SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 31, 1998
The Money Store Investment Corporation
The Money Store of New York Inc.
(Exact name of registrant as specified in its charter)
* 333-32775 *
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
2840 Morris Avenue, Union, New Jersey 07083
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (908) 686-2000
N/A
(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 5. OTHER EVENTS
The Sellers listed on Schedule A (the "Sellers") and certain of their
affiliates, registered issuances of up to $10,000,000,000 principal amount of
TMS Asset Backed Notes and Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-32775) (as
amended, the "Registration Statement"). Pursuant to the Registration Statement,
the Sellers caused a trust (the "Trust") to issue $90,000,000 aggregate
principal amount of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1 (the "Certificates") on March 31, 1998 (the
"Closing Date"). This Current Report on Form 8-K is being filed to file a
detailed description of the Loans transferred to the Trust on the Closing Date,
a copy of the Underwriting Agreement, including the related Pricing Agreement
and a copy of the Pooling and Servicing Agreement.
Capitalized terms not defined herein have the meanings assigned in the
Pooling and Servicing Agreement attached hereto as Exhibit 4.1.
<PAGE>
CERTAIN CHARACTERISTICS OF THE LOANS
________________________________________________________________________________
- MONSBA8A
- Small Business Administration Loans
- Cutoff Date - 02/28/98
- $71,365,826.41
________________________________________________________________________________
Index: Prime Rate
Number of Mortgage Loans: 553
Aggregate Unpaid Unguaranteed Principal Balance: $71,365,826.41
Average Unpaid Unguaranteed Principal Balance: $129,052.13
Maximum Unpaid Unguaranteed Principal Balance: $950,011.00
Minimum Unpaid Unguaranteed Principal Balance: $9,804.85
Aggregate Original Unguaranteed Principal Balance: $71,628,771.96
Average Original Unguaranteed Principal Balance: $129,527.62
Maximum Original Unguaranteed Principal Balance: $950,129.99
Minimum Original Unguaranteed Principal Balance: $10,000.00
Aggregate Unpaid Principal (Ung+Guar) Balance: $240,248,228.96
Average Unpaid Principal Balance: $434,445.26
Maximum Unpaid Principal Balance: $1,700,000.00
Minimum Unpaid Principal Balance: $49,024.26
Aggregate Original Principal (Ung+Guar) Balance: $241,179,423.00
Aggregate Unpaid Guaranteed Principal Balance: $168,876,847.74
Aggregate Original Guaranteed Principal Balance: $169,550,651.05
Weighted Average Coupon: 10.528%
Gross Coupon Range: 9.500% - 11.250%
Weighted Average Excess Interest on the Guaranteed Portion
Available for the Unguaranteed Portion: 1.352%
Excess Interest on the Guaranteed Portion Range: 0.000% - 5.000%
Weighted Average Months to Maturity: 230.851
Maturity Range: 80 - 300
Weighted Average Age in Months: 2.066
Age Range: 0 - 8
Weighted Average Original Term: 232.917
Original Term Range: 84 - 300
Weighted Average Number of Months Until
Next Interest Roll Date: 1.000
Range: 1 - 1
Weighted Average Gross Margin: 2.030%
Gross Margin Range: 1.000% - 2.750%
Aggregate Guaranteed Percentage Range: 70.293%
Aggregate Unguaranteed Percentage Range: 29.705%
Weighted Average Disc. Orig. LTV: 442.064%
Disc. Orig. LTV Range: 29.919% -16388.891%
Weighted Average Undisc. Orig. LTV: 94.400%
Undisc. Orig. LTV Range: 2.420% - 3759.500%
Weighted Average Debt Service Coverage Ratio: 1.439
Debt Service Coverage Ratio Range: 0.090 - 8.600
Weighted Average Life Floor: 3.079%
Life Floor Range: 1.000% - 6.250%
Weighted Average Life Cap (Gross): 15.593%
Life Cap Range: 15.000% - 16.250%
_______________________________________________________________________________
<TABLE>
<CAPTION>
GROSS INTEREST RATE RANGE
Percentage of
Gross Aggregate Cut-Off Date
Interest Rate Number of Current Unguar. Current Unguar. Percentage of
Range Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
9.00% * Gross Coupon *= 9.50% 2 278,127.12 0.39 .36
9.50% * Gross Coupon *= 10.00% 58 12,520,113.33 17.54 10.49
10.00% * Gross Coupon *= 10.50% 203 31,782,722.88 44.53 36.71
10.50% * Gross Coupon *= 11.00% 217 22,222,003.77 31.14 39.24
11.00% * Gross Coupon *= 11.50% 73 4,562,859.31 6.39 13.20
_______________________________________________________________________________________________
Total.......... 553 $ 71,365,826.41 100.00% 100.00%
===============================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL TERM
Percentage of
Aggregate Cut-Off Date
Number of Current Unguar. Current Unguar. Percentage of
Original Term Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
72 * Orig. Term *= 84 14 832,054.18 1.17% 2.53
84 * Orig. Term *= 96 15 610,807.77 0.86% 2.71
96 * Orig. Term *= 108 19 1,061,286.28 1.49% 3.44
108 * Orig. Term *= 120 174 13,593,449.26 19.05% 31.46
120 * Orig. Term *= 132 5 305,609.20 0.43% .90
132 * Orig. Term *= 144 8 982,667.69 1.38% 1.45
144 * Orig. Term *= 156 7 868,311.99 1.22% 1.27
156 * Orig. Term *= 168 5 626,760.57 0.88% .90
168 * Orig. Term *= 180 16 2,759,528.08 3.87% 2.89
180 * Orig. Term *= 192 15 2,292,012.88 3.21% 2.71
192 * Orig. Term *= 204 9 880,980.38 1.23% 1.63
204 * Orig. Term *= 216 10 1,104,705.01 1.55% 1.81
216 * Orig. Term *= 228 10 1,549,516.65 2.17% 1.81
228 * Orig. Term *= 240 29 3,878,709.24 5.43% 5.24
240 * Orig. Term *= 252 15 2,058,226.02 2.88% 2.71
252 * Orig. Term *= 264 16 2,119,255.69 2.97% 2.89
264 * Orig. Term *= 276 24 4,472,845.26 6.27% 4.34
276 * Orig. Term *= 288 18 3,110,781.18 4.36% 3.25
288 * Orig. Term *= 300 144 28,258,319.08 39.60% 26.04
_______________________________________________________________________________________________
Total............ 553 71,365,826.41 100.00% 100.00%
===============================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
AGE OF LOAN
Percentage of
Aggregate Cut-Off Date
Number of Current Unguar. Current Unguar. Percentage of
Age Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
Age = 0 129 16,773,374.09 23.50% 23.33
1 * Age *= 12 424 54,592,452.32 76.50% 76.67
_______________________________________________________________________________________________
Total............ 553 71,365,826.41 100.00% 100.00%
===============================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
REMAINING MONTHS TO STATED MATURITY
Percentage of
Aggregate Cut-Off Date
Number of Current Unguar. Current Unguar. Percentage of
Remaining Term Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
72 * Rem Term *= 84 14 832,054.18 1.17% 2.53
84 * Rem Term *= 96 15 610,807.77 0.86% 2.71
96 * Rem Term *= 108 19 1,061,286.28 1.49% 3.44
108 * Rem Term *= 120 174 13,593,449.26 19.05% 31.46
120 * Rem Term *= 132 5 305,609.20 0.43% .90
132 * Rem Term *= 144 8 982,667.69 1.38% 1.45
144 * Rem Term *= 156 7 868,311.99 1.22% 1.27
156 * Rem Term *= 168 5 626,760.57 0.88% .90
168 * Rem Term *= 180 16 2,759,528.08 3.87% 2.89
180 * Rem Term *= 192 15 2,292,012.88 3.21% 2.71
192 * Rem Term *= 204 9 880,980.38 1.23% 1.63
204 * Rem Term *= 216 10 1,104,705.01 1.55% 1.81
216 * Rem Term *= 228 10 1,549,516.65 2.17% 1.81
228 * Rem Term *= 240 29 3,878,709.24 5.43% 5.24
240 * Rem Term *= 252 15 2,058,226.02 2.88% 2.71
252 * Rem Term *= 264 16 2,119,255.69 2.97% 2.89
264 * Rem Term *= 276 24 4,472,845.26 6.27% 4.34
276 * Rem Term *= 288 18 3,110,781.18 4.36% 3.25
288 * Rem Term *= 300 144 28,258,319.08 39.60% 26.04
_______________________________________________________________________________________________
Total............ 553 71,365,826.41 100.00% 100.00%
===============================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
YEARS OF ORIGINATION
Percentage of
Number of Aggregate Cut-Off Date
Year of Mortgage Current Unguar. Current Unguar. Percentage of
Origination Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
1997 406 52,577,799.63 73.67 73.42
1998 147 18,788,026.78 26.33 26.58
______________________________________________________________________________________________________
Total................. 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF
MARGINS
Percentage of
Aggregate Cut-Off Date
Gross Number of Current Unguar. Current Unguar. Percentage of
Margin Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0.5 * Margin *= 1.0 2 278,127.12 0.39 .36
1.0 * Margin *= 1.5 58 12,520,113.33 17.54 10.49
1.5 * Margin *= 2.0 203 31,782,722.88 44.53 36.71
2.0 * Margin *= 2.5 216 22,204,003.77 31.11 39.06
2.5 * Margin *= 3.0 74 4,580,859.31 6.42 13.38
______________________________________________________________________________________________________
Total................. 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
LOAN SUMMARY STRATIFIED BY LIFE FLOOR
Percentage of
Aggregate Cut-Off Date
Gross Number of Current Unguar. Current Unguar. Percentage of
Life Floor Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0.500 * Floor *= 1.000 2 278,127.12 0.39 .36
1.000 * Floor *= 1.500 49 10,284,151.45 14.41 8.86
1.500 * Floor *= 2.000 144 22,210,577.98 31.12 26.04
2.000 * Floor *= 2.500 152 12,405,433.40 17.38 27.49
2.500 * Floor *= 3.000 66 4,048,929.09 5.67 11.93
4.000 * Floor *= 4.500 2 895,731.59 1.26 .36
4.500 * Floor *= 5.000 14 2,852,883.52 4.00 2.53
5.000 * Floor *= 5.500 61 11,209,796.74 15.71 11.03
5.500 * Floor *= 6.000 54 5,940,642.96 8.32 9.76
6.000 * Floor *= 6.500 9 1,239,552.56 1.74 1.63
______________________________________________________________________________________________________
Total................. 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
LOAN SUMMARY STRATIFIED BY
LIFE CAP
Percentage of
Cut-Off Date
Number of Aggregate Aggregate
Gross Mortgage Current Unguar. Current Unguar. Percentage of
Life Cap Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
CAPLESS 413 49,227,219.04 68.98 74.68
14.500 * CAP *= 15.000 9 2,235,961.88 3.13 1.63
15.000 * CAP *= 15.500 59 9,572,144.90 13.41 10.67
15.500 * CAP *= 16.000 64 9,798,570.37 13.73 11.57
16.000 * CAP *= 16.500 8 531,930.22 0.75 1.45
______________________________________________________________________________________________________
Total................. 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL AGGREGATE LOAN AMOUNTS
Percentage of
Cut-Off Date
Original Aggregate Number of Current Unguar. Current Unguar. Percentage of
Principal Balance Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0 * Balance *= 50,000 1 9,804.85 0.01 .18
50,000 * Balance *= 100,000 19 319,200.13 0.45 3.44
100,000 * Balance *= 150,000 56 1,833,567.77 2.57 10.13
150,000 * Balance *= 200,000 58 2,567,089.94 3.60 10.49
200,000 * Balance *= 250,000 67 3,789,333.18 5.31 12.12
250,000 * Balance *= 300,000 59 4,088,167.90 5.73 10.67
300,000 * Balance *= 350,000 49 4,012,521.63 5.62 8.86
350,000 * Balance *= 400,000 31 2,919,071.10 4.09 5.61
400,000 * Balance *= 450,000 29 3,116,134.01 4.37 5.24
450,000 * Balance *= 500,000 27 3,233,516.08 4.53 4.88
500,000 * Balance *= 550,000 23 3,020,534.15 4.23 4.16
550,000 * Balance *= 600,000 14 2,004,578.09 2.81 2.53
600,000 * Balance *= 650,000 23 3,633,060.72 5.09 4.16
650,000 * Balance *= 700,000 7 1,186,998.54 1.66 1.27
700,000 * Balance *= 750,000 7 1,283,663.36 1.80 1.27
750,000 * Balance *= 800,000 7 1,389,180.57 1.95 1.27
800,000 * Balance *= 850,000 12 2,480,098.75 3.48 2.17
850,000 * Balance *= 900,000 7 1,523,772.01 2.14 1.27
900,000 * Balance *= 950,000 5 1,580,198.39 2.21 .90
950,000 * Balance *= 1,000,000 6 1,464,693.77 2.05 1.08
1,000,000 * Balance *= 1,100,000 11 3,354,891.32 4.70 1.99
1,100,000 * Balance *= 1,200,000 8 3,379,289.91 4.74 1.45
1,200,000 * Balance *= 1,300,000 6 3,016,008.73 4.23 1.08
1,300,000 * Balance *= 1,400,000 2 1,229,359.69 1.72 .36
1,400,000 * Balance *= 1,500,000 9 6,425,234.66 9.00 1.63
1,500,000 * Balance 10 8,505,857.16 11.92 1.81
______________________________________________________________________________________________________
Total.................... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
CURRENT AGGREGATE LOAN AMOUNTS
Percentage of
Cut-Off Date
Current Aggregate Number of Current Unguar. Current Unguar. Percentage of
Principal Balance Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0 * Balance *= 50,000 1 9,804.85 0.01 .18
50,000 * Balance *= 100,000 20 343,810.93 0.48 3.62
100,000 * Balance *= 150,000 55 1,808,956.97 2.53 9.95
150,000 * Balance *= 200,000 59 2,614,399.38 3.66 10.67
200,000 * Balance *= 250,000 66 3,742,023.74 5.24 11.93
250,000 * Balance *= 300,000 61 4,233,790.87 5.93 11.03
300,000 * Balance *= 350,000 47 3,866,898.66 5.42 8.50
350,000 * Balance *= 400,000 31 2,919,071.10 4.09 5.61
400,000 * Balance *= 450,000 30 3,225,427.21 4.52 5.42
450,000 * Balance *= 500,000 27 3,245,701.73 4.55 4.88
500,000 * Balance *= 550,000 22 2,899,055.30 4.06 3.98
550,000 * Balance *= 600,000 15 2,153,974.50 3.02 2.71
600,000 * Balance *= 650,000 22 3,483,664.31 4.88 3.98
650,000 * Balance *= 700,000 7 1,186,998.54 1.66 1.27
700,000 * Balance *= 750,000 8 1,471,149.28 2.06 1.45
750,000 * Balance *= 800,000 7 1,394,054.60 1.95 1.27
800,000 * Balance *= 850,000 12 2,497,505.80 3.50 2.17
850,000 * Balance *= 900,000 6 1,314,005.01 1.84 1.08
900,000 * Balance *= 950,000 5 1,580,198.39 2.21 .90
950,000 * Balance *= 1,000,000 6 1,464,693.77 2.05 1.08
1,000,000 * Balance *= 1,100,000 11 3,354,891.32 4.70 1.99
1,100,000 * Balance *= 1,200,000 8 3,379,289.91 4.74 1.45
1,200,000 * Balance *= 1,300,000 6 3,016,008.73 4.23 1.08
1,300,000 * Balance *= 1,400,000 2 1,229,359.69 1.72 .36
1,400,000 * Balance *= 1,500,000 9 6,425,234.66 9.00 1.63
1,500,000 * Balance 10 8,505,857.16 11.92 1.81
______________________________________________________________________________________________________
Total.................... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
ORIGINAL UNGUARANTEED LOAN BALANCE
Percentage of
Aggregate Cut-Off Date
Original Unguar. Number of Current Unguar. Current Unguar. Percentage of
Principal Balance Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0 * Balance *= 25,000 20 329,004.98 0.46 3.62
25,000 * Balance *= 50,000 113 4,330,691.58 6.07 20.43
50,000 * Balance *= 75,000 127 7,947,467.21 11.14 22.97
75,000 * Balance *= 100,000 79 6,823,294.13 9.56 14.29
100,000 * Balance *= 150,000 94 11,483,060.93 16.09 17.00
150,000 * Balance *= 200,000 43 7,259,774.19 10.17 7.78
200,000 * Balance *= 250,000 30 6,643,800.64 9.31 5.42
250,000 * Balance *= 300,000 4 1,098,009.00 1.54 .72
300,000 * Balance *= 350,000 6 1,906,903.62 2.67 1.08
350,000 * Balance *= 400,000 5 1,863,149.63 2.61 .90
400,000 * Balance *= 450,000 3 1,312,240.06 1.84 .54
450,000 * Balance *= 500,000 4 1,954,614.51 2.74 .72
500,000 * Balance *= 550,000 2 1,061,394.22 1.49 .36
550,000 * Balance *= 600,000 1 553,878.92 0.78 .18
600,000 * Balance *= 650,000 3 1,867,450.97 2.62 .54
650,000 * Balance *= 700,000 3 2,031,578.07 2.85 .54
700,000 * Balance *= 750,000 6 4,393,656.59 6.16 1.08
750,000 * Balance *= 1,000,000 10 8,505,857.16 11.92 1.81
______________________________________________________________________________________________________
Total.................... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
CURRENT UNGUARANTEED LOAN BALANCE
Percentage of
Aggregate Cut-Off Date
Current Unguaranteed Number of Current Unguaranteed Current Unguar. Percentage of
Principal Balance Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
0 * Balance *= 25,000 21 353,615.78 0.50 3.80
25,000 * Balance *= 50,000 113 4,353,390.22 6.10 20.43
50,000 * Balance *= 75,000 128 8,045,780.74 11.27 23.15
75,000 * Balance *= 100,000 77 6,677,671.16 9.36 13.92
100,000 * Balance *= 150,000 95 11,632,457.34 16.30 17.18
150,000 * Balance *= 200,000 43 7,302,737.73 10.23 7.78
200,000 * Balance *= 250,000 29 6,451,440.69 9.04 5.24
250,000 * Balance *= 300,000 5 1,395,895.34 1.96 .90
300,000 * Balance *= 350,000 6 1,958,995.98 2.75 1.08
350,000 * Balance *= 400,000 4 1,513,170.93 2.12 .72
400,000 * Balance *= 450,000 3 1,312,240.06 1.84 .54
450,000 * Balance *= 500,000 4 1,954,614.51 2.74 .72
500,000 * Balance *= 550,000 2 1,061,394.22 1.49 .36
550,000 * Balance *= 600,000 2 1,153,334.88 1.62 .36
600,000 * Balance *= 650,000 2 1,267,995.01 1.78 .36
650,000 * Balance *= 700,000 3 2,031,578.07 2.85 .54
700,000 * Balance *= 750,000 6 4,393,656.59 6.16 1.08
750,000 * Balance *= 800,000 2 1,521,396.93 2.13 .36
800,000 * Balance *= 850,000 3 2,469,805.79 3.46 .54
850,000 * Balance *= 900,000 3 2,618,641.78 3.67 .54
900,000 * Balance *= 950,000 1 946,001.66 1.33 .18
950,000 * Balance *= 1,000,000 1 950,011.00 1.33 .18
______________________________________________________________________________________________________
Total.................... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHICAL DISTRIBUTION OF PROPERTIES BY LOAN
Percentage of
Aggregate Cut-Off Date
Number of Current Unguar. Current Unguar. Percentage of
State Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
AK 1 42,902.57 0.06 .18
AL 8 549,988.61 0.77 1.45
AR 2 99,610.54 0.14 .36
AZ 52 6,687,620.07 9.37 9.40
CA 109 13,662,901.81 19.14 19.71
CO 25 2,187,327.47 3.06 4.52
CT 1 189,505.58 0.27 .18
DC 1 38,738.04 0.05 .18
FL 32 4,040,285.47 5.66 5.79
GA 9 685,684.24 0.96 1.63
HI 1 126,563.81 0.18 .18
ID 7 445,222.07 0.62 1.27
IL 17 3,279,165.63 4.59 3.07
IN 7 2,023,082.03 2.83 1.27
KS 2 112,786.16 0.16 .36
KY 9 1,137,808.75 1.59 1.63
LA 1 156,857.53 0.22 .18
MA 6 398,048.66 0.56 1.08
MD 18 1,735,306.91 2.43 3.25
MI 7 660,965.09 0.93 1.27
MN 5 287,941.07 0.40 .90
MO 3 375,120.61 0.53 .54
MT 1 153,635.25 0.22 .18
NC 7 1,648,504.32 2.31 1.27
NE 2 251,825.30 0.35 .36
NH 1 84,407.88 0.12 .18
NJ 13 1,234,963.00 1.73 2.35
NM 1 73,084.00 0.10 .18
NV 4 480,194.35 0.67 .72
NY 15 1,812,698.44 2.54 2.71
OH 20 3,617,982.24 5.07 3.62
OK 9 1,004,279.68 1.41 1.63
OR 12 1,327,879.65 1.86 2.17
PA 14 2,088,627.58 2.93 2.53
SC 7 781,017.28 1.09 1.27
SD 1 750,000.00 1.05 .18
TN 5 882,946.99 1.24 .90
TX 52 6,243,695.66 8.75 9.40
UT 2 172,389.32 0.24 .36
VA 17 1,490,599.17 2.09 3.07
VT 1 97,500.00 0.14 .18
WA 31 6,671,914.58 9.35 5.61
WI 8 1,040,764.97 1.46 1.45
WV 2 148,672.58 0.21 .36
WY 1 105,750.00 0.15 .18
Unknown 4 279,061.45 0.39 .72
______________________________________________________________________________________________________
Total............... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Excess Int. Avail. for Unguar. Portion
Scaled to the Unguar. Portion
__________________________________________________________________________________________
Number Total
Excess of WA Current
Interest Loans % Pool WAC WAM Age Balance
<S> <C> <C> <C> <C> <C> <C>
Excess Int. = 0.00% 59 17.70 9.989 264.96 1.80 $12,633,738.33
0.00% * Excess Int. *= 0.25% 5 5.65 10.290 236.80 1.93 $4,035,164.34
0.25% * Excess Int. *= 0.50% 6 6.48 10.391 293.83 2.21 $4,626,388.96
0.50% * Excess Int. *= 0.75% 49 12.76 10.411 251.55 2.25 $9,102,947.34
0.75% * Excess Int. *= 1.00% 4 2.26 10.605 267.57 1.42 $1,613,136.12
1.00% * Excess Int. *= 1.25% 9 5.01 10.721 286.19 2.84 $3,572,456.49
1.25% * Excess Int. *= 1.50% 132 18.77 10.511 226.88 2.16 $13,393,524.99
1.50% * Excess Int. *= 1.75% 1 .46 10.750 298.00 2.00 $329,565.22
1.75% * Excess Int. *= 2.00% 8 .69 10.285 268.46 1.61 $493,248.22
2.00% * Excess Int. *= 2.25% 110 13.64 10.759 205.58 2.10 $9,733,605.84
2.50% * Excess Int. *= 2.75% 4 .43 10.879 215.50 2.92 $304,600.42
2.75% * Excess Int. *= 3.00% 92 9.81 10.998 152.60 2.04 $7,000,156.96
3.25% * Excess Int. *= 3.50% 1 .10 11.130 116.00 4.00 $72,267.38
3.50% * Excess Int. *= 3.75% 62 5.92 11.250 148.97 1.64 $4,225,755.65
3.75% * Excess Int. *= 4.00% 2 .05 11.000 107.44 .00 $34,400.00
4.00% * Excess Int. *= 4.25% 1 .09 11.250 115.00 5.00 $61,364.34
4.75% * Excess Int. *= 5.00% 8 .19 11.250 118.16 2.36 $133,505.81
_______________________________________________________________________________________
Total..... 553 100.00% 10.528 230.85 2.07 $71,365,826.41
=======================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
UNGUARANTEED LOAN PERCENTAGE
Percentage of
Aggregate Cut-Off Date
Number of Current Unguar. Current Unguar. Percentage of
Unguar. Percentage Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
15.000 * UNGR % *= 20.000 20 329,004.98 0.46 3.62
20.000 * UNGR % *= 25.000 481 43,787,048.57 61.36 86.98
25.000 * UNGR % *= 30.000 10 2,522,681.94 3.53 1.81
30.000 * UNGR % *= 35.000 9 2,976,454.29 4.17 1.63
35.000 * UNGR % *= 40.000 7 3,266,854.57 4.58 1.27
40.000 * UNGR % *= 45.000 3 1,660,850.18 2.33 .54
45.000 * UNGR % *= 50.000 12 7,678,983.44 10.76 2.17
50.000 * UNGR % *= 55.000 8 6,609,844.50 9.26 1.45
55.000 * UNGR % *= 60.000 2 1,896,012.66 2.66 .36
65.000 * UNGR % *= 70.000 1 638,091.28 0.89 .18
______________________________________________________________________________________________________
Total.................... 553 $ 71,365,826.41 100.00% 100.00%
======================================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
DEBT SERVICE COVERAGE RATIO
Percentage of
Debt Sevice Aggregate CutOff Date
Coverage Ratio Number of Current Unguar. Current Unguar. Percentage of
Range Loans Principal Balance Principal Balance Loan Count
<S> <C> <C> <C> <C>
Dsc Ratio = 0.00% 34 2,702,929.99 3.79 6.15
0.00 * Dsc Ratio *= 0.50 34 4,820,435.74 6.75 6.15
0.50 * Dsc Ratio *= 1.00 36 3,180,922.93 4.46 6.51
1.00 * Dsc Ratio *= 1.50 265 41,174,117.28 57.69 47.92
1.50 * Dsc Ratio *= 2.00 104 12,186,700.12 17.08 18.81
2.00 * Dsc Ratio *= 2.50 42 3,920,711.60 5.49 7.59
2.50 * Dsc Ratio *= 3.00 18 1,827,255.73 2.56 3.25
3.00 * Dsc Ratio *= 3.50 9 653,036.27 0.92 1.63
3.50 * Dsc Ratio *= 4.00 2 122,963.62 0.17 .36
4.00 * Dsc Ratio *= 4.50 4 239,298.08 0.34 .72
4.50 * Dsc Ratio *= 5.00 3 386,495.02 0.54 .54
5.00 * Dsc Ratio *= 5.50 1 91,960.03 0.13 .18
8.50 * Dsc Ratio *= 9.00 1 59,000.00 0.08 .18
_______________________________________________________________________________________________
Total....... 553 $ 71,365,826.41 100.00% 100.00%
===============================================================================================
* = Less Than
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY CODE
_________________________________________________________________________________________
WA Total
# % Rem WA Current
Industry Code Loan Pool WAC Term Age Balance
<S> <C> <C> <C> <C> <C> <C>
Agricultural Services 41 6.73 10.534 224.88 2.87 $4,800,059.08
Amusement, Recreation Ser 3 .55 10.370 238.53 1.14 $395,840.02
Construction - Htg, Plumb 18 4.02 10.361 229.09 2.65 $2,869,997.61
Construction - Residential 1 .06 10.750 299.00 1.00 $41,338.89
Finance, Insurance, Real 1 .07 10.500 298.00 2.00 $52,494.25
Health Services 75 6.28 10.876 164.37 1.82 $4,478,354.54
Hotels & Motels 29 17.68 10.560 285.20 2.16 $12,619,659.16
Insurance Agents, Brokers 3 .46 10.382 236.75 2.47 $329,421.35
Legal Services 8 1.30 10.386 263.03 1.75 $927,526.68
Manufacturing - Chemical 6 .77 10.662 183.16 3.12 $546,468.24
Manufacturing - Electronic 1 .53 10.750 155.00 1.00 $376,430.98
Manufacturing - Food, Bvg 3 1.22 10.320 276.42 3.68 $872,025.63
Manufacturing - Industrial 5 1.14 10.278 265.57 2.54 $814,407.77
Manufacturing - Lumber 16 4.00 10.376 224.27 1.36 $2,851,700.80
Manufacturing - Textile 1 .23 9.500 297.00 3.00 $164,502.12
Manufacturing - Transport 3 .68 10.253 298.34 1.66 $483,958.96
Motion Picture 1 .34 11.250 120.00 .00 $243,750.00
Office/Clinics - Dentist 92 13.90 10.471 204.62 1.97 $9,917,007.58
Office/Clinics - Doctor 9 1.87 10.547 271.95 2.91 $1,337,441.46
Public Transportation 10 2.25 10.512 219.37 1.69 $1,607,973.69
Real Estate Operators 4 .41 10.300 266.08 2.29 $293,042.98
Retail - Alcholic Beverag 2 .20 10.886 270.26 2.45 $144,386.54
Retail - Apparel,Acess,Fu 9 1.35 10.320 263.61 2.20 $963,214.31
Retail - Automobile 5 .46 10.668 219.81 2.74 $331,375.90
Retail - Gasoline Svc Stn 4 .32 10.989 163.33 1.30 $231,695.62
Retail - Miscellaneous 30 4.72 10.734 189.48 2.24 $3,368,664.91
Retail - Personal & House 12 1.49 10.654 234.33 1.49 $1,065,521.17
Retail - Prepared Food 54 7.95 10.610 182.21 1.77 $5,670,285.18
Services - Auto Repair 23 3.43 10.494 242.86 2.46 $2,444,543.67
Services - Business 21 4.55 10.233 258.89 1.70 $3,246,894.68
Services - Educ & Soc 12 2.61 10.596 253.90 2.05 $1,862,378.97
Services - Misc Repair 3 .37 10.547 260.40 2.56 $266,359.07
Services - Museums, Bus 14 3.29 10.502 258.98 1.94 $2,347,466.44
Services - Personal 14 1.51 10.610 197.45 1.89 $1,076,514.59
Wholesal - Durable Goods 8 1.41 10.424 231.64 .90 $1,005,767.98
Wholesale - Non-Durable Goods 6 1.13 10.211 203.20 .57 $803,269.88
Wholesale Parts & Tires 2 .12 11.099 227.10 1.60 $86,050.53
To be determined 4 .60 10.541 278.62 3.24 $428,035.18
_________________________________________________________________________________________
Total..... 553 100.00% 10.528 230.85 2.07 $71,365,826.41
=========================================================================================
</TABLE>
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) EXHIBITS
Exhibit No.
1.1 Underwriting Agreement dated March 17,
1998 among The Money Store Investment
Corporation, The Money Store of New
York, Inc., The Money Store Inc. and
Prudential Securities Incorporated,
including the related Pricing Agreement.
4.1 Pooling and Servicing Agreement dated as of
February 28, 1998 among The Money Store
Investment Corporation, The Money Store
of New York, Inc., The Money Store Inc.
as Representative, and Marine Midland
Bank, as Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Money Store Investment Corporation
The Money Store of New York Inc.
By: /s/Michael Benoff
Name: Michael Benoff
Title: Senior Vice President
Dated: April 2, 1998
<PAGE>
Schedule A
State of IRS Employer
Registrant Incorporation ID Number
The Money Store Investment New Jersey 22-2293019
Corporation
The Money Store of New York 22-3143559
New York, Inc.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
1.1 Underwriting Agreement dated March 17, 1998
among The Money Store Investment
Corporation, The Money Store of New York,
Inc., The Money Store Inc. and Prudential
Securities Incorporated, including the related
Pricing Agreement.
4.1 Pooling and Servicing Agreement dated as of
February 28, 1998 among The Money
Store Investment Corporation, The
Money Store of New York, Inc., The
Money Store Inc., as Representative,
and Marine Midland Bank, as Trustee.
$90,000,000
THE MONEY STORE INC.
The Money Store SBA Loan-Backed Adjustable Rate Certificates,
Series 1998-1
UNDERWRITING AGREEMENT
March 17, 1998
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), The
Money Store Investment Corporation, a New Jersey corporation, and The Money
Store of New York, Inc., a New York corporation ("TMSIC" and "MSNY",
respectively, each a "Seller" and together the "Sellers"), hereby confirm their
agreement with Prudential Securities Incorporated (the "Underwriter") with
respect to the delivery by the Sellers, of certificates entitled "The Money
Store SBA Loan-Backed Adjustable Rate Certificates, Series 1998-1, Class A (the
"Class A Certificates") and Class B (the "Class B Certificates," and together
with the Class A Certificates, the "Certificates"), to be issued pursuant to a
Pooling and Servicing Agreement, to be dated as of February 28, 1998 (the
"Pooling and Servicing Agreement"), among the Company, as Representative, TMSIC,
as servicer (in such capacity, the "Servicer"), MSNY and Marine Midland Bank, as
trustee ("Marine Midland" or, in its capacity as trustee under the Pooling and
Servicing Agreement, the "Trustee"). The initial aggregate principal amount of
the Class A Certificates shall be approximately $83,700,000, and the initial
aggregate principal amount of the Class B Certificates shall be approximately
$6,300,000. The Certificates represent the entire beneficial ownership interest
in a trust fund (the "Trust Fund") created by the Sellers which consists
primarily of the right to receive payments and other recoveries attributable to
certain unguaranteed interests (the "Unguaranteed Interests") in a pool of loans
(the "SBA Loans") made pursuant to Section 7(a) of the Small Business Act, as
amended, which are partially guaranteed by the U.S. Small Business
Administration (the "SBA").
As to any SBA Loan, the right to receive the guaranteed portion of the
principal balance thereof together with interest thereon at the per annum rate
in effect from time to time (less certain fees) is referred to herein as the
"Guaranteed Interest." The "Unguaranteed Interest" will equal as to any SBA
Loan, all payments and other recoveries on such SBA Loan not constituting the
Guaranteed Interest therein. The interest accruing on the guaranteed portion of
the principal balance of each SBA Loan in excess of the sum of the interest
payable to the related holder of the Guaranteed Interest net of certain fees is
hereinafter referred to as the "Excess Spread."
Prior to the delivery of the Certificates by the Sellers, and the
public offering thereof by the Underwriter, the Sellers and the Underwriter
shall enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement shall be between the Sellers and the
Underwriter and shall specify such applicable information as is indicated in,
and be in substantially the form of, Exhibit A hereto. The offering of the
Certificates will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Sellers, the Servicer, the Trustee and the SBA will enter into a
Multi-Party Agreement, dated February 28, 1998 (the "Multi-Party Agreement"),
which will set forth the relationship of the parties with respect to the SBA
Loans and the proceeds thereof and the consent of the SBA to the transactions
contemplated by the Pooling and Servicing Agreement.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Pooling and Servicing Agreement.
The Sellers understand that the Underwriter proposes to make a public
offering of the Certificates as soon as the Underwriter deems advisable after
the Pricing Agreement has been executed and delivered.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLERS.
(a) The Company and the Sellers represent and warrant to the
Underwriter 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 Sellers have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-32775) including a prospectus, and such amendments thereto as may have
been required to the date hereof, relating to the Certificates and the
offering thereof from time to time in accordance with Rule 415 under the
Securities Act of 1933, as amended (the "1933 Act"), and such registration
statement, as amended, has become effective. Such registration statement,
as amended, and the prospectus relating to the sale of the Certificates
constituting a part thereof as from time to time amended or supplemented
(including any prospectus supplement (the "Prospectus Supplement") filed
with the Commission pursuant to Rule 424 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations") and any
information incorporated therein by reference) are respectively referred to
herein as the "Registration Statement" and the "Prospectus." The conditions
of Rule 415 under the 1933 Act have been satisfied with respect to the
Company and the Registration Statement.
(ii)At the time the Registration Statement became effective and
at the Representation Date, the Registration Statement complied and will
comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriter by the Company for use in connection with the offering of the
Certificates which differs from the Prospectus on file at the Commission at
the time the Registration Statement became effective, in which case at the
time it is first provided to the Underwriter for such use) and at Closing
Time referred to in Section 2 hereof, will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by the Underwriter expressly for use in the Registration Statement or
Prospectus; and provided further, that neither the Company nor the Sellers
make any representations or warranties as to any information in any
Computational Materials (as defined below) provided by the Underwriter to
the Company pursuant to Section 10. 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 Sellers 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 any Seller to
perform its obligations under the Basic Documents (as defined below) to
which it is a party and (B) there have been no transactions entered into by
the Sellers 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 any Seller to perform its obligations under this Agreement, the
Pricing Agreement, the Pooling and Servicing Agreement and, in the case of
TMSIC and MSNY, the Multi-Party Agreement (this Agreement, the Pricing
Agreement, the Pooling and Servicing Agreement, and the Multi-Party
Agreement being herein referred to, collectively, as the "Basic
Documents").
(iv)Each of the Sellers 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 of the Sellers
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 Seller's ability to perform its obligations
under the Basic Documents to which it is a party, or (B) the business,
properties, financial position, operations or results of operations of the
Seller.
(v)Any person who signed this Agreement on behalf of any Seller,
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 Seller, 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.
(vi)Each Basic Document has been duly and validly authorized by
each Seller that is a party thereto and, when executed and delivered by
each Seller and duly and validly authorized, executed and delivered by the
other parties thereto, will constitute, the valid and binding agreement of
each such Seller, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law; and such
Basic Documents conform in all material respects to the statements relating
thereto contained in the Prospectus.
(vii)The Certificates have been duly and validly authorized by
the Servicer and, when executed and delivered by the Servicer and
authenticated by the Trustee as specified in the Pooling and Servicing
Agreement and delivered to the Underwriter pursuant to this Agreement, the
Certificates will be duly and validly issued and outstanding and entitled
to the benefits of the Pooling and Servicing Agreement; and the
Certificates conform in all material respects to all statements relating
thereto contained in the Prospectus.
(viii)Neither the issuance or delivery of the Certificates, nor
the consummation of any other of the transactions herein contemplated or in
any other Basic Document, nor the execution and delivery by each Seller of
the Basic Documents to which it is a party, nor the fulfillment of the
terms of the Certificates or each such Basic Document will result in the
breach of any term or provision of the charter or by-laws of any Seller,
and no Seller is 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 such Seller is
a party or by which it may be bound, or to which any of the property or
assets of such Seller is subject, or (B) any law, decree, order, rule or
regulation applicable to such Seller or the SBA Loans of any court or
supervisory, regulatory, administrative or governmental agency, body or
authority, or arbitrator having jurisdiction over such Seller or their
properties or the SBA Loans, the default in or the breach or violation of
which would have a material adverse effect on such Seller or the ability of
such Seller to perform its obligations under the Basic Documents to which
it is a party; and neither the issuance or delivery of the Certificates,
nor the consummation of any other of the transactions herein contemplated,
nor the fulfillment of the terms of the Certificates or the Basic Documents
will result in such a breach, violation or default which would have such a
material adverse effect.
(ix)Except as described in the Prospectus, there is no action,
suit or proceeding against or investigation of any Seller, now pending, or,
to the knowledge of any Seller, threatened against any Seller, 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 or the Certificates, (2) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by the Basic Documents, (3) which would
materially and adversely affect the performance by any Seller of its
obligations under the Basic Documents to which it is a party, or the
validity or enforceability of any Basic Document or the Certificates or (4)
seeking to adversely affect the federal income tax attributes of the
Certificates described in the Prospectus; all pending legal or governmental
proceedings to which any Seller 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 such Seller's ability to
perform its obligations under the Basic Documents to which it is a party.
(x)Each Seller possesses 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
it (except where the failure to possess any such license, certificate,
authority or permit would not materially and adversely affect the holders
of the Certificates) and no Seller 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 such Seller to perform its obligations
under the Basic Documents.
(xi)No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the Certificates hereunder, except such as may be
required under the 1933 Act or the 1933 Act Regulations or state securities
laws.
(xii)At the time of execution and delivery of the Pooling and
Servicing Agreement by the Company, the Sellers and the Trustee, the
Trustee will have acquired good title on behalf of the Trust Fund to the
Unguaranteed Interests, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, and, upon delivery to the
Underwriter of the Certificates, the Underwriter will have good and
marketable title to the Certificates free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(xiii)The transfer of the Unguaranteed Interests to the Trust
Fund at Closing Time will be treated by the Sellers for financial
accounting and reporting purposes as a sale of assets and not as a pledge
of assets to secure debt.
(xiv)Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and issuance of
the Basic Documents and the Certificates which have become due or will
become due on or prior to Closing Time shall have been paid at or prior to
Closing Time.
(xv)The Trust Fund is not required to be registered as an
"investment company" under the Investment Company Act of 1940 (the "1940
Act").
(b) Any certificate signed by any officer of either Seller and
delivered to the Underwriter or counsel for the Underwriter shall be deemed a
representation and warranty by such Seller as to the matters covered thereby.
Section 2. DELIVERY TO THE UNDERWRITER; CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, each Seller
agrees to deliver the Certificates to the Underwriter. In the event that the
initial remittance rates and prices for each Class of Certificates have not been
agreed upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed upon by the
Underwriter and the Sellers.
(b) Delivery of the Certificates shall be made at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038-4982,
or at such other place as shall be agreed upon by the Underwriter and the
Sellers, at 11:00 A.M., New York City time, on March 31, 1998, or such other
time not later than ten business days after such date as shall be agreed upon by
the Underwriter and the Sellers (such time and date of payment and delivery
being herein called "Closing Time").
(c) The Certificates will initially be represented as follows:
(i) The Class A Certificates will initially be represented by one
or more certificates registered in the name of Cede & Co., the nominee
of The Depository Trust Company ("DTC").
(ii) The Class B Certificates will initially be represented by
one or more certificates registered in the name of Cede & Co., the
nominee of DTC.
For purposes of this Agreement, all Certificates initially represented
by one or more certificates registered in the name of Cede & Co., the nominee of
DTC, shall be referred to herein, collectively, as the "DTC Certificates."
The interests of beneficial owners of the DTC Certificates will be
represented by book entries on the records of DTC and participating members
thereof. Definitive certificates evidencing the Certificates will be available
in exchange for DTC Certificates only under the limited circumstances specified
in the Pooling and Servicing Agreement. The DTC Certificates to be purchased by
the Underwriter will be delivered by the Sellers to the Underwriter (which
delivery in the case of the DTC Certificates shall be made through the
facilities of DTC) against payment of the purchase price therefor. The
Underwriter hereby agrees, subject to the terms, conditions and provisions
hereof, to purchase from the Sellers the Class A Certificates and the Class B
Certificates at the price of 99.50% of the aggregate initial principal amount of
the Class A and Class B Certificates plus accrued interest on such aggregate
initial principal amount at the weighted average Initial Remittance Rates from
March 15, 1998 to, but not including, the Closing Date. The purchase price shall
be paid by the Underwriter by a same day federal funds wire payable to the order
of the Sellers. The Certificates will be made available for examination by the
Underwriter not later than 10:00 A.M. on the last business day prior to Closing
Time.
(d) The Class A Certificates and the Class B Certificates shall be
offered to the public from time to time for sale in negotiated transactions or
otherwise, at prices determined at the time of sale.
Section 3. COVENANTS OF THE COMPANY AND THE Sellers. The Company and
the Sellers covenant with the Underwriter as follows:
(a) The Sellers will promptly notify the Underwriter, 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 either Seller
of any notification with respect to the suspension of the
qualification of the Certificates for sale in any jurisdiction or the
initiation or threatening of any proceedings for that purpose. The
Sellers 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 Sellers will give the Underwriter notice of their
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 Sellers propose for use by the
Underwriter in connection with the offering of the Certificates which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933
Act Regulations), will furnish the Underwriter 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 Underwriter or counsel for the
Underwriter shall reasonably object.
(c) The Sellers will deliver to the Underwriter 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 Underwriter may reasonably request.
(d) The Sellers will furnish to the Underwriter, 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 Underwriter 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 Underwriter,
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 Sellers will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriter) 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 Sellers
will furnish to the Underwriter a reasonable number of copies of such
amendment or supplement.
(f) The Sellers will endeavor, in cooperation with the
Underwriter, to qualify the Certificates for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States as the Underwriter may designate; provided,
however, that no Seller shall be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. In
each jurisdiction in which the Certificates have been so qualified,
each Seller 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 Certificates shall be outstanding, the Sellers
will deliver to the Underwriter, as promptly as practicable, such
information concerning the Sellers or the Certificates as the
Underwriter may reasonably request from time to time.
Section 4. PAYMENT OF EXPENSES. The Sellers 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 10); (ii)
the reproducing of the Basic Documents; (iii) the preparation, printing,
issuance and delivery of the certificates for the DTC Certificates to the
Underwriter; (iv) the fees and disbursements of (A) the Underwriter's counsel,
(B) KPMG Peat Marwick, accountants for the Company and issuer of the comfort
letter, (C) the Trustee and its counsel and (D) DTC in connection with the
book-entry registration of the DTC Certificates; (v) the qualification of the
Certificates under state securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriter in connection therewith and in connection with the
preparation of the Blue Sky Survey; (vi) the printing (or other reproducing) and
delivery to the Underwriter of copies of the Registration Statement as
originally filed and of each amendment thereto, of each preliminary prospectus
and of the Prospectus and any amendments or supplements thereto; (vii) the fees
charged by each of Moody's Investors Service, Inc. ("Moody's") and Duff & Phelps
Credit Rating Co. ("Duff & Phelps") for rating the Certificates; and (viii) the
reproducing and delivery to the Underwriter of copies of the Blue Sky Survey.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 5 or Section 9(a)(i), the Sellers shall reimburse the
Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter.
Section 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The
obligations of the Underwriter hereunder are subject to the accuracy of the
representations and warranties of the Company and the Sellers herein contained,
to the performance by Sellers of their respective obligations hereunder, and to
the following further conditions:
(a) The Registration Statement shall have become effective and,
at Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. As of
the Closing Time, the Prospectus shall have been filed with the
Commission in accordance with Rule 424 of the 1933 Act Regulations.
(b) At Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of
Closing Time, of Stroock & Stroock & Lavan LLP, counsel for
the Underwriter, to the effect that:
(A) The Registration Statement is
effective under the 1933 Act, and, to the best of
their knowledge and information, 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 therein, as
to which no opinion need be rendered) complied as
to form in all material respects with the
requirements of the 1933 Act and the Rules and
Regulations thereunder.
(C) The information in the
Prospectus under "Description of the Certificates"
and "The Agreements" and the information in the
Prospectus Supplement under "Description of the
Agreement and the Certificates" insofar as they
constitute summaries of certain provisions of the
Certificates and the Pooling and Servicing
Agreement, summarizes fairly such provisions.
(D) The information in the
Prospectus under "Summary of Terms -- Federal
Income Tax Consequences," "Summary of Terms --
ERISA Considerations," "Federal Income Tax
Consequences," "ERISA Considerations," "Legal
Aspects of the SBA Loans," and "Risk Factors --
The Status of the SBA Loans in the Event of
Bankruptcy of an Originator" and in the Prospectus
Supplement under "Summary of Terms -- Tax
Considerations," "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) TMSIC and MSNY have been duly
organized and are validly existing and are in good
standing under the laws of their jurisdiction of
incorporation. TMS SBA Holdings, Inc. (the "Spread
Account Depositor") has been duly organized and is
validly existing and in good standing under the
laws of the State of Delaware.
(F) Each Seller has the power to
engage in the transactions contemplated by this
Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates and, with
respect to TMSIC and MSNY, the Multi-Party
Agreement, and has all requisite power, authority
and legal right to execute and deliver this
Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates and, with
respect to TMSIC and MSNY, the Multi-Party
Agreement, (and any other documents delivered in
connection therewith) and to perform and observe
the terms and conditions of such instruments.
(G) The Pooling and Servicing
Agreement, the Multi- Party Agreement, the
Certificates, the Pricing Agreement and this
Agreement each have been duly authorized, executed
and delivered by each of the Sellers that is a
party thereto. Assuming due authorization,
execution and delivery by the other parties
thereto, the Pooling and Servicing Agreement, the
Certificates, the Multi-Party Agreement, the
Pricing Agreement and this Agreement are legal,
valid and binding agreements enforceable in
accordance with their respective terms against
each Seller that is a party thereto, 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.
(H) This Agreement and the Pooling
and Servicing Agreement have been duly authorized,
executed and delivered by the Company. Assuming
due authorization, execution and delivery by the
other parties thereto, this Agreement and the
Pooling and Servicing Agreement are legal, valid
and binding agreements enforceable in accordance
with their terms against the Company, subject (a)
to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium
and similar laws relating to or affecting
creditors' rights generally, (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.
(I) No consent, approval,
authorization or order of any court or
governmental agency or body is required for the
execution, delivery and performance by any Seller
of, or compliance by any Seller with, the Pooling
and Servicing Agreement, the Pricing Agreement,
this Agreement and, with respect to TMSIC and
MSNY, the Multi-Party Agreement, or the offer,
issuance, sale or delivery of the Certificates, or
the consummation of any other transactions by the
Sellers contemplated by the Pooling and Servicing
Agreement, the Pricing Agreement, this Agreement
and, with respect to TMSIC and MSNY, the
Multi-Party 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.
(J) Neither the transfer of the
Unguaranteed Interests to the Trust Fund, the
consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Pooling
and Servicing Agreement, the Multi-Party
Agreement, the Pricing Agreement and this
Agreement or the Certificates, conflicts or will
conflict with or results or will result in a
breach of or constitutes or will constitute a
default under (a) the Certificate of Incorporation
or Bylaws of any Seller, (b) the terms of any
material indenture or other material agreement or
instrument of which counsel has knowledge to which
any Seller is a party or by which it is bound or
to which it is subject or (c) 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 any Seller is subject or by which it is
bound.
(K) The sale of the Certificates
and the delivery of each SBA Note and Mortgage as
and in the manner contemplated by the Underwriting
Agreement and the Pooling and Servicing Agreement
is sufficient fully to transfer to the Trustee for
the benefit of the Certificateholders all right,
title and interest of the applicable Seller in and
to the Unguaranteed Interest of each SBA Loan,
including, without limitation, the right to
enforce each such SBA Loan in accordance with its
terms to the extent enforceable by the related
Seller at the time of such sale and delivery and
subject to the provisions of the Multi-Party
Agreement. With respect to the transfer of the SBA
Loans by the Sellers, such counsel need express no
opinion as to (i) except for transfers by MSNY,
whether the laws of the State of New York would
apply to the transfer of the related SBA Loans or
(ii) the effectiveness of the transfer of the SBA
Loans under the laws of the jurisdiction in which
TMSIC is located or the jurisdiction in which the
SBA Loans were originated or the right of the
Trustee to enforce such SBA Loans.
(L) The Certificates, assuming due
execution by the Sellers, due authorization by the
Trustee, and delivery and payment therefore
pursuant to the Underwriting Agreement, will be
validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement.
(M) Assuming compliance with all
provisions of the Pooling and Servicing Agreement,
for federal income tax purposes, the Trust Fund
will be classified as a "grantor trust" and not as
an association taxable as a corporation. The
"Spread" (as defined in the Registration
Statement) will be treated as "Stripped Coupons"
within the meaning of Section 1286 of the Internal
Revenue Code of 1986, as amended (the "Code"). A
portion of the interest accrued on each SBA Loan
will be treated as a "Stripped Coupon" purchased
by the Class B Certificateholders. Each Class A
Certificateholder will be treated as owning its
pro rata percentage interest in the principal of,
and interest payable on, the Unguaranteed Interest
of each SBA Loan (minus the portion of the
interest payable on such SBA Loan that is treated
as Spread or as a Stripped Coupon purchased by the
Class B Certificateholders) and such interest in
the Unguaranteed Interest of each SBA Loan will be
treated as a "Stripped Bond" within the meaning of
Section 1286 of the Code. Each Class B
Certificateholder will be treated as owning its
pro rata percentage interest in the principal of
the Unguaranteed Interest of each SBA Loan, plus a
disproportionate share of the interest payable on
each SBA Loan. Additionally, the Trust Fund will
not be subject to New York State income or
franchise tax.
(N) Neither the qualification of
the Pooling and Servicing Agreement under the
Trust Indenture Act of 1939, as amended, nor the
registration of the Trust Fund created by such
Agreement under the Investment Company Act of
1940, as amended, is presently required.
In rendering such opinion, Stroock & Stroock & Lavan LLP may rely
on certificates of responsible officers of the Company, the Sellers,
the 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).
(ii) The favorable opinion, dated as
of Closing Time, of corporate counsel for the Sellers and the
Company, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(A) Each of TMSIC and the Company
has been duly organized and is validly existing
and is in good standing under the laws of the
State of New Jersey.
(B) Each Seller has the power to
engage in the transactions contemplated by this
Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates and, with
respect to TMSIC and MSNY, the Multi-Party
Agreement, and has all requisite power, authority
and legal right to execute and deliver this
Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates and, with
respect to TMSIC and MSNY, the Multi-Party
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 Pooling and
Servicing Agreement, the Multi-Party Agreement,
the Pricing Agreement and the Certificates each
have been duly authorized, executed and delivered
by each of the Sellers that is a party thereto
and, assuming due authorization, execution and
delivery by the other parties thereto, are legal,
valid and binding agreements of each such Seller,
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 each such Seller,
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
Unguaranteed Interests to the Trust Fund, the
consummation of the transactions contemplated by,
nor the fulfillment of the terms of, this
Agreement, the Pooling and Servicing Agreement,
the Multi-Party Agreement, the Pricing Agreement
and the Certificates, (A) conflicts or will
conflict with or results or will result in a
breach of or constitutes or will constitute a
default under the Certificates of Incorporation or
Bylaws of any Seller, or the terms of any material
indenture or other material agreement or
instrument of which such counsel has knowledge to
which any Seller is a party or by which it is
bound or to which it is subject, or (B) results
in, or will result in the creation or imposition
of any lien or encumbrance upon the Trust Fund or
upon the related Certificates, except as otherwise
contemplated by the Pooling and Servicing
Agreement, or (C) any statute or order, rule,
regulations, writ, injunction or decree of any
court, governmental authority or regulatory body
to which any Seller 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 any Seller 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 any Seller or
in any material impairment of the right or ability
of any Seller to carry on its business
substantially as now conducted or result in any
material liability on the part of any Seller or
which would draw into question the validity of
this Agreement, the Pricing Agreement, the
Certificates, the Pooling and Servicing Agreement
or, with respect to TMSIC and MSNY, the
Multi-Party 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 any Seller to
perform under the terms of this Agreement, the
Pooling and Servicing Agreement, the Pricing
Agreement, the Certificates or, with respect to
TMSIC and MSNY, the Multi-Party 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 any Seller
of, or compliance by any Seller with, this
Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates or, with
respect to TMSIC and MSNY, the Multi-Party
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 of each SBA Loan
as and in the manner contemplated by the Pooling
and Servicing Agreement is sufficient fully to
transfer to the Trustee for the benefit of the
Certificateholders all right, title and interest
of the Sellers in and to each such Unguaranteed
Interest including, without limitation, the right
to enforce each such SBA Loan in accordance with
its terms to the extent enforceable by the Sellers
at the time of such delivery.
(iii) The favorable opinion, dated as of
Closing Time, of counsel for the SBA, in form and substance
satisfactory to counsel for the Underwriter, to the effect
that:
(A) the SBA has the full power and
authority and the legal right to execute, deliver
and perform the Multi-Party Agreement, and all
necessary action has been taken by the SBA to
authorize the execution, delivery and performance
of the Multi-Party Agreement by the SBA. The SBA
officers executing and delivering the Multi-Party
Agreement have full authority to act on behalf of
the SBA. The Multi-Party Agreement has been duly
executed and delivered on behalf of the SBA and
constitutes the legal, valid and binding
obligation of the SBA, enforceable against the SBA
in accordance with its terms.
(B) The execution, delivery and
performance of the Multi-Party Agreement by the
SBA will not violate any (i) organizational or
governing documents of the SBA, any law, treaty,
rule or regulation or a final binding
determination of an arbitrator or a determination
of a court or other governmental authority
(whether such governmental authority is the
Federal Government of the United States or any
other nation or government, or other political
subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to
government) in each case applicable to or binding
upon the SBA or its property or to which the SBA
or any of its property is subject or (ii)
provision of any security issued by SBA or any
agreement, instrument or undertaking to which the
SBA is a party or by which the SBA or any of its
property is bound.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Company, the Sellers, the
Trustee, the SBA 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 SBA.
(iv) The favorable opinion, dated as of
Closing Time, of Winston & Strawn, counsel for the Trustee, in
form and substance satisfactory to counsel for the
Underwriter.
(v) The favorable opinion, dated as of
Closing Time, of Eric R. Elwin, Esq., counsel for the Company,
relating to the due organization, valid existence and good
standing of the Company, the corporate power and authority of
the Company to own its assets, conduct its business and
perform its obligations under this Agreement, the due
execution and binding nature of this Agreement and the
non-contravention of this Agreement with respect to the
Company's organizational documents, law, the Company's other
agreements, all in customary form.
In giving its opinion required by subsection (b)(1) of this Section,
Stroock & Stroock & Lavan LLP shall additionally state that nothing has come to
its attention that has caused it to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriter by the Company for use in connection with
the offering of the Certificates which differs from the Prospectus on file at
the Commission at the Representation Date, in which case at the time it is first
provided to the Underwriter for such use) or at Closing Time, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (other than the financial, numerical,
statistical and quantitative information contained therein as to which such
counsel need express no view).
(c) At Closing Time the Underwriter shall have received from
Stroock & Stroock & Lavan LLP, counsel for the Underwriter, a letter,
dated as of Closing Time, authorizing the Underwriter to rely upon
each opinion delivered by Stroock & Stroock & Lavan LLP to each of
Moody's and Duff & Phelps in connection with the issuance of the
Certificates as though each such opinion was addressed to the
Underwriter and attaching a copy of each such opinion.
(d) At Closing Time there shall not have been, since the date
hereof or since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of any Seller 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 each Seller, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change; (ii) the representations and
warranties in Section 1(a) hereof are true and correct in all material
respects with the same force and effect as though expressly made at
and as of Closing Time; (iii) each of the Sellers has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time; and (iv) no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(e) At or prior to the delivery of the Prospectus Supplement, the
Underwriter shall have received from KPMG Peat Marwick a letter dated
as of such date and in form and substance satisfactory to the
Underwriter, 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
Servicer's servicing portfolio which are included in the Prospectus
Supplement and which are specified by the Underwriter, and have found
such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of such
Seller identified in such letter and (ii) certain information
regarding the SBA Loans and the SBA Files which are specified by the
Underwriter and contained in the Prospectus Supplement and setting
forth the results of such specified procedures.
(f) At Closing Time, the Underwriter shall have received from the
Trustee a certificate signed by one or more duly authorized officers
of the Trustee, dated as of Closing Time, as to the due acceptance of
the Pooling and Servicing Agreement by the Trustee and the due
authentication of the Certificates by the Trustee and such other
matters as the Underwriter shall request.
(g) At Closing Time, the Underwriter shall have received a
certificate signed by one or more duly authorized officers of each of
the Sellers, dated as of Closing Time to the effect that:
(i)the representations and warranties of each Seller in the
Pooling and Servicing Agreement are true and correct in all
material respects at and on the Closing Date, with the same
effect as if made on the Closing Date;
(ii)each Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied in connection with the sale and delivery of the
Certificates;
(iii)all statements and information contained in the
Prospectus Supplement under the captions "The Sellers," "The SBA
Loan Pool" and "The SBA Loan Program," 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 SBA Loan Schedule
required to be furnished pursuant to the Pooling and Servicing
Agreement is true and correct in all material respects;
(v)the copies of the Charter and By-laws of each Seller
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 either Seller which
if adversely determined, individually or in the aggregate, would
adversely affect the Sellers' obligations under the Pooling and
Servicing Agreement, the Pricing Agreement, this Agreement or,
with respect to TMSIC and MSNY, the Multi-Party Agreement;
(vii)each person who, as an officer or representative of any
Seller signed (a) this Agreement, (b) the Pooling and Servicing
Agreement, (c) the Certificates issued thereunder, (d) the
Multi-Party Agreement (e) the Pricing Agreement or (f) any other
document delivered prior hereto or on the date hereof in
connection with the purchase described in this Agreement and the
Pooling and Servicing Agreement, was, at the respective times of
such signing and delivery, and is now duly elected or appointed,
qualified and acting as such officer or representative;
(viii)except as otherwise set forth in the Pooling and
Servicing Agreement, each of the SBA Loans referred to in the
Pooling and Servicing Agreement was originated by one of the
Sellers;
(ix)a certified true copy of the resolutions of the board of
directors of each Seller with respect to the sale of the
Certificates subject to this Agreement and the Pooling and
Servicing Agreement, which resolutions have not been amended and
remain in full force and effect;
(x)all payments received with respect to the Unguaranteed
Interests 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;
(xi)Each Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied in connection with the issuance, sale and delivery of
the SBA Loans and the Certificates;
(xii)all statements contained in the Prospectus with respect
to the Company and the Sellers 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;
(h) At Closing Time, the Class A Certificates shall
have been rated "Aaa" by Moody's and "AAA" by Duff & Phelps and the
Class B Certificates shall have been rated "A2" by Moody's and "A" by
Duff & Phelps.
(i) At Closing Time, the Underwriter shall have
received a copy of the Spread Account Agreement, duly executed and
delivered by the parties thereto, accompanied by an opinion of counsel
relating to the due incorporation, valid existence and good standing of
the Spread Account Depositor, the corporate power and authority of the
Spread Account Depositor to own its assets, conduct its business and
perform its obligations under the Spread Account Agreement, and the due
execution and binding nature of the Spread Account Agreement with
respect to the Spread Account Depositor's organizational documents, law
and the Spread Account Depositor's other agreements, all in customary
form.
(j) At Closing Time, counsel for the Underwriter
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and delivery of the Certificates as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Certificates as herein
contemplated shall be satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
(k) On or before the Closing Time the Sellers shall
have delivered to the Trustee, to hold in trust for the benefit of the
holders of the Certificates, SBA Loans with aggregate outstanding
unguaranteed interests as of the Cut-Off Date of $55,707,829.59.
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 Underwriter by notice to the Sellers
at any time at or prior to Closing time, and such termination shall be
without liability of any party to any other party except as provided in
Section 4 hereof.
Section 6. INDEMNIFICATION.
(a) The Company and the Sellers jointly and severally agree to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter 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 each Seller; 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 the Underwriter), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any untrue statement or omission described in clause (i) above,
or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with the information referred to in clauses (x),
(y) and (z) of the immediately following paragraph; provided, further, such
indemnity with respect to the Prospectus or any preliminary prospectus shall not
inure to the benefit of the Underwriter (or person controlling such Underwriter)
from whom the person suffering any such loss, claim, damage or liability
purchased the Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus at or prior to the confirmation of the sale of
such Certificates to such person in any case where such delivery is required by
the 1933 Act and the untrue statement or omission of a material fact contained
in the Prospectus or any preliminary prospectus was corrected in the Prospectus.
(b) The Underwriter agrees to indemnify and hold harmless the Company
and the Sellers their directors, each of the Company's and Sellers' officers who
signed the Registration Statement, and each person, if any, who controls the
Company or either Seller within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, contained in (x) the second sentence of the fifth paragraph on the
second page which is located on the inside cover (discussing the risk of a lack
of secondary trading) of the Prospectus (or any amendment or supplement
thereto), (y) the second sentence under "Investment Considerations--Limited
Liquidity" of the Prospectus Supplement and (z) any Computational Materials,
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
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
Sellers jointly and severally, on the one hand, and the Underwriter, 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 Sellers jointly and severally, on the one hand,
and the Underwriter, on the other hand, as incurred, in such proportions that
the Underwriter is responsible for that portion represented by the underwriting
discount on the cover page of the Prospectus bears to the initial public
offering price of the Certificates appearing thereon, (or, with respect to
Computational Materials furnished by the Underwriter, the excess of the
principal amount of the Certificates over the underwriting discount allocated to
such principal amount of Certificates); and the Company and the Sellers 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, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by the Underwriter and distributed to the public exceeds the amount
of any damages which the 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 the Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as the Underwriter and each respective director of the Sellers, each officer of
the Sellers who signed the Registration Statement, and each respective person,
if any, who controls the Sellers within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as the Sellers.
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 Sellers submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of the Underwriter or any controlling person thereof, or by or on behalf
of the Sellers, and shall survive delivery of the Certificates to the
Underwriter.
Section 9. TERMINATION OF AGREEMENT.
(a) The Underwriter may terminate this Agreement, by notice to the
Company and the Sellers, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Registration Statement or
Prospectus, any change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Company or the Sellers
considered as one entity which, in the Underwriter's reasonable judgment,
materially impairs the investment quality of the Certificates; (ii) if there has
occurred any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any setting of minimum prices for trading on such
exchange or by any governmental authority; (iii) if any banking moratorium has
been declared by Federal or New York authorities; or (iv) if there has occurred
any outbreak or escalation of major hostilities in which the United States of
America is involved, any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the
Underwriter's judgment, the effects of any such outbreak, escalation,
declaration, calamity, or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Certificates.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 10. COMPUTATIONAL MATERIALS. (a) It is understood that the
Underwriter may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Certificates, subject to the following conditions:
(i) The 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" shall have the meaning
given such term and the term "ABS Term Sheets" 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 the Underwriter.
(iii) The 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 the
Underwriter. The Underwriter shall provide to the Company, for filing on Form
8-K as provided in Section 10(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 the Underwriter does not provide any Computational Materials
to the Company pursuant to subsection (a)(iii) above, the Underwriter shall be
deemed to have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Certificates that is required to be filed
with the Commission in accordance with the Kidder/PSA Letters.
(v) In the event of any delay in the delivery by the 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 the 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 is agreement set forth in Section
10(b) to file the Computational Materials by the time specified therein.
(b) The Company shall file the Computational Materials (if any)
provided to it by the Underwriter under Section 10(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 11. NOTICES. All notices and other communi-cations 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
Underwriter shall be directed to Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292, Attention: Len Blum; and notices to the
Company or any Seller shall be directed to it at 2840 Morris Avenue, Union, New
Jersey 07083, Attention: Executive Vice President.
Section 12. PARTIES. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriter, the Company,
the Sellers 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 Underwriter, 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 Underwriter, the Company, the Sellers and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Certificates from the Underwriter
shall be deemed to be a successor by reason merely of such purchase. The Company
and the Sellers shall be jointly and severally liable for all obligations
incurred under this Agreement and the Pricing Agreement.
Section 13. 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 14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Sellers a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Underwriter, the Sellers and the Company in
accordance with its terms.
<PAGE>
Very truly yours,
THE MONEY STORE
INVESTMENT CORPORATION
By: ________________________
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE OF NEW YORK, INC.
By: ________________________
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE INC.
By: ________________________
Name: Michael H. Benoff
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of the date
first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: ________________________
Name:
Title:
<PAGE>
$90,000,000
THE MONEY STORE INC.
The Money Store SBA Loan-Backed Adjustable Rate Certificates,
Series 1998-1, Class A
and Class B
PRICING AGREEMENT
March 17, 1998
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated March 17, 1998
(the "Underwriting Agreement"), relating to approximately $90,000,000, aggregate
principal amount of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1, Class A and Class B (collectively, the
"Certificates"). The approximate initial principal amount of Class A and Class B
Certificates shall be $83,700,000 and $6,300,000, respectively.
Pursuant to Section 2 of the Underwriting Agreement, The Money Store
Investment Corporation and The Money Store of New York, Inc. (collectively the
"Sellers") agree with Prudential Securities Incorporated (the "Underwriter") as
follows:
1. The Initial Remittance Rates on the Class A Certificates and
Class B Certificates shall be 6.18% and 6.60%, respectively, per
annum. Thereafter, the Class A Certificates and the Class B
Certificates shall bear interest as set forth in the Pooling and
Servicing Agreement.
2. The Underwriter shall purchase the Class A and Class B
Certificates for a price equal to 99.50% of the aggregate initial
principal amount of the Class A and Class B Certificates, plus accrued
interest on such aggregate initial principal amount at the weighted
average Initial Remittance Rates from March 15, 1998 to but not
including the Closing Date. The Class A and Class B Certificates shall
be offered by the Underwriter to the public from time to time in
negotiated transactions to be 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 Sellers a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Sellers in accordance with its terms.
Very truly yours,
THE MONEY STORE
INVESTMENT CORPORATION
By: _____________________________
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE OF NEW YORK, INC.
By: _____________________________
Name: Michael H. Benoff
Title: Senior Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: _______________________________
Name:
Title:
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Dated as of February 28, 1998
Marine Midland Bank
(Trustee)
and
THE MONEY STORE INVESTMENT CORPORATION
(Seller and Servicer)
and
THE MONEY STORE OF NEW YORK, INC.
(Seller)
and
THE MONEY STORE INC.
(Representative)
The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1, Class A and Class B
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
Definitions ............................................................I-1
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
2.01 Sale and Conveyance of Trust Fund...............................II-1
2.02 Possession of SBA Files.........................................II-1
2.03 Books and Records...............................................II-1
2.04 Delivery of SBA Loan Documents..................................II-2
2.05 Acceptance by Trustee of the Trust Fund;
Certain Substitutions;
Certification by Trustee.....................................II-4
2.06 [Intentionally Omitted].........................................II-6
2.07 Authentication of Certificates..................................II-6
2.08 Fees and Expenses of the Trustee................................II-7
2.09 Sale and Conveyance of the Subsequent
SBA Loans....................................................II-7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations of the Sellers..................................III-1
3.02 Individual SBA Loans............................................III-4
3.03 Purchase and Substitution of Defective
SBA Loans....................................................III-9
ARTICLE IV
THE CERTIFICATES
4.01 The Certificates................................................IV-1
4.02 Registration of Transfer and Exchange
Of Certificates..............................................IV-1
4.03 Mutilated, Destroyed, Lost or
Stolen Certificates..........................................IV-4
4.04 Persons Deemed Owners...........................................IV-4
ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
5.01 Duties of the Servicer..........................................V-1
5.02 Liquidation of SBA Loans........................................V-4
5.03 Establishment of Principal and
Interest Accounts; Deposits in
Principal and Interest Accounts..............................V-5
5.04 Permitted Withdrawals From the
Principal and Interest Account...............................V-7
5.05 [Intentionally Omitted].........................................V-9
5.06 Transfer of Accounts............................................V-9
5.07 Maintenance of Hazard Insurance.................................V-9
5.08 [Intentionally Omitted].........................................V-10
5.09 Fidelity Bond...................................................V-10
5.10 Title, Management and Disposition
of Foreclosed Property.......................................V-11
5.11 [Intentionally Omitted].........................................V-12
5.12 Collection of Certain SBA Loan Payments.........................V-11
5.13 Access to Certain Documentation and
Information Regarding the SBA Loans..........................V-12
5.14 Superior Liens..................................................V-13
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
6.01 Establishment of Certificate Account;
Deposits in Certificate Account; Permitted
Withdrawal From Withdrawal Account...........................VI-1
6.02 Establishment of Spread Account;
Deposits in Spread Account;
Permitted Withdrawals from Spread Account...................VI-2
6.03 Establishment of Expense Account;
Deposits in Expense Account; Permitted
Withdrawals from Expense Account.............................VI-4
6.04 Pre-Funding Account and Capitalized
Interest Account.............................................VI-5
6.05 [Intentionally Omitted].........................................VI-7
6.06 Investment of Accounts..........................................VI-7
6.07 Distributions...................................................VI-8
6.08 [Intentionally Omitted].........................................VI-9
6.09 Statements......................................................VI-9
6.10 Advances by the Servicer........................................VI-13
6.11 Compensating Interest...........................................VI-14
6.12 Reports of Foreclosure and Abandonment
of Mortgaged Property........................................VI-14
ARTICLE VII
GENERAL SERVICING PROCEDURE
7.01 [Intentionally Omitted].........................................VII-1
7.02 Satisfaction of Mortgages and Collateral
and Release of SBA Files.....................................VII-1
7.03 Servicing Compensation..........................................VII-2
7.04 Annual Statement as to Compliance...............................VII-3
7.05 Annual Independent Public
Accountants' Servicing Report................................VII-3
7.06 SBA's, and Trustee's Right to Examine
Servicer Records and Audit Operations........................VII-3
7.07 Reports to the Trustee; Principal and
Interest Account Statements..................................VII-4
7.08 Premium Protection Fee and Servicing Fee........................VII-4
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
8.01 Financial Statements............................................VIII-1
ARTICLE IX
THE SERVICER
9.01 Indemnification; Third Party Claims.............................IX-1
9.02 Merger or Consolidation of the Servicer.........................IX-2
9.03 Limitation on Liability of the
Servicer and Others..........................................IX-2
9.04 Servicer Not to Resign..........................................IX-4
ARTICLE X
DEFAULT
10.01 Events of Default...............................................X-1
10.02 Trustee to Act; Appointment of..................................X-3
10.03 Waiver of Defaults..............................................X-5
10.04 Control by Majority Certificateholders
and Others...................................................X-5
ARTICLE XI
TERMINATION
11.01 Termination.....................................................XI-1
11.02 Accounting Upon Termination of Servicer.........................XI-2
ARTICLE XII
THE TRUSTEE
12.01 Duties of Trustee...............................................XII-1
12.02 Certain Matters Affecting the Trustee...........................XII-2
12.03 Trustee Not Liable for Certificates
or SBA Loans.................................................XII-4
12.04 Trustee May Own Certificates....................................XII-4
12.05 Servicer To Pay Trustee's Fees
and Expenses.................................................XII-4
12.06 Eligibility Requirements for Trustee............................XII-5
12.07 Resignation and Removal of the Trustee..........................XII-6
12.08 Successor Trustee...............................................XII-7
12.09 Merger or Consolidation of Trustee..............................XII-8
12.10 Appointment of Co-Trustee or Separate
Trustee......................................................XII-8
12.11 Authenticating Agent............................................XII-9
12.12 Tax Returns and Reports.........................................XII-11
12.13 Protection of Trust Fund........................................XII-11
12.14 Representations, Warranties and
Covenants of Trustee.........................................XII-12
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 Acts of Certificateholders......................................XIII-1
13.02 Amendment.......................................................XIII-1
13.03 Recordation of Agreement........................................XIII-2
13.04 Duration of Agreement...........................................XIII-2
13.05 Governing Law...................................................XIII-2
13.06 Notices.........................................................XIII-2
13.07 Severability of Provisions......................................XIII-3
13.08 No Partnership..................................................XIII-3
13.09 Counterparts....................................................XIII-4
13.10 Successors and Assigns..........................................XIII-3
13.11 Headings........................................................XIII-4
13.12 Paying Agent....................................................XIII-4
13.13 Notification to Rating Agencies.................................XIII-5
13.14 Third Party Rights..............................................XIII-5
<PAGE>
EXHIBIT INDEX
EXHIBIT A Contents of SBA File
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class B Certificate
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D [Omitted]
EXHIBIT E [Omitted]
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F-1 Initial Certification
EXHIBIT F-2 Final Certification
EXHIBIT G [Omitted]
EXHIBIT H SBA Loan Schedule
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Liquidation Report
EXHIBIT K Form of Delinquency Report
EXHIBIT L Servicer's Monthly Computer Tape Format
EXHIBIT M Multi-Party Agreement
EXHIBIT N Spread Account Agreement
<PAGE>
Agreement dated as of February 28, 1998, among Marine Midland Bank, as
trustee (the "Trustee"), The Money Store Inc., as Representative (the
"Representative"), The Money Store Investment Corporation, as Seller (a
"Seller") and as Servicer (the "Servicer"), and The Money Store of New York,
Inc. (individually, a "Seller" and, together with The Money Store Investment
Corporation, the "Sellers"):
PRELIMINARY STATEMENT
The Sellers, in the ordinary course of their business, originate and
acquire SBA ss. 7(a) Loans (the "SBA ss. 7(a) Loans") to small businesses in
compliance with the provisions of the Small Business Act and the rules and
regulations thereunder and certain loans originated in connection with such
loans, which SBA ss. 7(a) Loans are evidenced by the SBA Notes in favor of the
Sellers.
Pursuant to and in accordance with the provisions of the Small
Business Act and the Loan Guaranty Agreement, a portion of each SBA ss. 7(a)
Loan has been guaranteed by the Small Business Administration (the "SBA") (such
portion, the "Guaranteed Interest").
The Sellers have previously sold the Guaranteed Interest in the SBA
ss. 7(a) Loans to certain Registered Holders pursuant to SBA Form 1086
Agreements between such Registered Holders, the SBA and the applicable Seller.
In accordance with such SBA Form 1086 Agreements, the parties hereto acknowledge
that the SBA is the party in interest with respect to the Guaranteed Interest.
Pursuant to and in accordance with policies of the SBA, the Servicer
is required to retain a portion of the interest received on the Guaranteed
Interest of each SBA ss. 7(a) Loan sold to the Trust Fund (such portion, the
"Premium Protection Fee").
To facilitate the sale of (i) the entire portion of each SBA ss. 7(a)
Loan not guaranteed by the SBA and sold to Registered Holders or constituting
part of the Premium Protection Fee and (ii) the Excess Spread (collectively, the
"Unguaranteed Interest"), and the servicing of the SBA Loans by the Servicer,
the Sellers and the Servicer are entering into this Agreement with the Trustee.
The Sellers are transferring the SBA Loans to the Trustee for the benefit of the
SBA and the Certificateholders under this Agreement, pursuant to which
Certificates are being issued, denominated on the face thereof as The Money
Store SBA Loan-Backed Adjustable Rate Certificates, Series 1998-1, Class A and
Class B, representing in the aggregate a 100% undivided beneficial ownership
interest in the right to receive the principal portion of the Unguaranteed
Interests of the SBA Loans together with interest thereon at the then applicable
Class A or Class B Remittance Rate, as the case may be. The Unguaranteed
Interest of the SBA Loans have an aggregate outstanding principal balance of
$71,365,826.41 as of February 28, 1998 (the "Cut-Off Date"), after application
of payments received by the Sellers on or before such date.
The offering of the Class A and Class B Certificates will be
registered under the Securities Act of 1933, as amended, pursuant to a
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission by the Representative, on behalf of itself, the Sellers and certain
of their affiliates. The Representative will be responsible for determining that
the issuance and offering of the Class A and Class B Certificates complies with
the provisions hereof and of such Registration Statement. Except for such
responsibility, the Representative shall have no obligations or duties
hereunder.
The parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings. This Agreement
relates to a Trust Fund evidenced by The Money Store SBA Loan-Backed Adjustable
Rate Certificates, Series 1998-1, Class A and Class B. Unless otherwise
provided, all calculations of interest pursuant to this Agreement including, but
not limited to, the Class A and Class B Interest Distribution Amounts, are based
on a 360-day year and twelve 30- day months.
ACCOUNT: The Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account established by the Trustee for the benefit of the
Certificateholders; the Expense Account established by the Trustee for the
benefit of the Trustee; and the Spread Account held by the Spread Account
Custodian pursuant to the Spread Account Agreement. The Trustee's obligation to
establish and maintain the Certificate Account is not delegable.
ACCOUNT NUMBER: The 15 digit number assigned to each SBA Loan by the
applicable Seller, as set forth in Exhibit H hereto.
ADDITION NOTICE: With respect to the transfer of Subsequent SBA Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than three Business Days prior to the related Subsequent Transfer
Date, of the Representative's designation of Subsequent SBA Loans to be sold to
the Trust Fund and the aggregate Principal Balance of such Subsequent SBA Loans.
ADDITIONAL FEE: With respect to each Additional Fee SBA Loan, the fee
payable to the SBA by the related Seller equal to 40 basis points or 50 basis
points per annum, as the case may be, on the outstanding balance of the
Guaranteed Interest of such Additional Fee SBA Loan.
ADDITIONAL FEE SBA LOAN: An SBA ss. 7(a) Loan sold in the secondary
market on or after September 1, 1993 (unless the related SBA ss. 7(a) Loan was
approved by the SBA on or after October 12, 1995), for which the related
Additional Fee is 40 basis points per annum, or an SBA ss. 7(a) Loan approved by
the SBA on or after October 12, 1995 (regardless of whether they were sold in
the secondary market), for which the related Additional Fee is 50 basis points
per annum.
ADJUSTED CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread
(other than the portion thereof allocable to the Servicing Fee on the Guaranteed
Interest), the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra
Interest and the Annual Expense Escrow Amount allocable to such interest (plus,
for the Remittance Dates occurring in April, May and June 1998, any amounts
transferred from the Pre-Funding Account and the Capitalized Interest Account
for such Remittance Date to be applied as a payment of interest on the
Certificates) and (B) a fraction, the numerator of which is the amounts set
forth in clauses (i) and (ii) of the definition of Class A Interest Distribution
Amount with respect to such Remittance Date, and the denominator of which is the
sum of the amounts set forth in clauses (i) and (ii) of the definition of Class
A Interest Distribution Amount and the amounts set forth in clauses (i) and (ii)
of the definition of Class B Interest Distribution Amount, each with respect to
such Remittance Date.
ADJUSTED CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread
(other than the portion thereof allocable to the Servicing Fee on the Guaranteed
Interest), the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra
Interest and the Annual Expense Escrow Amount allocable to such interest (plus,
for the Remittance Dates occurring in April, May and June 1998, any amounts
transferred from the Pre-Funding Account and the Capitalized Interest Account
for such Remittance Date to be applied as a payment of interest on the
Certificates) and (B) a fraction, the numerator of which is the amounts set
forth in clauses (i) and (ii) of the definition of Class B Interest Distribution
Amount with respect to such Remittance Date, and the denominator of which is the
sum of the amounts set forth in clauses (i) and (ii) of the definition of Class
A Interest Distribution Amount and the amounts set forth in clauses (i) and (ii)
of the definition of Class B Interest Distribution Amount, each with respect to
such Remittance Date.
ADJUSTED SBA LOAN REMITTANCE RATE: With respect to any SBA Loan, a
percentage per annum equal to the sum of (i) the then applicable weighted
average Class A and Class B Remittance Rates and (ii) .06% per annum, relating
to the Annual Expense Escrow Amount.
ADJUSTMENT DATE: The first Business Day of each January, April, July
and October, commencing July 1, 1998.
AGGREGATE CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class A Certificate Principal Balance less the sum
of all amounts previously distributed to the Class A Certificateholders in
respect of principal.
AGGREGATE CLASS B CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class B Certificate Principal Balance less the sum
of all amounts previously distributed to the Class B Certificateholders in
respect of principal.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: The product of .06% per annum and the
Pool Principal Balance, which is computed and payable on a monthly basis and
represents the estimated annual Trustee's fees and Trust Fund expenses.
ASSIGNMENT OF MORTGAGE: With respect to those SBA Loans secured by a
Mortgaged Property, an assignment of the Mortgage, notice of transfer or
equivalent instrument sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the transfer of the
related SBA Loan to the Trustee subject to the Multi-Party Agreement.
AUTHENTICATING AGENT: Initially, Marine Midland Bank and thereafter,
any successor appointed pursuant to Section 12.11.
AVAILABLE FUNDS: With respect to each Remittance Date, the sum of (i)
all amounts received from any source by the Servicer or any Subservicer during
the preceding calendar month (including Excess Spread) with respect to principal
and interest on the SBA Loans (net of the amount payable to the Registered
Holders, the Premium Protection Fee, the FTA's Fee, the Additional Fee, and the
Servicing Fee), (ii) advances by the Servicer, (iii) amounts to be transferred
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in April, May and June 1998, and (iv) amounts in the
Spread Account.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the States of California, New York or New
Jersey are authorized or obligated by law or executive order to be closed.
CAPITALIZED INTEREST ACCOUNT: As described in Section 6.04.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance Dates
in April, May and June 1998, the excess, if any, of (i) 30 days' interest (or,
with respect to the Remittance Date in April 1998, the actual number of days
from the Closing Date to but not including such Remittance Date) calculated at
the weighted average Class A and Class B Remittance Rates on the excess of (a)
the Aggregate Class A and Class B Certificate Principal Balances for such
Remittance Date over (b) the aggregate Principal Balances of the SBA Loans for
such Remittance Date over (ii) any Pre-Funding Earnings to be transferred to the
Certificate Account on such Remittance Date pursuant to Section 6.04(d). With
respect to the Special Remittance Date, accrued interest calculated at the
weighted average Class A and Class B Remittance Rates on the amount to be
transferred on the Special Remittance Date from the Pre-Funding Account to the
Certificate Account pursuant to Section 6.04(c).
CERTIFICATE: Any Class A or Class B Certificate executed by the
Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the form annexed hereto as Exhibits B-1 and B-2.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Class A or
Class B Certificate is registered in the Certificate Register, except that,
solely for the purposes of giving any consent, waiver, request or demand
pursuant to this Agreement, any Certificate registered in the name of the
Sellers, the Servicer, any Subservicer or any affiliate of any of them, shall be
deemed not to be outstanding and the undivided Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Certificates necessary to effect any such consent, waiver, request
or demand has been obtained.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, Marine Midland Bank, and thereafter,
any successor appointed pursuant to Section 4.02.
CLASS A CARRY-FORWARD AMOUNT: The amount, if any, by which (i) the
Class A Principal Distribution Amount with respect to any preceding Remittance
Date exceeded (ii) the amount of the actual principal distribution to the Class
A Certificates on such Remittance Date.
CLASS A CERTIFICATE: A Certificate denominated as a Class A
Certificate.
CLASS A CERTIFICATEHOLDER: A holder of a Class A Certificate.
CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the sum of (i) the interest accrued for the related Interest Accrual
Period at the then applicable Class A Remittance Rate on the Aggregate Class A
Certificate Principal Balance outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of any interest that the
Class A Certificates were entitled to receive on a preceding Remittance Date but
did not receive plus interest thereon at the then applicable Class A Remittance
Rate compounded monthly; provided, however, that on each Remittance Date the
Class A Interest Distribution Amount will be increased or decreased, as the case
may be, to equal the Adjusted Class A Interest Distribution Amount for such
Remittance Date.
CLASS A PERCENTAGE: With respect to each Remittance Date, 93%,
representing the beneficial ownership interest of the Class A Certificates in
the Trust Fund.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the Class A Percentage multiplied by the sum of, without duplication, (i)
the Unguaranteed Percentage of all payments and other recoveries of principal of
an SBA Loan (net of amounts reimbursable to the Servicer pursuant to this
Agreement) received by the Servicer or any Subservicer in the related Due
Period, excluding amounts received relating to SBA Loans which have been
delinquent 24 months or have been determined to be uncollectible, in whole or in
part, by the Servicer to the extent that the Class A Certificateholders have
previously received the Class A Percentage of the Principal Balance of such SBA
Loans; (ii) the principal portion of any Unguaranteed Interest actually
purchased by a Seller for breach of a representation and warranty or other
defect and actually received by the Trustee as of the related Determination
Date; (iii) any Substitution Adjustments deposited in the Principal and Interest
Account and transferred to the Certificate Account as of the related
Determination Date; (iv) the Unguaranteed Percentage of all losses on SBA Loans
which were finally liquidated during the applicable Due Period; (v) the
Unguaranteed Percentage of the then outstanding principal balance of any SBA
Loan which, as of the first day of the related Due Period, has been delinquent
24 months or has been determined to be uncollectible, in whole or in part, by
the Servicer; and (vi) the amount, if any, released from the Pre-Funding Account
on the April, May and June 1998 Remittance Dates.
CLASS A REMITTANCE RATE: During the initial Interest Accrual Period
6.18% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date minus 2.32% per annum.
CLASS B CARRY-FORWARD AMOUNT: The amount, if any, by which (i) the
Class B Principal Distribution Amount with respect to any preceding Remittance
Date exceeded (ii) the amount of the actual principal distribution to the Class
B Certificates on such Remittance Date.
CLASS B CERTIFICATE: A Certificate denominated as a Class B
Certificate.
CLASS B CERTIFICATEHOLDER: A holder of a Class B Certificate.
CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the sum of (i) the interest accrued for the related Interest Accrual
Period at the then applicable Class B Remittance Rate on the Aggregate Class B
Certificate Principal Balance outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of any interest that the
Class B Certificates were entitled to receive on a preceding Remittance Date but
did not receive plus interest thereon at the then applicable Class B Remittance
Rate compounded monthly; provided, however, that on each Remittance Date the
Class B Interest Distribution Amount will be increased or decreased, as the case
may be, to equal the Adjusted Class B Interest Distribution Amount for such
Remittance Date.
CLASS B PERCENTAGE: With respect to each Remittance Date, 7%,
representing the beneficial ownership interest of the Class B Certificates in
the Trust Fund.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the Class B Percentage multiplied by the sum of, without duplication, (i)
the Unguaranteed Percentage of all payments and other recoveries of principal of
an SBA Loan (net of amounts reimbursable to the Servicer pursuant to this
Agreement) received by the Servicer or any Subservicer in the related Due
Period, excluding amounts received relating to SBA Loans which have been
delinquent 24 months or have been determined to be uncollectible, in whole or in
part, by the Servicer to the extent that the Class B Certificateholders have
previously received the Class B Percentage of the Principal Balance of such SBA
Loans; (ii) the principal portion of any Unguaranteed Interest actually
purchased by a Seller for breach of a representation and warranty or other
defect and actually received by the Trustee as of the related Determination
Date; (iii) any Substitution Adjustments deposited in the Principal and Interest
Account and transferred to the Certificate Account as of the related
Determination Date; (iv) the Unguaranteed Percentage of all losses on SBA Loans
which were finally liquidated during the applicable Due Period; (v) the
Unguaranteed Percentage of the then outstanding principal balance of any SBA
Loan which, as of the first day of the related Due Period, has been delinquent
24 months or has been determined to be uncollectible, in whole or in part, by
the Servicer; and (vi) the amount, if any, released from the Pre-Funding Account
on the April, May and June 1998 Remittance Dates.
CLASS B REMITTANCE RATE: During the initial Interest Accrual Period
6.60% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date minus 1.90% per annum.
CLOSING DATE: March 31, 1998
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COLLATERAL: All items of property (including a Mortgaged Property),
whether real or personal, tangible or intangible, or otherwise, pledged by an
Obligor or others to a Seller (including guarantees on behalf of the Obligor) to
secure payment under an SBA Loan.
COMMERCIAL PROPERTY: Real property (other than agricultural property
or Residential Property) that is generally used by the Obligor in the conduct of
its business.
COMPENSATING INTEREST: As defined in Section 6.11.
CURTAILMENT: With respect to an SBA 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 SBA Loan in full, nor is intended to cure a delinquency.
CUT-OFF DATE: February 28, 1998; provided, however, that for purposes
of determining characteristics of the Initial SBA Loans, the Cut-Off Date for
those Initial SBA Loans originated after February 28, 1998 shall be deemed to be
the date of the applicable SBA Note.
DELETED SBA LOAN: An SBA Loan replaced by a Qualified Substitute SBA
Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to the 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 A2 or better
by Moody's and A or better by Duff & Phelps or P-1 by Moody's and A1 by Duff &
Phelps, 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 the Principal and
Interest Account.
DETERMINATION DATE: That day of each month which is the third Business
Day prior to the 15th day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Certificates from time to time as a
securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due
from the Obligor on an SBA Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
DUFF & PHELPS: Duff & Phelps Credit Rating Co. or any successor
thereto.
EVENT OF DEFAULT: As described in Section 10.01.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on
an SBA 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 SBA Loan, the excess, if any, of (a) the Unguaranteed Percentage of
the total Net Liquidation Proceeds, over (b) the Principal Balance of such SBA
Loan as of the date such SBA Loan became a Liquidated SBA Loan plus 30 days
interest thereon at the then applicable Adjusted SBA Loan Remittance Rate;
provided, however, that such excess shall be reduced by the amount by which
interest accrued on the advance, if any, made by the Servicer at the related SBA
Loan Interest Rate(s) exceeds interest accrued on such advance at the then
applicable weighted average Class A and Class B Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date, the amount, if
any, by which (i) the interest collected by the Servicer or any Subservicer on
the principal portion of the Guaranteed Interest of each SBA ss.7(a) Loan
exceeds (ii) the sum of (a) the interest payable to the Registered Holder, (b)
the FTA's Fee, (c) the Premium Protection Fee, (d) with respect to the
Additional Fee SBA Loans, the Additional Fee and (e) the Servicing Fee
attributable to the Guaranteed Interest.
EXPENSE ACCOUNT: The expense account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
EXTRA INTEREST: With respect to each SBA Loan, for each Remittance
Date the product of (i) the principal portion of the Unguaranteed Interest of
such SBA Loan for such Remittance Date and (ii) one-twelfth of the applicable
Extra Interest Percentage.
EXTRA INTEREST PERCENTAGE: With respect to each SBA Loan, the excess
of (i) the SBA Loan Interest Rate that would be in effect for such SBA Loan as
of the Cut-Off Date without giving effect to any applicable lifetime floors or
caps over (ii) the sum of the rates used in determining the Servicing Fee and
the Annual Expense Escrow Amount and 6.2094% per annum (i.e., the initial
weighted average Class A and Class B Remittance Rates without giving effect to
any applicable lifetime floors or caps on the SBA Loans).
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FORECLOSED PROPERTY: As described in Section 5.10.
FORECLOSED PROPERTY DISPOSITION: The final sale of a Foreclosed
Property acquired in foreclosure or by deed in lieu of foreclosure. The proceeds
of any Foreclosed Property Disposition constitute part of the definition of
Liquidation Proceeds.
FTA: Colson Services Corp., in its capacity as the Fiscal and Transfer
Agent of the SBA under the Multi-Party Agreement, or any successor thereto
appointed by the SBA.
FTA'S FEE: With respect to the Guaranteed Interest of each SBA ss.
7(a) Loan sold into the secondary market, the monthly fee payable to the FTA in
accordance with Form 1086 and the SBA Rules and Regulations.
FUNDING PERIOD: The period commencing on the Closing Date and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $100,000, (ii) the date on which an Event of
Default occurs or (iii) at the close of business on June 26, 1998.
GUARANTEED INTEREST: As to any SBA ss. 7(a) Loan, the right to receive
the guaranteed portion of the principal balance thereof together with interest
thereon at a per annum rate in effect from time to time in accordance with the
terms of the related SBA Form 1086. Certificateholders have no right or interest
in the Guaranteed Interest.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Certificate.
INITIAL DEPOSIT: A deposit of $356,829.13 required to be made by the
Spread Account Depositor into the Spread Account on the Closing Date, such
deposit being equal to 0.5% of the Original Pool Principal Balance.
INITIAL SBA LOANS: THE SBA Loans listed on Exhibit H hereto and
delivered to the Trustee on the Closing Date.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering an SBA Loan, Collateral or Foreclosed Property,
including but not limited to title, hazard, life, health and/or accident
insurance policies.
INTEREST ACCRUAL PERIOD: With respect to each Remittance Date, the
period commencing on the 15th day of the month preceding such Remittance Date
and ending on the 14th day of the month of such Remittance Date. However, for
the Remittance Date occurring in April 1998, the period commencing on March 15,
1998 and ending on April 14, 1998.
LIQUIDATED SBA LOAN: Any defaulted SBA Loan or Foreclosed 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 SBA
Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
any Foreclosed Property Disposition, revenues received with respect to the
conservation and disposition of a Foreclosed Property, and any other amounts
received in connection with the liquidation of defaulted SBA Loans, whether
through trustee's sale, foreclosure sale or otherwise.
LOAN GUARANTY AGREEMENT: The Loan Guaranty Agreement (Deferred
Participation) (SBA Form 750) dated August 13, 1980 between the SBA and The
Money Store Investment Corporation, as such agreement may be amended from time
to time, or such Loan Guaranty Agreement as applicable to a successor to the
Servicer, as the case may be.
LOAN-TO-VALUE RATIO OR LTV: With respect to any SBA Loan, the gross
amount of the loan divided by the total net collateral value (as determined by
the Sellers in accordance with their underwriting criteria) of the primary and
secondary Collateral securing such loan.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A and
Class B Certificates evidencing an Aggregate Class A Certificate Principal
Balance and Aggregate Class B Certificate Principal Balance in excess of 50% of
the Aggregate Class A Certificate Principal Balance and Aggregate Class B
Certificate Principal Balance.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section
6.10 hereof.
MONTHLY PAYMENT: The monthly payment of principal and/or interest
required to be made by an Obligor on the related SBA Loan, as adjusted pursuant
to the terms of the related SBA Note.
MOODY'S: Moody's Investors Service, Inc. or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
lien on a Mortgaged Property.
MORTGAGED PROPERTY: The underlying real property, if any, securing an
SBA Loan, consisting of a Commercial Property or Residential Property and any
improvements thereon.
MULTI-PARTY AGREEMENT: That certain Multi-Party Agreement dated as of
February 28, 1998 among the Sellers, the Trustee, the SBA and the FTA,
substantially in the form of Exhibit M hereto, as amended from time to time by
the parties thereto.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Obligor pursuant to
applicable law.
1933 ACT: The Securities Act of 1933, as amended.
OBLIGOR: The obligor on an SBA Note.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed
by the Chairman of the Board, the President, an Executive Vice President, a Vice
President, an Assistant Vice President, the Treasurer, the Secretary, or one of
the Assistant Secretaries of a Seller or the Servicer as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Sellers or Servicer, reasonably acceptable to the
Trustee and experienced in matters relating thereto.
ORIGINAL CLASS A CERTIFICATE PRINCIPAL BALANCE: $83,700,000.
ORIGINAL CLASS B CERTIFICATE PRINCIPAL BALANCE: $6,300,000.
ORIGINAL POOL PRINCIPAL BALANCE: $71,365,826.41.
ORIGINAL PRE-FUNDED AMOUNT: $18,634,173.59, representing the amount
deposited in the Pre-Funding Account on the Closing Date.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer
Date occurring in April 1998, the difference between (i) three-months' interest
on the aggregate Principal Balances of the Subsequent SBA Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the weighted average
Class A and Class B Remittance Rates, and (ii) three- months' interest on the
aggregate Principal Balances of the Subsequent SBA Loans acquired by the Trust
Fund on such Subsequent Transfer Date, calculated at the rate at which Pre-
Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in May 1998,
the difference between (i) two-months' interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A and Class B
Remittance Rates, and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in June 1998,
the difference between (i) one-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A and Class B
Remittance Rates, and (ii) one-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
PAYING AGENT: Initially, Marine Midland Bank, and thereafter, any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 13.12 hereof and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.
PERCENTAGE INTEREST: With respect to a Class A or Class B Certificate,
the portion of the Trust Fund evidenced by such Class A or Class B Certificate,
expressed as a percentage, the numerator of which is the denomination
represented by such Class A or Class B Certificate and the denominator of which
is the Original Class A Certificate Principal Balance or Original Class B
Certificate Principal Balance, as the case may be. The Certificates are issuable
only in the minimum Percentage Interest corresponding to a minimum denomination
of $1,000 and integral multiples of $1,000 in excess thereof, except for one
Certificate of each Class which may be issued in a different denomination to
equal the remainder of the Original Class A Certificate Principal Balance or
Original Class B Certificate Principal Balance, as the case may be.
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, 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 Prime-1 or better by Moody's and Duff 1+ or
better by Duff & Phelps;
(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 A3 or better by Moody's and A or better by
Duff & Phelps;
(iv) commercial paper (having original maturities of not more
than 365 days) rated Prime-1 or better by Moody's and Duff 1+ or
better by Duff & Phelps;
(v) debt obligations rated Aaa by Moody's and AAA by Duff &
Phelps (other than any such obligations that do not have a fixed par
value and/or whose terms do not promise a fixed dollar amount at
maturity or call date);
(vi) investments in money market funds rated Aaa or better by
Moody's and Duff 1+ or better by Duff & Phelps, if so rated by Duff &
Phelps, the assets of which are invested solely in instruments
described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds providing
for the investment of funds in an account or insuring a minimum rate
of return on investments of such funds, which contract or surety bond
shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial
strength or claims paying ability are rated "Aaa" by Moody's
and "AAA" by Duff & Phelps; and
(b) provide that the Trustee may exercise all of the
rights of the Representative under such contract or surety
bond without the necessity of the taking of any action by
the Representative;
(viii) A repurchase agreement that satisfies the following
criteria:
(a) Must be between the Trustee and a dealer bank
bank or securities firm described in 1. or 2. below:
1. Primary dealers on the Federal Reserve
reporting dealer list which are rated
Aa" or better by Moody's and "AA" or
better by Duff & Phelps, or
2. Banks rated "Aa" or better by Moody's
and "AA" or better by Duff & Phelps.
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for
the transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the full
faith and credit of the U.S.
government (and FNMA & FHLMC)
2. the term of the repurchase agreement
may be up to 60 days
3. the collateral must be delivered to
the Trustee or third party custodian
acting as agent for the Trustee by
appropriate book entries and
confirmation statements
must have been delivered before or
simultaneous with payment (perfection
by possession of certificated
securities)
4. Valuation of collateral
A. The securities must be valued
weekly, marked-to-market at current
market price plus accrued interest
i. The value of the collateral
must be equal to at least
104% of the amount of cash
transferred by the
Trustee or custodian for the
Trustee to the dealer bank
or security firm under
the repurchase agreement
plus accrued interest. If
the value of securities
held as collateral slips
below 104% of the
value of the cash
transferred by the
Trustee plus accrued
interest, then additional
cash and/or acceptable
securities must be
transferred. If, however,
the securities used as
collateral are FNMA or
FHLMC, then the value of
collateral must equal at
least 105%; and
(ix) any other investment acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the Trustee prior
to any such investment.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
POOL PRINCIPAL BALANCE: The aggregate Principal Balances as of any
date of determination.
PRE-FUNDED AMOUNT: With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance
with Section 6.04 hereof and maintained by the Trustee.
PRE-FUNDING EARNINGS: With respect to the Remittance Date in April
1998, the actual investment earnings earned during the period from the Closing
Date through the Business Day immediately preceding the Determination Date in
April 1998 (inclusive) on the Pre-Funded Amount. With respect to the Remittance
Dates in May and June 1998, the actual investment earnings earned during the
period from the Determination Date in April and May 1998, respectively, through
the Business Day immediately preceding the Determination Date in May and June
1998, respectively (inclusive), on the Pre-Funded Amount.
PREMIUM PROTECTION FEE: As to any SBA Loan and any date of
determination, an amount equal to 0.60% per annum of the then outstanding
principal balance of the related Guaranteed Interest.
PRIME RATE: With respect to any date of determination, the lowest
prime lending rate published in the Money Rate Section of THE WALL STREET
JOURNAL.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any SBA Loan or related Foreclosed
Property, at any date of determination, (i) the Unguaranteed Percentage of the
principal balance of the SBA Loan outstanding as of the Cut-Off Date (or
applicable Subsequent Cut-Off Date with respect to Subsequent SBA Loans), after
application of principal payments received on or before such date, minus (ii)
the sum of (a) the Unguaranteed Percentage of the principal portion of the
Monthly Payments received during each Due Period ending prior to the most recent
Remittance Date, which were distributed pursuant to Section 6.07 on any previous
Remittance Date, and (b) the Unguaranteed Percentage of all Principal
Prepayments, Curtailments, Excess Payments, Insurance Proceeds, Released
Mortgaged Property Proceeds, Net Liquidation Proceeds and net income from a
Foreclosed Property to the extent applied by the Servicer as recoveries of
principal in accordance with the provisions hereof, which were distributed
pursuant to Section 6.07 on any previous Remittance Date. The Principal Balance
of any Liquidated SBA Loan or any SBA Loan that has been paid off will equal $0.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on an
SBA Loan equal to the outstanding principal balance thereof, received in advance
of the final scheduled Due Date which is intended to satisfy an SBA Loan in
full.
PRIOR LIEN: With respect to any SBA Loan secured by a lien on a
Mortgaged Property which is not a first priority lien, each mortgage loan
relating to the corresponding Mortgaged Property having a prior priority lien.
QUALIFIED SUBSTITUTE SBA LOAN: An SBA loan or SBA loans substituted
for a Deleted SBA Loan pursuant to Section 2.05 or 3.03 hereof, which (i) has or
have an SBA Loan interest rate or rates of not less than (and not more than two
percentage points more than) the SBA Loan Interest Rate for the Deleted SBA
Loan, (ii) relates or relate to the same type of Collateral as the Deleted SBA
Loan, (iii) matures or mature no later than (and not more than one year earlier
than) the Deleted SBA 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 SBA Loan at such time, (v) has or have a principal
balance or principal balances relating to an unguaranteed interest or
unguaranteed interests (after application of all payments received on or prior
to the date of substitution) equal to or less than the Principal Balance of the
Unguaranteed Interest or Unguaranteed Interests as of such date of the Deleted
SBA Loan, (vi) has or have the same Unguaranteed Percentage at the time of
substitution as the Deleted SBA Loan; (vii) was originated under the same
program type as the Deleted SBA Loan; and (viii) complies or comply as the date
of substitution with each representation and warranty set forth in Section 3.02.
RATING AGENCIES: Moody's and Duff & Phelps.
RATING AGENCY CONDITION: With respect to any specified action, that
each of the Rating Agencies shall have notified the Servicer and the Trustee,
orally or in writing, that such action will not result in a reduction or
withdrawal of the rating assigned by the respective Rating Agency to either
Class of Certificates.
RECORD DATE: With respect to any Remittance Date, the close of
business on the last day of the month immediately preceding the month of the
related Remittance Date. With respect to the Special Remittance Date, May 31,
1998.
REGISTERED HOLDER: With respect to any SBA ss. 7(a) Loan, the Person
identified as such in the applicable SBA Form 1086, and any permitted assignees
thereof.
REGISTRATION STATEMENT: The registration statement (File No.
333-32775) filed by the Representative with the Securities and Exchange
Commission in connection with the issuance and sale of the Certificates,
including the Prospectus dated September 11, 1997 and the Prospectus Supplement
dated March 26, 1998.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer and/or a Seller with respect to (i) the Monthly Advances
and Servicing Advances reimbursable pursuant to Section 5.04(b), (ii) any
advances reimbursable pursuant to Section 9.01 and not previously reimbursed
pursuant to Section 6.03(c)(i), and (iii) any other amounts reimbursable to the
Servicer or a Seller pursuant to this Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any SBA Loan secured by a
Mortgaged Property, 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 SBA or the Registered Holder in accordance with the SBA Rules and
Regulations, the Servicer's customary SBA loan servicing procedures and this
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 in
April 1998.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and
its successors and assigns as Representative hereunder.
RESIDENTIAL PROPERTY: Any one or more of the following, (i) single
family dwelling unit not attached in any way to another unit, (ii) row house,
(iii) two-family house, (iv) low-rise condominium, (v) planned unit development,
(vi) three- or four-family house, (vii) high-rise condominium, (viii) mixed use
building or (ix) manufactured home (as defined in FNMA/FHLMC Seller-Servicers'
Guide) to the extent that it constitutes real property in the state in which it
is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division, 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. When
used with respect to a Seller, the President, any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SBA: The United States Small Business Administration, an agency of the
United States Government.
SBA FILE: As described in Exhibit A.
SBA FORM 1086: The Secondary Participation Guaranty and Certification
Agreement on SBA Form 1086, pursuant to which investors purchase the Guaranteed
Interest.
SBA LOAN: An individual loan which is transferred to the Trust Fund
pursuant to this Agreement, together with the rights and obligations of a holder
thereof and payments thereon and proceeds therefrom, the SBA Loans originally
subject to this Agreement being identified on the SBA Loan Schedule. Any loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust Fund by the Sellers (as
indicated by the SBA Loan Schedule), in fact was not transferred and assigned to
the Trust Fund for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.02(h) hereof with respect
to the loan, shall nevertheless be considered an "SBA Loan" for all purposes of
this Agreement. For the purposes of this Agreement, references to SBA Loans are
equivalent to references to SBA ss. 7(a) Loans.
SBA LOAN INTEREST RATE: With respect to any date of determination, the
then applicable annual rate of interest borne by an SBA Loan, pursuant to its
terms, which, as of the Cut-Off Date, is shown on the SBA Loan Schedule.
SBA LOAN SCHEDULE: The schedule of Initial SBA Loans listed on Exhibit
H attached hereto and delivered to the Trustee on the Closing Date, such
schedule identifying each Initial SBA Loan by address of the related premises,
and the name of the Obligor and setting forth as to each Initial SBA 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
of the SBA Loan, (iv) the Initial SBA Loan date and original number of months to
maturity, in months, (v) the SBA Loan Interest Rate as of the Cut-Off Date and
guaranteed rate payable to the Registered Holder and the FTA, (vi) when the
first Monthly Payment was due, (vii) the Monthly Payment as of the Cut-Off Date,
(viii) the remaining number of months to maturity as of the Cut-Off Date, (ix)
the Unguaranteed Percentage, (x) the SBA loan number, (xi) the margin which is
added to the Prime Rate to determine the SBA Loan Interest Rate, and (xii) the
lifetime minimum and maximum SBA Loan Interest Rates, if applicable.
SBA NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under an SBA Loan.
SBA RULES AND REGULATIONS: The Small Business Act, as amended,
codified at 15 U.S.C. 631 ET. SEQ., all rules and regulations promulgated from
time to time thereunder, the Loan Guaranty Agreement and SBA Standard Operating
Procedures and official notices as from time to time are in effect.
SBA SS. 7(A) LOAN: An SBA Loan originated pursuant to Section 7(a) of
the SBA Rules and Regulations. For purposes of this Agreement, references to SBA
ss. 7(a) Loans are equivalent to references to SBA Loans.
SELLERS: The Money Store Investment Corporation, a New Jersey
corporation, The Money Store of New York, Inc., a New York corporation, and
their respective successors and assigns as Sellers hereunder.
SERIES: 1998-1.
SERVICER: The Money Store Investment Corporation, a New Jersey
corporation, and its successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.09.
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 or other Collateral, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Foreclosed Property, (iv) compliance with the
obligations under clause (iv) of Section 5.01(a) and Sections 5.02 and 5.07,
which Servicing Advances are reimbursable to the Servicer to the extent provided
in Section 5.04(b) and (v) in connection with the liquidation of an SBA Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement thereon up to a maximum rate per annum equal to the related SBA
Loan Interest Rate, except that any amount of such interest accrued at a rate in
excess of the weighted average Class A and Class B Remittance Rates with respect
to the Remittance Date on or prior to which the Unguaranteed Percentage of the
Net Liquidation Proceeds will be distributed shall be reimbursable only from
Excess Proceeds.
SERVICING FEE: As to each SBA Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly from the amounts
received in respect of interest on the Guaranteed Interest and the Unguaranteed
Interest of such SBA Loan, shall accrue at the rate of 0.40% 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 an SBA Loan is computed. The
Servicing Fee is payable solely from the interest portion of related (i) Monthly
Payments, (ii) Liquidation Proceeds or (iii) Released Mortgaged Property
Proceeds collected by the Servicer, or as otherwise provided in Section 5.04.
The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the SBA Loans whose name
appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
SPECIAL REMITTANCE DATE: June 29, 1998.
SPECIFIED SPREAD ACCOUNT REQUIREMENT: The maximum amount of Spread
Balance required to be on deposit at any time in the Spread Account which, with
respect to any Remittance Date, shall be equal to the sum of (i) the then
outstanding Principal Balance with respect to all SBA Loans 180 days or more
delinquent and (ii) the greater of (a) 3.5% of the then outstanding Pool
Principal Balance or (b) 2.0% of the Original Pool Principal Balance; provided,
however, that for purposes of clauses (i) and (ii)(a), there shall be excluded
the Principal Balance of SBA Loans which have been delinquent 24 months or have
been determined to be uncollectible, in whole or in part, by the Servicer, to
the extent that the Certificateholders have previously received the Principal
Balance of such SBA Loans.
SPREAD ACCOUNT: The Spread Account established in accordance with the
terms of the Spread Account Agreement and maintained by the Spread Account
Custodian for distribution in accordance with the provisions of Section 6.02
hereof.
SPREAD ACCOUNT AGREEMENT: The Agreement dated as of March 31, 1998 by
and among the Spread Account Depositor and the Spread Account Custodian,
substantially in the form attached hereto as Exhibit N, as amended from time to
time by the parties thereto.
SPREAD ACCOUNT CUSTODIAN: Marine Midland Bank, in its capacity as
Spread Account Custodian under the Spread Account Agreement, or any successor
thereto.
SPREAD ACCOUNT DEPOSITOR: TMS SBA Holdings, Inc., a wholly-owned
subsidiary of The Money Store Investment Corporation.
SPREAD ACCOUNT EXCESS: As defined in Section 6.02(b)(iii).
SPREAD BALANCE: As of any date of determination, the sum of the
aggregate amount then on deposit in the Spread Account.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
SBA Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT SBA LOANS: The SBA Loans sold to the Trust Fund pursuant to
Section 2.09, which shall be listed on the Schedule of SBA Loans attached to the
related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee and the
applicable Seller(s), by which Subsequent SBA Loans are sold and assigned to the
Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each
Subsequent Transfer Agreement.
SUBSERVICER: The Money Store of New York, Inc. or any other person
with whom the Servicer has entered into a Subservicing Agreement and who
satisfies any requirements set forth in Section 5.01(b) hereof in respect of the
qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain SBA Loans
as provided in Section 5.01(b), a copy of which shall be delivered, along with
any modifications thereto, to the Trustee and the SBA.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the amount (if any) by which the aggregate
unguaranteed portions of the principal balances (after application of principal
payments received on or before the date of substitution) of any Qualified
Substitute SBA Loans as of the date of substitution are less than the aggregate
of the Principal Balance of the related Deleted SBA Loans.
TAX RETURN: The federal income tax return to be filed on behalf of the
Trust Fund together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
TRUST FUND: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
the Unguaranteed Interest of such SBA Loans as from time to time are subject to
this Agreement, together with the SBA Files relating thereto and all proceeds
thereof, (ii) the Unguaranteed Interest of such assets (including any Permitted
Instruments) as from time to time are identified as Foreclosed Property or are
deposited in or constitute the Certificate Account, (iii) the Unguaranteed
Interests of any Insurance Proceeds under all insurance policies with respect to
the SBA Loans required to be maintained pursuant to this Agreement, (iv) the
Unguaranteed Interest of any Liquidation Proceeds and (v) the Unguaranteed
Interest of any Released Mortgaged Property Proceeds, including all earnings
thereon and proceeds thereof. Amounts deposited in the Principal and Interest
Account, Spread Account, Pre-Funding Account and Capitalized Interest Account
shall be held by the Trustee or the Spread Account Custodian, as the case may
be, but shall not constitute part of the Trust Fund.
TRUSTEE: Marine Midland Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S DOCUMENT FILE: The documents delivered pursuant to Section
2.04.
UNGUARANTEED INTEREST: The sum of (i) that portion of an SBA Loan not
guaranteed by the SBA pursuant to the SBA Rules and Regulations and sold to
Registered Holders or constituting part of the Premium Protection Fee, the FTA's
Fee, with respect to the Additional Fee SBA Loans, the Additional Fee and the
Servicing Fee, and (ii) the Excess Spread.
UNGUARANTEED PERCENTAGE: With respect to any SBA ss. 7(a) Loan, the
quotient, expressed as a percentage, the numerator of which shall be the
principal portion of the Unguaranteed Interest of such SBA ss. 7(a) Loan as of
the Cut-Off Date (or, in the case of a Subsequent SBA Loan, as of the Subsequent
Cut-Off Date) and the denominator of which shall be the sum of the principal
portion of the Unguaranteed Interest and the principal portion of the Guaranteed
Interest of such SBA ss. 7(a) Loan as of the Cut-Off Date (or, in the case of a
Subsequent SBA Loan, as of the Subsequent Cut-Off Date).
<PAGE>
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND.
(a) The Sellers hereby sell, transfer, assign, set over and convey to
the Trustee without recourse and for the benefit of the SBA and the
Certificateholders, as their interests may appear, subject to the terms of this
Agreement and the Multi- Party Agreement, all of the right, title and interest
of the Sellers in and to the Unguaranteed Interests of the Initial SBA Loans and
all other assets included or to be included in the Trust Fund.
(b) The rights of the Certificateholders to receive payments with
respect to the SBA Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement.
Section 2.02 POSSESSION OF SBA FILES.
(a) Upon the issuance of the Certificates, the ownership of each SBA
Note, the Mortgage and the contents of the related SBA File relating to the
Initial SBA Loans is, and upon each Subsequent Transfer Date the ownership of
each Mortgage Note, the Mortgage and the contents of the related Mortgage File
relating to the applicable Subsequent SBA Loans will be, vested in the Trustee
for the benefit of the SBA and the Certificateholders, as their interests may
appear.
(b) Pursuant to Section 2.04, with respect to the Initial SBA Loans,
the Sellers have delivered or caused to be delivered, and, on each Subsequent
Transfer Date, the Sellers will deliver or cause to be delivered, each SBA Note
relating to an SBA ss. 7(a) Loan to the FTA.
Section 2.03 BOOKS AND RECORDS.
The sale of the Unguaranteed Interest of each SBA Loan shall be
reflected on the Sellers' balance sheets and other financial statements as a
sale of assets by the related Seller and each Seller shall respond to any
third-party inquiry that such transfer is so reflected as a sale. The Sellers
shall be responsible for maintaining, and shall maintain, a complete set of
books and records for each SBA Loan which shall be clearly marked to reflect the
ownership of the Unguaranteed Interest in each SBA Loan by the Trustee for the
benefit of the SBA and the Certificateholders, as their interests may appear.
Section 2.04 DELIVERY OF SBA LOAN DOCUMENTS.
The Sellers, (i) contemporaneously with the delivery of this
Agreement, have delivered or caused to be delivered to the Trustee or, with
respect to the SBA Notes relating to the SBA ss. 7(a) Loans being delivered
pursuant to (a) below, to the FTA, each of the following documents for each
Initial SBA Loan and (ii) on each Subsequent Transfer Date, will deliver or
cause to be delivered to the Trustee or to the FTA, each of the following
documents listed in (a) - (e) below for each Subsequent SBA Loan originated by
such Seller:
(a) The original SBA Note, endorsed by means of an allonge as follows:
"Pay to the order of Marine Midland Bank, and its successors and assigns, as
trustee under that certain Pooling and Servicing Agreement dated as of February
28, 1998, for the benefit of the United States Small Business Administration and
holders of The Money Store SBA Loan-Backed Certificates, Series 1998-1, Class A
and Class B, as their respective interests may appear, without recourse" and
signed, by facsimile or manual signature, in the name of the applicable Seller
by a Responsible Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to the applicable Seller, if
such Seller was not the originator;
(b) With respect to those SBA Loans secured by Mortgaged Properties,
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 of the
applicable Seller where the original has been transmitted for recording until
such time as the original is returned by the public recording office or duly
licensed title or escrow officer or (iii) a copy of the Mortgage certified by
the public recording office in those instances where the original recorded
Mortgage has been lost;
(c) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) the original Assignment of Mortgage from the applicable Seller
endorsed as follows: "Marine Midland Bank, ("Assignee") its successors and
assigns, as trustee under the Pooling and Servicing Agreement dated as of
February 28, 1998 subject to the Multi-Party Agreement dated as of February 28,
1998" 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 SBA Loans secured by Mortgaged Properties located in the same
county), or (ii) a copy of such Assignment of Mortgage certified as a true copy
by a Responsible Officer of the applicable Seller where the original has been
transmitted for recording (PROVIDED, HOWEVER, that where the original Assignment
of Mortgage is not being delivered to the Trustee, each such Responsible Officer
may complete one or more blanket certificates attaching copies of one or more
Assignments of Mortgage relating to the Mortgages originated by the applicable
Seller);
(d) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all intervening assignments, if any, showing a complete
chain of title from the originator to the applicable Seller, 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 applicable Seller 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;
(e) With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all title insurance policies relating to the Mortgaged
Properties to the extent the Sellers obtained such policies or (ii) copies of
any title insurance policies or other evidence of lien position, including but
not limited to PIRT policies, limited liability reports and lot book reports, to
the extent the Sellers obtain such policies or other evidence of lien position,
certified as true by the applicable Seller;
(f) For all SBA Loans, blanket assignment of all Collateral securing
the SBA Loan, including without limitation, all rights under applicable
guarantees and insurance policies;
(g) For all SBA Loans, irrevocable power of attorney of the applicable
Seller to the Trustee to execute, deliver, file or record and otherwise deal
with the Collateral for the SBA Loans in accordance with the Agreement. The
power of attorney will be delegable by the Trustee to the Servicer and any
successor servicer and will permit the Trustee or its delegate to prepare,
execute and file or record UCC financing statements and notices to insurers; and
(h) For all SBA Loans, blanket UCC-1 financing statements identifying
by type all Collateral for the SBA Loans in the SBA Loan Pool and naming the
Trustee as Secured Party and the applicable Seller as the Debtor. The UCC-1
financing statements will be filed promptly following the Closing Date in New
York, New Jersey and California and will be in the nature of protective notice
filings rather than true financing statements.
The Sellers shall, within ten Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or with respect to the
Subsequent SBA Loans, within one year of the related Subsequent Transfer Date),
deliver or cause to be delivered to the Trustee: (i) the original recorded
Mortgage in those instances where a copy thereof certified by the Seller was
delivered to the Trustee; (ii) the original recorded Assignment of Mortgage from
the applicable Seller to the Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Trustee in those instances where copies thereof certified by such Seller
were delivered to the Trustee; and (iii) any intervening assignments of Mortgage
in those instances where copies thereof certified by the applicable Seller were
delivered to the Trustee. 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 Sellers shall be deemed to have
satisfied their obligations hereunder upon delivery to the Trustee 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.
All SBA Loan documents held by the Trustee or the FTA, as the case may be, as to
each SBA Loan are referred to herein as the "Trustee's Document File."
Although it is the intent of the parties to this Agreement that the
conveyance of the Sellers' right, title and interest in and to the Unguaranteed
Interests of the SBA Loans and other assets in the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Sellers shall be deemed to have granted, and hereby do grant,
to the Trustee a first priority perfected security interest in all of the
Sellers' right, title and interest in, to and under the Unguaranteed Interests
of the SBA Loans and other assets in the Trust Fund, and that this Agreement
shall constitute a security agreement under applicable law.
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
(a) The SBA shall cause the FTA to execute and deliver on the Closing
Date (or, with respect to the Subsequent SBA Loans, on the related Subsequent
Closing Date), for each SBA ss. 7(a) Loan, an acknowledgment of receipt of the
SBA Note by the FTA in the form attached as Exhibit 1 to the Multi-Party
Agreement, and declares that the FTA will hold such documents and any
amendments, replacements or supplements thereto, as agent for the benefit of the
SBA and the Certificateholders. The Trustee agrees, for the benefit of the SBA
and the Certificateholders, to review each Trustee's Document File within 90
days after the Closing Date or Subsequent Closing Date, as the case may be (or,
with respect to any Qualified Substitute SBA Loan, within 45 days after the
assignment thereof), and to deliver to the Certificateholders, the Sellers, the
SBA and the Servicer a certification in the form attached hereto as Exhibit F-1.
Within 360 days after the Closing Date (or, with respect to any Qualified
Substitute SBA Loan, within 360 days after the assignment thereof), the Trustee
shall deliver to the Servicer, the applicable Seller, the SBA, each Rating
Agency and any Certificateholder who requests a copy from the Trustee a final
certification in the form attached hereto as Exhibit F-2 evidencing the
completeness of the Trustee's Document Files.
(b) If the Trustee or the SBA, as the case may be, during the process
of reviewing the Trustee's Document Files finds any document constituting a part
of a Trustee's Document File which is not properly executed, has not been
received, is unrelated to an SBA Loan identified in the SBA 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 SBA Loan Schedule, the Trustee or
the SBA, as the case may be, shall promptly so notify the Servicer and the
Sellers. In performing any such review, the Trustee or the SBA, as the case may
be, may conclusively rely on the Sellers as to the purported genuineness of any
such document and any signature thereon. It is understood that the scope of the
Trustee's and the SBA's review of the SBA Files is limited solely to confirming
that the documents listed in Section 2.04 have been executed and received and
relate to the SBA Loans identified in the SBA Loan Schedule. The Sellers agree
to use reasonable efforts to remedy a material defect in a document constituting
part of an SBA File of which it is so notified by the Trustee or the SBA, as the
case may be. If, however, within 60 days after the Trustee's or the SBA's notice
to it respecting such material defect the applicable Seller has not remedied the
defect and such defect materially and adversely affects the value of the related
SBA Loan, the Seller will (i) substitute in lieu of such SBA Loan a Qualified
Substitute SBA Loan in the manner and subject to the conditions set forth in
Section 3.03 or (ii) purchase the Unguaranteed Interest of such SBA Loan at a
purchase price equal to the Principal Balance of such Unguaranteed Interest as
of the date of purchase, plus 30 days' interest on such Principal Balance,
computed at the Adjusted SBA Loan Remittance Rate as of the next succeeding
Determination Date, plus any accrued unpaid Servicing Fees, Monthly Advances and
Servicing Advances reimbursable to the Servicer, which purchase price shall be
deposited in the Principal and Interest Account on the next succeeding
Determination Date.
(c) Upon receipt by the Trustee and the SBA of a certification of a
Servicing Officer of the Servicer of such purchase and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit I hereto), the Trustee and the SBA
shall release to the Servicer for release to the applicable Seller the related
Trustee's Document File and the Trustee and the SBA shall execute, without
recourse, and deliver such instruments of transfer necessary to transfer such
SBA Loan to the Seller. All costs of any such transfer shall be borne by the
Servicer.
(d) If in connection with taking any action the Servicer requires any
item constituting part of the Trustee's Document File, or the release from the
lien of the related SBA Loan of all or part of any Mortgaged Property or other
Collateral, the Servicer shall deliver to the Trustee and the SBA a certificate
to such effect in the form attached as Exhibit I hereto. Upon receipt of such
certification, the Trustee or the SBA, as the case may be, shall deliver to the
Servicer the requested documentation and the Trustee shall execute, without
recourse, and deliver such instruments of transfer necessary to release all or
the requested part of the Mortgaged Property or other Collateral from the lien
of the related SBA Loan.
On the Remittance Date in March of each year, the Trustee shall
deliver to the Sellers, the SBA and the Servicer a certification detailing all
transactions with respect to the SBA Loans for which the Trustee holds a
Trustee's Document File pursuant to this Agreement during the prior calendar
year. Such certification shall list all Trustee's Document Files which were
released by or returned to the Trustee or the FTA during the prior calendar
year, the date of such release or return and the reason for such release or
return.
Section 2.06 [Intentionally Omitted]
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Unguaranteed
Interests in the SBA Loans and the delivery to the Trustee and the FTA of the
Trustee's Document Files and, concurrently with such delivery, has authenticated
or caused to be authenticated and delivered to or upon the order of the Sellers,
in exchange for the Unguaranteed Interests in the SBA Loans, the Trustee's
Document Files and the other assets included in the definition of Trust Fund,
Certificates duly authenticated by the Trustee in authorized denominations.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE.
The fees and expenses of the Trustee including (i) the annual fees of
the Trustee, payable quarterly in advance, and subject to rebate to the Servicer
as additional servicing compensation hereunder for any fraction of a calendar
quarter in which this Agreement terminates, (ii) any other fees and expenses to
which the Trustee is entitled, and (iii) reimbursements to the Servicer for any
advances made by the Servicer to the Expense Account pursuant to Section 6.03
hereof, shall be paid from the Expense Account in the manner set forth in
Section 6.03 hereof; PROVIDED, HOWEVER, that the Sellers shall jointly and
severally be liable for any expenses of the Trust Fund incurred prior to the
Closing Date. The Servicer and the Trustee hereby covenant with the
Certificateholders that every material contract or other material agreement
entered into by the Trustee, or the Servicer, acting as attorney-in-fact for the
Trustee, on behalf of the Trust Fund shall expressly state therein that no
Certificateholder shall be personally liable in connection with such contract or
agreement.
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT SBA LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Sellers shall on any Subsequent Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Trustee all right, title and interest of the applicable Seller in and to the
Unguaranteed Interest of each Subsequent SBA Loan listed on the SBA Loan
Schedule delivered by the Seller on such Subsequent Transfer Date, all their
right, title and interest in and to principal collected and interest accruing on
the Unguaranteed Interest of each such Subsequent SBA Loan on and after the
related Subsequent Cut-Off Date and all their right, title and interest in the
Unguaranteed Interest in all insurance policies; provided, HOWEVER, that the
Sellers reserve and retain all their right, title and interest in and to
principal (including Principal Prepayments) collected and interest accruing on
each such Subsequent SBA Loan prior to the related Subsequent Cut-Off Date. The
transfer by the Sellers of the Unguaranteed Interest of the Subsequent SBA Loans
set forth on the SBA Loan Schedule to the Trustee shall be absolute and shall be
intended by all parties hereto to be treated as a sale by the Sellers.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate Principal Balances as of the related Subsequent
Transfer Date of the Subsequent SBA Loans so transferred.
(b) The Sellers shall transfer to the Trustee the Unguaranteed
Interest of the Subsequent SBA Loans and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Sellers shall have provided the
Trustee with a timely Addition Notice and shall have provided
any information reasonably requested by it with respect to the
Subsequent SBA Loans;
(ii) the Sellers shall have delivered to the
Trustee a duly executed written assignment (including an
acceptance by the Trustee) that shall include SBA Loan
Schedules, listing the Subsequent SBA Loans and any other
exhibits listed thereon;
(iii) the Sellers shall have deposited in
the Principal and Interest Account all collections in respect
of the Subsequent SBA Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date,
none of the related Seller, the Servicer or the Representative
was insolvent nor will any of them have been made insolvent
by such transfer nor is any of them aware of any pending
insolvency;
(v) such addition will not result in a
material adverse tax consequence to the Trust Fund or the
Holders of the Certificates;
(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Representative shall have
delivered to the Trustee an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this
paragraph (b) and in the related Subsequent Transfer
Agreement;
(viii) the Representative shall have
delivered to the Rating Agencies and the Trustee, Opinions of
Counsel with respect to the transfer of the Subsequent SBA
Loans substantially in the form of the Opinions of Counsel
delivered to the Trustee on the Closing Date (bankruptcy,
corporate and tax opinions); and
(ix) the FTA shall have delivered, pursuant
to Section 2.05(a) hereof, an acknowledgment of
receipt of the SBA Note relating to such SBA ss. 7(a) Loan in
the form attached as Exhibit 1 to the Multi-Party Agreement.
(c) The obligation of the Trust Fund to purchase the Unguaranteed
Interest of a Subsequent SBA Loan on any Subsequent Transfer Date is subject to
the requirement, as evidenced by a certificate from a Responsible Officer of the
Representative, that such Subsequent SBA Loan conforms in all material respects
to the representations and warranties concerning the individual Initial SBA
Loans set forth in Sections 3.01 and 3.02 (except that any reference therein to
the Cut-Off Date shall be deemed a reference to the applicable Subsequent
Cut-Off Date) and that the inclusion of all Subsequent SBA Loans being
transferred to the Trust Fund on such Subsequent Transfer Date will not change,
in any material respect, the characteristics of the Initial SBA Loans, in the
aggregate, set forth in Sections 3.01 and 3.02 or in the Prospectus Supplement
dated March _, 1998 forming a part of the Registration Statement under the
headings "Summary of Terms -- The SBA Loan Pool" and "The SBA Loan Pool."
Further, each Subsequent SBA Loan must be an SBA ss. 7(a) Loan. Additionally,
following each Subsequent Transfer Date, the weighted average number of months
since origination of all the SBA ss. 7(a) Loans (including the SBA ss.7(a) Loans
being purchased on such Subsequent Transfer Date) shall be no less than
approximately four months.
(d) In connection with the transfer and assignment of the Subsequent
SBA Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the
Remittance Dates in April, May and June 1998 and the Special Remittance Date,
the Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirements, Overfunded Interest Amounts, and Pre-Funding
Earnings and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account. If any amounts are incorrectly released to the Representative from the
Capitalized Interest Account, the Representative shall immediately repay such
amounts to the Trustee.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF THE SELLERS.
Each Seller hereby represents and warrants to the Trustee and the
Certificateholders as of the Closing Date:
(a) Such Seller 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 such Seller and perform its obligations hereunder; such Seller
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 such Seller 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 such Seller; and all requisite corporate action has been taken by
such Seller to make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon such Seller 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 SBA Loans by
the Trustee, as trustee.
(b) 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 Seller makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by such Seller 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 such Seller and the performance by such
Seller of its obligations under this Agreement and each Subservicing Agreement
and such of the other documents to which it is a party;
(c) 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 such
Seller 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 Seller or its property is subject, or result
in the violation of any law, rule, regulation, order, judgment or decree to
which such Seller or its property is subject;
(d) 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;
(e) Such Seller 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 or any Subservicing Agreement;
(f) There is no action, suit, proceeding or investigation pending or,
to the best of such Seller's knowledge, threatened against such Seller which,
either in any one instance or in the aggregate, may (i) except as described in
the Registration Statement, result in any material adverse change in the
business, operations, financial condition, properties or assets of such Seller
or in any material impairment of the right or ability of such Seller to carry on
its business substantially as now conducted, or in any material liability on the
part of such Seller or of any action taken or to be taken in connection with the
obligations of such Seller contemplated herein, or which would be likely to
impair materially the ability of such Seller to perform under the terms of this
Agreement and each Subservicing Agreement or (ii) which would draw into question
the validity of this Agreement and each Subservicing Agreement or the SBA Loans;
(g) The Trust Fund will not constitute an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(h) Such Seller 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 Seller or its properties or might have consequences that would
materially and adversely affect its performance hereunder;
(i) The statements contained in the Registration Statement which
describe such Seller or the SBA Loans or matters or activities for which such
Seller is responsible in accordance with the Registration Statement, this
Agreement and all documents referred to therein or herein or delivered in
connection therewith or herewith, or which are attributable to such Seller
therein or herein 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 Seller or the SBA Loans and does not omit to state a
material fact necessary to make the statements contained therein with respect to
such Seller or the SBA Loans not misleading. Such Seller 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 Seller or the SBA Loans and
known to such Seller that materially adversely affects or in the future may (so
far as such Seller can now reasonably foresee) materially adversely affect such
Seller or the SBA Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement;
(j) No Certificateholder is subject to state licensing requirements
solely by virtue of holding the Certificates;
(k) The transfer, assignment and conveyance of the SBA Notes and the
Mortgages by such Seller pursuant to this Agreement are not or, with respect to
the Subsequent SBA Loans, will not be, subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction and do not
violate the SBA Rules and Regulations;
(l) The origination and collection practices used by such Seller with
respect to each SBA Note and Mortgage relating to the Initial SBA Loans have
been, and the origination and collection practices to be used by such Seller
with respect to each SBA Note and Mortgage relating to the Subsequent SBA Loans
will have been, in all material respects legal, proper, prudent and customary in
the SBA loan origination and servicing business;
(m) Each Initial SBA Loan was, and each Subsequent SBA Loan will be,
selected from among the existing SBA loans in such Seller's portfolio at the
date hereof or, in the case of the Subsequent SBA Loans, at the related
Subsequent Cut-Off Date, in a manner not designed to adversely affect the
Certificateholders;
(n) Such Seller received fair consideration and reasonably equivalent
value or, in the case of the Subsequent SBA Loans, will have received fair
consideration and reasonably equivalent value, in exchange for the sale of the
Unguaranteed Interest of the SBA Loans evidenced by the Certificates;
(o) Neither such Seller nor any of its affiliates sold or, in the case
of the Subsequent SBA Loans, will have sold any interest in any SBA Loan
evidenced by the Certificates with any intent to hinder, delay or defraud any of
their respective creditors;
(p) Such Seller is solvent, and such Seller will not be rendered
insolvent as a result of the transfer of the SBA Loans to the Trust Fund or the
sale of the Certificates;
(q) The Subservicing Agreement to which such Seller is a party
conforms to the requirements for a Subservicing Agreement contained in this
Agreement; and
(r) The chief executive office and legal name of each Seller is as set
forth on the respective UCC-1 financing statement filed on behalf of such Seller
pursuant to Section 2.04(h), such office is the place where such Seller is
"located" for the purposes of Section 9-103(3)(d) of the Uniform Commercial Code
as in effect in the State of New York, and neither the location of such office
nor the legal name of such Seller has changed in the past four months.
Section 3.02 INDIVIDUAL SBA LOANS.
Each Seller hereby represents and warrants to the Trustee, and the
Certificateholders, with respect to each Initial SBA Loan originated or acquired
by such Seller, as of the Closing Date, and with respect to each Subsequent SBA
Loan originated by such Seller, as of the related Subsequent Transfer Date:
(a) The information with respect to each SBA Loan set forth in the SBA
Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in
Section 2.04 (including all material documents related thereto) has been or will
be delivered to the Trustee or the FTA, on behalf of the Trustee, on the Closing
Date or as otherwise provided in Section 2.04;
(c) Each Mortgaged Property is improved by a Commercial Property or a
Residential Property and does not constitute other than real property under
state law;
(d) Each SBA Loan has been originated by a Seller and each SBA Loan is
being serviced by the Servicer or one or more Subservicers;
(e) Each SBA Loan is an SBA ss. 7(a) Loan and is secured by one or
more items of Collateral;
(f) Each SBA Note will, with respect to principal payments, adjust
quarterly and provide for a schedule of Monthly Payments which are, if timely
paid, sufficient to fully amortize the principal balance of such SBA Note on its
maturity date;
(g) With respect to those SBA Loans secured by a Mortgaged Property,
each Mortgage is a valid and subsisting lien of record on the Mortgaged Property
subject only to any applicable Prior Liens on such Mortgaged Property and
subject in all cases to such exceptions that are generally acceptable to banking
institutions in connection with their regular commercial 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;
(h) Immediately prior to the transfer and assignment herein
contemplated, the applicable Seller held good and indefeasible title to, and was
the sole owner of, the Unguaranteed Interest of each SBA Loan conveyed by the
Seller subject to no liens, charges, mortgages, encumbrances or rights of others
except as set forth in Section 3.02(g) or other liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Trustee will hold good and
indefeasible title, to, and be the sole owner of, each SBA Loan subject to no
liens, charges, mortgages, encumbrances or rights of others except (i) as set
forth in Section 3.02(g), (ii) the interests of the SBA or (iii) other liens
which will be released simultaneously with such transfer and assignment;
(i) As of the Cut-Off Date (or, with respect to any Subsequent SBA
Loan, as of the related Subsequent Cut-Off Date), no SBA Loan is 59 or more days
delinquent in payment;
(j) To the best of the Seller'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;
(k) The SBA 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 SBA Note or any related Mortgage, or the exercise of
any right thereunder, render either the SBA Note or any related 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;
(l) Each SBA Loan at the time it was made complied and, as of the
Closing Date, complies in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and, if applicable, the SBA Rules and
Regulations;
(m) The SBA Loans were originated by a Seller in accordance with the
underwriting criteria set forth in the Registration Statement;
(n) Pursuant to the SBA Rules and Regulations, the Seller requires
that 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
Section 5.07;
(o) Pursuant to the SBA Rules and Regulations, the Seller requires
that if a 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
Section 5.07;
(p) Each SBA Note, any related Mortgage and any other agreement
pursuant to which Collateral is pledged to a Seller 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
Collateral or other agreement, and all parties to each SBA Loan had full legal
capacity to execute all SBA Loan documents and convey the estate therein
purported to be conveyed;
(q) The Servicer has caused and will cause to be performed any and all
acts reasonably required to be performed to preserve the rights and remedies of
the Trustee in any insurance policies applicable to the SBA Loans including,
without limitation, in each case, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee or Seller,
respectively;
(r) 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 Seller (or, subject to Section 2.04 hereof, are in
the process of being recorded);
(s) Each SBA Loan conforms, and all such SBA Loans in the aggregate
conform, to the description thereof set forth in the Registration Statement;
(t) The terms of the SBA Note and the related Mortgage or other
security agreement pursuant to which Collateral was pledged 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 SBA and
the Certificateholders and which has been delivered to the Trustee;
(u) There are no material defaults in complying with the terms of any
applicable 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;
(v) There is no proceeding pending or threatened for the total or
partial condemnation of any 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 SBA Loan or
the use for which the premises were intended;
(w) Each Mortgaged Property which is the primary collateral for the
related SBA Loan was, at the time of origination of such SBA Loan, and to the
best of the Seller's knowledge, is, as of the Cut-off Date, free of
contamination from toxic substances or hazardous wastes or is subject to ongoing
environmental rehabilitation approved by the SBA;
(x) The proceeds of the SBA Loan have been fully disbursed, and there
is no obligation on the part of the Sellers to make future advances thereunder.
Any and all requirements 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 SBA Loans were paid;
(y) There is no obligation on the part of the Sellers or any other
party (except for any guarantor of an SBA Loan) to make Monthly Payments in
addition to those made by the Obligor;
(z) No statement, report or other document signed by the Sellers
constituting a part of the SBA File contains any untrue statement of fact or
omits to state a fact necessary to make the statements contained therein not
misleading;
(aa) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Obligor;
(bb) No SBA Loan has a shared appreciation feature, or other
contingent interest feature;
(cc) With respect to each SBA Loan secured by a Mortgaged Property and
that is not a first mortgage loan, either (i) no consent for the SBA Loan is
required by the holder of any related Prior Lien or (ii) such consent has been
obtained;
(dd) Each SBA Loan was originated to a business located in the State
identified in the SBA Loan Schedule;
(ee) All parties which have had any interest in the SBA 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 any
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;
(ff) Any related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(gg) There is no default, breach, violation or event of acceleration
existing under the SBA 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 Sellers have waived any default, breach, violation or event of
acceleration;
(hh) All parties to the SBA Note and any related Mortgage or other
document pursuant to which Collateral was pledged had legal capacity to execute
the SBA Note and any such Mortgage or other document and each SBA Note and
Mortgage or other document have been duly and properly executed by such parties;
(ii) The SBA Loan was not selected for inclusion under this Agreement
from the applicable Seller's portfolio of comparable SBA loans on any basis
which would have a material adverse affect on a Certificateholder; and
(jj) All amounts received after the Cut-Off Date (or, with respect to
the Subsequent SBA Loans, after the related Subsequent Cut-Off Date) with
respect to the SBA Loans have been, to the extent required by this Agreement,
deposited into the Principal and Interest Account and are, as of the Closing
Date (or with respect to the Subsequent SBA Loans, as of the related Subsequent
Closing Date), in the Principal and Interest Account.
Section 3.03 PURCHASE AND SUBSTITUTION OF DEFECTIVE SBA LOANS.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates
to the Certificateholders. Upon discovery by the Servicer, any Subservicer or
the Trustee of a breach of any of such representations and warranties which
materially and adversely affects the value of the SBA Loans or the interest of
the Certificateholders or the SBA therein or which materially and adversely
affects the interests of the Certificateholders and the SBA in the related SBA
Loan in the case of a representation and warranty relating to a particular SBA
Loan (notwithstanding that such representation and warranty was made to the
Sellers' 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
appropriate Seller shall (a) promptly cure such breach in all material respects,
(b) purchase the Unguaranteed Interest of such SBA Loan by depositing in the
Principal and Interest Account, on the next succeeding Determination Date, an
amount and in the manner specified in Section 2.05(b), or (c) if within two
years of the Closing Date, remove such SBA Loan from the Trust Fund (in which
case it shall become a Deleted SBA Loan) and substitute one or more Qualified
Substitute SBA Loans. Any such substitution shall be accompanied by payment by
the appropriate Seller of the Substitution Adjustment, if any.
As to any Deleted SBA Loan for which the appropriate Seller
substitutes a Qualified Substitute SBA Loan or Loans, the Servicer shall effect
such substitution by delivering to the Trustee and the FTA a certification in
the form attached hereto as Exhibit I, executed by a Servicing Officer, and
shall also deliver to the Trustee and the FTA, as applicable, the documents
constituting the Trustee's Document File for such Qualified Substitute SBA Loan
or Loans.
The Servicer shall deposit in the Principal and Interest Account the
Unguaranteed Percentage of all payments of principal received in connection with
such Qualified Substitute SBA Loan or Loans after the date of such substitution
together with all interest (net of the portion thereof required to be paid to
the related Registered Holder, the FTA's Fee, the Premium Protection Fee and the
Servicing Fee with respect to each SBA Loan and the Additional Fee with respect
to each Additional Fee SBA Loan). Monthly Payments received with respect to
Qualified Substitute SBA Loans on or before the date of substitution will be
retained by the appropriate Seller. The Trust Fund will own all payments
received with respect to the Unguaranteed Interest on the Deleted SBA Loan on or
before the date of substitution, and the appropriate Seller shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
SBA Loan. The Servicer shall give written notice to the Trustee that such
substitution has taken place and shall amend the SBA Loan Schedule to reflect
the removal of such Deleted SBA Loan from the terms of this Agreement and the
substitution of the Qualified Substitute SBA Loan or Loans. Upon such
substitution, such Qualified Substitute SBA Loan or Loans shall be subject to
the terms of this Agreement in all respects, including Sections 2.04 and 2.05,
and the appropriate Seller shall be deemed to have made with respect to such
Qualified Substitute SBA 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 appropriate Seller will remit to the
Servicer, and the Servicer will deposit into the Principal and Interest Account
an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in
Sections 2.04, 2.05 and 3.03, the Sellers shall indemnify and hold harmless the
Trust Fund, the Trustee and the Certificateholders against any loss, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand, defense
or assertion based on or grounded upon, or resulting from, a breach of the
Sellers' representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Sellers set forth in Sections
2.04, 2.05 and 3.03 to cure, purchase or substitute for a defective SBA Loan and
to indemnify the Certificateholders and the Trustee as provided in Sections
2.04, 2.05 and 3.03 constitute the sole remedies of the Trustee and the
Certificateholders respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Servicer or the Sellers 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 SBA Loan upon (i) discovery of such
breach by any party and notice thereof to the appropriate Seller and or notice
thereof by the appropriate Seller to the Trustee, (ii) failure by the
appropriate Seller to cure such breach or purchase or substitute such SBA Loan
as specified above, and (iii) demand upon the appropriate Seller by the Trustee
for all amounts payable hereunder in respect of such SBA Loan.
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
The Class A and Class B Certificates shall be substantially in the
forms annexed hereto as Exhibits B-1 and B-2 and shall, upon original issue, be
executed and delivered by the Servicer to the Trustee for authentication and
redelivery to or upon the order of the Seller, upon receipt by the Trustee and
the FTA of the documents specified in Section 2.04. All Certificates shall be
executed on behalf of the Servicer by its President, one of its Executive Vice
Presidents, one of its Vice Presidents, one of its Senior Vice Presidents or one
of its Assistant Vice Presidents, in the denominations specified in the
definition of Percentage Interest, and shall be authenticated on behalf of the
Trustee by one of its Responsible Officers. Certificates bearing the signatures
of individuals who were at the time of the execution or authentication of the
Certificates the proper officers of the Servicer or a Responsible Officer of the
Trustee, as the case may be, shall bind the Servicer or the Trustee, as the case
may be, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the delivery of such Certificates or did not hold such
offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at the office of the
Certificate Registrar, in New York, New York, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, it shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series. Marine Midland Bank is initially
appointed Certificate Registrar for the purpose of registering Certificates and
transfer and exchanges of Certificates as herein provided.
(b) It is intended that the Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A Certificates shall initially be issued in the form of a
single fully registered Class A Certificate with an aggregate denomination equal
to $83,700,000. The Class B Certificates shall initially be issued in the form
of a single fully registered Class B Certificate with an aggregate denomination
equal to $6,300,000. Upon initial issuance, the ownership of such Certificates
shall be registered in the Register in the name of Cede & Co., or any successor
thereto, as nominee for the Depository.
The Sellers and the Trustee are hereby authorized to execute and
deliver a Letter of Representations with the Depository relating to the
Certificates.
(c) With respect to Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Sellers, Servicer and the
Trustee shall have no responsibility or obligation to Direct or Indirect
Participants or beneficial owners for which the Depository holds Certificates
from time to time as a Depository. Without limiting the immediately preceding
sentence, the Sellers, Servicer and the Trustee shall have no responsibility or
obligation with respect to (a) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Certificates, (b) the delivery to any Direct or Indirect
Participant or any other Person, other than a registered Holder of a
Certificate, (c) the payment to any Direct or Indirect Participant or any other
Person, other than a registered Holder of a Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Certificates or (d) the making of book-entry transfers among
Participants of the Depository with respect to Certificates registered in the
Register in the name of the nominee of the Depository. No Person other than a
registered Holder of a Certificate as shown in the Register shall receive a
certificate evidencing such Certificate.
(d) Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of distributions by the mailing of checks or drafts to the registered
Holders of Certificates appearing as registered Owners in the Certificate
Register on a Record Date, the name "Cede & Co." in this Agreement shall refer
to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Certificates and the Servicer is unable to locate a qualified successor or (ii)
the Servicer at its sole option elects to terminate the book-entry system
through the Depository, the Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Servicer may determine that the
Certificates shall be registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be acceptable to the
Servicer, or such depository's agent or designee but, if the Servicer does not
select such alternative global book-entry system, then the Certificates may be
registered in whatever name or names registered Holders of Certificates
transferring Certificates shall designate, in accordance with the provisions
hereof.
(f) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Certificates are registered in the name of Cede & Co.,
as nominee of the Depository, all distributions of principal and interest on
such Certificates and all notices with respect to such Certificates shall be
made and given, respectively, in the manner provided in the Letter of
Representations.
(g) No transfer of a Class A or Class B Certificate or Certificates or
any interest therein shall be made to any Employee Benefit Plan or other
retirement plan or arrangement which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, and/or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any entity whose
underlying assets include plan assets by reason of such plan or account
investing in such entity (including insurance company separate or general
accounts and collective investment funds).
(h) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Certificate
Registrar, the Servicer shall execute in the name of the designated transferee
or transferees, a new Certificate of the same Percentage Interest and dated the
date of authentication by the Trustee. The Certificate Registrar shall notify
the Servicer and the Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations of a like Class and aggregate
Percentage Interest, upon surrender of the Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Servicer
shall execute the Certificates which the Certificateholder making the exchange
is entitled to receive. Every Certificate presented or surrendered for transfer
or exchange shall be accompanied by wiring instructions, if applicable, in the
form of Exhibit E(1).
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment by the
transferor of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be marked
canceled by the Authenticating Agent and retained for one year and destroyed
thereafter.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which, in the case of an insurance company, shall be
limited to a letter of indemnity) as may be required by each of them to save
each of them harmless, then, in the absence of notice to the Servicer, the
Trustee and the Certificate Registrar that such Certificate has been acquired by
a bona fide purchaser, the Servicer shall execute and deliver, and the Trustee
shall authenticate, in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like Class, tenor and
Percentage Interest, but bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section 4.03, the Servicer
and the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Sellers, the Trustee, the Paying Agent and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.07 and for all other purposes whatsoever, and
the Sellers, the Servicer, the Trustee and the Certificate Registrar shall not
be affected by notice to the contrary.
<PAGE>
ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) The Servicer covenants and agrees that it shall act as agent (and
the Servicer is hereby appointed to act as agent) on behalf of the Trust Fund
and that, in such capacity, it shall: (i) prepare and file, or cause to be
prepared and filed, in a timely manner, any Tax Return required to be filed by
the Trust Fund; (ii) prepare and forward, or cause to be prepared and forwarded,
to the Trustee, the Certificateholders and to the Internal Revenue Service and
any other relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with any
provision of federal, state or local income tax laws; (iii) to the extent that
the affairs of the Trust Fund are within its control, conduct such affairs at
all times that any Certificates are outstanding so as to maintain the status of
the Trust Fund as a grantor trust under any applicable federal, state and local
laws; (iv) pay the amount of any and all federal, state, and local taxes,
imposed on the Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Servicer or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Servicer from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (v) ensure that any such returns or reports
filed on behalf of the Trust Fund are properly executed by the appropriate
person; and (vi) represent the Trust Fund in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of the
Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any item of the Trust Fund
and otherwise act on behalf of the Trust Fund in relation to any tax matter
involving the Trust Fund. The Servicer shall indemnify the Trustee and the Trust
Fund for any liability it may incur in connection with this Section 5.01(a),
which indemnification shall survive the termination of the Trust Fund; PROVIDED,
HOWEVER, that the Servicer shall not indemnify the Trustee for the Trustee's
negligence or wilful misconduct.
(b) The Servicer, as independent contract servicer, shall service and
administer the SBA 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 and the Multi-Party Agreement and the SBA Rules and
Regulations. The Servicer may enter into Subservicing Agreements for any
servicing and administration of SBA ss. 7(a) Loans with The Money Store of New
York, Inc. or any other entity approved with prior written consent by the SBA.
Any such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement and the Multi-Party 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 SBA ss. 7(a) Loans or enter into a Subservicing Agreement
with a successor subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the SBA and the Certificateholders for the servicing and administering
of the SBA Loans in accordance with the provisions of this Agreement and the
Multi-Party Agreement and the SBA Rules and Regulations, 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 SBA Loans. For purposes of this Agreement,
the Servicer shall be deemed to have received payments on SBA 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 SBA Loans involving a Subservicer in
its capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and the Trustee, the SBA and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof and the Multi-Party Agreement,
thereupon assume all of the rights and obligations of the Servicer under each
Subservicing Agreement that the Servicer may have entered into, unless the
Trustee is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms. The Trustee, its designee or the successor servicer
for the Trustee shall be deemed to have assumed all of the Servicer's interest
therein and to have replaced the Servicer as a party to each Subservicing
Agreement to the same extent as if the Subservicing Agreements had been assigned
to the assuming party, except that the Servicer shall not thereby be relieved of
any liability or obligations under the Subservicing Agreements. The Servicer at
its expense and without right of reimbursement therefor, shall, upon request of
the Trustee, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the SBA 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) So long as it is consistent with the terms of this Agreement and
the Multi-Party Agreement, the SBA Agreement (as defined in the Multi-Party
Agreement) and the SBA Rules and Regulations, the Servicer may waive, modify or
vary any term of any SBA 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 SBA and the
Certificateholders, PROVIDED, HOWEVER, that (unless (x) the Obligor is in
default with respect to the SBA Loan, or such default is, in the judgment of the
Servicer, imminent and (y) the Servicer determines that any modification would
not be considered a new loan for federal income tax purposes) the Servicer may
not permit any modification with respect to any SBA Loan that would change the
SBA Loan Interest Rate, defer (subject to Section 5.12), or forgive the payment
of any principal or interest (unless in connection with the liquidation of the
related SBA Loan), or extend the final maturity date on such SBA Loan without
the consent of the SBA, if such consent is then required by the SBA Rules and
Regulations. The Servicer may exercise all unilateral servicing actions
permitted by participating lenders in accordance with the SBA Rules and
Regulations. No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall for the purposes of distributions to Certificateholders
be added to the amount owing under the related SBA Loan. Without limiting the
generality of the foregoing, so long as it is consistent with the SBA Rules and
Regulations, the Servicer shall continue, and is hereby authorized and empowered
to execute and deliver on behalf of the Trustee, the SBA 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 SBA Loans and with respect to any Mortgaged Properties or other
Collateral. If reasonably required by the Servicer, each Certificateholder
and/or the Trustee shall furnish the Servicer, within 5 Business Days of receipt
of the Servicer's request, 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. Any such request to the Trustee
shall be accompanied by a certification in the form of Exhibit I attached hereto
signed by a Servicing Officer.
The Servicer, in servicing and administering the SBA Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
Foreclosed Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering SBA Loans for
its own account, in accordance with the SBA Rules and Regulations and giving due
consideration to the Certificateholders' and the SBA's reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 9.04, after
receipt of the Opinion of Counsel required pursuant to Section 9.04 addressed to
the SBA and the Trustee, the Trustee or its designee shall assume all of the
rights and obligations of the Servicer, subject to Section 10.02 hereof and the
Multi-Party Agreement. The Servicer shall, upon request of the Trustee but at
the expense of the Servicer, deliver to the Trustee all documents and records
(including computer tapes and diskettes) relating to the SBA 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.
Section 5.02 LIQUIDATION OF SBA LOANS.
In the event that any payment due under any SBA Loan and not postponed
pursuant to Section 5.01 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 SBA Loan, the Servicer shall take such action in accordance with the
applicable SBA Rules and Regulations as it shall deem to be in the best
interests of the Certificateholders and the SBA. With respect to any such SBA
ss. 7(a) Loan for which the SBA has expressed to the Servicer the SBA's desire
to assume servicing of such SBA Loan consistent with the SBA Rules and
Regulations, the Trustee shall, upon written direction of the Servicer, deliver
to the SBA or its designee all or any portion of the Trustee's Document File
relating to such SBA ss. 7(a) Loan and the Trustee shall execute such documents,
including but not limited to an endorsement of the related SBA Note and an
assignment of the related Mortgage, as the Servicer or the SBA shall request.
Expenses incurred in connection with any such action shall be the responsibility
of the Servicer and shall not be chargeable to the Principal and Interest
Account or the Certificate Account. Subject to the SBA Rules and Regulations and
with the prior written consent of the SBA (if required by the SBA Rules and
Regulations), the Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the SBA of Mortgaged Properties or other Collateral
relating to defaulted SBA ss. 7(a) Loans for which the related SBA ss. 7(a) Loan
is still outstanding, as to which no satisfactory arrangements can be made for
collection of delinquent payments in accordance with the provisions of Section
5.10. 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 Unguaranteed Percentage of
any amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances." The Servicer shall take into account the
existence of any hazardous substances, hazardous wastes or solid wastes on
Mortgaged Properties in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Mortgaged Property, and will not
foreclose on a Mortgaged Property where it has cause to believe such substances
exist unless it has received a Phase I environmental report and such report
reveals no environmental problems, or such Mortgaged Property is subject to an
environmental rehabilitation for which the Sellers are not responsible.
After an SBA Loan has become a Liquidated SBA Loan, the Servicer shall
promptly prepare and forward to the Trustee and the SBA and upon request, any
Certificateholder, a Liquidation Report, in the form attached hereto as Exhibit
J, detailing the Liquidation Proceeds received from the Liquidated SBA Loan,
expenses incurred with respect thereto, and any loss incurred in connection
therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS;
DEPOSITS IN PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or
more Principal and Interest Accounts, in one or more Designated Depository
Institutions (provided, however, that one or more Principal and Interest
Accounts may be established and maintained with The Chase Manhattan Bank so long
as The Chase Manhattan Bank remains a Designated Depository Institution), 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 Investment Corporation and The
Money Store of New York, Inc., in trust for the registered holders of The Money
Store SBA Loan-Backed Adjustable Rate Certificates, Series 1998- 1, Class A and
Class B." Such Principal and Interest Accounts shall be insured by the BIF or
SAIF administered by the FDIC to the maximum extent provided by law. The
creation of any Principal and Interest Account shall be evidenced by a letter
agreement in the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee, the
SBA and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two Business Days of receipt thereof) in the Principal and
Interest Account and retain therein:
(i) the Unguaranteed Percentage of all payments received after
the Cut-Off Date on account of principal on the SBA Loans, including
the Unguaranteed Percentage of all Excess Payments, Principal
Prepayments and Curtailments collected after the Cut- Off Date;
(ii) all payments received after the Cut-Off Date on account of
interest on the SBA Loans (net of the portion thereof required to be
paid to the related Registered Holders, the Premium Protection Fee,
the FTA's Fee and the Servicing Fee with respect to each SBA Loan, the
Additional Fee with respect to each Additional Fee SBA Loan, and other
servicing compensation payable to the Servicer as permitted herein);
(iii) the Unguaranteed Percentage of all Net Liquidation
Proceeds;
(iv) the Unguaranteed Percentage of all Insurance Proceeds (other
than amounts to be applied to restoration or repair of any related
Mortgaged Property, or to be released to the Obligor in accordance
with customary servicing procedures);
(v) the Unguaranteed Percentage of all Released Mortgaged
Property Proceeds;
(vi) any amounts paid in connection with the repurchase of the
Unguaranteed Interest of any SBA Loan and the amount of any
Substitution Adjustment received pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the Principal and
Interest Account pursuant to Section 5.04 or 5.10; and
(viii) the amount of any losses incurred in connection with
investments in Permitted Instruments.
(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, payments with respect to the
Guaranteed Interest, the Premium Protection Fee, the FTA's Fee and the Servicing
Fee (to the extent received and permitted by Section 7.03), with respect to each
SBA Loan and the Additional Fee with respect to each Additional Fee SBA Loan,
together with the difference between any Liquidation Proceeds and the related
Net Liquidation Proceeds, need not be deposited by the Servicer in the Principal
and Interest Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the Principal and Interest Account
by the Servicer immediately following its monthly remittance to the Trustee
pursuant to Section 5.04(a). Any reference herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNT
The Servicer shall withdraw funds from the Principal and Interest
Account for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date
for deposit in the Certificate Account, the portion of the Available Funds for
the related Remittance Date that is net of Compensating Interest, Monthly
Advances and amounts then on deposit in the Spread Account;
(b) to reimburse itself for any accrued unpaid Servicing Fees and
Premium Protection Fee, unreimbursed Monthly Advances and for unreimbursed
Servicing Advances to the extent deposited in the Principal and Interest Account
(and not netted from Monthly Payments received). The Servicer's right to
reimbursement for unpaid Servicing 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 SBA 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 SBA Loans generally, including
Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds
and any other amounts; PROVIDED, HOWEVER, that the Servicer's right to such
reimbursement pursuant hereto shall be subordinate to the rights of the
Certificateholders and the Registered Holders and may not be exercised until the
first Remittance Date on which the Spread Balance equals the then applicable
Specified Spread Account Requirement;
(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 5.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest
Account that were not required to be deposited therein or were deposited therein
in error;
(f) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds; and
(g) to clear and terminate the Principal and Interest Account upon the
termination of this Agreement.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained with a Designated Depository
Institution as an interest-bearing account meeting the requirements set forth in
Section 5.03(a), or the funds held therein may be invested by the Servicer (to
the extent practicable) in Permitted Instruments, as directed in writing by the
Servicer. 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
Investment Corporation and The Money Store of New York, Inc. in trust for the
registered holders of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998- 1." 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 the Principal and Interest Account pursuant to clause (d) above. The amount
of any losses incurred in connection with the investment of funds in the
Principal and Interest Account in Permitted Instruments shall be deposited in
the Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.
Section 5.05 [Intentionally Omitted]
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written notice to the Trustee and the SBA,
transfer any Principal and Interest Account to a different Designated Depository
Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall comply with the SBA Rules and Regulations
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of an SBA Loan, to the best of the Servicer's knowledge after
reasonable investigation, the related 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)
consistent with the SBA Rules and Regulations, the Servicer will require the
related Obligor to purchase a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the full insurable value of the Mortgaged Property, or (ii) 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, and in accordance with the SBA Rules and Regulations and the
Servicer's policies, on Foreclosed Property constituting real property, fire and
hazard insurance in the amounts described above and liability insurance. 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 the SBA Rules and Regulations) shall
be deposited in the Principal and Interest Account, subject to withdrawal
pursuant to Section 5.04. It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Obligor or
maintained on Foreclosed 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 or its
affiliates.
Section 5.08 [Intentionally Omitted]
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000,and a maximum deductible of $100,000, if
commercially available, with coverage on all employees acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the SBA Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, its officers and employees against losses resulting from forgery,
theft, embezzlement or fraud by such Servicer Employees. The errors and
omissions policy shall insure against losses resulting from the errors,
omissions and negligent acts of such Servicer employees. No provision of this
Section 5.09 requiring such fidelity bond and errors and omissions insurance
shall relieve the Servicer from its duties as set forth in this Agreement. Upon
the request of the Trustee, the SBA or any Certificateholder, the Servicer shall
cause to be delivered to the Trustee, the SBA or such Certificateholder a
certified true copy of such fidelity bond and insurance policy. The current
issuer of such fidelity bond and insurance policy is National Union Fire
Insurance Company of Pittsburgh, Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSED PROPERTY
In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (a "Foreclosed Property"), the
deed or certificate of sale may be taken in the name of the Trustee on behalf of
the Trust for the benefit of the Certificates and the SBA, as their interests
may appear.
Unless the servicing of a Foreclosed Property relating to an SBA ss.
7(a) Loan is assumed by the SBA pursuant to the SBA Rules and Regulations, the
Servicer, subject to Sections 5.01 and 5.02 hereof, shall manage, conserve,
protect and operate each Foreclosed Property for the SBA 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 Foreclosed 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 Foreclosed 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 SBA and the
Certificateholders.
The Servicer shall cause to be deposited in the Principal and Interest
Account, no later than five Business Days after the receipt thereof, the
Unguaranteed Percentage of all revenues received with respect to the
conservation and disposition of the related Foreclosed Property net of Servicing
Advances.
The disposition of Foreclosed Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer,
with SBA concurrence (if required by the SBA Rules and Regulations), deems to be
in the best interest of the SBA and the Certificateholders. The Unguaranteed
Percentage of the proceeds of sale of the Foreclosed Property shall promptly,
but in no event later than two Business Days after receipt, be deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid, the Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees and unreimbursed Monthly Advances, and
the Servicer shall deposit in the Principal and Interest Account the
Unguaranteed Percentage of the net cash proceeds of such sale to be distributed
to the Certificateholders in accordance with Section 6.07 hereof.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on an SBA Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer and the Trustee shall have received an Opinion
of Counsel also addressed to the SBA to the effect that such longer retention
will not cause the Trust Fund to be subject to Federal income tax.
Section 5.11 [Intentionally Omitted.]
Section 5.12 COLLECTION OF CERTAIN SBA LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the SBA 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 and the SBA Rules and Regulations, the Servicer may in its
discretion waive or permit to be waived any fee or charge (other than the
Servicing Fee, without the written consent of the SBA) which the Servicer would
be entitled to retain hereunder as servicing compensation and extend the due
date for payments due on an SBA Note for a period (with respect to each payment
as to which the due date is extended) not greater than 180 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 an SBA Note, the Servicer shall
nonetheless make payment of any required Monthly Advance with respect to the
payments so extended to the same extent as if such installment were due, owing
and delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 5.04(b) hereof.
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE SBA LOANS.
The Servicer shall provide to the Trustee, the SBA, the FDIC, the
Office of Thrift Supervision and the supervisory agents and examiners of each of
the foregoing access to the documentation regarding the SBA Loans required by
applicable local, state and federal regulations, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
Section 5.14 SUPERIOR LIENS.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by a 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 SBA and the Trust Fund, whatever actions are necessary to protect
the interests of the Certificateholders and the SBA, and/or to preserve the
security of the related SBA Loan. The Servicer shall immediately notify the
Trustee, each of the Rating Agencies and the SBA 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
Certificateholders and the SBA. The Servicer shall thereafter take such action
as is necessary to recover the amount so advanced.
<PAGE>
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNT; DEPOSITS IN
CERTIFICATE ACCOUNT; PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself in its trust department a trust account, which shall not be
interest-bearing, titled "Certificate Account, Marine Midland Bank, as trustee
for the registered holders of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1, Class A and Class B" (the "Certificate Account").
The Trustee shall, promptly upon receipt, deposit in the Certificate Account and
retain therein:
(i) the Available Funds (net of the amount of Monthly Advances
and Compensating Interest deposited pursuant to subclause (ii) below
and amounts then on deposit in the Spread Account) remitted by the
Servicer;
(ii) the Compensating Interest and the portion of the Monthly
Advance remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account pursuant to
Section 6.02(b)(i);
(iv) amounts required to be paid by the Servicer pursuant to
Section 6.06(e) in connection with losses on investments of amounts in
the Certificate Account; and
(v) amounts transferred from the Pre-Funding Account and the
Capitalized Interest Account on the Special Remittance Date pursuant
to Sections 6.04(c) and (h), respectively.
(b) Amounts on deposit in the Certificate
Account shall be withdrawn on each Remittance Date by the Trustee, or the Paying
Agent, on its behalf, to effect the distribution described in Section 6.07(b)
and thereafter by the following parties in no particular order of priority:
(i) by the Trustee, to invest amounts on deposit in the
Certificate Account in Permitted Instruments pursuant to Section 6.06;
(ii) by the Trustee, to pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings realized
on Permitted Instruments;
(iii) by the Trustee, to withdraw any amount not required to be
deposited in the Certificate Account or deposited therein in error;
and
(iv) by the Trustee, to clear and terminate the Certificate
Account upon the termination of this Agreement in accordance with the
terms of Section 11.01 hereof.
Section 6.02 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD
ACCOUNT; PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish
with the Spread Account Custodian an Account in accordance with the terms of the
Spread Account Agreement (the "Spread Account"). The Spread Account shall be the
property of the Spread Account Depositor, subject to the terms hereof and of
the Spread Account Agreement, and the funds held therein may be invested in
Permitted Instruments. The Spread Account shall not constitute part
of the Trust Fund. The Trustee or the Spread Account Custodian, as the case may
be, shall, promptly upon receipt, deposit into the Spread Account or, in the
case of the Trustee, transfer to the Spread Account Custodian for deposit in the
Spread Account:
(i) on the Closing Date, the Initial Deposit made by the Spread
Account Depositor;
(ii) on each Remittance Date, that portion of the Available
Funds, if any, required to be deposited into the Spread Account
pursuant to Section 6.07(b)(vii) until the Spread Balance equals the
then applicable Specified Spread Account Requirement; and
(iii) amounts required to be paid by the Servicer pursuant to
Section 6.06(e) in connection with losses on investments of amounts in
the Spread Account.
(b) Amounts on deposit in the Spread Account shall be
withdrawn by the Spread Account Custodian and transferred to the Trustee for
distribution in the manner set forth in subclause (c) below on each Remittance
Date in the following order of priority:
(i) to deposit in the Certificate Account an amount by which (a)
the sum of the Class A and Class B Interest Distribution Amounts, the
Class A and Class B Principal Distribution Amounts and the Class A and
Class B Carry Forward Amounts exceeds (b) the Available Funds for such
Remittance Date (but excluding from such definition of Available
Funds, amounts in the Spread Account);
(ii) to deposit in the Certificate Account the amount, if any,
required to make the full distribution to the Expense Account pursuant
to Section 6.07(b)(v); and
(iii) to the extent that the amount then on deposit in the Spread
Account after giving effect to all required transfers from the Spread
Account to the Certificate Account on such Remittance Date then
exceeds the Specified Spread Account Requirement as of such Remittance
Date (such excess, a "Spread Account Excess"), an amount equal to such
Spread Account Excess shall be distributed by the Spread Account
Custodian to the Spread Account Depositor;
and also, in no particular order of priority:
(iv) to invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.06;
(v) to withdraw any amount not required to be deposited in the
Spread Account or deposited therein in error; and
(vi) to clear and terminate the Spread Account upon the
termination of this Agreement in accordance with the terms of Section
11.01.
(c) Any amounts which are required to be withdrawn from the Spread
Account pursuant to paragraph (b) above shall be withdrawn from the Spread
Account in the following order of priority: (i) FIRST, from any uninvested funds
therein, and (ii) SECOND, from the proceeds of the liquidation of any
investments therein pursuant to Section 6.06(b).
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNT; DEPOSITS IN EXPENSE
ACCOUNT; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNT
(a) No later than the Closing Date, the Trustee will establish with
itself an account for the benefit of the Trustee to pay its fees and expenses
related to the Trust Fund (the "Expense Account"). The Expense Account shall not
constitute part of the Trust Fund and is for the benefit of the Trustee and, on
a subordinate basis, for the benefit of the Servicer as described in (b)(ii) and
(c) below. The Trustee shall deposit into the Expense Account:
(i) on each Remittance Date from the amounts on deposit in the
Certificate Account an amount equal to one-twelfth of the Annual
Expense Escrow Amount; and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on investments
of amounts in the Expense Account.
If, at any time the amount then on deposit in the Expense Account shall be
insufficient to pay in full the fees and expenses of the Trustee then due, the
Trustee shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount. Thereafter,
the Servicer shall be entitled to reimbursement from the Expense Account for the
amount of any such advance from any excess funds available pursuant to subclause
(c)(ii) below. Without limiting the obligation of the Servicer to advance such
insufficiency, in the event the Servicer does not advance the full amount of
such insufficiency by the Business Day immediately preceding the Determination
Date, the amount of such insufficiency shall be deposited into the Expense
Account for payment to the Trustee pursuant to Section 6.07(b)(v), to the extent
of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account
in Permitted Instruments pursuant to Section 6.06 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee's fees and expenses as described in Section
2.08 hereof;
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on
Permitted Instruments;
(iii) withdraw any amounts not required to be deposited in the
Expense Account or deposited therein in error; and
(iv) clear and terminate the Expense Account upon the termination
of this Agreement in accordance with the terms of Section 11.01.
(c) On the twelfth Remittance Date following the Closing Date, and on
each twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Seller, for reimbursable
advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it pursuant to
the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing compensation
any amounts remaining in the Expense Account after payments made
pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i) and (c)(ii),
above.
Section 6.04 PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Representative shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "The Money Store SBA Pre-Funding Account
1998-1" (the "Pre-Funding Account"). The Pre-Funding Account shall not
constitute part of the Trust Fund. The Representative shall be deemed the owner
of the Pre-Funding Account for Federal income tax purposes. The Trustee shall,
promptly upon receipt, deposit into the Pre-Funding Account and retain therein
the Original Pre- Funded Amount from the proceeds of the sale of the
Certificates.
(b) On each Subsequent Transfer Date, the Representative shall
instruct the Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Principal Balances of the Subsequent SBA Loans as of the
related Subsequent Cut-Off Date sold to the Trust Fund on such Subsequent
Transfer Date and pay such amount to or upon the order of the Representative
with respect to such transfer.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
such amounts in the Certificate Account. However, if at the close of business on
June 26 1998, amounts still remain in the Pre-Funding Account, the Servicer
shall instruct the Trustee to withdraw from the Pre- Funding Account on the
Special Remittance Date and deposit in the Certificate Account any Pre-Funded
Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in April, May and June 1998, the
Trustee shall transfer from the Pre-Funding Account to the Certificate Account,
the Pre-Funding Earnings, if any, applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "The Money Store SBA Capitalized Interest
Account 1998-1" (the "Capitalized Interest Account"). The Capitalized Interest
Account shall not constitute part of the Trust Fund. The Representative shall be
deemed the owner of the Capitalized Interest Account for Federal income tax
purposes. The Trustee shall, promptly upon receipt, deposit into the Capitalized
Interest Account $172,804.01. If prior to the end of the Funding Period the
funds on deposit in the Pre-Funding Account are invested in a guaranteed
investment contract, repurchase agreement or other arrangement acceptable to the
Rating Agencies, that constitutes a Permitted Instrument, the Trustee shall,
within one Business Day of its receipt of notification of satisfaction of the
Rating Agency Condition, withdraw from the Capitalized Interest Account and pay
to the Representative the amount set forth in such notification.
(f) On each Subsequent Transfer Date the Representative may instruct
the Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Representative the Overfunded Interest Amount
for such Subsequent Transfer Date, as calculated by the Representative pursuant
to Section 2.09(e) hereof.
(g) On the Remittance Dates occurring in April, May and June 1998 the
Trustee shall transfer from the Capitalized Interest Account to the Certificate
Account, the Capitalized Interest Requirement, if any, for such Remittance
Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from
the Capitalized Interest Account to the Certificate Account the Capitalized
Interest Requirement, if any, for such Special Remittance Date. Any amounts
remaining in the Capitalized Interest Account after taking into account such
transfer shall be paid on such Special Remittance Date to the Representative,
and the Capitalized Interest Account shall be closed.
Section 6.05 [Intentionally Omitted]
Section 6.06 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and
be continuing, and consistent with any requirements of the Code, all or a
portion of any Account which is not by the terms of this Agreement to be held
uninvested held by the Trustee or the Spread Account Custodian shall be invested
and reinvested by the Trustee or the Spread Account Custodian, as directed in
writing by the Servicer, in one or more Permitted Instruments in the name of the
Trustee or the Spread Account Custodian, as the case may be, bearing interest or
sold at a discount. No such investment in the Certificate Account, the
Pre-Funding Account, the Capitalized Interest Account and the Spread Account
shall mature later than the Business Day immediately preceding the next
Remittance Date and no such investment in the Expense Account shall mature later
than the Business Day immediately preceding the date such funds will be needed
to pay fees or premiums; PROVIDED, HOWEVER, the Trustee or any affiliate
thereof, may be the obligor on any investment which otherwise qualifies as a
Permitted Instrument and any investment on which the Trustee is the obligor may
mature on such Remittance Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee or the Spread Account Custodian and sufficient uninvested funds
are not available to make such disbursement, the Trustee or the Spread Account
Custodian, as the case may be, shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. Neither the Trustee
nor the Spread Account Custodian shall be liable for any investment loss or
other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, neither the Trustee nor the
Spread Account Custodian shall in any way be held liable by reason of any
insufficiency in any Account held by the Trustee or the Spread Account Custodian
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee and the Spread Account Custodian shall invest and
reinvest funds in the Accounts held by the Trustee or the Spread Account
Custodian, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by
the Trustee or the Spread Account Custodian shall be deposited in such Account,
as the case may be, immediately on receipt, and the Trustee or the Spread
Account Custodian shall notify the Servicer of any loss resulting from such
investments. The Servicer shall remit the amount of any such loss from its own
funds, without reimbursement therefor, to the Trustee or the Spread Account
Custodian, as the case may be, for deposit in the Account from which the related
funds were withdrawn for investment by the next Determination Date following
receipt by the Servicer of such notice.
Section 6.07 DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from
the proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement.
(b) On each Remittance Date the Trustee shall withdraw from the
Certificate Account the sum of (A) that portion of the Available Funds received
from the Servicer pursuant to Section 6.01(a)(i), (ii) and (iv),(B) the amounts
deposited therein pursuant to Section 6.02(b)(i) and make distributions thereof
in the following order of priority:
(i) First, to the Class A Certificates in an amount up to the
Class A Interest Distribution Amount;
(ii) Second, to the Class B Certificates in an amount up to the
Class B Interest Distribution Amount;
(iii) Third, to the Class A Certificates in an amount up to the
sum of (a) the Class A Principal Distribution Amount and (b) the Class
A Carry Forward Amount;
(iv) Fourth, to the Class B Certificates, in an amount up to the
sum of (a) the Class B Principal Distribution Amount and (b) the Class
B Carry Forward Amount;
(v) Fifth, to the Expense Account in an amount up to one-twelfth
of the Annual Expense Escrow Amount plus any amount required to be
paid to the Trustee pursuant to Section 6.03(a) resulting from
insufficiencies in the Expense Account;
(vi) Sixth, to the Servicer in an amount up to the Reimbursable
Amounts;
(vii) Seventh, to the Spread Account, any remaining Available
Funds unless and until the amount therein equals the Specified Spread
Account Requirement; and
(viii) Eighth, to the Spread Account Depositor, any amounts in
excess of the Specified Spread Account Requirement.
Notwithstanding the foregoing, the Servicer shall not be entitled to
receive Reimbursable Accounts pursuant to clause (vi) above until the first
Remittance Date on which the Spread Balance equals the then applicable Specified
Account Requirement.
Additionally, on the Special Remittance Date, the Trustee shall
withdraw from the Certificate Account the amount, if any, deposited therein
pursuant to Section 6.01(a)(v) and make distributions thereof as follows: (i)
from amounts transferred from the Pre-Funding Account, distributions of
principal to the Class A and Class B Certificates pro rata based upon the Class
A and Class B Percentages and (ii) from amounts transferred from the Capitalized
Interest Account, distributions of interest to such Class A and Class B
Certificates equal to the applicable Capitalized Interest Requirement.
(c) All distributions made to the Certificateholders of a particular
Class will be made on a pro rata basis among the Certificateholders of record of
the applicable Class on the next preceding Record Date based on the Percentage
Interest represented by their respective Certificates, and shall be made by
check or, upon request by a Certificateholder, by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, and, in the case of wire
transfers, at the expense of such Certificateholder unless such
Certificateholder shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Section 6.08 [Intentionally Omitted]
Section 6.09 STATEMENTS.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver to the Trustee, by telecopy, for
distribution to the Certificateholders, the receipt and legibility of which
shall be confirmed telephonically, with hard copy thereof and the Servicer's
Monthly Computer Tape in the form attached hereto as Exhibit L (both in hard
copy and in computer tape form) to be delivered on the Business Day following
the Determination Date, a certificate signed by a Servicing Officer (a
"Servicer's Certificate") stating the date (day, month and year), the Series
number of the Certificates, the date of this Agreement, and, as of the close of
business on the Record Date for such month:
(i) Available Funds for the related Remittance Date;
(ii) The Aggregate Class A Certificate Principal Balance, the
Aggregate Class B Certificate Principal Balance and the Pool Principal
Balance as reported in the prior Servicer's Certificate pursuant to
subclause (xii) below, or, in the case of the first Determination
Date, the Original Class A and Class B Certificate Principal Balance
and the Original Pool Principal Balance;
(iii) The number and Principal Balances of all SBA Loans which
were the subject of Principal Prepayments during the Due Period;
(iv) The product of the Unguaranteed Percentage multiplied by all
Curtailments which were received during the Due Period;
(v) The product of the Unguaranteed Percentage multiplied by all
Excess Payments and the product of the Unguaranteed Percentage
multiplied by all Monthly Payments in respect of principal received
during the Due Period;
(vi) The aggregate amount of interest received on each SBA Loan
net of the FTA's Fee, the Premium Protection Fee, the Additional Fee
and the portion thereof payable to the Registered Holders;
(vii) The amount of the Monthly Advances to be made on the
Determination Date and the Compensating Interest payment to be made on
the Determination Date;
(viii) The delinquency and foreclosure information set forth in
the form attached hereto as Exhibit K;
(ix) The product of the Unguaranteed Percentage multiplied by the
amount of any losses realized on a Liquidated SBA Loan;
(x) The Class A and Class B Interest Distribution Amounts and
Principal Distribution Amounts for the Remittance Date with the
components thereof stated separately;
(xi) The amount available in the Spread Account as of the related
Record Date in cash and from liquidation of Permitted Instruments and
the amount, if any, to be transferred from the Spread Account to the
Certificate Account pursuant to Section 6.02(b)(i);
(xii) The Aggregate Class A Certificate Principal Balance,
Aggregate Class B Certificate Principal Balance and the Pool Principal
Balance after giving effect to the distribution to be made on the
Remittance Date;
(xiii) The Excess Spread, the Spread Balance and the Specified
Spread Account Requirement with respect to such Remittance Date;
(xiv) The weighted average maturity and weighted average SBA Loan
Interest Rate;
(xv) The Servicing Fees and amounts to be deposited to the
Expense Account;
(xvi) The amount of all payments and reimbursements to the
Servicer pursuant to Section 5.04 (b), (c), (d)(ii), (e) and (f);
(xvii) The Class A and Class B Remittance Rates with respect to
such Remittance Date;
(xviii) During the Funding Period, the aggregate Principal
Balance of the Subsequent SBA Loans purchased during the prior Due
Period and the amount on deposit in the Pre-Funding Account as of the
end of such Due Period; and
(xix) Such other information as the Certificateholders or the
Rating Agencies may reasonably require.
The Trustee shall forward such report to the Certificateholders and
the Rating Agencies on the Remittance Date, together with a separate report
indicating the amount of funds deposited in the Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Seller pursuant to Sections 6.03(c)(i), 6.03(c)(ii) and 6.07(b)(vi) (all
reports prepared by the Trustee of such withdrawals and deposits will be based
in whole or in part upon the information provided to the Trustee by the
Servicer).
To the extent that there are inconsistencies between the telecopy of
the Servicer's Certificate and the hard copy thereof, the Trustee shall be
entitled to rely upon the telecopy. In the case of information furnished
pursuant to subclauses (ii), (iii), (iv), (v), (x) and (xii), above, the amounts
shall be expressed in a separate section of the report as a dollar amount for
each Class per $1,000 original dollar amount as of the Cut- Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based
upon information received from the Servicer, forward to the Certificateholders
and the Rating Agencies a report setting forth the amount of principal and
interest, if any, being paid to each Class of Certificates on the Special
Remittance Date.
(a) Within a reasonable period of time after the end of each calendar
year, the Servicer shall furnish to the Trustee for distribution to each Person
who at any time during the calendar year was a Certificateholder such
information as is reasonably necessary to provide to such Person a statement
containing the information set forth in subclauses (vi), (x), and (xiv), above,
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Servicer shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer pursuant to any requirements of
the Code as from time to time are in force.
(b) Upon reasonable advance notice in writing, the Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and access to information and documentation
regarding the SBA Loans sufficient to permit such Certificateholder to comply
with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Certificates.
(c) The Servicer shall furnish to each Certificateholder, during the
term of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Certificateholder or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
by and in accordance with such applicable instructions and directions as the
Certificateholder may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producible
in the ordinary course of the Servicer's business. The Rating Agencies shall
receive copies of any such reports or information furnished to the
Certificateholders.
Section 6.10 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the Certificate Account an
amount (as indicated in the Servicer's Certificate prepared pursuant to Section
6.09), to be distributed on the related Remittance Date pursuant to Section
6.07, equal to the amount by which (i) 30 days' interest at a rate equal to the
then applicable Adjusted SBA Loan Remittance Rate on the aggregate Class A and
Class B Principal Balances immediately prior to the related Remittance Date
(plus or minus the difference, if any, between (A) the sum of the Class A and
Class B Interest Distribution Amounts and (B) the sum of the Adjusted Class A
and Adjusted Class B Interest Distribution Amounts for the related Remittance
Date) exceeds (ii) the amount received by the Servicer as of the related Record
Date in respect of interest on the SBA Loans minus the interest payable to the
Registered Holders, the Premium Protection Fee, the Additional Fee, the
Servicing Fee and the FTA's Fee (plus, for the Remittance Dates in April, May
and June 1998, the sum of (i) all funds to be transferred to the Certificate
Account from the Capitalized Interest Account for such Remittance Date pursuant
to Section 6.04(g) and (ii) the Pre-Funding Earnings for the applicable
Remittance Date), such excess being defined herein as the "Monthly Advance." The
Servicer may reimburse itself for Monthly Advances made pursuant to Section
5.04. Notwithstanding the foregoing, the Servicer shall not be required to make
a Monthly Advance with respect to an SBA Loan if it determines, in good faith,
that such advance would be nonrecoverable from amounts received in respect of
the SBA Loans.
Section 6.11 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest on
the principal portion of the Unguaranteed Interest of each SBA Loan at the then
applicable Class A or Class B Remittance Rate, as the case may be. Not later
than the close of business on each Determination Date, with respect to each SBA
Loan for which a Principal Prepayment or Curtailment was received during the
related Due Period, the Servicer shall remit to the Trustee for deposit in the
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.09) equal to the difference between
(a) 30 days' interest at the Adjusted SBA Loan Remittance Rate on the Principal
Balance of each such SBA Loan as of the beginning of the Due Period applicable
to the Remittance Date on which such amount will be distributed, and (b) the
amount of interest actually received on each such SBA Loan for such Due Period
net of the portion thereof payable to the Registered Holder, the Premium
Protection Fee, the FTA's Fee, the Servicing Fee, the Excess Spread and the fees
and expenses of the Trustee allocable to such interest and, with respect to each
Additional Fee SBA Loan, the Additional Fee.
Section 6.12 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED
PROPERTY
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before February
15th of each year, shall provide to the Trustee, reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust Fund acquires an interest in a Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of
the SBA Loan, or (ii) knows or has reason to know that a Mortgaged Property has
been abandoned.
<PAGE>
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Intentionally Omitted]
Section 7.02 SATISFACTION OF MORTGAGES AND COLLATERAL AND RELEASE OF
SBA FILES
The Servicer shall maintain the Fidelity Bond as provided for in
Section 5.09 insuring the Servicer against any loss it may sustain with respect
to any SBA Loan not satisfied in accordance with the procedures set forth
herein.
Upon the payment in full of any SBA 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 FTA and
the Trustee by a certification in the form of Exhibit I attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Principal and Interest Account pursuant to Section 5.03 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Trustee's Document File. Upon receipt of such certification and
request, the FTA and the Trustee shall release, within 3 Business Days, the
related Trustee's Document File to the Servicer. Expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be payable
only from and to the extent of servicing compensation and shall not be
chargeable to the Principal and Interest Account or the Certificate Account.
Subject to the Multi-Party Agreement, from time to time and as
appropriate for the servicing or foreclosure of any SBA Loan, the FTA and the
Trustee shall, upon request of the Servicer and delivery to the FTA and the
Trustee of a certification in the form of Exhibit I attached hereto signed by a
Servicing Officer, release the related Trustee's Document File to the Servicer
within 3 Business Days, and the Trustee shall execute such documents as shall be
necessary to the prosecution of any such proceedings. The Servicer shall return
the Trustee's Document File to the FTA and the Trustee when the need therefor by
the Servicer no longer exists, unless the SBA Loan has been liquidated and the
Unguaranteed Percentage of the Liquidation Proceeds relating to the SBA Loan
have been deposited in the Principal and Interest Account and remitted to the
Trustee for deposit in the Certificate Account or the SBA 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 or other
Collateral either judicially or non-judicially, and the Servicer has delivered
to the FTA and the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such SBA 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 SBA Loan was liquidated,
the servicing receipt shall be released by the Trustee to the Servicer.
The Trustee shall execute and deliver to the Servicer any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or other
Collateral or to any legal action brought to obtain judgment against any Obligor
on the SBA Note or Mortgage or other agreement securing Collateral or to obtain
a deficiency judgment, or to enforce any other remedies or rights provided by
the SBA Note or Mortgage or other agreement securing Collateral or otherwise
available at law or in equity. Together with such documents or pleadings, the
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage or other agreement securing
Collateral, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale. The Trustee shall, upon receipt of a written
request from a Servicing Officer, execute any document provided to the 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 or other agreement
securing Collateral upon the satisfaction thereof and the Trustee will sign and
post, but will not guarantee receipt of, any such documents to the Servicer, or
such other party as the Servicer may direct, within five Business Days of the
Trustee's receipt of such certificate or documents. Such certificate or
documents shall establish to the Trustee's satisfaction that the related SBA
Loan has been paid in full by or on behalf of the Obligor and that such payment
has been deposited in the Principal and Interest Account.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Principal and Interest Account or to retain from
interest payments on the SBA Loans the Servicer's Servicing Fee and the Premium
Protection Fee in accordance with Section 5.04(b). Additional servicing
compensation in the form of assumption and other administrative fees, interest
paid on funds on deposit in the Principal and Interest Account, interest paid
and earnings realized on Permitted Instruments and amounts remitted pursuant to
Section 6.03(c)(iii) shall be retained by or remitted to the Servicer to the
extent not required to be remitted to the Trustee for deposit in the Certificate
Account. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Trustee, the SBA and the Rating
Agencies on or before March 31 of each year beginning March 31, 1999, an
Officer's Certificate stating that (i) the Servicer has fully complied with the
provisions of Articles V and VII, (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 to cure such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT
On or before March 31 of each year beginning March 31, 1999, the
Servicer, at its expense, shall cause one of the "big six" accounting firms to
furnish a letter or letters to the Trustee and the Rating Agencies to the effect
that such firm has with respect to the Servicer's overall servicing operations
examined such operations in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 7.06 SBA'S, AND TRUSTEE'S RIGHT TO EXAMINE SERVICER RECORDS
AND AUDIT OPERATIONS
The SBA and the 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. No amounts payable in respect
of the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE; PRINCIPAL AND INTEREST ACCOUNT
STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Trustee and the SBA a statement, certified by a Servicing
Officer, setting forth the status of the Principal and Interest Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into the Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from the Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount of
permitted withdrawals not made in the related Due Period, and the amount of any
Monthly Advances or payments of Compensating Interest, in each case, for the
related Due Period.
Section 7.08 PREMIUM PROTECTION FEE AND SERVICING FEE.
Pursuant to and in accordance with the policies of the SBA and SBA
Form 1086, the Servicer shall retain the Premium Protection Fee and the
Servicing Fee for each SBA ss. 7(a) Loan. The Premium Protection Fee and the
Servicing Fee shall not constitute part of the Trust Fund and Certificateholders
shall have no interest in, and are not entitled to receive any portion of, the
Premium Protection Fee or the Servicing Fee. If the Servicer is replaced as
servicer pursuant to any provision of this Agreement, it shall no longer be
entitled to the Premium Protection Fee and the Servicing Fee but, instead, the
successor Servicer shall be entitled thereto.
<PAGE>
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders the annual audited financial statements of the
Servicer's parent for one or more of the most recently completed five fiscal
years for which such statements are publicly available, which request shall not
be unreasonably denied.
The Servicer also agrees to make available on a reasonable basis to
any prospective Certificateholder a knowledgeable financial or accounting
officer for the purpose of answering reasonable questions respecting recent
developments affecting the Servicer or the financial statements of the Servicer
and to permit any prospective Certificateholder or to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
such prospective Certificateholder that the Servicer has the ability to service
the SBA Loans in accordance with this Agreement.
<PAGE>
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the SBA,
and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the SBA, and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the SBA Loans in compliance with the terms of
this Agreement. The Servicer shall immediately notify the Trustee, the SBA and
each Certificateholder if a claim is made by any party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Trustee, the
SBA, and/or Certificateholder in respect of such claim. The Trustee may
reimburse the Servicer from the Expense Account pursuant to Section 6.03(c)(i)
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 SBA Loans in compliance with the terms of this Agreement.
(b) The Sellers agree to indemnify and hold the Trustee, the SBA and
each Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the SBA, and any Certificateholder
may sustain in any way related to the failure of the Servicer, if it is an
affiliate thereof, or the failure of the Sellers to perform their respective
duties in compliance with the terms of this Agreement and in the best interests
of the SBA and the Certificateholders. The Sellers shall immediately notify the
Trustee, the SBA, and each Certificateholder if a claim is made by a third party
with respect to this Agreement, and the Sellers shall assume (with the consent
of the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Sellers, the Trustee, the SBA and/or Certificateholder in respect of such claim.
The Trustee may reimburse the Sellers from the Expense Account pursuant to
Section 6.03(c)(i) for all amounts advanced by them pursuant to the preceding
sentence except when the claim relates directly to the Sellers indemnification
pursuant to Section 2.05 and Section 3.03 or to the failure of the Servicer, if
it is an affiliate of a Seller, to perform its obligations to service and
administer the Mortgages in compliance with the terms of this Agreement, or the
failure of the Sellers to perform their duties in compliance with the terms of
this Agreement and in the best interests of the SBA and the Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer will 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 SBA Loans and to
perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution that has a
net worth of at least $15,000,000 and shall be an approved SBA guaranteed lender
in good standing, operating pursuant to an effective Loan Guaranty Agreement,
and shall be the successor of the Servicer, 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 shall send notice
of any such merger or consolidation to the Trustee, the Rating Agencies and the
SBA.
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 SBA 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 SBA, the Trustee and the Majority Certificateholders, or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law or administrative determination 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 Trustee, the SBA and
to each Certificateholder, which Opinion of Counsel shall be in form and
substance acceptable to the Trustee. No such resignation shall become effective
until a successor has assumed the Servicer's responsibilities and obligations
hereunder in accordance with Section 10.02.
<PAGE>
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:
(i) (A) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and adversely
affects the interests of the Certificateholders; (B) the failure by
the Servicer to make any required Monthly Advance; (C) the failure by
the Servicer to remit any Compensating Interest; or (D) any failure by
the Servicer to remit to Certificateholders, or to the Trustee for the
benefit of the Certificateholders, any payment required to be made
under the terms of this Agreement which continues unremedied after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or
to the Servicer and the Trustee by any Certificateholder; or
(ii) failure by the Servicer or the Sellers duly to observe or
perform, in any material respect, any other covenants, obligations or
agreements of the Servicer or the Sellers 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
Sellers, as the case may be, by the Trustee or to the Servicer, or the
Sellers, as the case may be, and the Trustee by any Certificateholder;
or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Servicer 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, marshalling 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 an Event of
Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(B)), if such Event of Default shall not have been
remedied within 30 days after the Servicer has received notice of such Event of
Default, (x) with respect solely to clause (i)(B) above, if such Monthly Advance
is not made earlier than 4:00 p.m. New York time on the Determination Date, the
Trustee shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer and, unless such failure is cured, either by receipt of
payment or receipt of evidence (E.G., a wire reference number communicated by
the sending bank) that such funds have been sent, by 12:00 Noon New York time on
the following Business Day, the Trustee 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)(C), (i)(D), (iii), (iv) and (v), the Majority
Certificateholders, by notice in writing to the Servicer (except with respect to
(iii), (iv) and (v) for which no notice is required) may, in addition to
whatever rights such Certificateholders may have at law or equity including
damages, injunctive relief and specific performance, in each case immediately
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the SBA Loans and the proceeds thereof, as Servicer. Upon such
receipt by the Servicer of a second written notice from the Majority
Certificateholders stating that they or it intend to terminate the Servicer as a
result of such Event of Default, all authority and power of the Servicer under
this Agreement, whether with respect to the SBA Loans or otherwise, shall,
subject to Section 10.02 and the Multi-Party Agreement, pass to and be vested in
the Trustee and the Trustee 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 SBA Loans and related documents. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee 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 SBA Loans. The Trustee shall provide
notice to the SBA of any Event of Default hereunder.
Section 10.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR
On and after the time of the Servicer's immediate termination, or the
Servicer's receipt of notice if required by Section 10.01, or at any time if the
Trustee receives the resignation of the Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.04 or the Servicer is removed as Servicer pursuant
to this Article X, the 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 Trustee shall
not be liable for any actions of any Servicer prior to it, and that the Trustee
shall not be obligated to make advances or payments pursuant to Sections 6.03,
6.10, 6.11, 5.10 or 5.14 but only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee. As compensation therefor,
the Trustee shall be entitled to all funds relating to the SBA Loans which the
Servicer would have been entitled to receive from the Principal and Interest
Account pursuant to Section 5.04 if the Servicer had continued to act as
Servicer hereunder and shall be entitled to the Servicing Fee and the Premium
Protection Fee, together with other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 7.01
and 7.03.
Notwithstanding the above, the Trustee shall, if it is unable to so
act or if the SBA so requests in writing to the Trustee, appoint, or petition a
court of competent jurisdiction to appoint, any established servicing
institution acceptable to the SBA and satisfying the Rating Agency Condition
that has a net worth of not less than $15,000,000, and which is an approved SBA
guaranteed lender in good standing, operating pursuant to an effective Loan
Guaranty Agreement, 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 Trustee and remitted directly to the
Trustee or, at the direction of the Trustee, to the successor servicer. The
compensation of any successor servicer (including, without limitation, the
Trustee) so appointed shall be the aggregate Servicing Fees and other servicing
compensation in the form of assumption fees, late payment charges or otherwise.
In the event the Trustee is required to solicit bids as provided herein, the
Trustee shall solicit, by public announcement, bids from banks and mortgage
servicing institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the aggregate Servicing Fees and Premium Protection Fees as
servicing compensation, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise. Within thirty days
after any such public announcement, the Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee shall deduct from any sum received by the 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 Trustee as a servicing fee to the SBA
at the time of such sale, transfer and assignment to the Servicer's successor.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The Servicer
agrees to cooperate with the Trustee and any successor servicer in effecting the
termination of the Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the 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 Trustee or such successor servicer, as applicable, all amounts which then
have been or should have been deposited in the Principal and Interest Account or
Spread Account by the Servicer or which are thereafter received with respect to
the SBA Loans. Neither the 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 Trustee to each Certificateholder and the SBA
and the Trustee and the SBA shall have consented thereto. The Trustee shall not
resign as servicer until a successor servicer reasonably acceptable to the SBA
has been appointed.
Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on SBA 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 7.03 or otherwise as
provided in this Agreement. The Servicer, the Trustee 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 SBA or the Majority Certificateholders may, on behalf of all
Certificateholders, and subject to the consent of the SBA, which consent may not
be unreasonably withheld, and satisfaction of the Rating Agency Condition, waive
any events permitting removal of the Servicer pursuant to this Article X;
provided, however, that the Majority Certificateholders or the SBA may not waive
a default in making a required distribution on a Certificate without the consent
of the holder of such Certificate. Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto except to the extent expressly so waived.
Section 10.04. CONTROL BY MAJORITY CERTIFICATEHOLDERS AND OTHERS.
The SBA or the Majority Certificateholders with the consent of the SBA
may direct the time, method and place of conducting any proceeding relating to
the Trust Fund or the Certificates or for any remedy available to the Trustee
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to the Certificates or the Trust Fund PROVIDED THAT:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; PROVIDED,
HOWEVER, that the Trustee, as the case may be, need not take any
action which it determines might involve it in liability or may be
unjustly prejudicial to the Holders not so directing.
<PAGE>
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon notice to the Trustee of the
earlier of the following events: (a) the final payment or other liquidation of
the last SBA Loan or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure of any SBA Loan and the remittance of all funds
due thereunder, or (b) mutual consent of the Servicer and all Certificateholders
in writing; provided, however, that in no event shall the Trust established by
this Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the United
States to the Court of St. James, alive as of the date hereof.
The Servicer may, at its option, terminate this Agreement on any date
on which the Pool Principal Balance is less than 10% of the sum of (i) the
Original Pool Principal Balance and (ii) the Original Pre-Funded Amount by
purchasing, on the next succeeding Remittance Date, all of the Unguaranteed
Interests in the SBA Loans and Foreclosed Properties at a price equal to the sum
of (i) 100% of the then outstanding Aggregate Class A and Class B Certificate
Principal Balances, and (ii) 30 days' interest thereon at the then applicable
Class A and Class B Remittance Rates, as the case may be (the "Termination
Price"). Notwithstanding the prior sentence, if at the time the Servicer
determines to exercise such option the unsecured long-term debt obligations of
the Servicer are not rated at least Baa3 by Moody's and BBB- by Duff & Phelps,
if such Rating Agencies are still rating the Certificates, the Servicer shall
give such Rating Agencies prior written notice of the Servicer's determination
to exercise such option and shall not exercise such option, without the consent
of each such Rating Agency, prior to furnishing each such Rating Agency with an
Opinion of Counsel, in form and substance reasonably satisfactory to each such
Rating Agency, that the exercise of such option would not be deemed a fraudulent
conveyance by the Servicer.
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and that the Certificateholders shall surrender
their Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. Any obligation of the Servicer to pay
amounts due to the Trustee shall survive the termination of this Agreement.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the national
edition of THE WALL STREET JOURNAL notice that such money remains unclaimed. If
within six months after the second notice all of the Certificates shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Seller shall be entitled to all unclaimed
funds and other assets which remain subject hereto and the Trustee upon transfer
of such funds subject hereto and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds and the Certificateholders
shall look to the Seller for payment.
Section 11.02 ACCOUNTING UPON TERMINATION OF SERVICER
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
(a) deliver to their successor or, if none shall yet have been
appointed, to the Trustee the funds in any Principal and Interest Account;
(b) deliver to their successor or, if none shall yet have been
appointed, to the Trustee all SBA Files and related documents and statements
held by it hereunder and a SBA Loan portfolio computer tape;
(c) deliver to their successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the SBA Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the SBA Loans to their successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement.
<PAGE>
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or the Sellers hereunder. If any such instrument is
found not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of
judgment made in good faith by officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
(d) In the absence of actual knowledge of an Event of Default, the
Trustee shall not be required to take notice or be deemed to have notice or
knowledge of any default or Event of Default unless the Trustee shall be
specifically notified in writing by the Servicer or any of the
Certificateholders. In the absence of actual knowledge or receipt of such
notice, the Trustee may conclusively assume that there is no default or Event of
Default; and
(e) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may request and rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any opinion of
counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default (which
has not been cured), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by
Holders of Certificates evidencing Percentage Interests aggregating
not less than 25% provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Servicer or, if
paid by the Trustee, shall be repaid by the Servicer upon demand from
the Servicer's own funds;
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or the
powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR SBA LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any SBA Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the SBA Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Servicer will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith, provided that the Trustee shall have no
lien on the Trust Fund for the payment of its fees and expenses. To the extent
that actual fees and expenses of the Trustee exceed the amount available for
payment thereof on deposit in the Expense Account as of the date such fees and
expenses are due and payable, the Servicer shall reimburse the Trustee for such
shortfall out of its own funds without reimbursement therefor, except as
provided in Section 6.03. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability or expense (i) incurred in connection with any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder, and (ii) resulting from any error
in any tax or information return prepared by the Servicer. The obligations of
the Servicer under this Section 12.05 shall survive payment of the Certificates,
and shall extend to any co-trustee appointed pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be (i) a national banking
association or banking corporation or trust company organized and doing business
under the laws of any state or the United States of America, (ii) authorized
under such laws to exercise corporate trust powers, (iii) having a combined
capital and surplus of at least $30,000,000, (iv) having unsecured and
unguaranteed long-term debt obligations rated at least Baa3 by Moody's and BBB-
by Duff & Phelps (provided Duff & Phelps is rating the unsecured and
unguaranteed long-term debt obligations of the Trustee) or such other rating as
is acceptable to the SBA, (v) is subject to supervision or examination by
federal or state authority, (vi) is an approved SBA guaranteed lender in good
standing, operating pursuant to an effective Loan Guaranty Agreement, and (vii)
is reasonably acceptable to the SBA. If such banking association publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section its combined capital and surplus shall be deemed to be as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall (a) give prompt notice that it has so ceased to be
eligible to be the Trustee (which shall give prompt notice to the SBA and each
Certificateholder) and (b) resign, upon the request of the SBA or the Majority
Certificateholders, in the manner and with the effect specified in Section
12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the SBA, and to
all Certificateholders. Upon receiving such notice of resignation, the Servicer
shall with the consent of the SBA promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders by the Servicer. Unless a successor
trustee shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee. If the resigning Trustee fails to petition an appropriate court, the
SBA may, after such 60 day period, petition any court of competent jurisdiction
for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 12.06 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Servicer
may remove the Trustee and appoint, subject to the approval of the SBA, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and the SBA by the
Servicer.
The Majority Certificateholders with the consent of the SBA, which
consent will not be unreasonably withheld, and upon satisfaction of the Rating
Agency Condition, or the SBA may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08.
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all SBA
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall send notice of any
such merger or consolidation to the Rating Agencies.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, the SBA pursuant to the procedure set forth below, to act as co-trustee
or co-trustees, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Fund, and to vest in such Person or
Persons, in such capacity, such title to the Trust Fund, or any part thereof,
and, subject to the other provisions of this Section 12.10, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 12.06 hereunder. No notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. The Trustee shall notify the SBA prior to
the appointment of any co- trustee(s) or separate trustee(s) and the SBA shall
have ten Business Days from its receipt of such notice to notify the Trustee
whether it, in its reasonable judgment, disapproves of such co-trustee(s) or
separate trustee(s). If the SBA does not notify the Trustee within such time
frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the SBA notifies the Trustee within such time frame that they, in
their reasonable judgment, disapproves of such co-trustee(s) or separate
trustee(s) (which notice shall be accompanied by the name(s) of the SBA's
alternative proposed co-trustee(s) or separate trustee(s)), such appointments
shall not be effective.)
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 12.10, all rights, powers, duties and obligations
conferred or imposed upon the trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co- trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, initially, Marine Midland Bank, with power to act on the
Trustee's behalf and subject to its direction in the authentication and delivery
of the Certificates in connection with transfers and exchanges under Section
4.02, as fully to all intents and purposes as though the Authenticating Agent
had been expressly authorized by that Section to authenticate and deliver
Certificates. For all purposes of this Agreement, the authentication and
delivery of Certificates by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of Certificates by the
Trustee. Such Authenticating Agent shall at all times be a Person meeting the
requirements for the Trustee set forth in Section 12.06.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of the Trust Fund and, upon request within five
(5) Business Days after its receipt thereof, shall (i) sign on behalf of the
Trust Fund any Tax Return that the Trustee is required to sign pursuant to
applicable federal, state or local tax laws, and (ii) cause such Tax Return to
have been returned to the Servicer for filing.
The Servicer shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to the
Trust Fund and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Trustee shall
sign all tax information returns filed pursuant to this Section and any other
returns as may be required by the Code, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Servicer.
Section 12.13 PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund and such other assets as may
from time to time be deposited with it hereunder in trust for the benefit of the
Holders and the SBA and at the request of the Sellers or the SBA will from time
to time execute and deliver all such supplements and amendments hereto pursuant
to Section 13.02 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the
Trust Fund or such other assets;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the SBA Loans; or
(iv) preserve and defend title to the Trust Fund and the rights
of the Trustee, and the ownership interests of the Certificateholders
represented thereby, in such Trust Fund against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the Sellers
or the SBA to take any action pursuant to this Section 12.13 to the Holders.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.13 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders, the SBA or the Sellers in accordance
with the terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.14 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TRUSTEE.
The Trustee hereby makes the following representations, warranties and
covenants on which the Seller, the Servicer, the SBA and the Certificateholders
shall rely:
(a) The Trustee is a banking corporation and trust company duly
organized, validly existing and in good standing under the laws of the State of
New York.
(b) The Trustee has full power, authority and legal right to execute,
deliver and perform this Agreement, and shall have taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement.
(c) The execution, delivery and performance by the Trustee of this
Agreement shall not (i) violate any provision of any law or any order, writ,
judgment or decree of any court, arbitrator or governmental authority applicable
to the Trustee or any of its assets, (ii) violate any provision of the corporate
charter or By-laws of the Trustee or (iii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any lien on any properties included in the
Trust Fund pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to materially and adversely affect the
Trustee's performance or ability to perform its duties under this Agreement or
the transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with or the taking of any other
action in respect of any governmental authority or agency regulating the banking
and corporate trust activities of the Trustee.
(e) This Agreement has been duly executed and delivered by the Trustee
and constitutes the legal, valid and binding agreement of the Trustee,
enforceable in accordance with its terms, 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. The Trustee hereby agrees and
covenants that it will not at any time in the future, deny that this Agreement
constitutes the legal, valid and binding agreement of the Trustee.
(f) The Trustee shall not take any action, or fail to take any action,
if such action or failure to take action will materially interfere with the
enforcement of any rights of the SBA or the Certificateholders under this
Agreement or the Certificates.
(g) The Trustee will comply at all times with the provisions of the
SBA Rules and Regulations in respect of its activities concerning the SBA Loans,
and will at all times hold an effective Loan Guaranty Agreement.
<PAGE>
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Sellers,
the Servicer and the Trustee by written agreement, upon the prior written
consent of the SBA, without the notice to or consent of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, adversely affect the interests of any Certificateholder or any other
party and further provided that no such amendment shall reduce in any manner the
amount of, or delay the timing of, any amounts received on SBA Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the Sellers,
the Servicer, the Trustee and the Majority Certificateholders, upon the prior
written consent of the SBA, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or reduce the percentage of Holders
which are required to consent to any such amendment without the consent of the
Holders of 100% of the Certificates affected thereby and, provided further, that
no amendment affecting only one class of Certificates shall require the approval
of holders of Certificates of the other Class.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the SBA 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 Servicer and the Sellers, The Money Store Investment
Corporation, 707 Third Street, 7th Floor, West Sacramento California 95605
Attention: Paul Leliakov, and The Money Store of New York, Inc., 2840 Morris
Avenue, Union, New Jersey 07083, Attention: Executive Vice President or such
other addresses as may hereafter be furnished to the Certificateholders in
writing by the Sellers and the Servicer, (ii) in the case of the Trustee, Marine
Midland Bank, 140 Broadway, New York, New York 10005, 12th Floor, Attention:
Corporate Trust Department, (iii) in the case of the Certificateholders, as set
forth in the Certificate Register, (iv) in the case of Moody's, to Moody's
Investors Service, ABS Monitoring Department, 99 Church Street, 4th Floor, New
York, New York 10007, (v) in the case of Duff & Phelps, to Duff & Phelps Credit
Rating Co., 55 East Monroe Street, Chicago, Illinois 60603, Attention: Asset
Backed Monitoring Group, and (vi) in the case of the SBA, the United States
Small Business Administration, 409 Third Street, S.W., Washington, D.C. 20416,
Attention: Associate Administrator for Financial Assistance (vii) in the case of
The Money Store Inc., to The Money Store Inc., 3301 C Street, Suite 100,
Sacramento California, 95816, Attention: Michael H. Benoff. Any such notices
shall be deemed to be effective with respect to any party hereto upon the
receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificate- holders.
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
Sellers and the Servicer, the Trustee and the Certificateholders and their
respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 13.12 PAYING AGENT.
The Trustee hereby appoints Marine Midland Bank as Paying Agent. The
Trustee may appoint one or more other Paying Agents or successor Paying Agents
meeting the eligibility requirements of a Trustee set forth in Section 12.06
(i), (ii), (iii), (iv), (v) and (vii) hereof.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.06, that such Paying Agent
will:
(a) allocate all sums received for distribution to the Holders of
Certificates for which it is acting as Paying Agent on each Remittance Date
among such Holders in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Holders entitled
thereto until such sums shall be paid to such Holders or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificateholders by mailing notice thereof
to their addresses appearing on the Certificate Register.
Section 13.13 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any change of the Trustee,
the Servicer or Paying Agent, (3) any Event of Default or waiver of an Event of
Default, (4) that any superior lienholder has accelerated or intends to
accelerate the obligations secured by a Prior Lien, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Servicer shall give
prompt notice to the Rating Agencies if the Servicer or any of its affiliates
acquire any Certificates.
Section 13.14 THIRD PARTY RIGHTS
The Trustee, the FTA, the Spread Account Custodian and the Servicer
agree that the SBA shall be deemed a third-party beneficiary of this Agreement
entitled to all the rights and benefits set forth herein as fully as if it were
a party hereto.
<PAGE>
IN WITNESS WHEREOF, the Sellers, the Representative, the Servicer and
the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
THE MONEY STORE INVESTMENT
CORPORATION, as
Seller and Servicer
By:______________________________
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE OF NEW YORK, INC.,
as Seller
By:_______________________________
Name: Michael H. Benoff
Title: Senior Vice President
THE MONEY STORE INC.,
as Representative
By:________________________________
Name: Michael H. Benoff
Title: Executive Vice President
MARINE MIDLAND BANK,
as Trustee
By:________________________________
Name:
Title:
<PAGE>
ACCEPTANCE OF MARINE MIDLAND BANK
Marine Midland Bank hereby accepts its appointment under the within
instrument to serve as initial Authenticating Agent, Certificate Registrar and
Paying Agent. In connection therewith, Marine Midland Bank agrees to be bound by
all applicable provisions of such instrument.
MARINE MIDLAND BANK, as initial
Authenticating Agent, Certificate
Registrar and Paying Agent
By:______________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the ____ day of March, 1998 before me, a Notary Public in and for
said State, personally appeared ____________________ known to me to be an
officer of the Trustee, the trust company that executed the within instrument,
and also known to me to be the person who executed it on behalf of said banking
corporation, and acknowledged to me that such banking corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________
Notary Public
My Commission expires____________
<PAGE>
STATE OF __________ )
: ss.:
COUNTY OF __________)
On the ____ day of March, 1998 before me, a Notary Public in and for
the State of New York, personally appeared ___________ known to me to be the
_______________ of The Money Store Investment Corporation, one of the
corporations that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________
Notary Public
My Commission expires____________
<PAGE>
STATE OF __________ )
: ss.:
COUNTY OF __________)
On the ____ day of March, 1998 before me, a Notary Public in and for
the State of New York, personally appeared ___________ known to me to be the
____________ of The Money Store of New York Inc., one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________
Notary Public
My Commission expires____________
<PAGE>
STATE OF __________ )
: ss.:
COUNTY OF __________)
On the ____ day of March, 1998 before me, a Notary Public in and for
the State of New York, personally appeared ______________ known to me to be the
________________ of The Money Store Inc., one of the corporations that executed
the within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________
Notary Public
My Commission expires____________
<PAGE>
EXHIBIT A
CONTENTS OF SBA FILE
With respect to each SBA Loan, the SBA File shall include a copy of
any of the following items delivered to the Trustee or, with respect to 1 below
for the SBA ss. 7(a) Loans, the FTA:
1. The original SBA Note, endorsed by means of an allonge as
follows: "Pay to the order of Marine Midland Bank, and its
successors and assigns, as trustee under that certain Pooling and
Servicing Agreement dated as of February 28, 1998, for the
benefit of the United States Small Business Administration and
holders of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1, Class A and Class B, as their
respective interests may appear, without recourse" and signed, by
facsimile or manual signature, in the name of the applicable
Seller by a Responsible Officer, with all prior and intervening
endorsements showing a complete chain of endorsement from the
originator to the applicable Seller, if such Seller was not the
originator;
2. With respect to those SBA Loans secured by Mortgaged Properties,
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 of the applicable Seller where the original
has been transmitted for recording until such time as the
original is returned by the public recording office or duly
licensed title or escrow officer or (iii) a copy of the Mortgage
certified by the public recording office in those instances where
the original recorded Mortgage has been lost;
3. With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) the original Assignment of Mortgage from the
applicable Seller endorsed as follows: "Marine Midland Bank,
("Assignee") its successors and assigns, as trustee under the
Pooling and Servicing Agreement dated as of February 28, 1998
subject to the Multi-Party Agreement dated as of February 28,
1998" 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 SBA Loans secured
by Mortgaged Properties located in the same county), or (ii) a
copy of such Assignment of Mortgage certified as a true copy by a
Responsible Officer of the applicable Seller where the original
has been transmitted for recording (PROVIDED, HOWEVER, that where
the original Assignment of Mortgage is not being delivered to the
Trustee, each such Responsible Officer may complete one or more
blanket certificates attaching copies of one or more Assignments
of Mortgage relating to the Mortgages originated by the
applicable Seller);
4. With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all intervening assignments, if any,
showing a complete chain of title from the originator to the
applicable Seller, 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 applicable Seller 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;
5. With respect to those SBA Loans secured by Mortgaged Properties,
either: (i) originals of all title insurance policies relating to
the Mortgaged Properties to the extent the Sellers obtained such
policies or (ii) copies of any title insurance policies or other
evidence of lien position, including but not limited to PIRT
policies, limited liability reports and lot book reports, to the
extent the Sellers obtain such policies or other evidence of lien
position, certified as true by the applicable Seller;
6. For all SBA Loans, blanket assignment of all Collateral securing
the SBA Loan, including without limitation, all rights under
applicable guarantees and insurance policies;
7. For all SBA Loans, irrevocable power of attorney of the
applicable Seller to the Trustee to execute, deliver, file or
record and otherwise deal with the Collateral for the SBA Loans
in accordance with the Agreement. The power of attorney will be
delegable by the Trustee to the Servicer and any successor
servicer and will permit the Trustee or its delegate to prepare,
execute and file or record UCC financing statements and notices
to insurers; and
8. For all SBA Loans, blanket UCC-1 financing statements identifying
by type all Collateral for the SBA Loans in the SBA Loan Pool and
naming the Trustee as Secured Party and the applicable Seller as
the Debtor. The UCC-1 financing statements will be filed promptly
following the Closing Date in New York, New Jersey and California
and will be in the nature of protective notice filings rather
than a true financing statement.
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A CERTIFICATE]
NO TRANSFER OF A CLASS A CERTIFICATE OR CERTIFICATES OR ANY INTEREST THEREIN
SHALL BE MADE TO ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH
IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), OR ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF SUCH PLAN OR ACCOUNT INVESTING IN SUCH ENTITY (INCLUDING INSURANCE
COMPANY SEPARATE OR GENERAL ACCOUNTS AND COLLECTIVE INVESTMENT FUNDS).
THE RIGHTS OF THE HOLDERS OF THE CLASS B CERTIFICATES TO RECEIVE DISTRIBUTIONS
WITH RESPECT TO INTEREST AND PRINCIPAL WILL BE SUBORDINATED TO SUCH RIGHTS OF
THE HOLDERS OF THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
<PAGE>
THE MONEY STORE SBA LOAN-BACKED ADJUSTABLE RATE CERTIFICATES
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of CEDE & CO. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an
interest herein.
Series 1998-1 Original Class A Certificate
Class A Principal Balance:
No. 1 $83,700,000
Original Dollar Amount as
of the Cut-Off Date
Represented by this
Certificate:
$83,700,000
Remittance Rate: Percentage Interest of
Variable the Class A Certificates
Evidenced by this
Certificate: 100%
Date of Pooling and Servicer:
Servicing Agreement The Money Store Investment
and Cut-Off Date: Corporation
February 28, 1998
First Remittance Date: Latest Maturity Date:
April 15, 1998 July 15, 2024
CUSIP No.: 87258PAN0
Closing Date: Trustee:
March 31, 1998 Marine Midland Bank
The Money Store Investment Corporation certifies that Cede & Co. is
the registered owner of a percentage interest (the "Percentage Interest") in the
Unguaranteed Interest in a pool of loans partially guaranteed by the U.S. Small
Business Administration and, to the extent delivered pursuant to the Agreement
referred to below, certain loans originated in connection with such loans (the
"SBA Loans") and serviced by The Money Store Investment Corporation (hereinafter
called the "Servicer," in its capacity as the Servicer, and together with The
Money Store of New York, Inc., the "Sellers," in their capacity as Sellers,
which terms include any successor entity under the Agreement referred to below).
The SBA Loans were originated or purchased by the Sellers. The SBA Loans will be
serviced pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of February 28, 1998 (the "Agreement") by and among
The Money Store Investment Corporation, The Money Store of New York, Inc., and
Marine Midland Bank, as trustee (the "Trustee"), certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
On each Remittance Date, commencing on April 15, 1998, the Trustee or
Paying Agent shall distribute to the Person in whose name this Certificate is
registered at the close of business on the last day of the month next preceding
the month of such distribution (the "Record Date"), an amount equal to the
product of the Percentage Interest of the Class A Certificates evidenced by this
Certificate and the amount required to be distributed to Holders of Class A
Certificates on such Remittance Date pursuant to Section 6.07 of the Agreement.
During the initial Interest Accrual Period, this Certificate will bear
interest at the rate of 6.18% per annum. During each subsequent Interest Accrual
Period, this Certificate will bear interest at a per annum rate equal to the
Prime Rate in effect on the preceding Adjustment Date minus 2.32% per annum,
subject to the limits described in the Agreement.
Distributions on this Certificate will be made by the Trustee or
Paying Agent by check mailed to the address of the Person entitled thereto as
such name and address shall appear on the Certificate Register or, upon written
request to the Trustee, by wire transfer of immediately available funds to the
account of the Person entitled thereto as shall appear on the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation thereon, at a bank or other entity having appropriate facilities
therefor, and, in the case of wire transfers, at the expense of such Person
unless such Person shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the
Certificate Registrar in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as The Money Store SBA Loan-Backed, Adjustable Rate Certificates,
Series 1998-1, Class A and Class B (herein called the "Certificates") and
representing undivided ownership in the right to receive the principal portion
of the Unguaranteed Interests of the SBA Loans together with interest thereon at
the then applicable Class A or Class B Remittance Rate, as the case may be.
Neither the Certificates nor the SBA Loans represent an obligation of,
or an interest in, the Servicer and (except for the Excess Spread) are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Small
Business Administration, the Government National Mortgage Association or the
Veterans Administration or any other governmental agency. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
SBA Loans, all as more specifically set forth herein and in the Agreement. In
the event Servicer funds are advanced with respect to any SBA Loan, such advance
is reimbursable to the Servicer from late recoveries of interest on the SBA
Loans generally.
As provided in the Agreement, deposits and withdrawals from the
Certificate Account, the Spread Account and the Expense Account may be made by
the Trustee from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Servicer of
advances made, or certain expenses incurred, by it, and investment in Permitted
Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Sellers, the Servicer
and the Trustee without the consent of the Certificateholders and (b) by the
Sellers, the Servicer and the Trustee with the consent of the Majority
Certificateholders. The Agreement permits the Majority Certificateholders to
waive, on behalf of all Certificateholders, any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
in a default in making any required distribution on a Certificate. Any such
consent or waiver by the Majority Certificateholders shall be conclusive and
binding on the holder of this Certificate and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Certificate Registrar in
New York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to, the Trustee, duly executed by the holder
hereof or such holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations evidencing the same
aggregate undivided Percentage Interest will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Servicer, the Seller, the Trustee and the Certificate Registrar,
and any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
Except for certain obligations of the Servicer to the Trustee, the
obligations created by the Agreement shall terminate upon notice to the Trustee
of: (i) the later of the final payment or other liquidation of the last SBA Loan
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any SBA Loan and the remittance of all funds due thereunder or
(ii) mutual consent of the Servicer and all Certificateholders in writing.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be
duly executed.
THE MONEY STORE INVESTMENT
CORPORATION, Servicer
By::__________________________
Name:
Title:
Dated:_________________
Attest:
- -------------------------
Assistant Secretary
This is one of the Certificates referred to in the within-mentioned Agreement.
MARINE MIDLAND BANK,
as Trustee
By:______________________
Authorized Signatory
or
MARINE MIDLAND BANK
as Authenticating Agent
By: ______________________
Authorized Signatory
<PAGE>
EXHIBIT B-2
[FORM OF CLASS B CERTIFICATE]
NO TRANSFER OF A CLASS B CERTIFICATE OR CERTIFICATES OR ANY INTEREST THEREIN
SHALL BE MADE TO ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT,
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), OR ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF SUCH PLAN OR ACCOUNT INVESTING IN SUCH ENTITY
(INCLUDING INSURANCE COMPANY SEPARATE OR GENERAL ACCOUNTS AND COLLECTIVE
INVESTMENT FUNDS).
THE RIGHTS OF THE HOLDERS OF THE CLASS B CERTIFICATES TO RECEIVE DISTRIBUTIONS
WITH RESPECT TO INTEREST AND PRINCIPAL WILL BE SUBORDINATED TO SUCH RIGHTS OF
THE HOLDERS OF THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
<PAGE>
THE MONEY STORE SBA LOAN-BACKED ADJUSTABLE RATE CERTIFICATES
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of CEDE & CO. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an
interest herein.
Series 1998-1 Original Class B Certificate
Class B Principal Balance:
No. 1 $6,300,000
Original Dollar Amount as
of the Cut-Off Date
Represented by this
Certificate:
$6,300,000
Remittance Rate: Percentage Interest of
Variable the Class B Certificates
Evidence by this Certificate: 100%
Date of Pooling and Servicer:
Servicing Agreement The Money Store Investment
and Cut-Off Date: Corporation
February 28, 1998
First Remittance Latest Maturity Date:
Date: July 15, 2024
April 15, 1998
CUSIP NO.: 87258PAP5
Closing Date: Trustee:
March 31, 1998 Marine Midland Bank
The Money Store Investment Corporation certifies that Cede & Co. is
the registered owner of a percentage interest (the "Percentage Interest") in the
Unguaranteed Interest in a pool of loans partially guaranteed by the U.S. Small
Business Administration and, to the extent delivered pursuant to the Agreement
referred to below, certain loans originated in connection with such loans (the
"SBA Loans") and serviced by The Money Store Investment Corporation (hereinafter
called the "Servicer," in its capacity as the Servicer, and together with The
Money Store of New York, Inc. the "Sellers," in their capacity as Sellers, which
terms include any successor entity under the Agreement referred to below). The
SBA Loans were originated or purchased by the Sellers. The SBA Loans will be
serviced pursuant to the terms and conditions of that certain Pooling and
Servicing Agreement dated as of February 28, 1998 (the "Agreement") by and among
The Money Store Investment Corporation, The Money Store of New York, Inc. and
Marine Midland Bank, as trustee (the "Trustee"), certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
On each Remittance Date, commencing on April 15, 1998, the Trustee or
Paying Agent shall distribute to the Person in whose name this Certificate is
registered at the close of business on the last day of the month next preceding
the month of such distribution (the "Record Date"), an amount equal to the
product of the Percentage Interest of the Class B Certificates evidenced by this
Certificate and the amount required to be distributed to Holders of Class B
Certificates on such Remittance Date pursuant to Section 6.07 of the Agreement.
During the initial Interest Accrual Period, this Certificate will bear
interest at the rate of 6.60% per annum. During each subsequent Interest Accrual
Period, this Certificate will bear interest at a per annum rate equal to the
Prime Rate in effect on the preceding Adjustment Date minus 1.90% per annum,
subject to the limits described in the Agreement.
Distributions on this Certificate will be made by the Trustee or
Paying Agent by check mailed to the address of the Person entitled thereto as
such name and address shall appear on the Certificate Register or, upon written
request to the Trustee, by wire transfer of immediately available funds to the
account of the Person entitled thereto as shall appear on the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation thereon, at a bank or other entity having appropriate facilities
therefor, and, in the case of wire transfers, at the expense of such Person
unless such Person shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Certificate Registrar in New
York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as The Money Store SBA Loan-Backed, Adjustable Rate Certificates,
Series 1998-1, Class A and Class B (herein called the "Certificates") and
representing undivided ownership in the right to receive the principal portion
of the Unguaranteed Interests of the SBA Loans together with interest thereon at
the then applicable Class A or Class B Remittance Rate, as the case may be.
Neither the Certificates nor the SBA Loans represent an obligation of,
or an interest in, the Servicer and (except for the Excess Spread) are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Small
Business Administration, the Government National Mortgage Association or the
Veterans Administration or any other governmental agency. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
SBA Loans, all as more specifically set forth herein and in the Agreement. In
the event Servicer funds are advanced with respect to any SBA Loan, such advance
is reimbursable to the Servicer from late recoveries of interest on the SBA
Loans generally.
As provided in the Agreement, deposits and withdrawals from the
Certificate Account, the Spread Account and the Expense Account may be made by
the Trustee from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Servicer of
advances made, or certain expenses incurred, by it, and investment in Permitted
Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Sellers, the Servicer
and the Trustee without the consent of the Certificateholders and (b) by the
Sellers, the Servicer and the Trustee with the consent of the Majority
Certificateholders. The Agreement permits the Majority Certificateholders to
waive, on behalf of all Certificateholders, any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
in a default in making any required distribution on a Certificate. Any such
consent or waiver by the Majority Certificateholders shall be conclusive and
binding on the holder of this Certificate and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Certificate Registrar in
New York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to, the Trustee, duly executed by the holder
hereof or such holder's attorney duly authorized in writing, and thereupon one
or more new Certificates in authorized denominations evidencing the same
aggregate undivided Percentage Interest will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Servicer, the Seller, the Trustee and the Certificate Registrar,
and any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
Except for certain obligations of the Servicer to the Trustee, the
obligations created by the Agreement shall terminate upon notice to the Trustee
of: (i) the later of the final payment or other liquidation of the last SBA Loan
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any SBA Loan and the remittance of all funds due thereunder or
(ii) mutual consent of the Servicer and all Certificateholders in writing.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be
duly executed.
THE MONEY STORE INVESTMENT
CORPORATION, Servicer
By: ___________________________
Name:
Title:
Dated:_________________
Attest:
- -------------------------
Assistant Secretary
This is one of the
Certificates referred
to in the within-mentioned Agreement.
MARINE MIDLAND BANK,
as Trustee
By:_____________________
Authorized Signatory
or
MARINE MIDLAND BANK,
as Authenticating Agent
By:_____________________
Authorized Signatory
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: _______________________________
_______________________________
_______________________________ (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
February 28, 1998, The Money Store SBA Loan-Backed Adjustable Rate Certificates,
Series 1998-1 Class A and Class B (the "Agreement"), we hereby authorize and
request you to establish an account, as a Principal and Interest Account
pursuant to Section 5.03 of the Agreement, to be designated as "The Money Store
Investment Corporation and The Money Store of New York, Inc., in trust for the
registered holders of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998- 1." 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 INVESTMENT
CORPORATION
By:________________________
Name:
Title:
<PAGE>
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation.
___________________________
(Name of Depository)
By:_______________________
Name:_____________________
Title:____________________
<PAGE>
EXHIBIT D
[OMITTED]
<PAGE>
EXHIBIT E
[OMITTED]
<PAGE>
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
________________________
- ------------------------
Re: The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1,
[CLASS A] [CLASS B] NUMBER ____
Dear Sir:
In connection with the sale of the above-captioned Certificate by
___________________________________ to ___________________________________,
("Transferee") you, as Paying Agent, are instructed to make all remittances to
Transferee as Certificateholder as of ____________, 19__ by wire transfer. For
such wire transfer, the wiring instructions are as follows:
_____________________________
_____________________________
________________________________
Transferee
Certificateholder's mailing address:
Name:
Address:
<PAGE>
EXHIBIT F-1
FORM OF INITIAL CERTIFICATION
_______________ , 1998
[Sellers]
[Servicer]
[SBA]
Re: Pooling and Servicing Agreement
The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1998-1, dated
as of February 28, 1998 among The Money
Store Investment Corporation, The Money
Store of New York, Inc., The Money Store
Inc. abd Marine Midland Bank, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement (the "Agreement"), the undersigned, as Trustee, hereby
certifies that, except as noted on the attachment hereto, if any (the "Loan
Exception Report"), it has received each of the documents required to be
delivered to it pursuant to Section 2.04 of the Agreement (not including the
original SBA Notes relating to the SBA ss. 7(a) Loans, which are to be delivered
to the FTA) with respect to each [Initial] [Subsequent] SBA Loan listed in the
SBA Loan Schedule and the documents contained therein appear to bear original
signatures.
The Trustee has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement.
The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any such documents or
any of the SBA Loans identified on the SBA Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such SBA Loan.
MARINE MIDLAND BANK,
as Trustee
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT F-2
FORM OF FINAL CERTIFICATION
[date]
[Servicer]
[Seller]
[SBA]
Re: Pooling and Servicing Agreement, The Money Store
SBA Loan-Backed Adjustable Rate Certificates,
Series 1998-1, dated as of February 28, 1998
among The Money Store Investment Company,
The Money Store of New York, Inc.,
The Money Store Inc. and Marine Midland Bank,
as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each SBA Loan listed in the SBA Loan
Schedule (other than any SBA Loan paid in full or listed on the attachment
hereto) it has reviewed the documents delivered to it pursuant to Section 2.04
of the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged, torn or otherwise physically altered and
relate to such SBA Loan and (iii) based on its examination, and only as to the
foregoing documents, the information set forth in the SBA Loan Schedule
respecting such SBA Loan is correct. The SBA has made no independent examination
of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The SBA makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Loans identified on the
SBA Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such SBA Loan.
MARINE MIDLAND BANK,
as Trustee
By:____________________
Name:__________________
Title:_________________
<PAGE>
EXHIBIT G
[OMITTED]
<PAGE>
EXHIBIT H
SBA LOAN SCHEDULE
[NOT ATTACHED]
<PAGE>
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee]
[FTA]
Re: Pooling and Servicing Agreement,
The Money Store SBA Loan-Backed Adjustable
Rate Certificates, Series 1998-1,
DATED AS OF FEBRUARY 28, 1998
In connection with the administration of the pool of SBA Loans held by
you, we request the release, and acknowledge receipt, of the (Trustee's SBA
File/[specify document]) for the SBA Loan described below, for the reason
indicated.
OBLIGOR'S NAME, ADDRESS & ZIP CODE:
SBA LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
____ 1. SBA Loan Paid in Full
(Servicer hereby certifies that all amounts received
in connection therewith have been credited to the
Principal and Interest Account and remitted to the
Trustee for deposit into the Certificate Account
pursuant to the Pooling and Servicing Agreement.)
____ 2. SBA Loan Liquidated
(Servicer hereby certifies that all proceeds
of
foreclosure, insurance or other liquidation have been
finally received and credited to the Principal and
Interest Account and remitted to the Trustee for
deposit into the Certificate Account pursuant to the
Pooling and Servicing Agreement.)
____ 3. SBA Loan in Foreclosure
_____4. SBA Loan Repurchased Pursuant to Section 11.01
of the Pooling and Servicing Agreement.
_____5. SBA Loan Repurchased or Substituted Pursuant to
Article II or III of the Pooling and
Servicing Agreement (Servicer hereby
certifies that the repurchase price or
Substitution Adjustment has been credited to
the Principal and Interest Account and/or
remitted to the Trustee for deposit into the
Certificate Account pursuant to the Pooling
and Servicing Agreement.)
____ 6. Collateral Being Released Pursuant to Section
5.01(f) of the Pooling and Servicing Agreement.
____ 7. SBA Loan Collateral being substituted or subordinated.
If box 1 or 2 above is checked, and if all or part of the Trustee's
SBA 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 SBA Loan.
If box 3, 4, 5, 6 or 7 above is checked, upon our return of all of the
above documents to you, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
THE MONEY STORE INVESTMENT
CORPORATION, as Servicer
BY:
NAME:
DATE:
Documents returned to Trustee:
- -------------------------------
Trustee
By:____________________________
Date:__________________________
<PAGE>
EXHIBIT J
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Unguaranteed Percentage of Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Unguaranteed Percentage of
Total Proceeds $_______
2. Servicing Advances $________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the SBA
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
EXHIBIT K
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
<TABLE>
<CAPTION>
RANGES # GROSS GROSS CERT. UNGTD
SERIES (IN DAYS) ACCT AMOUNT PCT AMOUNT PCT
<S> <C> <C> <C> <C> <C> <C>
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 TO 179 Days
180 to 719 Days
720 AND OVER
FORECLOSURE
REO PROPERTY
DELINQUENCY
OUTSTANDING
</TABLE>
<PAGE>
EXHIBIT L
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section
6.09 shall contain the following information for each SBA Loan as of the related
Record Date:
1. Name of the Obligor, address of the Mortgaged Property, if
applicable, and Account Number.
2. The SBA Loan Interest Rate.
3. The Monthly Payment.
4. The dates on which the payments were received for the applicable
Due Period and the amount of such payments segregated into the
following categories; (a) total interest received (including
Servicing Fee, interest payable to holder of the Guaranteed
Interest, the Premium Protection Fee, FTA's Fee, Excess Spread,
Extra Interest and, if applicable, Additional Fee); (b) interest
payable to the holder of the Guaranteed Interest and FTA's Fee;
(c) principal and Excess Payments received; (d) Curtailments
received; and (e) Principal Prepayments received.
5. The SBA Loan principal balance.
6. The SBA Loan date and original term to maturity.
7. A "Delinquency Flag" noting that the SBA Loan is current or
delinquent. If delinquent, state the date on which the last
payment was received.
8. For any SBA Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, a "Foreclosure Flag"
noting that the SBA Loan is the subject of foreclosure
proceedings.
9. For any SBA Loan that is not either 24 months delinquent or
otherwise determined to be uncollectible, an "REO Flag" noting
that the Mortgaged Property is an REO Property.
10. A "Liquidated SBA Loan Flag" noting that the SBA Loan is a
Liquidated SBA Loan and the Net Liquidation Proceeds received in
connection therewith.
11. Any additional information reasonably requested by the Trustee.
<PAGE>
EXHIBIT M
MULTI-PARTY AGREEMENT
AMONG THE MONEY STORE INVESTMENT CORPORATION, THE MONEY
STORE OF NEW YORK, INC, MARINE MIDLAND BANK, COLSON
SERVICES CORP. AND SBA
This Multi-Party Agreement is entered into as of February 28, 1998
(this "Agreement"), by and among The Money Store Investment Corporation
("TMSIC"), The Money Store of New York, Inc. ("MSNY") (each, individually, an
"SBA Lender" and collectively "SBA Lenders"), Marine Midland Bank, as Trustee
("Trustee"), Colson Services Corp. ("FTA"), and the United States Small Business
Administration ("SBA").
Each SBA Lender has made and intends to continue to make loans to
small businesses under the Small Business Act, as amended ("SBA Lender Loans").
SBA guarantees a portion of each SBA Lender Loan in accordance with 13
C.F.R. Part 120 and a Small Business Administration Loan Guaranty Agreement (SBA
Form 750), dated August 13, 1980 , between SBA and TMSIC (the "SBA Agreement").
Because SBA guarantees a portion of each SBA Lender Loan, SBA has an
interest in the SBA Lender Loans, the underlying collateral, and the Loan
Documents.
Each SBA Lender has entered into certain Secondary Participation
Guaranty Agreements on SBA Form 1086 ( each, a "Participation Agreement") with a
purchaser ( each, a "Guaranteed Holder"), SBA and FTA. Under the Participation
Agreements, each SBA Lender has sold the guaranteed portion (the "Guaranteed
Interest") in certain SBA Lender Loans (the "Loan Pool"). SBA has caused FTA to
issue a certificate to each Guaranteed Holder which entitles the Guaranteed
Holder to receive the payments and other recoveries of principal relating to the
Guaranteed Interest on the related SBA Lender Loans, together with interest on
the Guaranteed Interest at a per annum rate in effect from time to time in
accordance with the Participation Agreement.
The SBA Lenders, The Money Store Inc. and the Trustee have entered
into a Pooling and Servicing Agreement dated as of February 28, 1998 (the
"Pooling and Servicing Agreement") which establishes a trust (the "Trust").
Under the Pooling and Servicing Agreement, each SBA Lender will convey the
Conveyed Interest to the Trust. The Trust will issue certificates (the
"Certificates") evidencing the right to receive the Unguaranteed Interest in the
SBA Lender Loans in the Loan Pool together with interest.
13 C.F.R. Section 120.420 and the SBA Agreement require the SBA
Lenders to obtain SBA's written consent before they sell the Unguaranteed
Interest.
The SBA Lenders, the Trustee and SBA want to assure consistency
between the SBA Agreement and the Pooling and Servicing Agreement and clarify
the respective rights of the parties.
SBA Lenders, Trustee, FTA and SBA agree as follows:
1. DEFINITIONS. In this Agreement, the following terms have the
following meanings:
a. "Conveyed Interest": the Unguaranteed Interest plus the
amount by which the interest collected by the Servicer on
the principal portion of the Guaranteed Interest of each SBA
Lender Loan in the Loan Pool exceeds the sum of (a) the
interest payable to the Registered Holder, (b) the fees
payable to SBA and FTA, (c) the Servicing Fee and (d) the
Premium Protection Fee.
b. "Event of Default": as defined in the Pooling and Servicing
Agreement.
c. "Loan Documents": all Notes, mortgages, deeds of trust,
security deeds, security agreements, instruments of
hypothecation, guarantees and other agreements and documents
that relate to the SBA Lender Loans.
d. "Notes": the notes evidencing the SBA Lender Loans in the
Loan Pool.
e. "Premium Protection Fee": 0.60% per annum of the then
outstanding principal balance of the Guaranteed Interest.
f. "SBA Lender Loan Debtor": any debtor obligated under an SBA
Lender Loan.
g. "SBA Rules and Regulations": the Small Business Act, as
amended, the SBA Agreement, all rules and regulations
promulgated from time to time under the Small Business Act,
and SBA Standard Operating Procedures and official Notices
as from time to time in effect.
h. "Servicer": the Servicer (as defined in the Pooling and
Servicing Agreement) and, as applicable, the Subservicer (as
defined in the Pooling and Servicing Agreement).
i. "Servicing Fee": 0.40% per annum of the then outstanding
principal balance of the entire SBA Lender Loan.
j. "Unguaranteed Interest": the portion of each SBA Lender Loan
in the Loan Pool not guaranteed by SBA.
2. SBA'S GUARANTEED INTEREST. Each of the SBA Lenders, Trustee
(on behalf of itself and the holders of the Certificates) and FTA
acknowledges SBA's interest in the Guaranteed Interest of all SBA
Lender Loans, together with the collateral securing the SBA Lender
Loans and the Loan Documents, and in all payments and recoveries with
respect to the SBA Lender Loans and the collateral, including
insurance proceeds and agree to recognize and uphold such interest
under SBA Rules and Regulations. SBA Lenders and Trustee will execute
any release, assignment, endorsement or other document that SBA may
from time to time reasonably request with respect to the Guaranteed
Interest. Each of SBA Lender and Trustee will remit funds it receives
in respect of the Guaranteed Interest in the SBA Lender Loans to FTA
or SBA, as required. If SBA purchases the Guaranteed Interest in any
SBA Lender Loan, any recoveries from the SBA Lender Loan Debtor or the
collateral securing the SBA Lender Loan will be distributed pro rata
to SBA as holder of the Guaranteed Interest and to Trustee as holder
of the Unguaranteed Interest.
3. UNGUARANTEED INTEREST. SBA acknowledges that it has no
interest in the Unguaranteed Interest, the Servicing Fee or the
Premium Protection Fee. SBA further acknowledges that it has no
interest in any collateral that secures any SBA Lender Loan or any
Loan Document, except to the extent the collateral secures or a Loan
Document relates to the Guaranteed Interest. The collateral for an SBA
Lender Loan secures the Guaranteed Interest and the Unguaranteed
Interest pari passu and all recoveries from insurance or any other
source will be shared pro rata. If SBA receives any amount in respect
of the Conveyed Interest, SBA will remit the sum to Trustee for the
credit of the SBA Lenders, provided that in no event will SBA have any
obligation to pay any amount not owed by SBA under SBA Rules and
Regulations. If SBA receives any amount in respect of the Servicing
Fee or the Premium Protection Fee, SBA will remit the sum to TMSIC for
distribution to itself or MSNY, as applicable, or if TMSIC is not the
Servicer, the Servicer, provided that Trustee shall have given FTA and
SBA 15 days prior written notice under this Agreement of the change in
Servicer. This Agreement constitutes a notice of claims assignment for
the full term of the Pooling and Servicing Agreement under the Federal
Assignment of Claims Act of 1940, as amended, 31 U.S.C. Section 3727,
with respect to any right to payment of any Unguaranteed Interest or
the Servicing Fee or the Premium Protection Fee.
4. SBA CONSENT TO POOLING AND SERVICING AGREEMENT.
(a) SBA consents to SBA Lenders' execution and performance of the
Pooling and Servicing Agreement and the transactions contemplated in
it including, but not limited to, the sales of Certificates.
(b) Notwithstanding anything to the contrary contained in the
Pooling and Servicing Agreement, a default by either SBA Lender under
another agreement or a default by an entity other than SBA Lenders
under another agreement may not be an event of default under the
Pooling and Servicing Agreement. Trustee waives any rights it may
have, including rights of set-off and banker's liens, to any account
of either SBA Lender into which payments from SBA Lender Loan Debtors
are received and the Principal and Interest Account (as defined in the
Pooling and Servicing Agreement).
5. SBA LENDERS TO RETAIN ULTIMATE RISK OF LOSS. As required by 13
C.F.R. Section 120.420(b)(2), each SBA Lender must retain an economic
risk in and bear the ultimate risk of loss on the Unguaranteed
Interest. SBA Lenders will establish the Spread Account under the
Pooling and Servicing Agreement and cause a wholly owned subsidiary to
be and remain the Spread Account Depositor (as defined in the Pooling
and Servicing Agreement).
6. PREMIUM PROTECTION FEE AND SERVICING Fee. Each SBA Lender will
retain the Premium Protection Fee and the Servicing Fee with respect
to its SBA Lender Loans.
7. RESTRICTION ON USE OF SBA LENDER LOANS. Neither SBA Lender
will use the SBA Lender Loans or the collateral supporting the SBA
Lender Loans for any borrowing or other financing not related to
financing of the guaranteed or unguaranteed portions of the SBA Lender
Loans.
8. FTA TO HOLD ORIGINAL SBA LENDER NOTES; POSSESSION OF LOAN
DOCUMENTS. (a) SBA Lenders will deliver all original Notes relating to
the Initial SBA Loans (as defined in the Pooling and Servicing
Agreement) to FTA prior to the issuance of the Certificates and SBA
Lenders will deliver all original Notes relating to the Subsequent SBA
Loans (as defined in the Pooling and Servicing Agreement) to FTA prior
to each Subsequent Transfer of the Subsequent SBA Loans. Each Note
will be endorsed by means of an allonge (an endorsement of the Note
constituting a separate piece of paper) as follows: "Pay to the order
of Marine Midland Bank, and its successors and assigns, as trustee
under the Pooling and Servicing Agreement dated as of February 28,
1998, for the benefit of the United States Small Business
Administration and the holders of The Money Store SBA Loan Backed
Certificates, Series 1998-1, Class A and Class B as their respective
interests may appear, without recourse." Upon receiving the Note, FTA
will deliver to the SBA Lenders and the Trustee a receipt for such
Note in the form of Exhibit 1.
(b) The Notes are being delivered to FTA for the purposes of
protecting the SBA's and the Certificateholders' respective interests.
SBA appoints FTA as its fiscal and transfer agent and each of SBA and
Trustee appoint FTA as its agent to hold the Notes. FTA does not and
will not during the term of this Agreement have any interest in the
SBA Lender Loans in the Loan Pool or the related Loan Documents.
(c) FTA will not release any Note to either SBA Lender or any
other person except (i) upon receipt from an SBA Lender of a Request
for Release of Note in the form of Exhibit 3, along with a
confirmation of release from the Trustee, or (ii) with SBA's prior
written consent. Upon receipt of the required request and confirmation
or consent, FTA will release, within 3 Business Days, the related
Note. The Servicer will return the Notes to FTA in accordance with the
appropriate provisions of the Pooling and Servicing Agreement and when
the Notes are returned to FTA, FTA will issue a receipt in the form of
Exhibit 1 hereto. SBA will notify Moody's Investors Service, Inc. if
FTA releases any Note solely upon the instructions of SBA.
(d) Upon reasonable notice to FTA, SBA will have the right during
normal business hours to inspect the original Notes at FTA's office.
(e) SBA Lenders will deliver to the Trustee the Loan Documents
and assignments of Loan Documents in accordance with the Pooling and
Servicing Agreement. All instruments of assignment will assign the
applicable collateral to "Marine Midland Bank, ("Assignee") its
successors and assigns, as trustee under the Pooling and Servicing
Agreement dated as of February 28 1998, subject to the Multi-Party
Agreement dated as of February 28, 1998". All financing statements
will name the Trustee as secured party. Any power of attorney from
either SBA Lender to Trustee must require the Trustee to deal with the
collateral in accordance with the terms of the Pooling and Servicing
Agreement and this Agreement.
(f) If the Servicer or the SBA must be the record owner or
secured party with respect to any Note or any collateral securing any
Note for any purpose including, without limitation, to liquidate
(including by any judicial means) or otherwise pursue remedies against
any SBA Lender Loan Debtor or any collateral securing any Note,
Trustee will assign such Note or collateral to the Servicer, or SBA,
as necessary.
9. SERVICING OF SBA LENDER LOANS. TMSIC will service the SBA
Lender Loans in the Loan Pool, provided that MSNY may service the SBA
Lender Loans it originated. Any servicing actions required of TMSIC
under the Pooling and Servicing Agreement or this Agreement may be
performed by MSNY, but performance by MSNY will not limit or reduce
TSMIC's obligations or liabilities as Servicer under the Pooling and
Servicing Agreement or this Agreement. The Servicer will remit funds
to which the Guaranteed Holders or SBA is entitled in accordance with
the terms of the Participation Agreements, and will remit funds which
are required to be remitted to the Trustee to the Trustee in
accordance with the terms of the Pooling and Servicing Agreement.
TMSIC must proceed with all collection, enforcement of remedies and
liquidation actions against SBA Lender Loan Debtors in default in
accordance with SBA Rules and Regulations. TMSIC must perform all
servicing activities in accordance with SBA Rules and Regulations, the
Participation Agreements and, to the extent there is no conflict, the
Pooling and Servicing Agreement. Property acquired through foreclosure
or deed in lieu of foreclosure will be titled in the name of the
Trustee for the benefit of the SBA and the holders of the
Certificates, as their interests may appear, subject to the terms of
this Agreement. TMSIC will continue to administer such property and
will be responsible for its disposition in accordance with the terms
of the Pooling and Servicing Agreement. TMSIC will distribute
disposition proceeds to the SBA, as party in interest with respect to
the Guaranteed Interest, and to the Trustee in respect of the
Unguaranteed Interest, PRO RATA. SBA may, at its option, assume
servicing of any SBA Lender Loan in accordance with SBA Rules and
Regulations. Prior to an Event of Default, Trustee will not take (i)
any action regarding the servicing of any SBA Lender Loan or (ii) any
action with respect to any SBA Lender Loan Debtor or any collateral
securing any SBA Lender Loan. Any actions required of SBA Lender under
the Pooling and Servicing Agreement or this Agreement may be performed
by or through a subservicer approved by SBA under an agreement
approved by SBA, but any such subservicing arrangement will not limit
or reduce either SBA Lender's obligations or liabilities as servicer
under the Pooling and Servicing Agreement or this Agreement. The SBA
hereby approves MSNY as a subservicer under this Agreement and the
Pooling and Servicing Agreement.
10. DEFAULT UNDER POOLING AND SERVICING AGREEMENT. Trustee will
give SBA prompt written notice of an Event of Default and prompt
written notice of any termination of TMSIC as Servicer under the
Pooling and Servicing Agreement. Upon an Event of Default and
termination of TMSIC as Servicer in accordance with the terms of the
Pooling and Servicing Agreement, Trustee may be substituted as
Servicer so long as Trustee is then an approved SBA participating
lender in good standing, operating under a current Small Business
Administration Loan Guaranty Agreement (Deferred Participation) (Form
750). If the Trustee does not meet that condition or is otherwise
unable to act or if SBA requests in writing, the Trustee will appoint
another Servicer in accordance with the Pooling and Servicing
Agreement. Any successor Servicer must agree to be bound by the terms
of this Agreement and must execute an agreement in the form of Exhibit
2. Any substitute Servicer will be entitled to receive the Servicing
Fee and the Premium Protection Fee.
11. TRANSFEREES. Other than the issuance of the Certificates,
Trustee will not sell, participate, pledge, hypothecate, enter into
any repurchase agreement with respect to, or otherwise transfer any of
its interest in any SBA Lender Loan or any Note without SBA's prior
written consent. The proposed transferee must be an approved SBA
participating lender in good standing, operating under a current Small
Business Administration Loan Guaranty Agreement (Deferred
Participation) (Form 750) and must be acceptable to SBA. Upon
consenting to any proposed transfer, SBA will give FTA prompt written
notice. Any transferee must agree to be bound by the terms of this
Agreement.
12. SBA LENDER ACKNOWLEDGMENT OF CONTINUING OBLIGATION; NO
ASSUMPTION OF LIABILITIES. No action taken by Trustee, SBA or a
Servicer under this Agreement, the SBA Agreement, or the Pooling and
Servicing Agreement will release or relieve either SBA Lender of any
of its obligations to SBA or Trustee. None of SBA, Trustee, FTA or a
Servicer will incur any liability or obligation to either SBA Lender
by reason of any reasonable or customary action taken in carrying out
the provisions of this Agreement. Neither the execution of this
Agreement, nor the taking of any action by Trustee, SBA, FTA or a
servicer under this Agreement will be an assumption by Trustee, SBA,
FTA or a Servicer of any liabilities or obligations of either SBA
Lender. The provisions of this Section will survive termination of
this Agreement.
13. FTA'S AND SBA'S LIMITED LIABILITY AND EXPENSES. (a) FTA may
rely upon any signature, notice, certificate, or other document
reasonably believed by it to be genuine and to have been signed by the
party purporting to sign it. SBA Lenders will assume liability for and
indemnify, protect, and hold harmless FTA from any liabilities or
losses arising out of this Agreement, except in the case of FTA's
gross negligence or willful misconduct. SBA Lenders will reimburse FTA
for all expenses, taxes, and other charges that FTA incurs in
administering this Agreement. SBA Lenders will pay FTA its standard
fee for its services under this Agreement. In performing its
obligations under this Agreement, FTA will not follow instructions
from any party other than SBA or, pursuant to Section 8(c), upon the
request of an SBA Lender and concurring instructions of the Trustee.
SBA Lenders will not hold FTA liable for any action taken in
accordance with such instructions.
(b) SBA may rely on any signature, notice, certificate, request
or other document reasonably believed by it to be genuine and to have
been signed by the party purporting to sign it. SBA Lenders will
assume liability for and indemnify, protect and hold harmless SBA from
all liabilities or losses arising out of this Agreement, except in the
case of gross negligence or willful misconduct. Upon request by SBA,
SBA Lenders will reimburse SBA for all expenses and other charges that
SBA incurs in connection with this Agreement.
(c) The provisions of this Section 13 will survive any
termination of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which will be an original.
15. INCONSISTENCIES. If any provision of this Agreement is
inconsistent with any provision in any other agreement, including but
not limited to the Pooling and Servicing Agreement, the provision of
this Agreement controls. The Pooling and Servicing Agreement and any
agreements entered into in connection with such agreement are amended
to the extent necessary to give effect to the prior sentence. The SBA
Agreement is amended to provide that FTA will hold the Notes that are
transferred pursuant to the Pooling and Servicing Agreement and that
Trustee may hold the Loan Documents as provided in this Agreement.
16. AMENDMENT AND TERM. This Agreement may not be terminated or
amended without the prior written consent of the parties. Neither the
SBA Agreement nor the Pooling and Servicing Agreement may be amended
in any manner that would impair the respective rights of the SBA or
the Trustee under this Agreement without the prior written consent of
the party so affected.
17. GOVERNING LAW. This Agreement will be interpreted and
construed in accordance with the laws of the State of New York,
without reference to its conflict of laws rules.
18. SUCCESSORS AND ASSIGNS. This Agreement binds and benefits the
parties and their respective successors and assigns.
19. SECTION HEADINGS. The section headings in this Agreement are
for convenience only, and are without substantive meaning or content.
20. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will be given no
effect and shall not invalidate any other provision of this Agreement.
21. NOTICES AND DELIVERIES. Except as otherwise expressly
provided in this document, all notices or deliveries under this
Agreement will be given by actual delivery to the parties at the
addresses below or to such other addresses that any party may
designate for itself by written notice to each of the other parties.
All notices will be effective upon receipt by the applicable party.
If to either SBA Lender, at:
The Money Store Investment Corporation
3301 C Street
Suite 100-M
Sacramento, California
Telecopy No.:
Attention:
If to Trustee, at:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration
If to FTA, at:
Colson Services Corp.
150 Nassau Street
New York, New York 10038
Attn: President
If to SBA, at:
U.S. Small Business Administration
409 3rd Street, S.W.
Washington, D.C. 20416
Attn: Associate Administrator for Financial Assistance
In witness whereof SBA Lenders, Trustee, FTA, and SBA have executed
this Agreement below.
THE MONEY STORE INVESTMENT
CORPORATION
By: ___________________
THE MONEY STORE OF NEW YORK, INC.
By: ___________________
MARINE MIDLAND BANK , as Trustee
By: _____________________
UNITED STATES SMALL BUSINESS
ADMINISTRATION
By: ______________________
Jane Palsgrove Butler
COLSON SERVICES CORP.
By: ________________
<PAGE>
EXHIBIT 1
ACKNOWLEDGMENT OF RECEIPT OF NOTE
___________, 1998
In accordance with Section 8 of the Multi-Party Agreement, dated as of
February 28, 1998, by and among The Money Store Investment Corporation, The
Money Store of New York, Inc., Marine Midland Bank, Colson Services Corp.
("Colson") and the United States Small Business Administration ("SBA"), Colson,
as agent for SBA, hereby acknowledges receipt of the SBA guaranteed Note
described below with respect to the following:
MAKER:
ORIGINAL PRINCIPAL AMOUNT:
DATE OF NOTE:
SBA LOAN NUMBER (GP NUMBER):
TMSIC ACCOUNT NUMBER:
COLSON SERVICES CORP.,
AS AGENT FOR THE UNITED STATES
SMALL BUSINESS ADMINISTRATION
By:_______________________________
Its:______________________________
INSTRUCTIONS TO COLSON SERVICES CORP. One original executed copy of this receipt
should be made available for pick-up at the office of Colson or delivered to
Marine Midland Bank, as trustee, 140 Broadway, 12th Floor, New York, New York
10005, and a copy The Money Store Investment Corporation, 3464 El Camino Avenue,
Suite 130, Sacramento, California 95821.
<PAGE>
EXHIBIT 2
The undersigned consent and agree to be bound as ____________________
by the terms of foregoing Multi-Party Agreement, dated as of February 28, 1998
among the Money Store Investment Corporation, The Money Store of New York, Inc.,
Marine Midland Bank, Colson Services Corp. and the United States Small Business
Administration.
-----------------------------------
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT 3
REQUEST FOR RELEASE OF NOTE
_____________, 1998
Colson Services Corp.
As Agent for the United States
Small Business Administration
150 Nassau Street
New York, NY 10038
In accordance with Section 8(c) of the Multi-Party Agreement dated as
of February 28, 1998 by and among The Money Store Investment Corporation, The
Money Store of New York, Inc., Marine Midland Bank, Colson Services Corp.
("Colson") and the United States Small Business Administration ("SBA") and,
subject to your receipt of concurrence from Marine Midland Bank, as Trustee, The
Money Store Investment Corporation hereby requests release of the Note described
below:
OBLIGOR'S NAME AND ADDRESS:
SBA LOAN NUMBER (GP NUMBER):
Reason for Requesting Note
(ONE OF THESE MUST BE CHECKED)
____1. SBA Loan Paid in Full
____2. SBA Loan Liquidated
____3. SBA Loan in Foreclosure
____4. SBA Loan repurchased pursuant to Section 11.01 of the Pooling and
Servicing Agreement, dated as of February 28, 1998, relating to The
Money Store SBA Loan-Backed Adjustable Rate Certificates, Series
1998-1 (The "Pooling and Servicing Agreement")
____5. SBA Loan repurchased or substituted pursuant to Article
II or Article III of the Pooling and Servicing Agreement
____6. Collateral being released pursuant to Section 5.01(f) of
the Pooling and Servicing Agreement
____7. SBA Loan collateral being substituted or subordinated
THE MONEY STORE
INVESTMENT CORPORATION
By: ________________________
Its:________________________
<PAGE>
EXHIBIT N
SPREAD ACCOUNT AGREEMENT
This Spread Account Agreement is dated as of March __, 1998 (the
"Agreement") among TMS SBA Holdings, Inc., a Delaware corporation, as Spread
Account Depositor (the "Spread Account Depositor"), Marine Midland Bank, as
trustee (the "Trustee"), and Marine Midland Bank, in its capacity as custodian
hereunder (the "Spread Account Custodian"). All capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement referred to below.
WHEREAS, The Money Store Investment Corporation and The Money Store of
New York, Inc. (collectively the "Sellers"), The Money Store Inc., and Marine
Midland Bank, in its capacity as Trustee, have entered into a Pooling and
Servicing Agreement, dated as of February 28, 1998 (the "Pooling and Servicing
Agreement"), in connection with the establishment of a Trust (the "Trust") and
the issuance of The Money Store SBA Loan-Backed, Adjustable Rate Certificates,
Series 1998-1, representing an undivided beneficial ownership interest in the
Trust;
WHEREAS, the Spread Account Depositor wishes to establish the Spread
Account (the "Account") with the Spread Account Custodian, to be used in
accordance with the provisions of Section 6.02 of the Pooling and Servicing
Agreement; and
WHEREAS, the Spread Account Custodian herein agrees to maintain the
Account in accordance with the terms of this Agreement and the Pooling and
Servicing Agreement.
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
Pooling 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.
"Account" has the meaning set forth in the second WHEREAS clause
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 Spread Account
Custodian, endorsed to, or registered in the name of, the Spread
Account Custodian or its nominee or endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Spread Account
Custodian; or
(ii) delivery thereof in registered form to the Spread Account
Custodian and
(A) the certificate is endorsed to the Spread Account
Custodian or in blank by effective endorsement; or
(B) the certificate is registered in the name of the Spread
Account Custodian, 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 Spread
Account Custodian; or
(ii) the issuer has agreed that it will comply with instructions
originated by the Spread Account Custodian 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 Spread Account Custodian's
securities account;
(e) with respect to a security entitlement:
(i) the Spread Account Custodian becomes the entitlement holder;
or
(ii) the securities intermediary has agreed that it will comply
with entitlement orders originated by the Spread Account Custodian
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 Spread Account Custodian acquires possession
thereof;
(B) another person (other than a securities intermediary)
either acquires possession thereof on behalf of the Spread
Account Custodian or, having previously acquired possession
thereof, acknowledges that it holds for the Spread Account
Custodian; or
(C) a securities intermediary acting on behalf of the Spread
Account Custodian acquires possession of thereof, only if the
certificate is in registered form and has been specially endorsed
to the Spread Account Custodian by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Spread Account Custodian 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
Spread Account Custodian or, having previously become the
registered owner, acknowledges that it holds for the Spread
Account Custodian;
(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 Spread Account
Custodian 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.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"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.
"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 SPREAD ACCOUNT CUSTODIAN. The Spread Account
Depositor and the Trustee hereby appoint Marine Midland Bank 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 Account and all amounts and
investments deposited therein or credited thereto. Marine Midland Bank hereby
accepts and acknowledges its appointment as agent on behalf of the Spread
Account Depositor and the Trustee.
Section 3. PLEDGE OF SECURITY INTEREST. The Spread Account Depositor
hereby assigns, sells, conveys and transfers to the Spread Account Custodian 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 Section 6.02 of the Pooling and Servicing Agreement, the
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 Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
Uncertificated Securities, or otherwise) in consideration of its right to
receive Excess Spread in accordance with Section 6.02 of the Pooling 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 Spread Account Custodian, its successors and assigns, in
trust for the benefit of the Trustee and the Certificateholders, subject to the
terms and provisions, set forth in this Agreement. The Spread Account Custodian
hereby acknowledges such transfer and, upon receipt, shall hold and distribute
the Account Property in accordance with the terms and provisions of this
Agreement.
Section 4. ESTABLISHMENT OF THE ACCOUNT. In consideration of its right
to receive Excess Spread in accordance with Section 6.02 of the Pooling and
Servicing Agreement, the Spread Account Depositor hereby establishes and shall
hereafter maintain with the Spread Account Custodian the Account as a separate
trust account to include the money and other property deposited and held therein
pursuant hereto. The Account shall be a segregated trust account maintained in
New York and initially established with the Spread Account Custodian and
maintained with the Spread Account Custodian in the Corporate Trust Department
of the Spread Account Custodian. The Spread Account Custodian acknowledges the
interest of the Trustee in the Account, as set forth herein and in Article VI of
the Pooling and Servicing Agreement. The Spread Account Custodian further
acknowledges and agrees that (i) any deposits to the Account shall be made
solely by the Servicer or the Trustee in accordance with Section 6.02(a) of the
Pooling and Servicing Agreement; (ii) any withdrawals from the Account shall be
made by the Spread Account Custodian solely upon instructions therefor given by
the Trustee as specifically set forth in Section 6.02(b) of the Pooling and
Servicing Agreement; and (iii) the Seller and the Servicer and the Spread
Account Depositor shall have no rights to receive any amounts in the Account
other than as specifically set forth herein and in Section 6.02(b) of the
Pooling and Servicing Agreement.
Section 5. DELIVERY OF ACCOUNT PROPERTY. With respect to the Account
Property, the Spread Account Depositor and the Spread Account Custodian 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
Spread Account Custodian, and the Spread Account Custodian shall have
sole signature authority with respect thereto;
(b) any Account Property that is Physical Property shall be
delivered to the Spread Account Custodian in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Spread Account Custodian or a
securities intermediary (as such term is defined in Section
8-102(a)(14) of the Relevant UCC);
(c) any Account Property that is a "certificated security" under
Article 8 of the Relevant UCC shall be delivered to the Spread Account
Custodian in accordance with paragraph (b) of the definition of
"Delivery" and shall be held, pending maturity or disposition, solely
by the Spread Account Custodian or a securities intermediary (as such
term is defined in Section 8- 102(a)(14) of the Relevant UCC);
(d) any Account Property that is an "uncertificated security"
under Article 8 of the Relevant UCC shall be delivered to the Spread
Account Custodian in accordance with paragraph (c) of the definition
of "Delivery" and shall be maintained by the Spread Account Custodian,
pending maturity or disposition, through continued registration on the
books and records of the issuer thereof of the ownership of such
security by the Spread Account Custodian (or its nominee) or a
securities intermediary (as such term is defined in Section
8-102(a)(14) of the Relevant 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 Spread Account Custodian in
accordance with paragraph (d) of the definition of "Delivery" and
shall be maintained by the Spread Account Custodian, pending maturity
or disposition, through continued book-entry registration of such
Account Property in the name of the Spread Account Custodian or a
securities intermediary (as such term is defined in Section 8-
102(a)(14) of the Relevant UCC);
(f) any Account Property held through a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the Relevant UCC)
shall be held in a securities account (as such term is defined in
Section 8-501(a) of the Relevant UCC) that is established by such
securities intermediary in the name of the Spread Account Custodian
for which the Spread Account Custodian is the sole entitlement holder
(as defined in Section 8-102(a)(7) of the Relevant UCC).
Section 6. INVESTMENT. Amounts held in the Account shall be invested
in Permitted Instruments in accordance with the provisions of Section 6.06 of
the Pooling and Servicing Agreement. All such investments shall be made in the
name of the Spread Account Custodian or its nominee, and all income and gain
realized thereon shall be retained in the Account until withdrawals are
permitted under Section 6.02(b)(iii) of the Pooling and Servicing Agreement.
Section 7. STATEMENT OF ACCOUNT. On or before each Determination Date,
the Spread Account Custodian shall deliver to the Trustee, the Servicer and the
Spread Account Depositor an Officer's Certificate of the Spread Account
Custodian setting forth, as of such date, (i) the amount on deposit in the
Account, (ii) the activity in the Account for the preceding month and (iii) the
amount of any income or gain (or loss) on amounts held in the Account.
Section 8. TERMINATION. This Agreement shall terminate upon the
termination of the Pooling and Servicing Agreement in accordance with their
terms. Upon termination of this Agreement, any amounts on deposit in the Account
shall be paid by the Spread Account Custodian to the Spread Account Depositor in
accordance with the terms of the Pooling and Servicing Agreement.
Section 9. AMENDMENT. This Agreement may be amended by the Spread
Account Depositor and the Spread Account Custodian with the consent of the
Trustee. The parties hereto agree to make any changes to this Agreement required
by Moody's or Duff & Phelps in order to obtain an investment-grade rating.
Section 10. 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 11. 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 12. NOTICES. All demands, notices and communications upon or
to the Spread Account Depositor, the Servicer, the Spread Account Custodian or
the Trustee 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 (a) in the case of the Spread Account Depositor,
the Servicer and the Trustee, at the addresses therefor set forth in Section
13.06 of the Pooling and Servicing Agreement; (b) in the case of the Spread
Account Custodian, at 140 Broadway, New York, New York 10005, 12th Floor,
Attention: Corporate Trust Department; and (c) in the case of the Spread Account
Depositor, c/o The Money Store Investment Corporation, 2840 Morris Avenue,
Union, New Jersey 07083.
Section 13. 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 14. ASSIGNMENT; BENEFIT OF AGREEMENT. Notwithstanding anything
to the contrary contained herein, this Agreement may not be assigned by the
Spread Account Depositor Spread Account Custodian without the prior written
consent of the Trustee. Subject to the foregoing, this Agreement will inure to
the benefit of and be binding upon the parties hereto and the Trustee and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the Spread Account Depositor and the Spread
Account Custodian have caused this Spread Account Agreement to be duly executed
by their respective officers as of the day and year first above written.
Marine Midland Bank,
as Trustee
By_____________________________
Authorized Officer
MARINE MIDLAND BANK,
as Spread Account Custodian
By_______________________________
TMS SBA HOLDINGS, INC.,
as Spread Account Depositor
By_______________________________
Name: Michael H. Benoff
Title: Senior Vice President
