as the Indenture 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 Indenture Trustee and the Custodian and their
respective successors and assigns. Concurrently with the appointment of a
successor trustee as provided in Section 6.8 of the Indenture, the Indenture
Trustee and the Custodian shall amend this Agreement to make said successor
trustee the successor to the Indenture Trustee hereunder.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
THE BANK OF NEW YORK
as Indenture Trustee under the
Indenture referred to above
By:
Name:
Title:
[-------------------------------], as
Custodian under the Sale and
Servicing Agreement referred to above
By:
Name:
Title:
<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 Indenture 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 Mortgage 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
Indenture Trustee.
<PAGE>
EXHIBIT N
FORM OF SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of 29th day of
September, 1998, by and between The Money Store Inc., a New Jersey corporation
(the "Servicer") whose principal business address is 707 Third Street, West
Sacramento, California 95605, 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 August 31, 1998
(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 Indenture 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 Indenture Trustee or 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
Indenture 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 Indenture 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 Indenture Trustee on
notice to an Originator, at any time after the Indenture Trustee shall have
become the successor servicer with respect to the Loans or, 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 Indenture
Trustee, which agreement shall be in form and substance satisfactory to the
Indenture Trustee and its counsel, which recognizes the Indenture 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 Indenture 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 Trust 1998-C (the "Trust"),
does hereby make, constitute and appoint [THE MONEY STORE INC., as
Representative and Servicer (the "Servicer"),] [FIRST UNION NATIONAL BANK, as
Trust Administrator (the "Trust Administrator")] under the Sale and Servicing
Agreement dated as of August 31, 1998 (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.
EXECUTED this 29th of September, 1998.
CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely as
Owner Trustee for the Money Store
Trust 1998-C
By: __________________________________
Name:_____________________________
Title:____________________________
EXHIBIT 4.2
EXECUTION COPY
THE MONEY STORE TRUST 1998-C
TRUST AGREEMENT
among
THE ORIGINATORS LISTED HEREIN
Originators
and
CHASE MANHATTAN BANK DELAWARE
Owner Trustee
Dated as of August 31, 1998
<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 Special Interest;
Liability of the Holder of the Special Interest.................7
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 ................................................9
SECTION 2.12.Federal Income Tax Allocations ................................10
SECTION 2.13.Investment Company ............................................10
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership .............................................11
SECTION 3.2. The Trust Certificates ........................................11
SECTION 3.3. Authentication of Trust Certificates ..........................11
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates ...12
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust Certificates .......12
SECTION 3.6. Persons Deemed Certificateholders .............................13
SECTION 3.7. Access to List of Certificateholders' Names and Addresses .....13
SECTION 3.8. Appointment of Authenticating Agent ...........................14
SECTION 3.9. Appointment of Paying Agent ...................................14
SECTION 3.10.Restrictions on Transfer ......................................14
SECTION 3.11.[Reserved] ....................................................16
SECTION 3.12.Disposition by the Holder of the Special Interest .............16
ARTICLE IV - ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters ........17
SECTION 4.2. Action by Holder of the Voting Interest with Respect to
Certain Matters................................................18
SECTION 4.3. Action by Holder of Voting Interest with Respect to
Bankruptcy.....................................................18
SECTION 4.4. Restrictions on Power .........................................19
SECTION 4.5. Control by Holder of the Voting Interest ......................19
SECTION 4.6. Execution of Documents ........................................19
ARTICLE V - APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account .............20
SECTION 5.2. Application of Funds in Certificate Distribution Account ......20
SECTION 5.3. [Reserved.] ...................................................21
SECTION 5.4. Method of Payment .............................................21
SECTION 5.5. No Segregation of Monies; No Interest .........................21
SECTION 5.6. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others....22
SECTION 5.7. Signature on Returns; Tax Matters Partner .....................22
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority .............................................22
SECTION 6.2. Action upon Instruction .......................................23
SECTION 6.3. No Duties Except as Specified in this Agreement or in
Instructions...................................................24
SECTION 6.4. No Action Except under Specified Documents or Instructions ....25
SECTION 6.5. Restrictions ..................................................25
SECTION 6.6. Notice of Default Under Indenture .............................25
ARTICLE VII - CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties ...............................25
SECTION 7.2. Furnishing of Documents .......................................27
SECTION 7.3. Representations and Warranties ................................27
SECTION 7.4. Reliance; Advice of Counsel ...................................27
SECTION 7.5. Not Acting in Individual Capacity .............................28
SECTION 7.6. Owner Trustee Not Liable for Trust Certificates or Loans ......28
SECTION 7.7. Owner Trustee May Own Trust Certificates and Series 1997-
C Notes........................................................29
SECTION 7.8. Payments from Owner Trust Estate ..............................29
SECTION 7.9. Doing Business in Other Jurisdictions .........................29
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses .............................29
SECTION 8.2. Indemnification ...............................................30
SECTION 8.3. Payments to the Owner Trustee .................................30
SECTION 8.4. Non-recourse Obligations ......................................30
ARTICLE IX - DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1. Termination of Trust Agreement ................................31
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES
SECTION 10.1.Eligibility Requirements for Owner Trustee ....................32
SECTION 10.2.Resignation or Removal of Owner Trustee .......................32
SECTION 10.3.Successor Owner Trustee .......................................33
SECTION 10.4.Merger or Consolidation of Owner Trustee ......................34
SECTION 10.5.Appointment of Co-Trustee or Separate Indenture Trustee .......34
SECTION 10.6.Resignation or Removal of Owner Trustee .......................35
ARTICLE XI - MISCELLANEOUS
SECTION 11.1.Supplements and Amendments ....................................36
SECTION 11.2.No Legal Title to Owner Trust Estate in Certificateholders ....37
SECTION 11.3.Limitations on Rights of Others ...............................38
SECTION 11.4.Notices .......................................................38
SECTION 11.5.Severability ..................................................38
SECTION 11.6.Separate Counterparts .........................................39
SECTION 11.7.Successors and Assigns ........................................39
SECTION 11.8.[Reserved.] ...................................................39
SECTION 11.9.No Petition ...................................................39
SECTION 11.10.No Recourse...................................................39
SECTION 11.11.Headings......................................................39
SECTION 11.12.Governing Law.................................................39
SECTION 11.13.The Note Insurer..............................................40
SECTION 11.14.Servicer......................................................40
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 August 31, 1998 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, the Insurance Agreement, the Spread Account 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, the Note Insurer 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.
"Holder" or "Certificateholder" shall mean the Person in whose name a Trust
Certificate is registered on the Certificate Register and the Holder of the
Special Interest.
"Holder of the Special Interest" shall mean First Union National Bank, a
national banking association.
"Holder of the Voting Interest" shall mean Norwest Bank Minnesota, National
Association, 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 August 31, 1998 between
the Trust and The Bank of New York, as Indenture Trustee, as the same may be
amended or supplemented from time to time.
"Indenture Trustee" shall mean The Bank of New York, as Indenture Trustee
under the Indenture, or any successor thereto.
"Insurance Agreement" shall mean the agreement dated as of September 1,
1998 among the Note Insurer, The Money Store Inc., the Originators, First Union
National Bank, as Custodian, and the Indenture Trustee, as amended from time to
time by the parties thereto.
"Loan" shall have the meaning set forth in the Sale and Servicing
Agreement.
"Note Depository Agreement" shall mean the agreement among the Trust, the
Indenture 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 1998-C Notes, as the same may be amended or supplemented
from time to time.
"Note" shall mean a Class AF-1 Adjustable Rate Note, Class AF-2 Auction
Rate Note or Class AV Adjustable Rate Note issued by The Money Store Trust
1998-C pursuant to the Indenture dated as of August 31, 1998 between The Money
Store Trust 1998-C and The Bank of New York, as Indenture Trustee.
"Note Insurance Policy" shall mean, collectively, the note insurance
guaranty policies relating to the Notes of Pool I and Pool II, each dated the
Closing Date and issued by the Note Insurer for the benefit of the Holders of
the Notes of the related Pool.
"Note Insurer" shall mean MBIA Insurance Corporation, a New York stock
insurance corporation, or any successors thereof, as issuer of the Note
Insurance Policy.
"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.
` "Rate Agreement" shall mean the interest rate agreement dated September
17, 1998 between Merrill Lynch Derivative Products AG and The Money Store Inc.,
which was assigned to the Trust on the Closing Date, pursuant to which
Supplemental Interest Payments (as defined in the Sale and Servicing Agreement)
are required to be paid, as amended from time to time by the parties thereto.
"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 August 31, 1998, among the Trust, the Originators listed therein and
The Money Store Inc., as Representative and Servicer, 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 1998-C Notes" shall mean The Money Store Trust 1998-C Asset Backed
Notes, Series 1998-C, Class AF-1, Class AF-2 and Class AV.
"Servicer" means The Money Store Inc., a New Jersey corporation, or any
successor servicer under the Sale and Servicing Agreement.
"Special Interest" shall have the meaning assigned to such term in Section
2.7.
"Spread Account Agreement" shall mean the Spread Account Agreement dated as
of September 29, 1998 between First Union National Bank and the Indenture
Trustee, as the same may be amended or supplemented from time to time.
"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.
"Voting Interest" shall have the meaning assigned to such term in Section
2.11.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS. 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.
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.
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.
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."
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 Trust 1998-C", 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, the Note
Insurer and the Representative.
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:
to execute, deliver and issue the Series 1998-C Notes pursuant to the
Indenture and to authorize, execute, authenticate, issue and deliver the
Trust Certificates, the Special Interest and the Voting Interest pursuant
to this Agreement, and to sell the Series 1998-C Notes, the Trust
Certificates, the Special Interest and the Voting Interest;
with the proceeds of the sale of the Series 1998-C Notes and the Trust
Certificates, 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;
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;
to enter into, execute, deliver, file and perform its obligations
under the Basic Documents;
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
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 if, for federal income tax purposes, the
Trust is considered to have more than one Certificateholder, or as a division of
the Certificateholder that is ignored as an entity separate from the
Certificateholder if, for federal income tax purposes, there is a single
Certificateholder. 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 or division of the
Certificateholder, as just described, 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 SPECIAL INTEREST;
LIABILITY OF THE HOLDER OF THE SPECIAL INTEREST. (a) First Union National Bank,
as holder of no less than 1% Ownership Percentage in the Trust (the "Special
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 obligations of the Holder of the Special Interest under this
paragraph shall be evidenced by the Trust Certificate representing a 1%
Ownership Percentage issued to the Holder of the Special Interest as described
in Section 3.12, which solely 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 Special 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 Special 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.
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 and the Note Insurer, 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 acceptance and agreement to this
Agreement, Norwest Bank Minnesota, National Association, (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 and shall be entitled
to all rights of the Holder of the Voting Interests hereunder. 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
Note Insurer or by the Indenture Trustee with the prior written consent of the
Note Insurer (on which the Holder of the Voting Interest shall conclusively rely
and shall be fully protected for all purposes in so relying). The Holder of the
Voting Interest shall have no duty or obligation other than to exercise such
power and authority in accordance with such written instructions and shall have
no liability or obligation to act in the absence of such written instructions;
provided, however, that should the written instructions of the Note Insurer or
the Indenture Trustee, as the case may be, instruct the Holder of the Voting
Interest to take any action that, in the reasonable judgment of the Holder of
the Voting Interests 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 the Holder of Voting Interest shall not be required to take
such action except upon receipt of the written consent of all Certificateholders
to such action (or, in connection with any requested action that the Holder of
Voting Interest believes may adversely affect the Federal or state tax
consequences to the Certificateholders, upon receipt of an opinion of counsel
acceptable to the Holder of Voting Interest, which opinion shall not be an
expense of the Holder of Voting Interest, to the effect that such action will
not adversely affect the Federal or state tax consequences to the
Certificateholders). The Owner Trustee shall cooperate with the Holder of the
Voting Interest in coordinating and providing any required communication with
Certificateholders, including providing to the Holder of Voting Interest, upon
request, a certified listing of names and addresses of Certificateholders upon
which the Holder of Voting Interest may conclusively rely.
Notwithstanding any provision herein or in any other document to the
contrary, the Holder of the Voting Interest shall not have any liability for any
duties, responsibilities, obligations or actions of the Trust or any other
person or entity, any action taken or omitted pursuant to any written
instructions of the Note Insurer or the Indenture Trustee with the written
consent of the Note Insurer, or otherwise relating to the Trust or its serving
as the Holder of the Voting Interest except for liability relating solely to its
own willful misconduct, bad faith or gross negligence. 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 Special Interest and the Note Insurer; PROVIDED,
HOWEVER, that upon any merger, consolidation or transfer of the corporate trust
business of the Holder of the Voting Interest or sale of substantially all of
the assets of the corporate trust business of the Holder of the Voting Interest,
all rights, duties and obligations of the Holder of Voting Interest hereunder
shall transfer to any successor to the Holder of the Voting Interest or its
corporate trust business without any further action. 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.
The Holder of Special Interest hereby indemnifies and holds harmless each
of Norwest Bank Minnesota, National Association and each of its directors,
officers, employees and agents, and its and their respective successors and
assigns, as applicable, from and against any and all losses, liabilities,
claims, charges, damages, fines, penalties, judgments, actions, suits, costs and
expenses of any kind or nature (including reasonable attorneys' fees and
expenses and reasonable fees and expenses of experts) imposed on, incurred by,
or asserted against any such person or entity in any way related to or arising
out of Norwest Bank Minnesota, National Association acting as the Holder of
Voting Interest hereunder, except to the extent caused by such person's bad
faith, gross negligence or willful misconduct. In particular, the Holder of
Special Interest hereby agrees promptly to reimburse the Holder of Voting
Interest for all costs and expenses incurred by the Holder of Voting Interest in
connection with the performance of its obligations hereunder, including any
costs of notices or distributions to Certificateholders. These indemnification
and reimbursement provisions shall survive the termination of the this Trust
Agreement and the resignation or removal of the Holder of Voting Interest
hereunder.
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.
SECTION 2.13. INVESTMENT COMPANY.. No originator or Certificateholder shall
take any action that would cause the Trust to become an "investment company"
required to register under the Investment Company Act of 1940, as amended.
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
Special 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
Special 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 Special 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 Special 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 First Union
National Bank. Thereupon, all such Certificates, the Special 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 the Voting Interest and
of transfers and exchanges of Trust Certificates and the Voting Interest 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, the Note Insurer and the Holder of the Special Interest,
within 15 days after receipt by the Certificate Registrar of a request therefor
from the Servicer, the Representative, the Note Insurer or the Holder of the
Special Interest in writing, a list, in such form as the Servicer, the
Representative, or the Holder of the Special 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 Note Insurer 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, the Note
Insurer 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) 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. Except for
the initial issuance of the Trust Certificates to First Union National Bank, 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
Special 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) Notwithstanding anything contained herein to the contrary, First Union
National Bank, as holder of the Trust Certificates, shall not sell, transfer or
otherwise dispose of some or all of the Trust Certificates unless either (i) the
Note Insurer consents in writing to such sale, transfer or other disposition or
(ii) First Union National Bank contributes and transfers the Spread Account to
the Trust (or other entity acceptable to the Note Insurer) and provides the Note
Insurer with an opinion of counsel (and amendments to any Basic Documents, if
necessary) satisfactory to the Note Insurer to the effect that in the event of
the bankruptcy or insolvency of the proposed transferee of the Trust
Certificates, the Spread Account would not be deemed property of the estate of
such transferee and the Trust would not be consolidated with such transferee.
Further, if while First Union National Bank owns some or all of the Trust
Certificates, an event described in Section 7.05(a) of the Sale and Servicing
Agreement occurs that requires the Spread Account to be transferred from First
Union National Bank to another entity, First Union National Bank shall, upon the
written direction of the Note Insurer (i) contribute and transfer the Trust
Certificates to a "bankruptcy remote" special purpose entity acceptable to the
Note Insurer and (ii) provide the Note Insurer with an opinion of counsel (and
amendments to any Basic Documents, if necessary) satisfactory to the Note
Insurer to the effect that in the event of the insolvency of First Union
National Bank (or the parent of the special purpose entity if not First Union
National Bank) the assets and liabilities of such special purpose entity would
not be consolidated with the assets and liabilities of First Union National Bank
(or the parent of the special purpose entity if not First Union National Bank).
(e) 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 IS SUBJECT TO THE TERMS OF THE TRUST AGREEMENT AND TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN ARTICLE III OF THE TRUST
AGREEMENT. THIS TRUST CERTIFICATE AND ANY RIGHTS REPRESENTED THEREBY MAY BE
SUBJECT TO LIENS GRANTED BY A PRIOR HOLDER THEREOF.
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 SPECIAL INTEREST. On and
after the Closing Date, the Holder of the Special Interest shall retain
beneficial and record ownership of Trust Certificates representing at least 1%
of the Ownership Percentage, including the Special Interest. Any attempted
transfer of any Trust Certificate that would reduce such interest of the Holder
of the Special Interest below 1% of the Ownership Percentage shall be void. The
Trust Certificate representing the 1% Special Interest issued to the Holder of
the Special 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, the Holder of the Voting Interest and the Note
Insurer in writing of the proposed action and (i) the Note Insurer shall have
consented thereto and (ii) 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, with the written consent of the Note
Insurer, provided alternative direction:
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);
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);
the amendment of any Basic Document;
the appointment pursuant to the Indenture of a successor Note Registrar,
Paying Agent or Indenture Trustee or, pursuant to this Agreement, of a successor
Certificate Registrar or Certificate Paying Agent or the consent to the
assignment by the Note Registrar, Paying Agent, Indenture Trustee, Certificate
Registrar or Certificate Paying Agent of its obligations under the Indenture or
this Agreement, as applicable;
the consent to the calling or waiver of any default under any Basic
Document;
the consent to the assignment by the Indenture Trustee or Servicer of their
respective obligations under any Basic Document;
except as provided in Article IX hereof, dissolve, terminate or liquidate
the Trust in whole or in part;
merge or consolidate the Trust with or into any other entity, or convey or
transfer all or substantially all of the Trust's assets to any other entity;
cause the Trust to incur, assume or guaranty any indebtedness other than as
set forth in the Basic Documents;
perform any act that conflicts with any other Basic Document;
perform any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.3 hereof;
confess a judgment against the Trust;
possess Trust assets or assign the Trust's right to property for other than
a Trust purpose;
cause the Trust to lend any funds to any entity; or
change the Trust's purpose and powers from those enumerated in this
Agreement.
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, and with the written consent of the
Note Insurer, to (a) remove the Servicer under the Sale and Servicing Agreement
pursuant to Section 10.01 thereof, (b) except as expressly provided in the Basic
Documents, sell the Loans after the termination of the Indenture, (c) institute
proceedings to have the Trust declared or adjudicated to be bankrupt or
insolvent, (d) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (e) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (f) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or any similar official)
of the Trust or a substantial portion of the property of the Trust, (g) make any
assignment for the benefit of the Trust's creditors, (h) cause the Trust to
admit in writing its inability to pay its debts generally as they become due,
(i) take any action or cause the Trust to take any action, in furtherance of any
of the foregoing clauses (c) through (i) (any of such clauses, a "Bankruptcy
Action"). So long as the Indenture and the Insurance Agreement remain in effect,
no Certificateholder nor the Indenture Trustee nor the Note Insurer shall be
entitled to direct the Holder of the Voting Interests to take any Bankruptcy
Action with respect to the Trust or to direct the Owner Trustee to take any
Bankruptcy Action with respect to the Trust. The Owner Trustee shall take the
actions referred to in the preceding sentence only upon written instructions
signed by the Holder of the Voting Interests and the Note Insurer.
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 Note Insurer
and the delivery to the Owner Trustee and the Note Insurer 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 Owner Trustee shall not 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.
(b) None of the Certificateholders, the Indenture Trustee or the Note
Insurer, acting independently or through the Holder of the Voting Interest, nor
the Holder of the Voting Interest, shall 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, acting pursuant
to Section 2.11, previously shall have given to the Owner Trustee and the Note
Insurer a written notice of default and of the continuance thereof, as provided
in this Agreement, and the Note Insurer shall have consented thereto, or unless
Certificateholders evidencing not less than 25% of the aggregate Ownership
Percentage shall have made with the prior written consent of the Note Insurer,
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 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, but subject to the terms of
this Agreement, 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 pursuant to Section 2.11. 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 1998-C 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 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.
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.
(d) Distributions to Certificateholders shall be subordinated to the
creditors of the Trust, including the Noteholders and the Note Insurer.
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 Special
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 Special 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, if the Trust is treated as a partnership for federal income tax
purposes, as described in Section 2.6) 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, if the Trust is treated
as a partnership for federal income tax purposes, as described in Section 2.6),
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 or division of a single Certificateholder, as described in
Section 2.6, as the case may be, 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 Special Interest. The Owner
Trustee shall sign all tax information returns, if any, furnished to it in
execution form by the Holder of the Special Interest and any other returns as
may be required by law and so furnished to it by the Holder of the Special
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 Special 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, if any, of the Trust furnished to it in execution form by
the Holder of the Special 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 Special Interest.
(b) If the Trust is characterized as a partnership for federal income tax
purposes, as described in Section 2.6, the Holder of the Special 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 Indenture Trustee to authenticate and deliver Class
AF-1 Notes in the aggregate principal amount of $401,250,000, Class AF-2 Notes
in the aggregate principal amount of $133,750,000 and Class AV Notes in the
aggregate principal amount of $360,000,000. 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 and the Rate Agreement. 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
Special 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 Special 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, and subject to the terms of this Agreement,
the Majority Securityholders, the Indenture 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, the
Note Insurer 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 Note Insurer or,
with the prior written consent of the Note Insurer, the Holder of the Voting
Interest, 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, the
Note Insurer 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 Note Insurer or,
with the prior written consent of the Note Insurer, 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 Owner Trustee and the Bank nevertheless agrees, each as to
itself only, 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 or the Owner Trustee,
as the case may be, 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. (a) The Owner Trustee shall not take any action
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 knowingly direct the Owner Trustee to take action that
would violate the provisions of this Section.
(b) The Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and records
separate from those of any other entity. Except as expressly set forth herein,
the Trust shall pay its indebtedness, operating expenses and liabilities from
its own funds, and the Trust shall not pay the indebtedness, operating expenses
and liabilities of any other entity. The Trust shall maintain appropriate
minutes or other records of all appropriate actions and shall maintain its
office separate from the offices of any other entity.
SECTION 6.6. NOTICE OF DEFAULT UNDER INDENTURE. Within 5 days of receipt of
a written notice of Default under the Indenture from the Indenture 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):
the Bank shall not be liable for any error of judgment made by a
Responsible Officer of the Owner Trustee;
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
Indenture Trustee, the Servicer, the Holder of the Special Interest, the Holder
of the Voting Interest, Majority Securityholders, the Note Insurer or any
Certificateholder or in reliance on any provision of this Agreement;
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;
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 1998-C Notes;
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;
the Bank shall not be liable for the default or misconduct of the Indenture
Trustee or the Servicer or the Holder of the Special 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 Indenture
Trustee or the Servicer or the Holder of the Special 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 Indenture Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement or the Holder of the Special
Interest under this Agreement; and
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 Indenture Trustee, the Certificateholders or Majority Securityholders or the
Holder of the Voting Interest, unless such Indenture 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, the Note Insurer and for the benefit of the
Certificateholders, that:
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.
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.
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
Agreement, 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 1998-C 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 Indenture 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 1998-C
NOTES. The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Trust Certificates or Series 1998-C Notes and may deal with
the Indenture 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 nor
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 7.03(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, in its
individual capacity and as Owner Trustee 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, the Holder of the Voting Interest 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, 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
and the termination of the Indenture and the Insurance Agreement; 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,
including the Holder of the Special Interest, 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, any
Originator nor the Holder of the Special 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 and the Note
Insurer 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 Special
Interest. Certificateholders shall thereafter look solely to the Holder of the
Special 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 Special 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.
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 reasonably acceptable to the
Note Insurer and (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 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").
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 and the Note Insurer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Owner Trustee with the consent of the Note Insurer, which will not be
unreasonably withheld, 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
reasonably acceptable to the Note Insurer.
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 the Note Insurer, 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 with
the consent of the Note Insurer, which will not be unreasonably withheld, and
shall remove the Owner Trustee at the written direction of the Note Insurer. If
the Servicer shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Servicer, with the consent of the Note
Insurer, which will not be unreasonably withheld, shall promptly appoint a
successor Owner Trustee acceptable to the Note Insurer 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 and
the Note Insurer.
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 Indenture Trustee, the Noteholders, the
Note Insurer 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 and the Note Insurer.
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 or the Note
Insurer 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
with the consent of the Note Insurer, which consent will not be unreasonably
withheld. 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, except that notice to, and
the written consent of, the Note Insurer shall be required for the appointment
of a co-trustee.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
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;
no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this
Agreement; and
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 or 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 or 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.
SECTION 10.6. RESIGNATION OR REMOVAL OF HOLDER OF THE VOTING INTEREST. The
Holder of the Voting Interest may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Owner Trustee, the
Holder of the Special Interest and the Note Insurer. Upon receiving such notice
of resignation, the Holder of the Special Interest shall promptly appoint a
successor Holder of the Voting Interest with the consent of the Note Insurer,
which will not be unreasonably withheld, by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Holder of the
Voting Interest and one copy to the successor Holder of the Voting Interest. If
no successor Holder of the Voting Interest 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 Holder
of the Voting Interest so resigning or being removed may petition any court of
competent jurisdiction for the appointment of a successor Holder of the Voting
Interest reasonably acceptable to the Note Insurer.
If at any time the Holder of the Voting Interest shall be legally unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver of the Holder of
the Voting Interest or of its property shall be appointed, or any public officer
shall take charge or control of the Holder of the Voting Interest or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Holder of the Special Interest may remove the Holder of
the Voting Interest with the consent of the Note Insurer, which will not be
unreasonably withheld, and shall remove the Holder of the Voting Interest at the
written direction of the Note Insurer. If the Holder of the Special Interest
shall remove the Holder of the Voting Interest under the authority of the
immediately preceding sentence, the Holder of the Special Interest, with the
consent of the Note Insurer, which will not be unreasonably withheld, shall
promptly appoint a successor Holder of the Voting Interest acceptable to the
Note Insurer by written instrument, in duplicate, one copy of which instrument
shall be delivered to the outgoing Holder of the Voting Interest so removed and
one copy to the successor Holder of the Voting Interest along with payment of
all fees and other amounts, if any, owed to the outgoing Holder of the Voting
Interest.
Any resignation or removal of the Holder of the Voting Interest and
appointment of a successor Holder of the Voting Interest pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Holder of the Voting Interest and payment of all
fees and expenses owed to the outgoing Holder of the Voting Interest. The Owner
Trustee shall provide notice of such resignation or removal of the Holder of the
Voting Interest to each of the Rating Agencies and the Note Insurer.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS. (a) This Agreement may be amended
by the Representative and the Owner Trustee, with the prior written consent of
the Note Insurer and 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 the prior written consent of the Note
Insurer and prior written notice to the Rating Agencies, with the consent of the
Holders of Series 1998-C Notes evidencing not less than a majority of the
Outstanding Amount of the Series 1998-C 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 1998-C Notes and the Ownership Percentage
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Series 1998-C 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 Indenture Trustee, the Note Insurer 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 Indenture 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, the
Note Insurer and, to the extent expressly provided herein, the Indenture 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 Special Interest,
addressed to The Money Store Inc., 707 Third Street, West Sacramento, California
95605, Attention: Executive Vice President; if to the Rating Agencies, addressed
to Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 26
Broadway, 15th Floor, New York, New York 10004, Attention: Structured Finance,
and to Moody's Investors Service, 99 Church Street, 4th Floor, New York, New
York 10007, Attention: Structured Finance; if to the Note Insurer, addressed to
MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management-SF (Mortgage-Backed) (The Money Store Trust
1998-C); if to the Holder of the Voting Interest, addressed to Norwest Bank
Minnesota, National Association, 11000 Broken Land Parkway, Columbia, Maryland
21044, Attention: Corporate Trust Department (Money Store 98-C), or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
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 Special Interest, the Note Insurer, 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.]
SECTION11.9. 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, the Bank, the Originators and the Indenture 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 Trust, or join in
any institution against 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.
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 Special Interest, the Holder of the Voting Interest,
the Owner Trustee, the Bank, the Indenture Trustee, the Note Insurer 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. THE NOTE INSURER. The Note Insurer shall be a third party
beneficiary hereof and shall be entitled to enforce the provisions hereof as if
a party hereto. Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not owe any fiduciary duties to the Note Insurer; this
provision shall not be construed to limit or modify in any way the fiduciary
obligation of the Owner Trustee to the beneficial owners of the Trust.
Notwithstanding the foregoing, any right conferred to the Note Insurer shall be
suspended during any period in which the Note Insurer is in default in its
payment obligations under any Note Insurance Policy. At such time as the Notes
are no longer outstanding, and no amounts owed to the Note Insurer under the
Basic Documents remain unpaid, the Note Insurer's rights hereunder shall
terminate.
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/ WILLIAM S. TEMPLETON
-------------------------------------
Name: William S. Templeton
Title: President
ACCEPTED AND AGREED:
FIRST UNION NATIONAL BANK,
Holder of the Special Interest and
Certificateholder
By: /s/ PATRICK TADIE
-------------------------------------
Name: Patrick Tadie
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
Holder of The Voting Interest
By: /s/ AMY WAHL
-------------------------------------
Name: Amy Wahl
Title: Assistant Vice President
THE MONEY STORE INC.,
Representative and Servicer
By: /s/ WILLIAM S. TEMPLETON
-------------------------------------
Name: William S. Templeton
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 IS SUBJECT TO THE TERMS OF THE TRUST AGREEMENT AND
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN ARTICLE III OF THE TRUST
AGREEMENT. THIS TRUST CERTIFICATE AND ANY RIGHTS REPRESENTED THEREBY MAY BE
SUBJECT TO LIENS GRANTED BY A PRIOR HOLDER THEREOF.
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 Special
Interest.
<PAGE>
THE MONEY STORE TRUST 1998-C
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 Trust 1998-C (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
August 31, 1998 (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
August 31, 1998, between the Trust and The Bank of New York, as Indenture
Trustee, are Series 1998-C Asset Backed Notes (collectively, the "Series 1998-C
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 after the Cut-Off Date, 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 October 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 Special 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 Special Interest) will be
treated as partners in that partnership if, for federal income tax purposes,
there is more than one Certificateholder, or the Trust will be treated as a
division of the Certificateholder and ignored as an entity separate from the
Certificateholder if, for federal income tax purposes, there is a single
Certificateholder. The Holder of the Special Interest and the other
Certificateholders by acceptance of a Trust Certificate, agree to treat, and to
take no action inconsistent with the treatment for such tax purposes of, the
Trust Certificates for such tax purposes as partnership interests in the Trust
and the Trust as a partnership if the Trust is a partnership as just described,
and the Trust as a division of the Certificateholder if there is a single
Certificateholder for federal income tax purposes.
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 Special Interest, or join in any institution
against the Trust or the Holder of the Special 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 1998-C 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: September ___, 1998
THE MONEY STORE TRUST 1998-C
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: September ___, 1998
[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 TRUST 1998-C
THIS Certificate of Trust of The Money Store Trust 1998-C (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
TRUST 1998-C.
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.
3. EFFECTIVE DATE. This certificate of Trust shall be effective upon
filing.
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.
707 Third Street
West Sacramento, California 95605
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attn: Corporate Trust Administration
Re: THE MONEY STORE TRUST 1998-C
Ladies and Gentlemen:
In connection with its purchase of certain Trust Certificates (the
"Certificates") of The Money Store Trust 1998-C (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 IS SUBJECT TO THE TERMS OF THE TRUST AGREEMENT AND TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN ARTICLE III OF THE TRUST
AGREEMENT. THIS TRUST CERTIFICATE AND ANY RIGHTS REPRESENTED THEREBY MAY BE
SUBJECT TO LIENS GRANTED BY A PRIOR HOLDER THEREOF.
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.
EXHIBIT 4.3
Execution Copy
===============================================================
THE MONEY STORE TRUST 1998-C
Class AF-1 Adjustable Rate Notes
Class AF-2 Auction Rate Notes
Class AV Adjustable Rate Notes
--------------------------------
INDENTURE
Dated as of August 31, 1998
--------------------------------
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......................................................2
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.............12
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...........................................16
SECTION 2.10 Book-Entry Notes................................................16
SECTION 2.11 Notices to Clearing Agency......................................17
SECTION 2.12 Definitive Notes................................................17
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest...............................18
SECTION 3.2 Maintenance of Office or Agency.................................18
SECTION 3.3 Money for Payments To Be Held in Trust..........................18
SECTION 3.4 Existence.......................................................20
SECTION 3.5 Protection of Trust Estate......................................20
SECTION 3.6 Opinions as to Trust Estate.....................................20
SECTION 3.7 Performance of Obligations; Servicing of the Loans..............21
SECTION 3.8 Negative Covenants..............................................22
SECTION 3.9 Annual Statement as to Compliance...............................23
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms.............23
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...........................................26
SECTION 3.17 Compliance with Laws...........................................26
SECTION 3.18 Restricted Payments............................................26
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 IIIA
Representations and Warranties
SECTION 3.1A Representations and Warranties of Issuer.......................28
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture.........................28
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...........................................35
SECTION 5.5 Optional Preservation of the Loans.............................36
SECTION 5.6 Limitation of Suits............................................36
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest.......................................................37
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.................................38
SECTION 5.11 Control by Noteholders.........................................38
SECTION 5.12 Waiver of Past Defaults........................................38
SECTION 5.13 Undertaking for Costs..........................................39
SECTION 5.14 Waiver of Stay or Extension Laws...............................39
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..............................................40
SECTION 6.2 Rights of Trustee..............................................42
SECTION 6.3 Individual Rights of Trustee...................................43
SECTION 6.4 Trustee's Disclaimer...........................................43
SECTION 6.5 Notice of Defaults.............................................43
SECTION 6.6 Reports by Trustee to Holders..................................43
SECTION 6.7 Compensation and Indemnity.....................................43
SECTION 6.8 Replacement of Trustee.........................................44
SECTION 6.9 Successor Trustee by Merger....................................46
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee..................46
SECTION 6.11 Eligibility; Disqualification..................................47
SECTION 6.12 Preferential Collection of Claims Against Issuer...............47
SECTION 6.13 Appointment of Custodians......................................47
SECTION 6.14 Executing Basic Documents......................................48
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of Noteholders....48
SECTION 7.2 Preservation of Information; Communications to Noteholders......48
SECTION 7.3 Reports by Issuer...............................................49
SECTION 7.4 Reports by Trustee..............................................49
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money.............................................50
SECTION 8.2 Trust Accounts..................................................50
SECTION 8.3 General Provisions Regarding Accounts...........................50
SECTION 8.4 Release of Trust Estate.........................................51
SECTION 8.5 Opinion of Counsel..............................................51
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures without Consent of Noteholders..........52
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.............53
SECTION 9.3 Execution of Supplemental Indentures............................55
SECTION 9.4 Effect of Supplemental Indenture................................55
SECTION 9.5 Conformity with Trust Indenture Act.............................55
SECTION 9.6 Reference in Notes to Supplemental Indentures...................55
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption.....................................................55
SECTION 10.2 Form of Redemption Notice......................................56
SECTION 10.3 Notes Payable on Redemption Date...............................57
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc......................57
SECTION 11.2 Form of Documents Delivered to Trustee.........................59
SECTION 11.3 Acts of Noteholders............................................59
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies..........60
SECTION 11.5 Notices to Noteholders; Waiver.................................61
SECTION 11.6 Alternate Payment and Notice Provisions........................61
SECTION 11.7 Conflict with Trust Indenture Act..............................61
SECTION 11.8 Effect of Headings and Table of Contents.......................62
SECTION 11.9 Successors and Assigns.........................................62
SECTION 11.10 Separability..................................................62
SECTION 11.11 Benefits of Indenture.........................................62
SECTION 11.12 Legal Holidays................................................62
SECTION 11.13 Governing Law.................................................62
SECTION 11.14 Counterparts..................................................62
SECTION 11.15 Recording of Indenture........................................62
SECTION 11.16 Trust Obligation..............................................63
SECTION 11.17 No Petition...................................................63
SECTION 11.18 Inspection....................................................63
SECTION 11.19 Usury .......................................................63
Testimonium, Signatures and Seals
Schedule I Auction Procedures
Exhibit A Schedule of Loans
Exhibit B Form of Class A Note
Exhibit C Form of Custodial Agreement
<PAGE>
INDENTURE dated as of August 31, 1998, between THE MONEY STORE TRUST
1998-C, 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 AF-1 Adjustable Rate Notes (the "Class AF-1 Notes"); Class AF-2
Auction Rate Notes (the "Class AF-2 Notes and, collectively with the Class AF-1
Notes, the "Class AF Notes"); and Class AV Adjustable Rate Notes (the "Class AV
Notes," and together with the Class AF-1 Notes and Class AF-2 Notes, the
"Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee with respect to all 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 Loan identified in the
Loan Schedule delivered by the Issuer on the Closing Date; (b) the principal
collected and interest accrued on each such Loan after the Cut-Off Date; (c) the
principal and interest received on such Loan on or prior to the Cut-Off Date
that is due after the CutOff Date; (d) all prepayments, proceeds of foreclosure
proceedings, insurance proceeds, investment income respecting the foregoing, (e)
any Mortgaged Property which becomes an REO Property; (f) the Issuer's rights
and benefits, but none of its obligations or burdens, under the Sale and
Servicing Agreement and the Rate Agreement; (g) all items contained in each
Indenture Trustee's Loan File; (h) all funds on deposit in any account
maintained by the Owner Trustee or the Servicer on behalf of the Issuer; and (i)
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.
The Trustee, as 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 according to customary industry practice to the end that the interests
of the Holders of the Notes may be adequately and effectively protected. The
Trustee also acknowledges the pledge to it of the Spread Account by First Union
National Bank, as Spread Account Depositor under the Spread Account Agreement
dated as of September 29, 1998 between the Trustee and the Spread Account
Depositor and the Trustee hereby agrees to exercise its rights under the Spread
Account Agreement and its rights to the Spread Account for the benefit of the
Noteholders and the Note Insurer.
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.
"AUCTION PROCEDURES" means the procedures set forth in Schedule I to
this Indenture by which the Auction Rate is determined for the Class AF-2 Notes.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures.
"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 Note Depository
Agreements, the Insurance Agreement, the Spread Account Agreement 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 in the States of California, New York,
North Carolina or Delaware 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.
"CLASS AF NOTES" means, collectively, the Class AF-1 Notes and the
Class AF-2 Notes.
"CLASS AF-1 NOTES" means the Class AF-1 Adjustable Rate Notes,
substantially in the form of Exhibit B.
"CLASS AF-1 REMITTANCE RATE" has the meaning set forth in the Sale and
Servicing Agreement.
"CLASS AF-2 NOTES" means the Class AF-2 Auction Rate Notes,
substantially in the form of Exhibit B.
"CLASS AF-2 REMITTANCE RATE" has the meaning set forth in the Sale and
Servicing Agreement.
"CLASS AV NOTES" means the Class AV Adjustable Rate Notes,
substantially in the form of Exhibit B.
"CLASS AV REMITTANCE RATE" has the meaning set forth in the Sale and
Servicing Agreement. The Class AV Remittance Rate shall be determined in
accordance with the Auction Procedures attached hereto as Schedule I.
"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.
"CONTROLLING PARTY" means the Note Insurer, so long as no Insurer
Default shall have occurred and be continuing, and the Trustee, for so long as
an Insurer Default shall have occurred and be continuing.
"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 MBS Administration (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).
"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.
"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.
"INSURANCE AGREEMENT EVENT OF DEFAULT" has the meaning specified
therefor in the Insurance Agreement.
"INSURED PAYMENTS" has the meaning specified in the Note Policy.
"INSURER DEFAULT" means (i) the failure of the Note Insurer to make a
payment under the Note Policy in accordance with its terms or (ii) an Insolvency
Event (as defined in the Sale and Servicing Agreement) occurs and is continuing
with respect to the Note Insurer.
"INSURER ISSUER SECURED OBLIGATIONS" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Note Insurer under
this Indenture, the Insurance Agreement or any other Basic Document.
"INTEREST RATE SERVICES AGREEMENT" means that certain Interest Rate
Services Agreement dated as of September 29, 1998 between the Indenture Trustee
and the Remarketing Agent, as amended or supplemented.
"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.
"ISSUER SECURED OBLIGATIONS" means the Insurer Issuer Secured
Obligations and the Trustee Issuer Secured Obligations.
"ISSUER SECURED PARTIES" means each of the Trustee in respect of the
Trustee Issuer Secured Obligations and the Note Insurer in respect of the
Insurer Issuer Secured Obligations.
"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 AF-1 Note, a Class AF-2 Note or a Class AV 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 POLICIES" means the note guaranty insurance policies issued by
the Note Insurer with respect to the Notes.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.4.
"NOTES" means the collective reference to the Class AF-1 Notes, the
Class AF-2 Notes and the Class AV 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 the
Note Insurer, and which opinion or opinions shall be addressed to the Trustee as
Trustee and the Note Insurer, shall comply with any applicable requirements of
Section 11.1, and shall be in form and substance satisfactory to the Trustee and
the Note Insurer.
"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 HOWEVER, that Notes which have
been paid with proceeds of a Note Policy shall continue to remain
Outstanding for purposes of this Indenture until the Note Insurer has
been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement, and the Note Insurer shall be deemed to be the
Holder thereof to the extent of any payments thereon made by the Note
Insurer; PROVIDED, FURTHER, 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 acceptable to the
Note Insurer 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 Pool I Note
Distribution Account and Pool II 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 and any amounts then owing to the Note Insurer, or
(b) in the case of a payment made to Noteholders pursuant to Section 10.1(b),
the amount on deposit in the applicable Note Distribution Account, but not in
excess of the amount specified in clause (a) above.
"REMARKETING AGENT" means First Union Capital Markets, a division of
Wheat First Securities, Inc., and its successors and assigns under the Interest
Rate Services Agreement.
"REMITTANCE RATE" means with respect to (i) the Class AF-1 Notes, the
Class AF-1 Remittance Rate, (ii) the Class AF-2 Notes, the Class AF-2 Remittance
Rate and (iii) the Class AV Notes, the Class AV 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
(a) 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 and (b) who shall have direct responsibility for the
administration of this Indenture.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of August 31, 1998, among the Issuer, the Representative and Servicer,
and the Originators named therein, as the same may be amended or supplemented
from time to time.
"SPECIAL INTEREST" shall have the meaning given to such term in the
Trust Agreement.
"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).
"TERMINATION DATE" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the date on which the Note Insurer shall have received payment and
performance of all Insurer Issuer Secured Obligations and (iii) the date on
which the Trustee shall have received payment and performance of all Trustee
Issuer Secured Obligations.
"TRUST AGREEMENT" means the Trust Agreement, dated as of August 31,
1998, 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 and the Note Insurer
(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.
"TRUSTEE ISSUER SECURED OBLIGATIONS" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Trustee for the
benefit of the Noteholders and the Note Insurer under this Indenture or the
Notes. "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
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
Due Period............................................. Section 1.01
Final Maturity Date.................................... Section 1.01
Insurance Agreement.................................... Section 1.01
Liquidated Loan........................................ Section 1.01
Monthly Advances....................................... Section 1.01
Note Depository Agreements............................. Section 1.01
Loan................................................... Section 1.01
Mortgaged Property..................................... Section 1.01
Note Distribution Account.............................. Section 1.01
Note Insurer........................................... Section 1.01
Original Principal Balance............................. Section 1.01
Originator............................................. Section 1.01
Permitted Instruments.................................. Section 1.01
Person................................................. Section 1.01
Pool Available Remittance Amount....................... Section 1.01
Principal and Interest Account......................... Section 1.01
Rate Agreement......................................... 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
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, 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 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 receipt of the Note Policies and Issuer Order
authenticate and deliver Class AF-1 Notes for original issue in an aggregate
principal amount of $401,250,000, Class AF-2 Notes for original issue in an
aggregate principal amount of $133,750,000 and Class AV Notes for original issue
in an aggregate principal amount of $360,000,000. 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 $25,000 and
in integral multiples of $1,000 in excess thereof.
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 acceptable to the Note Insurer 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 and the Note Insurer 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 and the Note Insurer shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Trustee and the Note Insurer 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 and the Note Insurer (unless an Insurer
Default shall have occurred and be continuing) such security or indemnity as may
be required by it to hold the Issuer, the Note Insurer 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, the Note Insurer 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 and the Note Insurer 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 none of the Issuer, the Trustee, the Note Insurer 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 respective Note and the Sale
and Servicing Agreement 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 Maturity 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 at the
direction of the Note Insurer or the Holders of the Notes representing not less
than a majority of the Outstanding Amount of the Notes with the prior written
consent of the Note Insurer 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 Notes shall be made pro rata to the Noteholders of such Class
entitled thereto from the Loans of the respective Pool. 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 and the Note Insurer as provided in Section 10.2.
(c) [Reserved]
(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, the Note Insurer
and the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid (which Noteholder will be the
Note Insurer to the extent an Insured Payment is made pursuant to the Note
Insurance Policies).
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 TIAss.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, with the prior written consent of the Note
Insurer, 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, the Note Insurer 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 on a
Remittance Date pursuant to the Sale and Servicing Agreement (i) all amounts on
deposit in the Pool I Note Distribution Account for the benefit of the Class AF
Notes to the Class AF Noteholders and (ii) all amounts on deposit in the Pool II
Note Distribution Account for the benefit of the Class AV Notes to the Class AV
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 either
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 Pool I Note Distribution Account
and Pool II Note Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due under the Class AF Notes and Class AV Notes,
respectively, 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 and the Note Insurer 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, 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 if such money or any portion thereof
had been previously deposited by the Note Insurer with the Trustee for the
payment of principal or interest on the Notes, to the extent any amounts are
owing to the Note Insurer, such amounts shall be paid promptly to the Note
Insurer upon receipt of a written request by the Note Insurer to such effect,
and PROVIDED, FURTHER, 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.
SECTION3.5 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, the Note Insurer 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
prepared and delivered to the Trustee that are 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 and the Note Insurer 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 for the benefit of the Issuer Secured Parties 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 and the Note Insurer
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 acceptable to the Note
Insurer (so long as no Insurer Default shall have occurred and be continuing) to
assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Trustee and the Note Insurer 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 and the Trust
Administrator, pursuant to the Sale and Servicing Agreement, 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 be 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, the Note Insurer 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, the Note Insurer 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 rights and powers pursuant
to Section 10.01 of the Sale and Servicing Agreement or if an Insurer Default
shall have occurred, the Issuer shall promptly notify the Trustee. As soon as a
successor to the Servicer (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 and
the Note Insurer. 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, the Note Insurer (unless an Insurer Default shall have
occurred and be continuing) and/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, the
Note Insurer (unless an Insurer Default shall have occurred and be continuing)
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 and the Note Insurer, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ending December 31,
1998), 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 supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee and the
Note Insurer (so long as no Insurer Default shall have occurred and be
continuing), 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 and the Note
Insurer (so long as no Insurer Default shall have occurred and be
continuing)) to the effect that such transaction will not have any
material adverse tax consequence to the Trust, the Note Insurer, 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;
(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) ; and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written
notice of such consolidation or merger at least 20 Business Days prior
to the consummation of such action and shall have received the prior
written approval of the Note Insurer of such consolidation or merger
and the Issuer or the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (a) greater than zero and
(b) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
(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
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee and the Note Insurer (so long as no
Insurer Default shall have occurred and be continuing), 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 and the Note
Insurer (so long as no Insurer Default shall have occurred and be
continuing)) to the effect that such transaction will not have any
material adverse tax consequence to the Trust, the Note Insurer, 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;
(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) ;and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written
notice of such conveyance or transfer at least 20 Business Days prior
to the consummation of such action and shall have received the prior
written approval of the Note Insurer of such consolidation or merger
and the Issuer or the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (a) greater than zero and
(b)not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
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 Trust 1998-C 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 Trust
1998-C 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, obligations owing from time to time to the
Note Insurer under the Insurance Agreement 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 personality).
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 Note Insurer, the Trustee, the Holder of
the Special 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, the Note Insurer, 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
or the Note Insurer, 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 and the Issuer shall
take all actions necessary to ensure that the Issuer is not treated as an
association (or publicly traded partnership) taxable as a corporation.
ARTICLE IIIA
REPRESENTATIONS AND WARRANTIES
SECTION 3.1A. REPRESENTATIONS AND WARRANTIES OF ISSUER. The Issuer
hereby represents and warrants as of the date of initial issuance of Notes as
follows:
(a) The Issuer is a business trust, and is duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Notes, when executed, authenticated and issued in accordance
with the Indenture, and the Basic Documents (other than the Notes) to which the
Issuer is a party, when executed and delivered by the Issuer, will constitute
the legal, valid and binding obligations of the Issuer, enforceable in
accordance with their respective terms against the Issuer, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws relating to or affecting creditors' equitable principles and
public policy considerations as to rights of indemnification.
(c) The Issuer's principal place of business is located in Wilmington,
Delaware.
(d) The Issuer has good and marketable title to each Loan and Mortgage
Note free and clear of any lien (other than liens contemplated by the Basic
Documents) and the Issuer has the authority to pledge the Loans and Mortgage
Notes to the Indenture Trustee as contemplated in this Indenture.
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 and
the Note Policy has expired and been returned to the Note Insurer 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 their respective Final
Maturity Dates 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 Insurer Issuer Secured
Obligations and all Trustee Issuer Secured Obligations and all other sums
payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee and the Note Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA,
the Trustee or the Note Insurer (so long as no Insurer Default shall have
occurred and be continuing)) 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 Noteholders' Interest Carryover, if applicable) when the same
becomes due and payable, and such default shall continue for a period
of five days (a payment on the Notes funded by the Note Insurer shall
not be deemed to be a payment made by the Issuer); or
(ii) default in the payment of the principal of any Note when the
same becomes due and payable (a payment on the Notes funded by the
Note Insurer shall not be deemed to be a payment made by the Issuer);
or
(iii) so long as an Insurer Default shall have occurred and be
continuing, 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) so long as an Insurer Default shall have occurred and be
continuing, 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) so long as an Insurer Default shall have occurred and be
continuing, 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;
(vi) so long as an Insurer Default shall have occurred and be
continuing, 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; or
(vii) so long as an Insurer Default shall not have occurred and
be continuing, an Insurance Agreement Event of Default shall have
occurred; provided, however, that the occurrence of an Insurance
Agreement Event of Default may not form the basis of an Event of
Default unless the Note Insurer shall, upon prior written notice to
the Rating Agencies, have delivered to the Issuer and the Trustee and
not rescinded a written notice specifying that such Insurance
Agreement Event of Default constitutes an Event of Default under the
Indenture.
The Issuer shall deliver to the Trustee and the Note Insurer, 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. (a) If
an Event of Default shall have occurred and be continuing, the Controlling Party
may exercise any of the remedies specified in Section 5.4(a). In the event of
any acceleration of any Notes at the direction of the Note Insurer by operation
of this Section 5.2, the Trustee shall continue to be entitled to make claims
under the Note Policies for Note Insured Payments on the Notes. Payments under
the Note Policies following acceleration of any Notes shall be applied by the
Trustee:
FIRST: to Noteholders of the applicable Pool for amounts due and
unpaid on the Notes for interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes of such
Pool for interest; and
SECOND: to Noteholders of the applicable Pool for amounts due and
unpaid on the Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes of such
Pool for principal.
(b) In the event any Notes are accelerated due to an Event of Default,
the Note Insurer shall have the right (in addition to its obligation to pay Note
Insured Payments on the Notes in accordance with the Note Policies), but not the
obligation, to make payments under the Note Policies or otherwise of interest
and principal due on such Notes, in whole or in part, on any date or dates
following such acceleration as the Note Insurer, in its sole discretion, shall
elect.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee in its
discretion may, or if so requested in writing by Holders holding Notes
representing not less than a majority of the Outstanding Amount of the Notes,
shall declare by written notice to the Issuer that the Notes become, whereupon
they shall become, immediately due and payable at par, together with accrued and
unpaid interest thereon.
(d) If an Insurer Default shall have occurred and be continuing, then
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 (which
demand will be made by the Trustee only with the prior written consent of the
Note Insurer), pay to it, for the benefit of the Holders of the Notes and the
Note Insurer, 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) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Issuer Secured Party such acts, things and deeds for or on behalf of and
in the name of such Issuer Secured Party under this Indenture (including
specifically under Section 5.4) and under the Basic Documents which such Issuer
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration, maintenance or disposition of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the
Trustee may, with the consent of the Note Insurer if the Note Insurer is the
Controlling Party and shall, at the direction of the Note Insurer if the Note
Insurer is the Controlling Party (except as provided in Section 5.3(d) below),
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate proceedings as the Trustee or the Note Insurer if the Note
Insurer is the Controlling Party 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) Notwithstanding anything to the contrary contained in this
Indenture and regardless of whether an Insurer Default shall have occurred and
be continuing, if the Issuer fails to perform its obligations under Section
10.1(b) hereof when and as due, the Trustee shall (and without the consent of
the Note Insurer if the Note Insurer is the Controlling Party) 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 specific performance 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; provided that the Trustee shall only
be entitled to take any such actions without the consent of the Note Insurer if
the Note Insurer is the Controlling Party to the extent such actions are taken
only to enforce the Issuer's obligations to redeem the principal amount of
Notes.
(e) 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.
(f) 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.
(g) 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.
(h) 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 Controlling Party 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;
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property held as Collateral in the
following order of priority (such payments to be made first from proceeds of the
applicable Pool and, if any funds from the other Pool remain after payment of
clauses FIRST through FOURTH, from proceeds of the other Pool):
FIRST: to the Noteholders of a Pool for amounts due and unpaid
for interest, ratably and without preference or priority of any kind,
according to the amounts due and payable on the Notes of such Pool for
interest;
SECOND: to the Noteholders of a Pool for amounts due and unpaid
on the Notes for principal, ratably and without preference or priority
of any kind, according to the amounts due and payable on the Notes of
such Pool for principal;
THIRD: amounts due and owing and required to be distributed to
the Note Insurer pursuant to Section 7.14(a)(ii) and (iii) of the Sale
and Servicing Agreement and not previously distributed; and
FOURTH: to the Trustee for amounts under Section 6.7.
Any remaining amounts shall be paid 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 Trustee is the
Controlling Party and 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.
SECTION5.6 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;
(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; and
(vi) an Insurer Default shall have occurred and be continuing; 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 Controlling
Party 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 Controlling Party 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 Controlling Party 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.
SECTION5.11 CONTROL BY NOTEHOLDERS. If the Trustee is the Controlling
Party, 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. If an Insurer Default shall have
occurred and be continuing 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 the Trustee is the Controlling Party and 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 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 Custodian.
(k) The Trustee shall, upon reasonable prior notice to the Trustee,
permit any representative of the Note Insurer, at the Note Insurer's expense,
during the Trustee's normal business hours, to examine all books of account,
records, reports and other papers of the Trustee relating to the Notes, to make
copies and extracts therefrom and to discuss the Trustee's affairs and actions,
as such affairs and actions relate to the Trustee's duties with respect to the
Notes, with the Trustee's officers and employees responsible for carrying out
the Trustee's duties with respect to the Notes.
(l) The Trustee shall, and hereby agrees that it will, hold the Note
Policies in trust, and will hold any proceeds of any claim on a Note Policy in
trust solely for the use and benefit of the Noteholders.
(m) Without limiting the generality of this Section 6.1, the Trustee
shall have no duty (i) to see to any recording, filing or depositing of this
Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Loans, or to see to the maintenance of any
such recording or filing or depositing or to any recording, refiling or
redepositing of any thereof, (ii) to see to the payment or discharge of any tax,
assessment or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against any part of the Trust, (iii)
to confirm or verify the contents of any reports or certificates delivered to
the Trustee pursuant to this Indenture or the Sale and Servicing Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (iv) to inquire as to the performance of
observance of any of the Issuer's, the Originator's, the Trust Administrator's
or the Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer under the Sale and Servicing Agreement.
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) With the prior written consent of the Note Insurer, 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. 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.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or the Controlling Party shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Note Insurer (so long
as no Insurer Default shall have occurred and be continuing) or (if an Insurer
Default shall have occurred and be continuing) by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount thereof; PROVIDED,
HOWEVER, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be paid by the Person making
such request, or, if paid by the Trustee, shall be reimbursed by the Person
making such request upon demand.
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 and to the Note Insurer promptly
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 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, and the Servicer 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 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 or the Custodian's agents, counsel, accountants and experts. The
Issuer shall or shall cause the Servicer to indemnify the 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 or the
Custodian shall notify the Issuer and the Servicer promptly of any claim for
which it may seek indemnity. Failure by the 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 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 or the Custodian through the Trustee's or Custodian's, as applicable,
own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee and the Custodian
pursuant to this Section shall survive the discharge of this Indenture and the
resignation or removal of the 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, the Representative and the Note Insurer. The
Representative may with the consent of the Note Insurer and, at the request of
the Note Insurer (unless an Insurer Default shall have occurred and be
continuing) 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 official) 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, the Representative and
the Note Insurer (so long as no Insurer Default shall have occurred and be
continuing). 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 6.10 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 with the consent of the
Note Insurer (so long as no Insurer Default shall have occurred and be
continuing) shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a c 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, dissolve, become insolvent, 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.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIAss. 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 and Baa by Moody's. The Trustee
shall comply with TIAss. 310 (b), including the optional provision permitted by
the second sentence of TIAss. 310(b)(9); provided, however, that there shall be
excluded from the operation of TIAss. 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 TIAss. 310(b)(1) are met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIAss. 311(a), excluding any creditor relationship
listed in TIAss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIAss. 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, the
Certificateholders and the Note Insurer. 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 Loans that
constitute, or may in the future constitute, part of Pool I and Pool II, 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 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.
SECTION 6.14 EXECUTING BASIC DOCUMENTS. The Trustee is hereby
instructed to execute and deliver the Interest Rate Services Agreement, the
Spread Account Agreement and all other Basic Documents to which the Trustee is a
party.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 ISSUER TO FURNISH TO 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. The Trustee or, if the Trustee
is not the Note Registrar, the Issuer shall furnish to the Note Insurer in
writing on an annual basis on each September 30 (beginning on September 30,
1999) and at such other times as the Note Insurer may request a copy of the
list.
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 December 31, beginning with December 31, 1999, 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, the Certificateholders and the Note
Insurer, 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 respective Note
Distribution Accounts 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 each Note Distribution Account to the
respective Class of Noteholders in respect of such 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 and the Note Insurer an Opinion of
Counsel, acceptable to the Trustee and the Note Insurer, 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 TIAss. 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 the consent of the
Note Insurer (unless an Insurer Default shall have occurred and be continuing)
and 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 the
prior written consent of the Note Insurer and 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 Note Insurer (unless
an Insurer Default shall have occurred and be continuing), 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 subject to
the express rights of the Note Insurer under the Basic Documents 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, based upon an Opinion of Counsel delivered to it,
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 and the Note Insurer 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 Pool I Note
Distribution Account and Pool II Note Distribution Account, as the case may be,
on or before the Redemption Date, the Redemption Price of the respective Class
AF Notes or Class AV 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 Pool I Note
Distribution Account and Pool II Note Distribution Account, as the case may be,
shall be paid to the respective Class AF Noteholders or Class AV Noteholders up
to the Outstanding Amount of the respective Class of Notes and all accrued and
unpaid interest thereon, and the Note Insurer shall receive all amounts then
owing to it. 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 and the Note Insurer 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 and to the
Note Insurer (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
and the Note Insurer 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
and the Note Insurer 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 and the Note Insurer 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 Trust 1998-C, 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, or
(c) The Note Insurer by the Issuer or the Trustee shall be sufficient
for any purpose hereunder if in writing and mailed by registered mail or
personally delivered or telexed or telecopied to the recipient as follows: to
the Note Insurer: MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504, Attention: Insured Portfolio Management - SF (Mortgage-Backed) (The Money
Store Trust 1998-C), Fax: 914-765-3810, Ph: 914-273-4545.
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 Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Structured Finance and (ii) in the case of S&P, at the following address:
Standard & Poor's a division of the McGraw-Hill Companies, Inc., 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. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing.
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.
The Note Insurer may disclaim any of its rights and powers under this Indenture
(in which case the Trustee may exercise such right or power hereunder), but not
its duties and obligations under the Note Policies, upon delivery of a written
notice to the Trustee.
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 and the Note Insurer) 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 Special 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 Special 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 Special
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 Special Interest, the Owner Trustee or the Trustee or of any
successor or assign of the Representative, the Servicer, the holder of the
Special 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 Special Interest or the Trust, or join in any institution
against the Representative, the holder of the Special 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 or the Note Insurer,
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 TRUST 1998-C,
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 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 Loans. The Files relating to the Loans initially will be kept in
our offices located in North Highlands, California. In connection therewith,
First Union National Bank agrees to be bound by all applicable provisions of the
Indenture and the Sale and Servicing Agreement.
FIRST UNION NATIONAL BANK, as Custodian
By: /s/ DANIEL OBER
----------------------------------
Name: Daniel Ober
Title: Vice President
<PAGE>
SCHEDULE I
AUCTION PROCEDURES
DEFINITIONS
Capitalized terms used herein and not otherwise defined have the meanings
ascribed in the Sale and Servicing Agreement and the Indenture. Additionally,
the following terms have the meanings ascribed to them (the term "Security" as
used in this Schedule I refers to the Class AF-2 Notes and the term
"Securityholder" refers to Holders of Class AF-2 Notes).
"All Hold Rate" means ninety percent (90%) of One-Month LIBOR.
"Auction" means the implementation of the Auction Procedures on an Auction
Date.
"Auction Date" means, with respect to the Initial Period for each Class of
Securities, October 14, 1998 and thereafter, the Business Day immediately
preceding the first day of each Auction Period for each Security, other than:
(A) each Auction Period commencing after the ownership of the Securities
is no longer maintained in Book-Entry Form by DTC;
(B) each Auction Period commencing after and during the continuance of an
Event of Default; or
(C) each Auction Period commencing less than two Business Days after the
cure or waiver of an Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed as described herein.
"Auction Period" means, with respect to each Security, the Interest Period
applicable to such Security during which time the applicable Security Interest
Rate is determined pursuant to the Indenture.
"Auction Period Adjustment" means an adjustment to the Auction Period as
described herein.
"Auction Procedures" means the procedures set forth and described herein by
which the Auction Rate applicable to a Security is determined.
"Auction Rate" means, with respect to any Security, the rate of interest
pre annum that results from the implementation of the Auction Procedures and is
determined as described herein.
"Estimated Range of Interest Rate" has the meaning as set forth herein.
"Initial Period" means, as to any Security, the period commencing on the
Closing Date of such Security and continuing through the day immediately
preceding the Security Initial Rate Adjustment Date for such Security.
"Interest Period" means, with respect to a Security, the Initial Period for
such Security and each period commencing on the Rate Adjustment Date for such
Security and ending on the day before (i) the next Rate Adjustment Date for such
Security or (ii) the final maturity date of such Security, as applicable.
"Interest Rate Services Agreement" means the initial Interest Rate Services
Agreement unless and until a substitute Interest Rate Services Agreement is
entered into, after with
"Interest Rate Services Agreement" shall mean such substitute Interest Rate
Services Agreement.
"Maximum Auction Rate" generally means the lesser of (i) either (A)
One-Month LIBOR plus 0.40% (if both ratings assigned by the Rating Agencies to
the applicable Security are "Aa3" or "AA-" or better) or (B) One-Month LIBOR
plus 1.25% (if any one of the ratings assigned by the Rating Agencies to the
Security is less than "Aa3" or "AA-") or (ii) 14.00%. For purposes of the
Remarketing Agent and the Remarketing Agent has been given notice pursuant to
the Interest Rate Services Agreement.
"Non-Payment Rate" means the then applicable Maximum Auction Rate.
"One-Month LIBOR" means LIBOR as defined in the Sale and Servicing
Agreement.
"Rate Adjustment Date" means, with respect to each Security, the date on
which the applicable Security Interest Rate is effective and means, with respect
to each such Security, the date of commencement of each Auction Period.
"Rate Determination Date" means, with respect to any Security, the Auction
Date, or if no Auction Date is applicable to such Security, the Business Day
immediately preceding the date of commencement of an Auction Period.
"Remarketing Agent" means the initial remarketing agent under the initial
Interest Rate Services Agreement unless and until a substitute Interest Rate
Services Agreement becomes effective, after which "Remarketing Agent" shall mean
the substitute remarketing agent.
"Remarketing Agent Fee" has the meaning set forth in the Interest Rate
Services Agreement.
"Security Initial Rate" means, with respect to any Security, the rate at
which interest accrues on such Security during the Initial Period.
"Security Initial Rate Adjustment Date" means October 15, 1998.
SECTION 1.1. CLASS REMITTANCE RATE.
SECTION 1.1.1. DETERMINING THE CLASS REMITTANCE RATE FOR THE AUCTION RATE
NOTES.
Promptly after the Remarketing Agent has made the determinations described
in Section 1.1.3, the Remarketing Agent is to advise the Indenture Trustee of
the Maximum Auction Rate, the All Hold Rate and the components thereof on the
Auction Date, and based on such determinations, the Auction Rate for the next
succeeding Interest Period for the Auction Rate Notes.
Promptly after the Remarketing Agent has determined the Auction Rate, the
Remarketing Agent will determine and advise the Indenture Trustee of such
Auction Rate for the Auction Rate Notes, which rate will be the lesser of (a)
the Maximum Auction Rate for the Auction Rate Notes and (b) the rate established
by the Remarketing Agent for the Class AF-2 Notes (the "Auction Rate Notes") no
later than 1:00 p.m., New York City time, on the Auction Date immediately
preceding each Interest Period for the Auction Rate Notes as being the minimum
rate of interest that would be necessary, in the best professional judgment of
the Remarketing Agent, taking into account prevailing market conditions, to sell
all of the Auction Rate Notes for the next succeeding Interest Period on such
date in the secondary market at a price equal to the principal amount thereof
for settlement on the next succeeding Remittance Date for the Auction Rate
Notes.
In the process of taking into account prevailing market conditions, the
Remarketing Agent shall take, among other actions it may deem appropriate, the
following actions. Not more than one Business Day before the Auction Date, the
Remarketing Agent shall make available to all interested parties an estimated
range of interest rates for the Auction Rate Notes for the next ensuing Interest
Period (the "Estimated Range of Interest Rate"). The Remarketing Agent shall
then inquire of owners of the Auction Rate Notes that communicate with the
Remarketing Agent as to whether or not such owners choose to continue to hold
their Auction Rate Notes at the Estimated Range of Interest Rate or, if not, as
to the specific interest rate, if any, at which such owners would choose to
continue to hold such Auction Rate Notes. The Remarketing Agent shall thereupon
establish the Auction Rate for the Auction Rate Notes for the next ensuing
Auction Period or Periods and communicate the same to the parties and in the
manner required by the Auction Procedures.
For each Auction Date, the Indenture Trustee shall notify the Remarketing
Agent of the principal amount of Auction Rate Notes outstanding not later than
the Business Day preceding each Auction Date. The Remarketing Agent will accept
bids that satisfy the lowest possible bid for all outstanding Auction Rate Notes
and will allocate payments accordingly. In accordance with DTC's normal
procedures, on the Business Day after the Auction Date, the transactions
described above will be executed through DTC, so long as DTC is the depository,
and the accounts of the respective Participants at DTC will be debited and
credited and the Auction Rate Notes delivered as necessary to effect the
purchases and sales of the Auction Rate Notes as determined in the Auction.
Purchasers are required to make payment through their Participants in same-day
funds to DTC against delivery through their Participants. DTC will make payment
in accordance with its normal procedures, which now provide for payment against
delivery by its Participants in immediately available funds.
SECTION 1.1.2. INSURER DEFAULT; REMARKETING AGENT FEES AND EXPENSES.
(a) The Indenture Trustee shall determine not later than 2:00 p.m., eastern
time, on the Business Day succeeding a Remittance Date, whether a Note Insurer
Default has occurred. If an Insurer Default has occurred, the Indenture Trustee
shall, not later than 2:15 p.m., eastern time, on such Business Day, send a
notice thereof to the Remarketing Agent, the Representative and the Note Insurer
by telecopy or similar means and, if such Insurer Default is cured, the
Indenture Trustee shall immediately send a notice to the Remarketing Agent, the
Representative and the Note Insurer by telecopy or similar means.
(b) Not later than 2:00 p.m., eastern time, on each Remittance Date , the
Indenture Trustee shall pay to the Remarketing Agent, in immediately available
funds out of amounts in the Expense Account an amount equal to the Remarketing
Agent Fee as calculated in the Interest Rate Services Agreement. The
Representative shall from time to time at the request of the Remarketing Agent
reimburse the Remarketing Agent for its reasonable expenses as provided in the
Interest Rate Services Agreement.
SECTION 1.1.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE,
THREE-MONTH LIBOR AND NON-PAYMENT RATE.
The Remarketing Agent will calculate the Maximum Auction Rate, the All Hold
Rate and One-Month LIBOR on each Auction Date. If the ownership of a Class of
Auction Rate Notes is no longer maintained in Book-Entry Form, the Indenture
Trustee will calculate the Maximum Auction Rate, on the Business Day immediately
preceding the first day of each Interest Period commencing after delivery of
such Class of Auction Rate Notes. If the Note Insurer is in default under the
Note Insurance Policies, the Indenture Trustee will calculate the Non-Payment
Rate on the Class Rate Determination Date for (i) each Interest Period
commencing after the occurrence and during the continuance of such Insurer
Default and (ii) any Interest Period commencing less than two Business Days
after the cure of such Event of Default. The Remarketing Agent will determine
One-Month LIBOR for each Interest Period other than the Initial Period for a
Class of Auction Rate Notes; provided, that if the ownership of the Auction Rate
Notes is no longer maintained in Book-Entry Form, or if an Insurer Default has
occurred and is continuing, then the Indenture Trustee will determine One-Month
LIBOR for each such Interest Period. The determination by the Indenture Trustee
or the Remarketing Agent, as the case may be, of One-Month LIBOR will (in the
absence of manifest error) be final and binding upon the Noteholders and all
other parties. If calculated or determined by the Remarketing Agent, the
Remarketing Agent will promptly advise the Indenture Trustee of One-Month LIBOR.
SECTION 1.1.4. NOTIFICATION OF RATES, AMOUNTS OF REMITTANCE DATES.
Promptly after the Closing Date and after the beginning of each subsequent
Interest Period relating to each Class of Auction Rate Notes, and in any event
at least 10 days prior to any Remittance Date relating to a Class of Auction
Rate Notes, the Indenture Trustee shall confirm with the Remarketing Agent, so
long as no Note Insurer Default has occurred and is continuing and the ownership
of the Auction Rate Notes is maintained in Book-Entry Form by the Depository,
(1) the date of such next Remittance Date relating to a Class of Auction Rate
Notes and (2) the amount payable to the Remarketing Agent on the Auction Date
pursuant to Section 2.1.2(b) hereof.
If any day scheduled to be a Remittance Date shall be changed after the
Indenture Trustee shall have given the notice or confirmation referred to in the
preceding sentence, the Indenture Trustee shall, not later than 9:15 a.m.,
eastern time, on the Business Day next preceding the earlier of the new
Remittance Date or the old Remittance Date, by such means as the Indenture
Trustee deems practicable, give notice of such change to the Remarketing Agent,
so long as no Note Insurer Default has occurred and is continuing and the
ownership of the Auction Rate Notes is maintained in Book-Entry Form by the
Depository.
SECTION 1.1.5. REMARKETING AGENT. First Union Capital Markets, a division
of Wheat First Securities, Inc. ("First Union Capital Markets") is hereby
appointed as initial Remarketing Agent to serve as agent for the Representative
in connection with Auctions. The Indenture Trustee is hereby directed to, enter
into the initial Interest Rate Services Agreement with First Union Capital
Markets. The Remarketing Agent may, with the consent of the Representative and
the Note Insurer and notice to the Indenture Trustee and designation of the
party authorized to direct the Indenture Trustee, enter into an agreement with
one or more co-remarketing agents under which certain duties of the Remarketing
Agent may be delegated to the co-remarketing agent. The Remarketing Agent, any
successors to the Remarketing Agent and any co-remarketing agent shall be
members of the National Association of Securities Dealers, Inc. having a
capitalization acceptable to the Representative and the Note Insurer and
authorized by laws to perform all the duties imposed upon them hereunder, under
the Sale and Servicing Agreement and under the Interest Rate Services Agreement.
The Remarketing Agent may at any time resign and be discharged of the duties and
obligations created by the Sale and Servicing Agreement and the Interest Rate
Services Agreement by giving at least sixty (60) days' written notice to the
Representative, the Note Insurer and the Indenture Trustee. The Remarketing
Agent may be removed upon at least sixty (60) days' written notice to the
Remarketing Agent, at the direction of the Representative and with the prior
written consent of the Indenture Trustee and the Note Insurer, by an instrument
signed by the Representative and filed with the Remarketing Agent, the Indenture
Trustee and the Note Insurer. Notwithstanding the foregoing, no resignation or
removal of the Remarketing Agent shall be effective unless and until a successor
shall have been appointed; provided that such resignation by the Remarketing
Agent shall be effective upon such sixty (60) days' written notice whether or
not a successor has been appointed if and when the Remarketing Agent reasonably
determines that any one of the following shall obtain: (i) the Representative is
not diligently pursuing the appointment of a successor Remarketing Agent at the
level of compensation then generally paid in the marketplace for the services to
be performed by the successor Remarketing Agent, (ii) events have occurred which
materially adversely affect the Remarketing Agent's ability to fulfill its
duties as Remarketing Agent, including the elimination of the Remarketing
Agent's capacity to fulfill the duties of the Remarketing Agent or a
determination by counsel to the Remarketing Agent that continuation of
performance as such hereunder would be contrary to law or would expose the
Remarketing Agent to material risk of illegality, (iii) the Sale and Servicing
Agreement has been amended, modified or terminated in such manner as would
affect the Remarketing Agent or its duties without the consent of the
Remarketing Agent, or (iv) any condition to performance by the Remarketing Agent
hereunder shall not be satisfied. Any subsequent Remarketing Agent shall be
selected by the Representative, with the prior written consent of the Note
Insurer with notice to the Indenture Trustee, provided, however, that, with the
Representative's consent, the co-remarketing agent (or one of them, at the
Representative's discretion and the prior written consent of the Note Insurer)
shall become the Remarketing Agent automatically if the Remarketing Agent ceases
to act as Remarketing Agent for any reason.
In the event of the resignation or removal of the Remarketing Agent, the
Remarketing Agent shall pay over, assign and deliver the Auction Rate Notes held
by it in such capacity to its successor. In the event that the Representative
shall fail to appoint a Remarketing Agent hereunder, the Indenture Trustee may
do so at the direction and with the written consent of the Note Insurer.
SECTION 1.2. CHANGES IN AUCTION TERMS.
SECTION 1.2.1. CHANGES IN THE AUCTION DATE.
The Remarketing Agent, at the written direction of the Representative, may
specify an earlier Auction Date (but in no event more than five Business Days
earlier) than the Auction Date that would otherwise be determined in accordance
with the definition of "Auction Date" with respect to one or more specified
Auction Periods in order to conform with then current market practice with
respect to similar securities or to accommodate economic and financial factors
that may affect or be relevant to the day of the week constituting an Auction
Date and the interest rate borne on the Auction Rate Notes. The Representative
will not consent to such change in the Auction Date unless the Representative
will have received from the Remarketing Agent not less than three days nor more
than 20 days prior to the effective date of such change a written request for
consent together with a certificate demonstrating the need for change in
reliance on such factors. The Remarketing Agent will provide notice of its
determination to specify an earlier Auction Date for one or more Auction Periods
by means of a written notice delivered at least 10 days prior to the proposed
changed Auction Date to the Indenture Trustee, the Remarketing Agent, the Note
Insurer and the Representative.
Subject to the prior written consent of the Note Insurer, the changes in
Auction terms described above may be made with respect to the Auction Rate
Notes. In connection with any change in Auction Terms described above, the
Remarketing Agent is to provide such further notice to such parties as is
specified in the Interest Rate Services Agreement.
<PAGE>
EXHIBIT A
Schedule of Loans
[Provided to Trustee]
<PAGE>
[Form of Class A Note] EXHIBIT B
REGISTERED $
No. ___
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
<PAGE>
[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 TRUST 1998-C
CLASS A_ ASSET BACKED NOTES
The Money Store Trust 1998-C, 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
applicable Note Distribution Account in respect of principal on the Class A__
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 a variable interest rate
equal to Class A_ Remittance Rate as set forth in the Indenture (the "Remittance
Rate") on each Remittance Date commencing in October 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 consisting of the actual number of days
elapsed since interest was last paid or, in the case of the first Remittance
Date, from the Closing Date. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
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.
The Notes are entitled to the benefits of a note guaranty insurance policy
(the "Note Policy") issued by MBIA Insurance Corporation (the "Note Insurer"),
pursuant to which the Note Insurer has unconditionally guaranteed payments of
Insured Payments on each Remittance Date, all as more fully set forth in the
Indenture.
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: September 29, 1998 THE MONEY STORE TRUST 1998-C,
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 A__ Asset Backed Notes of The Money Store Trust
1998-C designated above and referred to in the within-mentioned Indenture.
Date: September 29, 1998 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 August 31, 1998 (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 AF Notes and Class AV 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 October 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 (i) on the date on which
an Event of Default shall have occurred and be continuing so long as an Insurer
Default shall not have occurred and be continuing or (ii) if an Insurer Default
shall have occurred and be continuing, 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.
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 (with the consent of the Note
Insurer, under certain circumstances), on any Remittance Date on or after the
date on which the Pool Balance is less than five percent of the Original Pool
Principal Balances.
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 Special
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 Special 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 Special Interest, the Owner
Trustee or the Trustee or of any successor or assign of the Representative, the
Servicer, the holder of the Special 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 Special Interest or
the Issuer, or join in any institution against the Representative, the holder of
the Special 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, the Note Insurer and any agent of the Issuer, the Trustee
or the Note Insurer 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 Note Insurer and 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: ___________ _______________________
Signature Guaranteed:
_________
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 Exhibit I to the Sale and Servicing Agreement
EXHIBIT 4.4
Execution Copy
SPREAD ACCOUNT AGREEMENT
This Spread Account Agreement is dated as of September 29, 1998 (the
"Agreement") between First Union National Bank, a national banking association,
as Spread Account Depositor (the "Spread Account Depositor"), and The Bank of
New York, as indenture trustee (the "Indenture Trustee"), under the Indenture
referred to below. All capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Indenture and the Sale and Servicing
Agreement referred to below.
WHEREAS, certain subsidiaries of The Money Store Inc. (such subsidiaries,
the "Originators") have entered into a Trust Agreement dated as of August 31,
1998 (the "Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner
Trustee") pursuant to which The Money Store Trust 1998-C (the "Trust") was
established; and
WHEREAS, The Money Store Inc. ("TMS"), the Originators and the Trust have
entered into a Sale and Servicing Agreement dated as of August 31, 1998 (the
"Sale and Servicing Agreement") pursuant to which the Originators transferred to
the Trust a portfolio of mortgage loans (the "Loans"); and
WHEREAS, the Trust and the Indenture Trustee have entered into an Indenture
dated as of August 31, 1998 (the "Indenture") pursuant to which the Trust is
issuing certain classes of asset-backed notes (the "Notes"); and
WHEREAS, MBIA Insurance Corporation (the "Note Insurer") has issued its
note guaranty insurance policies with respect to the Notes, pursuant to which
the Note Insurer has agreed to make Insured Payments; and
WHEREAS, the Spread Account Depositor is the owner of all the Trust
Certificates issued by the Trust, which Trust Certificates entitle the holders
thereof to receive certain Excess Spread received on or with respect to the
Loans, which Excess Spread is required to be deposited into the Spread Account
pursuant to Section 7.14(b)(ii) of the Sale and Servicing Agreement and the
provisions of an Insurance Agreement dated as of September 1, 1998 (the
"Insurance Agreement") among the Note Insurer, TMS, the Originators, First Union
National Bank, as custodian, and the Indenture Trustee; and
WHEREAS, amounts in the Spread Account are available to fund Insured
Payments otherwise required to be paid by the Note Insurer; and
WHEREAS, the Spread Account Depositor desires to pledge to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, all of the
Spread Account Depositor's right, title and interest in the Spread Account to
serve as collateral for the Spread Account Depositor's obligation to apply
Excess Spread as set forth in the Sale and Servicing Agreement and the
Indenture;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
Section 1. DEFINITIONS. In addition to those terms defined in the Indenture
and the Sale and Servicing Agreement and otherwise herein, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
"Account Property" has the meaning set forth in Section 3 hereof.
"Certificated Securities" has the meaning set forth in Section
8-102(4) of the UCC.
"Clearing Corporation" has the meaning set forth in Section 8-102(5)
of the UCC.
"Delivery" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Indenture Trustee, endorsed
to, or registered in the name of, the Indenture Trustee or its nominee or
endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee; or
(ii) delivery thereof in registered form to the Indenture Trustee and
(A) the certificate is endorsed to the Indenture Trustee or in
blank by effective endorsement; or
(B) the certificate is registered in the name of the Indenture
Trustee, upon original issue or registration of transfer by the
issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Indenture
Trustee; or
(ii) the issuer has agreed that it will comply with instructions
originated by the Indenture Trustee without further consent by the
registered owner;
(d) with respect to any security issued by the U.S. Treasury that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the book-entry
security to the securities account (as defined in 31 CFR Part 357) of a
participant (as defined in 31 CFR Part 357) which is also a securities
intermediary; and
(ii) the participant indicates by book entry that the book-entry
security has been credited to the Indenture Trustee's securities account;
(e) with respect to a security entitlement:
(i) the Indenture Trustee becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it will comply with
entitlement orders originated by the Indenture Trustee without further
consent by the entitlement holder;
(f) for the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Trustee acquires possession thereof;
(B) another person (other than a securities intermediary) either
acquires possession thereof on behalf of the Indenture Trustee or,
having previously acquired possession thereof, acknowledges that it
holds for the Indenture Trustee; or
(C) a securities intermediary acting on behalf of the Indenture
Trustee acquires possession of thereof, only if the certificate is in
registered form and has been specially endorsed to the Indenture
Trustee by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee as the registered
owner, upon original issue or registration of transfer; or
(B) another person (other than a securities intermediary) either
becomes the registered owner thereof on behalf of the Indenture
Trustee or,
having previously become the registered owner, acknowledges that it
holds for the Indenture Trustee;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause same to be made
on the records of its nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
"Depositary" has the meaning set forth in 31 C.F.R. 306.118 or
similar federal regulations governing the transfer of securities
issued by the United States Treasury which are maintained in
book-entry form.
"FUNB" means First Union National Bank, a national banking
association headquartered in Charlotte, North Carolina, and its
successors and assigns.
"Instruments" has the meaning set forth in Section 9-105(l)(ii)
of the UCC but excludes any "instruments" that are "certificated
securities" as defined in Section 8-102(l) (a) of the UCC.
"Physical Property" has the meaning set forth in clause (i) of
the definition of "Delivery" in this Section 1.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"UCC" means the New York Uniform Commercial Code.
"Uncertificated Security" has the meaning set forth in Section
8-102(a)(18) of the UCC.
Section 2. APPOINTMENT OF INDENTURE TRUSTEE. The Spread Account Depositor
and the Note Insurer hereby appoint the Indenture Trustee as their agent under
this Agreement to act on their behalf in accordance with the terms of this
Agreement with respect to their interests in the Spread Account and all amounts
and investments deposited therein or credited thereto. The Indenture Trustee
hereby accepts and acknowledges its appointment as agent on behalf of the Spread
Account Depositor and the Note Insurer.
Section 3. PLEDGE OF SECURITY INTEREST. The Spread Account Depositor hereby
assigns, sells, conveys and transfers to the Indenture Trustee and its
successors and assigns, and grants thereto a security interest in, all of its
right, title and interest in and to all amounts payable to the Spread Account
pursuant to the Sale and Servicing Agreement, the Spread Account, all amounts
deposited therein or credited thereto, from time to time, and all proceeds of
the foregoing, including, without limitation, all other amounts and investments
held from time to time in the Spread Account to secure all its obligations
hereunder and all its obligations under the Basic Documents related to the
Spread Account in consideration of its right to receive Excess Spread in
accordance with Section 7.05(b) of the Sale and Servicing Agreement (all of the
foregoing, collectively, the "Account Property"), to have and to hold all the
aforesaid property, rights and privileges unto the Indenture Trustee, its
successors and assigns, in trust for the benefit of the Noteholders and the Note
Insurer, subject to the terms and provisions, set forth in this Agreement. The
Indenture Trustee hereby acknowledges such pledge and, upon receipt, shall hold
and distribute the Account Property in accordance with the terms and provisions
of this Agreement and the Sale and Servicing Agreement.
Section 4. ESTABLISHMENT OF THE ACCOUNT. In consideration of its right to
receive Excess Spread in accordance with Section 7.05(b) of the Sale and
Servicing Agreement, the Spread Account Depositor hereby establishes an account
titled "The Bank of New York--TMS Spread Account 1998-C" (the "Spread Account").
The Spread Account shall be the property of the Holder of the Trust Certificates
under the Trust Agreement, which is initially the Spread Account Depositor,
subject to the terms hereof and of the Sale and Servicing Agreement. The Spread
Account shall be a deposit account maintained with FUNB for so long as (i)(A)
the Servicer remains an affiliate of FUNB, (B) no Servicer Default shall have
occurred and be continuing, (C) FUNB maintains a short-term debt rating of at
least A-1 by S&P and P-1 by Moody's, and for five Business Days following any
reduction, suspension, termination or withdrawal in either such rating, (D) FUNB
maintains a long-term rating of at least "A" by S&P and "A2" by Moody's, and for
five Business Days following any reduction, suspension, termination or
withdrawal in either such rating, (E) there has been no (X) material adverse
change in the financial condition of FUNB or (Y) event which, in the reasonable
judgment of the Note Insurer, could result in a material adverse change in the
financial condition of FUNB and (F) no change in facts or circumstances exist
which, in the reasonable judgment of the Note Insurer, could result in the
Indenture Trustee not being entitled to the benefits of the Spread Account, or
(ii) following the occurrence and continuation of any event described in
subclause (i) of this paragraph, an arrangement is established that is
satisfactory to the Note Insurer which does not in itself result in (I) any
reduction of any rating issued in respect of the Notes or (II) any reduction
below investment grade of the Notes without the benefit of the Note Insurance
Policies. If the foregoing conditions are no longer satisfied, the Indenture
Trustee shall (and is hereby authorized to), upon obtaining actual knowledge
that the conditions are no longer satisfied, transfer the Spread Account to a
Designated Depository Institution as instructed in writing by the Note Insurer,
and obtain sole signatory authority thereto and invest amounts credited thereto
in Permitted Instruments in accordance with the provisions of Section 5 of this
Agreement which mature in the manner required by Section 7.07 of the Sale and
Servicing Agreement. Amounts on deposit on the Spread Account shall be invested
as set forth in Section 7.07(a) of the Sale and Servicing Agreement and, so long
as the Spread Account is maintained with FUNB, FUNB shall remit to the Spread
Account, from its own funds, the amount of any loss resulting from investments,
without reimbursement therefor, by the next Determination Date following such
loss. The Indenture Trustee shall not be liable for any loss resulting from the
investment of amounts on deposit in the Spread Account unless the Indenture
Trustee is the obligor under the investment.
The Spread Account Depositor hereby acknowledges and agrees that the Spread
Account is subject to the term of the Basic Documents, including, but not
limited to, Section 7.14(b)(ii) and Section 7.05(b) of the Sale and Servicing
Agreement. The Spread Account Depositor further acknowledges and agrees that
Indenture Trustee shall be entitled to withdraw amounts from the Spread Account
as provided in Section 7.05 of the Sale and Servicing Agreement. The Spread
Account Depositor covenants that amounts on deposit in the Spread Account shall
have an annual rate of return of at least 5.0%.
Section 5. DELIVERY OF ACCOUNT PROPERTY. With respect to the Account
Property that is not maintained with FUNB, the Spread Account Depositor and the
Indenture Trustee agree that:
(a) any Account Property that is held in deposit accounts shall
be held solely in an Eligible Deposit Account; and each such deposit
account shall be subject to the exclusive dominion and control of the
Indenture Trustee, and the Indenture Trustee shall have sole signature
authority with respect thereto;
(b) any Account Property that is Physical Property shall be
delivered to the Indenture Trustee in accordance with paragraph (a) of
the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC);
(c) any Account Property that is a "certificated security" under
Article 8 of the Relevant UCC shall be delivered to the Indenture
Trustee in accordance with paragraph (b) of the definition of
"Delivery" and shall be held, pending maturity or disposition, solely
by the Indenture Trustee or a securities intermediary (as such term is
defined in Section 8-102(a)(14) of the UCC);
(d) any Account Property that is an "uncertificated security"
under Article 8 of the Relevant UCC shall be delivered to the
Indenture Trustee in accordance with paragraph (c) of the definition
of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued registration on the
books and records of the issuer thereof of the ownership of such
security by the Indenture Trustee (or its nominee) or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC);
(e) any Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered to the Indenture Trustee in accordance
with paragraph (d) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or disposition,
through continued book-entry registration of such Account Property in
the name of the Indenture Trustee or a securities intermediary (as
such term is defined in Section 8-102(a)(14) of the UCC); and
(f) any Account Property held through a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the UCC) shall be
held in a securities account (as such term is defined in Section
8-501(a) of the UCC) that is established by such securities
intermediary in the name of the Indenture Trustee for which the
Indenture Trustee is the sole entitlement holder (as defined in
Section 8-102(a)(7) of the UCC).
Notwithstanding the foregoing, the parties hereto acknowledge that so long
as the Spread Account remains with FUNB, the provisions of this Section 5 shall
not apply.
Section 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPREAD ACCOUNT
DEPOSITOR AND THE INDENTURE TRUSTEE. (a) The Spread Account Depositor represents
and warrants that (i) the Spread Account Depositor is the sole owner of the
Spread Account, subject to no adverse claim (including any lien, encumbrance or
claim of legal or beneficial ownership), except the lien and security interest
in favor of the Indenture Trustee, (ii) the Spread Account Depositor has full
power, authority and legal right to pledge the Spread Account hereunder, and no
consent, approval or other authorization of any governmental authority shall be
required in connection therewith, (iii) the pledge of the Spread Account
pursuant to this Agreement will create a lien on and a security interest in the
Spread Account and the proceeds thereof, (iv) the performance by it of its
obligations hereunder will not result in the creation of any security interest,
lien or other incumbrance on the Spread Account other than the security interest
created under Section 3; provided, however, that no representation is made as to
the perfection or priority of the security interest in the Spread Account, (v)
the Spread Account Depositor's principal place of business is located at One
First Union Center, 301 S. College Street, Charlotte, North Carolina, 28288,
(vi) it is a national banking association duly organized and validly existing in
good standing under the laws of the United States, (vii) it has taken all
corporate action necessary to authorize the execution and delivery by it of this
Agreement, and (viii) neither the execution nor the delivery by it of this
Agreement, nor the performance by it of its obligations contemplated hereby nor
compliance by it with any of the terms or provisions hereof, will contravene any
federal law, governmental rule or regulation governing the banking powers of the
Spread Account Depositor or any judgment or order binding on it, or constitute
any default under its charter documents or by-laws or any material indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
(b) The Indenture Trustee hereby represents and warrants that: (i) it is a
banking corporation duly organized and validly existing in good standing under
the laws of the State of New York, (ii) it has taken all corporate action
necessary to authorize the execution and delivery by it of this Agreement, and
(iii) neither the execution nor the delivery by it of this Agreement, nor the
performance by it of its obligations contemplated hereby nor compliance by it
with any of the terms or provisions hereof will contravene any federal or New
York State law, governmental rule or regulation governing the banking or trust
powers of the Indenture 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. STATEMENT OF ACCOUNT. On or before each Determination Date, the
Spread Account Depositor shall deliver to the Indenture Trustee, the Servicer
and the Note Insurer an Officer's Certificate of the Spread Account Depositor
setting forth, as of such date, (i) the amount on deposit in the Spread Account,
(ii) the activity in the Spread Account for the preceding month and (iii) the
amount of any income or gain (or loss) on amounts held in the Spread Account.
Section 8. FURTHER ASSURANCES. The Spread Account Depositor agrees that it
will execute and file Uniform Commercial Code financing statements, including
amendments thereto and continuation statements, with respect to that portion of
the Account Property in which perfection may be obtained by filing in such
jurisdictions as may be necessary to protect the security interest granted
hereby.
Section 9. NO DISPOSITION BY THE SPREAD ACCOUNT DEPOSITOR. The Spread
Account Depositor agrees that it will not, without the prior written consent of
the Note Insurer, sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Spread Account, nor will it create, incur
or permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge, option or any other encumbrance with respect to any of the Spread
Account, or any interest therein, or any proceeds thereof, except for the lien
and security interest provided for by this Agreement and the other Basic
Documents.
Section 10. TERMINATION. This Agreement shall terminate upon the
termination of the Trust in accordance with its terms. Upon termination of this
Agreement, any amounts on deposit in the Account shall be paid by the Indenture
to the Spread Account Depositor in accordance with the terms of the Sale and
Servicing Agreement.
Section 11. TERMINATION OF SECURITY INTEREST. Upon the payment in full of
the Notes pursuant to the Indenture and the payment in full of all amounts owed
to the Note Insurer with respect thereto, the lien and security interest
provided for herein as to the Spread Account shall immediately terminate and
cease to attach thereto (if such lien and security interest has not previously
terminated and ceased to attach) and the Indenture Trustee shall execute any and
all documents, including but not limited to UCC financing statements, necessary
to terminate any such lien and security interest upon receipt of such documents
from the Spread Account Depositor.
Section 12. THE NOTE INSURER. The parties hereto agree that the Note
Insurer shall be deemed a third party beneficiary of this Agreement entitled to
all rights and benefits set forth herein as fully as if it were a party hereto.
Notwithstanding the foregoing, any right conferred upon the Note Insurer
hereunder shall be suspended during any period in which an Insurer Default shall
be in effect.
Section 13. TRANSFER OF TRUST CERTIFICATES. First Union National Bank, as
holder of the Trust Certificates, shall not sell, transfer or otherwise dispose
of some or all of the Trust Certificates unless either (i) the Note Insurer
consents in writing to such sale, transfer or other disposition or (ii) First
Union National Bank contributes and transfers the Spread Account to the Trust
(or other entity acceptable to the Note Insurer) and provides the Note Insurer
with an opinion of counsel (and amendments to any Basic Documents, if necessary)
satisfactory to the Note Insurer to the effect that in the event of the
bankruptcy or insolvency of the proposed transferee of the Trust Certificates,
the Spread Account would not be deemed property of the estate of such transferee
and the Trust would not be consolidated with such transferee. Further, if while
First Union National Bank owns some or all of the Trust Certificates, an event
described in Section 4 hereof occurs that requires the Spread Account to be
transferred from First Union National Bank to another entity, First Union
National Bank shall, upon the written direction of the Note Insurer (i)
contribute and transfer the Trust Certificates to a "bankruptcy remote" special
purpose entity acceptable to the Note Insurer and (ii) provide the Note Insurer
with an opinion of counsel (and amendments to any Basic Documents, if necessary)
satisfactory to the Note Insurer to the effect that in the event of the
insolvency of First Union National Bank (or the parent of the special purpose
entity if not First Union National Bank) the assets and liabilities of such
special purpose entity would not be consolidated with the assets and liabilities
of First Union National Bank (or the parent of the special purpose entity if not
First Union National Bank).
Section 14. AMENDMENT. This Agreement may be amended by the Spread Account
Depositor and the Indenture Trustee with the consent of the Note Insurer.
Section 15. 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 16. 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 UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 17. NOTICES. All demands, notices and communications upon or to the
Spread Account Depositor, the Indenture Trustee or the Note Insurer under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt at the address set forth for the respective party in the Sale and
Servicing Agreement.
Section 18. SEVERABILITY OF PROVISIONS. If any one or more of the
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such agreements, provisions or terms shall be
deemed severable from the remaining agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 19. ASSIGNMENT; BENEFIT OF AGREEMENT. Notwithstanding anything to
the contrary contained herein, this Agreement may not be assigned by the Spread
Account Depositor or Indenture Trustee without the prior written consent of the
Note Insurer. Subject to the foregoing, this Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the Spread Account Depositor and the Indenture Trustee
have caused this Spread Account Agreement to be duly executed by their
respective officers as of the day and year first above written.
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Indenture Trustee
By
----------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Spread Account Depositor
By:
----------------------------------
Name:
Title:
Acknowledged and Accepted
MBIA INSURANCE CORPORATION
By: ___________________________
Name:
Title:
