SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) DECEMBER 31, 1997
The Money Store Trust 1997-D and the Originators as listed
below under a Pooling and Servicing Agreement dated as of
November 30, 1997 providing for the issuance of The Money
Store Asset Backed Certificates, Series 1997-D.
The Money Store Trust 1997-D
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
THE MONEY STORE/MINNESOTA INC.
(Exact name of registrant as specified in its charter)
* 333-32775 *
- -------------------------------- ----------- -------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
2840 MORRIS AVENUE, UNION, NEW JERSEY 07083
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (908) 686-2000
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) EXHIBITS
EXHIBIT NO.
4.1 Pooling and Servicing Agreement, dated as of November 30, 1997,
among The Money Store Inc., the Originators and The Bank of New
York, as Trustee.
<PAGE>
Schedule A
STATE OF IRS EMPLOYER
REGISTRANT INCORPORATION ID NUMBER
- ---------- ------------- ------------
TMS Mortgage Inc. New Jersey 22-3217781
The Money Store/D.C. Inc. D.C. 22-2133027
The Money Store/Kentucky Inc. Kentucky 22-2459832
The Money Store Home Equity Corp. Kentucky 22-2522232
The Money Store/Minnesota Inc. Minnesota 22-3003495
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TMS MORTGAGE INC.
THE MONEY STORE/D.C. INC.
THE MONEY STORE/KENTUCKY INC.
THE MONEY STORE HOME EQUITY CORP.
THE MONEY STORE/MINNESOTA INC.
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Senior Vice President
Dated: January 30, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
4.1 Pooling and Servicing Agreement, dated as of November
30, 1997, among The Money Store Inc., the Originators
and The Bank of New York, as Trustee.
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of November 30, 1997
THE BANK OF NEW YORK
(Trustee)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Asset Backed Certificates, Series 1997-D
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I DEFINITIONS.....................................................1
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND..........................1
Section 2.01 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests....................1
Section 2.02 Possession of Mortgage Files...............................1
Section 2.03 Books and Records..........................................2
Section 2.04 Delivery of Mortgage Loan Documents........................2
Section 2.05 Acceptance by Trustee and Custodian of the Trust
Fund; Certain Substitutions; Certification by
Trustee and Custodian....................................4
Section 2.06 Designations under REMIC Provisions; Designation of
Startup Day..............................................7
Section 2.07 Authentication of Certificates.............................8
Section 2.08 Fees and Expenses of the Trustee, Co-Trustee and
Custodian................................................9
Section 2.09 Sale and Conveyance of the Subsequent Mortgage Loans.......9
Section 2.10 Optional Repurchase of Defaulted Mortgage Loans...........13
ARTICLE III REPRESENTATIONS AND WARRANTIES................................1
Section 3.01 Representations of Representative, Servicer, Claims
Administrator and Originators............................1
Section 3.02 Individual Mortgage Loans..................................8
Section 3.03 Purchase and Substitution.................................19
ARTICLE IV THE CERTIFICATES...............................................1
Section 4.01 The Certificates...........................................
Section 4.02 Registration of Transfer and Exchange of
Certificates.............................................5
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.........10
Section 4.04 Persons Deemed Owners.....................................10
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................1
Section 5.01 Duties of the Servicer.....................................1
Section 5.02 Liquidation of Mortgage Loans..............................5
Section 5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal
and Interest Accounts....................................6
Section 5.04 Permitted Withdrawals From the Principal and
Interest Accounts........................................8
Section 5.05 Payment of Taxes, Insurance and Other Charges.............10
Section 5.06 Transfer of Accounts......................................10
Section 5.07 Maintenance of Hazard Insurance...........................10
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.......11
Section 5.09 Fidelity Bond.............................................11
Section 5.10 Title, Management and Disposition of REO Property.........12
Section 5.11 Certain Tax Information...................................13
Section 5.12 Collection of Certain Mortgage Loan Payments..............14
Section 5.13 Access to Certain Documentation and Information
Regarding the Mortgage Loans............................14
Section 5.14 Superior Liens............................................14
Section 5.15 Duties of the Claims Administrator........................15
Section 5.16 [Reserved]................................................16
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS.............................1
Section 6.01 Establishment of Certificate Accounts; Deposits in
Certificate Accounts;
Permitted Withdrawals from Certificate Accounts..........1
Section 6.02 Establishment of Pre-Funding Account and
Capitalized Interest Account;
Deposits in Pre-Funding Account and Capitalized
Interest Account; Permitted Withdrawals from
Pre-Funding Account and Capitalized Interest Account....3
Section 6.03 Establishment of Expense Accounts; Deposits in
Expense Accounts;
Permitted Withdrawals from Expense Accounts..............4
Section 6.04 Establishment of Insurance Accounts; Deposits in
Insurance Accounts;
Permitted Withdrawals from Insurance Accounts............6
Section 6.05 Establishment of Spread Account; Deposits in Spread
Account;
Permitted Withdrawals from Spread Account................8
Section 6.06 Establishment of FHA Premium Account; Deposits in
FHA Premium Account;
Permitted Withdrawals from FHA Premium Account..........10
Section 6.07 Investment of Accounts....................................11
Section 6.08 Priority and Subordination of Distributions...............12
Section 6.09 Allocation of Realized Losses.............................22
Section 6.10 Statements................................................24
Section 6.11 Advances by the Servicer..................................29
Section 6.12 Compensating Interest.....................................30
Section 6.13 Reports of Foreclosure and Abandonment of Mortgaged
Property................................................30
Section 6.14 Allocation of Total Monthly Excess Cashflow...............30
Section 6.15 Establishment of Servicing Accounts; Collection of
Taxes, Assessments
and Similar Items.......................................33
ARTICLE VII GENERAL SERVICING PROCEDURE...................................1
Section 7.01 Assumption Agreements......................................1
Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files....................................................2
Section 7.03 Servicing Compensation and Contingency Fee.................3
Section 7.04 Annual Statement as to Compliance..........................4
Section 7.05 Annual Independent Public Accountants' Servicing
Report...................................................4
Section 7.06 Trustee's, Co-Trustee's and Certificate Insurer's
Right to Examine
Servicer Records and Audit Operations....................4
Section 7.07 Reports to the Trustee and the Certificate Insurer;
Principal and Interest
Account Statements.......................................5
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER...........................1
Section 8.01 Financial Statements.......................................1
ARTICLE IX THE SERVICER...................................................1
Section 9.01 Indemnification; Third Party Claims........................1
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator....................2
Section 9.03 Limitation on Liability of the Servicer and Others.........2
Section 9.04 Servicer and Claims Administrator Not to Resign............3
Section 9.05 Appointment of Assistant Claims Administrator..............3
Section 9.06 Right of Certificate Insurer to Replace Servicer
and Claims Administrator.................................3
ARTICLE X DEFAULT.........................................................1
Section 10.01 Events of Default.........................................1
Section 10.02 Trustee and Co-Trustee to Act; Appointment of
Successor................................................3
Section 10.03 Waiver of Defaults........................................5
Section 10.04 Transfer of Tax Matters Person Residual Interest..........5
Section 10.05 Control by Majority Certificateholders....................5
ARTICLE XI TERMINATION....................................................1
Section 11.01 Termination...............................................1
Section 11.02 Termination Upon Loss of REMIC Status.....................3
Section 11.03 Additional Termination Requirements.......................4
Section 11.04 [omitted].................................................5
Section 11.05 Accounting Upon Termination of Servicer and Claims
Administrator............................................5
ARTICLE XII THE TRUSTEE...................................................1
Section 12.01 Duties of Trustee.........................................1
Section 12.02 Certain Matters Affecting the Trustee.....................2
Section 12.03 Trustee Not Liable for Certificates or Mortgage
Loans....................................................4
Section 12.04 Trustee May Own Certificates..............................4
Section 12.05 Servicer To Pay Trustee's Fees and Expenses...............4
Section 12.06 Eligibility Requirements for Trustee......................5
Section 12.07 Resignation and Removal of the Trustee....................5
Section 12.08 Successor Trustee.........................................6
Section 12.09 Merger or Consolidation of Trustee........................7
Section 12.10 Appointment of Co-Trustee or Separate Trustee.............7
Section 12.11 Authenticating Agent......................................9
Section 12.12 Tax Returns and Reports...................................9
Section 12.13 Appointment of Custodians................................11
Section 12.14 Protection of Trust Fund.................................11
Section 12.15 Calculation of LIBOR.....................................12
ARTICLE XIII MISCELLANEOUS PROVISIONS.....................................1
Section 13.01 Acts of Certificateholders................................1
Section 13.02 Amendment.................................................1
Section 13.03 Recordation of Agreement..................................2
Section 13.04 Duration of Agreement.....................................2
Section 13.05 Governing Law.............................................2
Section 13.06 Notices...................................................2
Section 13.07 Severability of Provisions................................3
Section 13.08 No Partnership............................................3
Section 13.09 Counterparts..............................................3
Section 13.10 Successors and Assigns....................................3
Section 13.11 Headings..................................................3
Section 13.12 The Certificate Insurer...................................4
Section 13.13 Paying Agent..............................................4
Section 13.14 Notification to Rating Agencies...........................5
Section 13.15 Third Party Rights........................................5
<PAGE>
SCHEDULE I Description of Certain Litigation
SCHEDULE II-A Auction Procedures for Class AF-6 Certificates
SCHEDULE II-B Auction Procedures for Class MV-1, Class MV-2 and Class BV
Certificates
SCHEDULE III Targeted Balance Schedules
EXHIBIT A Contents of Mortgage File
EXHIBIT B Forms of Certificates
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D Resale Certification
EXHIBIT E [Omitted]
EXHIBIT E(1) [Omitted]
EXHIBIT F Form of Trustee/Co-Trustee Initial Certification
EXHIBIT F-1 Form of Trustee/Co-Trustee Interim Certification
EXHIBIT G Form of Trustee/Co-Trustee Final Certification
EXHIBIT H Pool I Mortgage Loan Schedule
EXHIBIT H-1 Pool II Mortgage Loan Schedule
EXHIBIT H-2 Pool III Mortgage Loan Schedule
EXHIBIT H-3 Pool IV Mortgage Loan Schedule
EXHIBIT I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT J-1 Request for Release Documents of 90 Day
Delinquent FHA Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L Form of Notice
EXHIBIT M Custodial Agreement
EXHIBIT M-1 Pool III Custodial Agreement
EXHIBIT N Form of Liquidation Report
EXHIBIT O Form of Delinquency Report
EXHIBIT P [Omitted]
EXHIBIT Q [Omitted]
EXHIBIT R Servicer's Monthly Computer Tape Format
EXHIBIT S Subservicing Agreement
EXHIBIT T Prices for Low Interest Mortgage Loans
<PAGE>
Agreement dated as of November 30, 1997, among The Bank of New York,
as trustee (the "Trustee"), the entities listed on Exhibit I hereto
(collectively, the "Originators") and The Money Store Inc., as Representative
(the "Representative"), Servicer (the "Servicer") and Claims Administrator (the
"Claims Administrator"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Mortgage Loans by the
Servicer, the Representative, the Servicer, the Originators and the Claims
Administrator are entering into this Agreement with the Trustee. The Originators
are selling the Mortgage Loans and amounts on deposit in the Pre-Funding Account
to the Trustee for the benefit of the Certificateholders, pursuant to which the
following classes of Certificates are being issued, denominated on the face
thereof as The Money Store Asset Backed Certificates, 1997-D, Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7, Class AV-1,
Class AV-2, Class MV-1, Class MV-2, Class BV, Class AH-1, Class AH-2, Class
AH-3, Class AH-4, Class MH-1, Class MH-2, Class BH, Class AMF, Class X, Class
R-1 and Class R-2, respectively, representing in the aggregate a 100% undivided
ownership interest in the Mortgage Loans and amounts on deposit in the
Pre-Funding Account. The Initial Pool I, Initial Pool II, Initial Pool III and
Initial Pool IV Mortgage Loans have an aggregate outstanding principal balance
of $594,721,551.00, $611,679,247.73, $162,432,256.57 and $8,456,877.92,
respectively (and an aggregate outstanding Principal Balance of
$1,377,289,933.22, which gives effect to the discounts on the Low Interest
Mortgage Loans of $0), as of November 30, 1997, except for those Initial
Mortgage Loans originated after November 30, 1997 and delivered to the Trustee
on the Closing Date as to which the aggregate outstanding principal balance
shall be as of the date of the related Mortgage Note (the "Cut-Off Date"), after
application of payments received by the Originators on or before such date, and
the original Pre- Funded Amount equals $207,710,066.78. Except for the Low
Interest Mortgage Loans in the related Pool, if any, each Initial Mortgage Loan
in such Pool has, and each Subsequent Mortgage Loan in such Pool will have, a
Mortgage Interest Rate in excess of the Class Adjusted Mortgage Loan Remittance
Rate of each Class of Certificates in the related Pool. The Class R Certificates
are subordinated to the other Classes of Certificates, in each case to the
extent described herein. As provided herein, two separate real estate mortgage
investment conduit ("REMIC") elections will be made in connection with the
assets constituting each of REMIC I and REMIC II for federal income tax
purposes. On the Startup Day, all the Classes of REMIC II Regular Certificates
will be designated "regular interests" in REMIC II and the Class R-2
Certificates will be designated the single class of "residual interests" in such
REMIC for purposes of the REMIC Provisions (as defined herein). On the Startup
Day, all the Classes of Certificates except for the Class R-1 and Class R-2
Certificates will be designated "regular interests" in REMIC I and the Class R-1
Certificates will be designated the single class of "residual interests" in such
REMIC for purposes of the REMIC Provisions.
The parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings. This Agreement
relates to a Trust Fund evidenced by The Money Store Asset Backed Certificates,
Series 1997-D, Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class
AF-6, Class AF-7, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV,
Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH-2, Class
BH, Class AMF, Class X, Class R-1 and Class R-2. Unless otherwise provided, all
calculations of interest pursuant to this Agreement are based on a 360-day year
and twelve 30-day months.
ACCOUNT: The Certificate Accounts, Pre-Funding Account, Expense
Accounts, Capitalized Interest Account, Spread Account, Servicing Account or
Insurance Accounts (including any sub-accounts of any of the foregoing)
established and held in trust by the Trustee for the Certificateholders and the
FHA Premium Account established and held in trust by the Trustee for the benefit
of the Certificateholders of the Pool III Certificates to reimburse the Servicer
and the Certificate Insurer for payments with respect to FHA Insurance Premiums
or to make payments with respect to FHA Insurance Premiums. The obligation to
establish and maintain the Accounts is not delegable.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage
Loans to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be
given not later than five Business Days prior to the related Subsequent Transfer
Date, of the Representative's designation of Subsequent Mortgage Loans of the
related Pool to be sold to the Trust Fund and the aggregate Principal Balance of
such Subsequent Mortgage Loans.
ADJUSTABLE RATE CERTIFICATES: The Class AV-1 Certificates.
ADJUSTED MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, a
percentage per annum, equal to the related Mortgage Interest Rate less the per
annum rate used in calculating (i) the Annual Expense Escrow Amount, (ii) in the
case of a Pool I or a Pool IV Mortgage Loan, the premiums payable to the
Certificate Insurer as set forth in the Insurance Agreement, (iii) in the case
of a Pool III Mortgage Loan the FHA Insurance Premium in connection with FHA
Loans for which the related Mortgagor pays the FHA Insurance Premium as part of
the Mortgage Interest Rate, (iv) the Servicing Fee, (v) the Contingency Fee,
(vi) with respect to a Pool II Mortgage Loan, the Auction Agent Fee, and (vii)
with respect to a Pool I Mortgage Loan, the Remarketing Agent Fee.
AGGREGATE INITIAL SPREAD ACCOUNT DEPOSIT: With respect to any
Remittance Date, the sum of the Initial Pool Spread Account Deposits for Pool I
and Pool IV.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i)
.01% per annum (in the case of Pool I, Pool II and Pool IV) or .02% per annum
(in the case of Pool III) and (ii) the aggregate Class Principal Balances of the
Class A, Class M and Class B Certificates of the applicable Pool, which is
computed and payable on a monthly basis and represents the estimated annual
Trustee's, Co-Trustee's and Custodian's fees and expenses of the Trust Fund.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
transfer or equivalent instrument sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the sale
of the Mortgage to the Trustee (or, with respect to Mortgages relating to Pool
III Mortgage Loans, the Co-Trustee) for the benefit of the Certificateholders.
AUCTION AGENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT AGREEMENT: The meaning set forth in the Auction
Procedures.
AUCTION AGENT FEE: The meaning set forth in the Auction Agent
Agreement. The Auction Agent Fee includes the Broker-Dealer Fee payable to the
Broker-Dealer (each as defined in the Auction Procedures).
AUCTION PROCEDURES: The procedures set forth in (i) Schedule II-A
hereof by which the Auction Rate is determined for the Class AF-6 Certificates
and (ii) Schedule II-B hereof by which the Auction Rate is determined for the
Class MV-1, Class MV-2 and Class BV Certificates.
AUCTION RATE: The rate of interest per annum that results from
implementation of the Auction Procedures.
AUCTION RATE CERTIFICATES: The Class AF-6, Class MV-1, Class MV-2 and
Class BV Certificates.
AUCTION REPORTING DATE: That day of each month which is the fifth
Business Day prior to the Remittance Date occurring in such month.
AUTHENTICATING AGENT: Initially, The Bank of New York, and thereafter,
any successor appointed pursuant to Section 12.11.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the States of New York, New Jersey,
California or North Carolina are authorized or obligated by law or executive
order to be closed. When used with respect to an Interest Determination Date,
"Business Day" shall also mean a day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance
with Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to each Pool and the
Remittance Dates in January, February and March 1998, the excess, if any, of (i)
for Pool I, Pool III and Pool IV, 30 days' interest calculated at the weighted
average Class Remittance Rates of the Classes of Certificates of such Pool, and
for Pool II, interest calculated on the actual number of days since the last
Remittance Date (or with respect to the Remittance Date in January 1998, the
actual number of days from December 15, 1997 to but not including such
Remittance Date with respect to the Adjustable Rate Certificates and the actual
number of days from the Closing Date to but not including such Remittance Date
with respect to the Auction Rate Certificates) to but not including the related
Remittance Date at the weighted average Class Remittance Rates of the Pool II
Certificates, on the excess of (a) the Pool Principal Balance of such Pool for
such Remittance Date over (b) the aggregate Principal Balances of the Mortgage
Loans of such Pool for such Remittance Date over (ii) any Pool Pre-Funding
Earnings for such Pool to be transferred to the applicable Certificate Account
on such Remittance Date pursuant to Section 6.02(d). With respect to the Special
Remittance Date, 30 days' interest (or, in the case of the Class AF-6
Certificates and Pool II, 15 days' interest) calculated at the weighted average
Class Remittance Rates of the Classes of Certificates of such Pool on the amount
to be transferred on the Special Remittance Date from the Pre-Funding Account to
the Certificate Account relating to the Certificates of such Pool pursuant to
Section 6.02(c).
CERTIFICATE: Any Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AF-7, Class AV-1, Class AV-2, Class MV-1, Class MV-2,
Class BV, Class AH- 1, Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class
AH-6, Class MH-1, Class MH-2, Class BH, Class AMF, Class X, Class R-1 or Class
R-2 Certificate executed by the Servicer and authenticated by the Trustee or the
Authenticating Agent substantially in the forms annexed hereto in Exhibit B.
CERTIFICATE ACCOUNTS: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purposes
of giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Representative, the Servicer, the
Claims Administrator, any Subservicer or any Originator, or any affiliate of any
of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. When used with respect to
any Class or Pool of Certificates, a Certificateholder or Holder of such Class
or Pool of Certificates, as the case may be.
CERTIFICATEHOLDERS' INTEREST CARRYOVER: For any Remittance Date on
which the Class AV-1, Class MV-1, Class MV-2 or Class BV Remittance Rate is
based upon the applicable Net Funds Cap for Pool II, the excess of (i) the
amount of interest the Class AV-1, Class MV-1, Class MV-2 or Class BV
Certificates would be entitled to receive on such Remittance Date had interest
been calculated at a rate equal to LIBOR plus the applicable Margin or the
applicable Auction Rate, as the case may be (but in no event exceeding 14.00%
per annum), over (ii) the amount of interest such Class will receive on such
Remittance Date at the applicable Net Funds Cap for Pool II together with the
unpaid portion of any such excess from prior Remittance Dates (and interest
thereon at the then applicable Class AV-1, Class MV-1, Class MV-2 or Class BV
Remittance Rate, as the case may be, without giving effect to the Net Funds Cap,
but in no event exceeding 14.00% per annum). No Certificateholders' Interest
Carryover shall be paid on the Class AV-1, Class MV-1, Class MV-2 or Class BV
Certificates after the Class Principal Balance of the respective Class is
reduced to zero.
CERTIFICATE INSURANCE POLICIES: Collectively, the certificate guaranty
insurance policies relating to the Certificates of Pool I and Pool IV, each
dated the Closing Date, and each issued by the Certificate Insurer for the
benefit of the Holders of the Certificates of the related Pool, pursuant to
which the Certificate Insurer guarantees Insured Payments and, with respect to
Pool I, Guaranteed Supplemental Payements.
CERTIFICATE INSURER: MBIA Insurance Corporation, a New York stock
insurance corporation, or any successor thereof, as issuer of the Certificate
Insurance Policies.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, The Bank of New York, and
thereafter, any successor appointed pursuant to Section 4.02.
CHANGE DATE: The date on which the Mortgage Interest Rate of each Pool
II Mortgage Loan and each adjustable rate Pool IV Mortgage Loan is subject to
adjustment, which date is the Due Date set forth in the related Mortgage Note
and each first, third, sixth or twelfth Due Date thereafter, as set forth in the
related Mortgage Note.
CLAIM: An insurance claim submitted to the FHA by the Claims
Administrator with respect to a 90 Day Delinquent FHA Loan pursuant to the FHA
Regulations.
CLAIMS ADMINISTRATOR: The Servicer, acting in the capacity of Claims
Administrator appointed as herein provided.
CLASS: Collectively, Certificates having the same priority of payment
and bearing the same designation.
CLASS A CERTIFICATE: A Certificate denominated as a Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7, Class AV-1,
Class AV-2, Class AH- 1, Class AH-2, Class AH-3, Class AH-4 or Class AMF
Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A POOL FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to
any Remittance Date and each of the Pool I, Pool II and Pool IV Certificates,
means the applicable Senior Percentage multiplied by the applicable Pool
Principal Distribution Amount, provided, however, that, with respect to any
Remittance Date, the Class A Formula Principal Distribution Amount for a Pool
shall never exceed the aggregate Class Principal Balances of the Class A
Certificates of the applicable Pool.
CLASS A POOL PRINCIPAL BALANCE: The sum of the Class Principal
Balances of the Pool I Class A Certificates, the Pool II Class A Certificates,
the Pool III Class A Certificates or the Pool IV Class A Certificates, as
applicable.
CLASS A POOL PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date and the Pool II Class A Certificates, the lesser of (i) the
applicable Class A Pool Formula Principal Distribution Amount or (ii) the
applicable Pool Available Amount remaining after the payment of the Pool Current
Interest Requirement for Pool II payable on such Remittance Date.
CLASS ADJUSTED MORTGAGE LOAN REMITTANCE RATE: With respect to each
Mortgage Loan, a percentage per annum, being the sum of (i) (a) the Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5, then current Class AF-6 or,
Class AF-7 Remittance Rate, as the case may be, with respect to a Pool I
Mortgage Loan, (b) the then current Class AV-1, Class AV-2, Class MV-1, Class
MV-2 or Class BV Remittance Rate with respect to a Pool II Mortgage Loan, (c)
the Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH-2 or
Class BH Remittance Rate, as the case may be, with respect to a Pool III
Mortgage Loan or (d) the Class AMF Remittance Rate with respect to a Pool IV
Mortgage Loan, (ii) .01% per annum (with respect to a Pool I, Pool II or Pool IV
Mortgage Loan) or .02% per annum (with respect to a Pool III Mortgage Loan), in
each case relating to the Annual Expense Escrow Amount, (iii) with respect to
the Pool I and Pool IV Mortgage Loans the applicable per annum rate relating to
premiums payable to the Certificate Insurer as set forth in the Insurance
Agreement, (iv) with respect to the Pool I Mortgage Loans, for purposes of
determining the Class Adjusted Mortgage Loan Remittance Rate with respect to the
Class AF-6 Certificates, the Remarketing Agent Fee, (v) with respect to the Pool
II Mortgage Loans, for purposes of determining the Class Adjusted Mortgage Loan
Remittance Rate with respect to the Class MV-1, Class MV-2 and Class BV
Certificates, the Auction Agent Fee as set forth in the Auction Agent Agreement,
and (vi) with respect to FHA Loans for which the FHA Insurance Premium is paid
by the related Mortgagor, the applicable Insurance Rate.
CLASS AF-1 CERTIFICATE: A Certificate denominated as a Class AF-1
Certificate.
CLASS AF-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-1 Certificateholders, which shall be equal to 6.815%.
CLASS AF-2 CERTIFICATE: A Certificate denominated as a Class AF-2
Certificate.
CLASS AF-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-2 Certificateholders, which shall be equal to 6.415%.
CLASS AF-3 CERTIFICATE: A Certificate denominated as a Class AF-3
Certificate.
CLASS AF-3 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-3 Certificateholders, which shall be equal to 6.345%.
CLASS AF-4 CERTIFICATE: A Certificate denominated as a Class AF-4
Certificate.
CLASS AF-4 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-4 Certificateholders, which shall be equal to 6.440%.
CLASS AF-5 CERTIFICATE: A Certificate denominated as a Class AF-5
Certificate.
CLASS AF-5 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-5 Certificateholders, which shall be equal to 6.555%.
CLASS AF-6 CERTIFICATE: A Certificate denominated as a Class AF-6
Certificate.
CLASS AF-6 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-6 Certificateholders, which shall be equal to 5.9375% for the first
Remittance Date. Thereafter, the Class AF-6 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II-A (but in no event exceeding 14.0% per annum).
CLASS AF-6 SUPPLEMENTAL INTEREST AMOUNT: For any Remittance Date, the
excess, if any, of (i) interest accrued on the Class AF-6 Certificates for the
related Interest Period based upon the then applicable Class AF-6 Remittance
Rate, without giving effect to the Net Funds Cap (but in no event exceeding
14.0% per annum), over (ii) interest accrued on the Class AF- 6 Certificates for
the related Interest Period based upon the Net Funds Cap for the Class AF-6
Certificates (but in no event exceeding 14.0% per annum).
CLASS AF-7 CERTIFICATE: A Certificate denominated as a Class AF-7
Certificate.
CLASS AF-7 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date, the
product of (i) the applicable Class AF-7 Principal Percentage for such
Remittance Date and (ii) the Class AF-7 Pro Rata Principal Distribution Amount
for such Remittance Date; provided, however, that in no event will the Class
AF-7 Principal Distribution Amount on any Remittance Date be greater than the
Pool Principal Distribution Amount for Pool I for such Remittance Date or the
Class Principal Balance of the Class AF-7 Certificates.
CLASS AF-7 PRINCIPAL PERCENTAGE: For each Remittance Date, the Class
AF-7 Principal Percentage shall be as follows:
Class AF-7
Principal
Remittance Dates Percentage
January 1998 - December 2000 0%
January 2001 - December 2002 45%
January 2003 - December 2003 80%
January 2004 - December 2004 100%
January 2005 and thereafter 300%
CLASS AF-7 PRO RATA PRINCIPAL DISTRIBUTION AMOUNT: For each Remittance
Date, an amount equal to the product of (x) a fraction, the numerator of which
is the Class Principal Balance of the Class AF-7 Certificates immediately prior
to such Remittance Date and the denominator of which is the aggregate Class
Principal Balance of the Pool I Certificates immediately prior to such
Remittance Date and (y) the Pool Principal Distribution Amount for Pool I on
such Remittance Date.
CLASS AF-7 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-7 Certificateholders, which shall be equal to 6.485%.
CLASS AH-1 CERTIFICATE: A Certificate denominated as a Class AH-1
Certificate.
CLASS AH-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-1 Certificateholders, which shall be equal to 6.520%.
CLASS AH-2 CERTIFICATE: A Certificate denominated as a Class AH-2
Certificate.
CLASS AH-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-2 Certificateholders, which shall be equal to 6.365%.
CLASS AH-3 CERTIFICATE: A Certificate denominated as a Class AH-3
Certificate.
CLASS AH-3 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-3 Certificateholders, which shall be equal to 6.570%.
CLASS AH-4 CERTIFICATE: A Certificate denominated as a Class AH-4
Certificate.
CLASS AH-4 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-4 Certificateholders, which shall be equal to 6.950%.
CLASS AMF CERTIFICATE: A Certificate denominated as a Class AMF
Certificate.
CLASS AMF REMITTANCE RATE: The annual rate of interest payable to the
Class AMF Certificateholders, which shall be equal to 6.790%.
CLASS AV-1 CERTIFICATE: A Certificate denominated as a Class AV-1
Certificate.
CLASS AV-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AV-1 Certificateholders, which shall be equal to 6.06094% for the first
Remittance Date. Thereafter, the Class AV-1 Remittance Rate shall be equal to
the lesser of (i) LIBOR plus before the Optional Servicer Termination Date,
0.10% and after the Optional Servicer Termination Date if termination has not
occurred, 0.20%, and (ii) the applicable Net Funds Cap, but in no event
exceeding 14.0% per annum.
CLASS AV-2 CERTIFICATE: A Certificate denominated as a Class AV-2
Certificate.
CLASS AV-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date
prior to and including the Remittance Date in June 2001 will be zero and
thereafter will equal the Class A Pool Principal Distribution Amount for Pool
II; provided, however, that in no event will the Class AV-2 Principal
Distribution Amount on any Remittance Date be greater than the Class Principal
Balance of the Class AV-2 Certificates.
CLASS AV-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AV-2 Certificateholders, which shall be equal to 6.490%.
CLASS B CERTIFICATE: A Certificate denominated as a Class BH or Class
BV Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B POOL APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date and the Pool II or Pool III Class B Certificates, the lesser of (x) the
Class Principal Balance of the Pool II or Pool III Class B Certificates, as
applicable, (after taking into account the distribution of the applicable Class
B Pool Principal Distribution Amount on such Remittance Date, but prior to the
application for the applicable Class B Pool Applied Realized Loss Amount, if
any, on such Remittance Date) and (y) the applicable Pool Applied Realized Loss
Amount as of such Remittance Date.
CLASS B POOL CROSS-OVER DATE: Means, with respect to the Pool II
Certificates, the earlier of (a) the Remittance Date on which the Class
Principal Balance of the Class MV-2 Certificates is reduced to zero and (b) the
first Remittance Date on or after the Remittance Date occurring in January 2001
on which the fraction, expressed as a percentage, the numerator of which is the
sum of the Class Principal Balances of the Pool II Class A and Pool II Class M
Certificates as of the immediately preceding Remittance Date and the denominator
of which is the aggregate Principal Balances of the Pool II Mortgage Loans as of
the end of the second preceding Due Period, is less than or equal to 85.0%.
CLASS B POOL FORMULA PRINCIPAL DISTRIBUTION AMOUNT: Means with respect
to the Pool II Certificates, (i) prior to the Class B Pool Cross-over Date, $0
and (ii) on each Remittance Date on or after the Class B Cross-over Date, the
applicable Class B Pool Percentage multiplied by the Pool Principal Distribution
Amount for Pool II; provided, however, that with respect to any Remittance Date,
the Class B Pool Formula Principal Distribution Amount shall never exceed the
Class Principal Balance of the Pool II Class B Certificates.
CLASS B POOL PERCENTAGE: Means (i) until such time as the Class
Principal Balances of the Pool II Class A and Pool II Class M Certificates have
been reduced to zero, 100% minus the Senior Percentage for Pool II and (ii)
thereafter, 100%.
CLASS B POOL PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date and the Pool II Class B Certificates means the lesser of (i) the
applicable Class B Pool Formula Principal Distribution Amount or (ii) the
applicable Pool Available Amount remaining after the payment of the Pool Current
Interest Requirement for Pool II, all applicable Class A Pool Principal
Distribution Amounts and the Class MV-1 and Class MV-2 Principal Distribution
Amounts payable on such Remittance Date.
CLASS B POOL REALIZED LOSS AMOUNT: Means, as of any Remittance Date
and the Pool II or Pool III Class B Certificates, the lesser of (x) the Unpaid
Realized Loss Amount for the Class BV or Class BH Certificates, as applicable,
as of such Remittance Date and (y) the portion of the applicable Pool Available
Amount for the Pool II or Pool III Certificates, as applicable, for such
Remittance Date remaining after application of amounts set forth in Section
6.08(d)(Y)(i)-(xv) or Section 6.08(d)(Z)(i)-(xv), inclusive.
CLASS BH CERTIFICATE: A Certificate denominated as a Class BH
Certificate.
CLASS BH PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an
amount equal to (a) prior to the Stepdown Date, and for any Remittance Date on
or after the Stepdown Date on which the Trigger Event for Pool III is in effect
and the Pool III Class A Certificates, the Class MH-1 Certificates or the Class
MH-2 Certificates are still outstanding, zero and (b) on any other Remittance
Date, the excess, if any, of (i) the sum of (A) the Class Principal Balance of
the Pool III Class A Certificates after giving effect to the payment of the Pool
III Class A Principal Distribution Amount on such Remittance Date, (B) the Class
Principal Balance of the Class MH-1 Certificates after giving effect to the
payment of the Class MH-1 Principal Distribution Amount on such Remittance Date,
(C) the Class Principal Balance of the Class MH-2 Certificates after giving
effect to the payment of the Class MH-2 Principal Distribution Amount on such
Remittance Date and (D) the Class Principal Balance of the Class BH Certificates
immediately prior to such Remittance Date over (ii) the lesser of 88.5% of the
outstanding Principal Balance of the Pool III Loans as of the last day of the
related Due Period and (B) the outstanding Principal Balance of the Pool III
Loans as of the last day of the related Due Period minus $1,000,000.
CLASS BH REMITTANCE RATE: The annual rate of interest payable to the
Class BH Certificateholders, which shall be equal to 7.575%.
CLASS BV CERTIFICATE: A Certificate denominated as a Class BV
Certificate.
CLASS BV REMITTANCE RATE: The annual rate of interest payable to the
Class BV Certificateholders, which shall be equal to 6.50% for the first
Remittance Date. Thereafter, the Class BV Remittance Rate shall be equal to the
annual rate of interest determined according to the Auction Procedures set forth
in Schedule II-B, subject to the Net Funds Cap (but in no event exceeding 14.0%
per annum).
CLASS CURRENT INTEREST REQUIREMENT: For each Class of Class A, Class M
and Class B Certificates and with respect to each Remittance Date, the amount
equal to 30 days interest (or, in the case of the Adjustable Rate Certificates
and the Auction Rate Certificates, the actual number of days since the last
Remittance Date for such Classes to but not including the related Remittance
Date) at the related Class Remittance Rate (which, for the Class AF-6
Certificates, will be limited to the applicable Net Funds Cap) on the Class
Principal Balance for such Class outstanding immediately prior to such
Remittance Date; provided, however, that with respect to the January 1998
Remittance Date, interest on the Adjustable Rate Certificates shall accrue at
the applicable Class Remittance Rate from and including December 15, 1997 to but
not including the January 1998 Remittance Date and interest on the Auction Rate
Certificates shall accrue at the applicable Class Remittance Rate from and
including the Closing Date to but not including the January 1998 Remittance
Rate. If a principal prepayment is made to a Class of Class A, Class M or Class
B Certificates on the Special Remittance Date, the Current Interest Requirement
for each such Class for the April 1998 Remittance Date will be based on 30 days'
interest (or, in the case of the Adjustable Rate Certificates and the Auction
Rate Certificates, the actual number of days since the March 1998 Remittance
Date) on the Class Principal Balance for such Class on the Special Remittance
Date, after giving effect to such principal prepayment. The Current Interest
Requirement for the Pool II Certificates shall not include any
Certificateholders' Interest Carryover.
CLASS M CERTIFICATE: A Certificate denominated as a Class MH-1, Class
MH- 2, Class MV-1 or Class MV-2 Certificate.
CLASS M CERTIFICATEHOLDER: A Holder of a Class M Certificate.
CLASS MH-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class MH-1
Certificates (after taking into account the distribution of the Class MH-1
Principal Distribution Amount on such Remittance Date, but prior to the
application of the Class MH-1 Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for Pool III for such Remittance Date over (ii) the sum of the Class MH-2
Applied Realized Loss Amount and the Class B Pool Applied Realized Amount for
Pool III, in each case for such Remittance Date.
CLASS MH-1 CERTIFICATE: A Certificate denominated as a Class MH-1
Certificate.
CLASS MH-1 PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an
amount equal to (a) prior to the Stepdown Date, and for any Remittance Date on
or after the Stepdown Date on which the Trigger Event for Pool III is in effect
and the Pool III Class A Certificates are still outstanding, zero and (b) on any
other Remittance Date, the excess, if any, of (i) the sum of (A) the Class
Principal Balance of the Pool III Class A Certificates after giving effect to
the payment of the Pool III Class A Principal Distribution Amount on such
Remittance Date and (B) the Class Principal Balance of the Class MH-1
Certificates immediately prior to such Remittance Date over (ii) the lesser of
(A) 55% of the outstanding principal balance of the Pool III Loans as of the
last day of the related Due Period and (B) the outstanding principal balance of
the Pool III Loans as of the last day of the related Due Period MINUS
$1,000,000.
CLASS MH-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the Class MH-1 Certificates as
of such Remittance Date and (y) the portion of the Pool Available Amount for the
Pool III Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Z)(i) through (xi), inclusive.
CLASS MH-1 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-1 Certificateholders, which shall be equal to 6.940%.
CLASS MH-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class MH-2
Certificates (after taking into account the distribution of the Class MH-2
Principal Distribution Amount on such Remittance Date, but prior to the
application of the Class MH-2 Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for the Pool III Certificates for such Remittance Date over (ii) the Class B
Applied Realized Loss Amount for Pool III for such Remittance Date.
CLASS MH-2 CERTIFICATE: A Certificate denominated as a Class MH-2
Certificate.
CLASS MH-2 PRINCIPAL DISTRIBUTION AMOUNT: On each Remittance Date, an
amount equal to (a) prior to the Stepdown Date, and for any Remittance Date on
or after the Stepdown Date on which the Trigger Event for Pool III is in effect
and the Pool III Class A Certificates or the Class MH-1 Certificates are still
outstanding, zero and (b) on any other Remittance Date, the excess, if any, of
(i) the sum of (A) the Class Principal Balance of the Pool III Class A
Certificates after giving effect to the payment of the Pool III Class A
Principal Distribution Amount on such Remittance Date, (B) the Class Principal
Balance of the Class MH-1 Certificates after giving effect to the payment of the
Class MH-1 Principal Distribution Amount on such Remittance Date and (C) the
Class Principal Balance of the Class MH-2 Certificates immediately prior to such
Remittance Date over (ii) the lesser of (A) 70% of the outstanding Principal
Balance of the Pool III Loans as of the last day of the related Due Period and
(B) the outstanding Principal Balance of the Pool III Loans as of the last day
of the related Due Period MINUS $1,000,000.
CLASS MH-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the Class MH-2 Certificates as
of such Remittance Date and (y) the portion of the Pool Available Amount for
Pool III Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Z)(i) through (xiii), inclusive.
CLASS MH-2 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-2 Certificateholders, which shall be equal to 7.280%.
CLASS MV-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class MV-1
Certificates (after taking into account the distribution of the Class MV-1
Principal Distribution Amount on such Remittance Date, but prior to the
application of the Class MV-1 Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for Pool II for such Remittance Date over (ii) the sum of the Class MV-2 Applied
Realized Loss Amount and the Class B Pool Applied Realized Amount for Pool II,
in each case for such Remittance Date.
CLASS MV-1 CERTIFICATE: A Certificate denominated as a Class MV-1
Certificate.
CLASS MV-1 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool II
Class A Certificates has been reduced to zero, means the applicable Senior
Percentage multiplied by the Pool Principal Distribution Amount for Pool II
(less any portion of the Pool Principal Distribution Amount required to be
distributed to the Holders of the Pool II Class A Certificates on such
Remittance Date); provided, however, that, with respect to any Remittance Date,
the Class MV-1 Formula Principal Distribution Amount shall never exceed the
Class Principal Balance of the Class MV-1 Certificates.
CLASS MV-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date means the lesser of (i) the Class MV-1 Formula Principal
Distribution Amount or (ii) the Pool Available Amount for Pool II remaining
after the payment of all Class Current Interest Requirements for Pool II
Certificates and the Class A Pool Principal Distribution Amount for Pool II
Class A Certificates payable on such Remittance Date.
CLASS MV-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the Class MV-1 Certificates as
of such Remittance Date and (y) the portion of the Pool Available Amount for the
Pool II Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Y)(i) through (xi), inclusive.
CLASS MV-1 REMITTANCE RATE: The annual rate of interest payable to the
Class MV-1 Certificateholders, which shall be equal to 6.05% for the first
Remittance Date. Thereafter, the Class MV-1 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II-B, subject to the applicable Net Funds Cap (but in no event
exceeding 14.0% per annum).
CLASS MV-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance
Date, the lesser of (x) the Class Principal Balance of the Class MV-2
Certificates (after taking into account the distribution of the Class MV-2
Principal Distribution Amount on such Remittance Date, but prior to the
application of the Class MV-2 Applied Realized Loss Amount, if any, on such
Remittance Date) and (y) the excess of (i) the Pool Applied Realized Loss Amount
for the Pool II Certificates for such Remittance Date over (ii) the Class B
Applied Realized Loss Amount for Pool II for such Remittance Date.
CLASS MV-2 CERTIFICATE: A Certificate denominated as a Class MV-2
Certificate.
CLASS MV-2 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool II
Class A and Class MV-1 Certificates have been reduced to zero, means the
applicable Senior Percentage multiplied by the Pool Principal Distribution
Amount for Pool II (less any portion of the Pool Principal Distribution Amount
for Pool II required to be distributed to the Holders of the Pool II Class A or
Class MV-1 Certificates on such Remittance Date); provided, however, that, with
respect to any Remittance Date, the Class MV-2 Formula Principal Distribution
Amount shall never exceed the Class Principal Balance of the Class MV-2
Certificates.
CLASS MV-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date, the lesser of (i) the Class MV-2 Formula Principal Distribution
Amount or (ii) the Pool Available Amount for Pool II remaining after giving
effect to all payments of Class Current Interest Requirements for Pool II
Certificates, the Class A Pool Principal Distribution Amount for Pool II Class A
Certificates and the Class MV-1 Principal Distribution Amount payable on such
Remittance Date.
CLASS MV-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for the Class MV-2 Certificates as
of such Remittance Date and (y) the portion of the Pool Available Amount for
Pool II Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Y)(i) through (xiii), inclusive.
CLASS MV-2 REMITTANCE RATE: The annual rate of interest payable to the
Class MV-2 Certificateholders, which shall be equal to 6.10% for the first
Remittance Date. Thereafter, the Class MV-2 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II-B, subject to the applicable Net Funds Cap (but in no event
exceeding 14.0% per annum).
CLASS POOL FACTOR: With respect to a Class of Class A, Class M or
Class B Certificates, as of any date of determination, the then Class Principal
Balance for such Class divided by the Original Principal Balance for such Class.
CLASS PRINCIPAL BALANCE: With respect to each Class of Class A, Class
M or Class B Certificates, as of any date of determination, the Original
Principal Balance of such Class less (i) the sum of all amounts (including with
respect to Pool I and Pool IV Certificates, the principal portion of any related
Insured Payment and with respect to Pool III Certificates, any FHA Payments made
in respect of principal) previously distributed to the Certificateholders of
such Class in respect of principal pursuant to Section 6.08(d) and (ii) the
amount, if any, of Applied Realized Loss Amounts previously allocated to such
Class pursuant to Section 6.09 or any actual loss of principal suffered with
respect to a Pool I or Pool IV Certificate as a result of the failure of the
Certificate Insurer to perform. For purposes of determining the Class Principal
Balance of each Class of Class A, Class M or Class B Certificates with respect
to any Remittance Date, no effect shall be given to any principal to be
distributed, or Applied Realized Amounts or loss due to the Certificate
Insurer's failure to perform to be allocated, to each such Class on such
Remittance Date.
CLASS REMITTANCE RATE: With respect to each Class of Class A, Class M
or Class B Certificates, the annual rate of interest payable to the
Certificateholders of such Class as provided herein.
CLASS R-1 CERTIFICATE: A Certificate denominated as a Class R-1
Certificate.
CLASS R-2 CERTIFICATE: A Certificate denominated as a Class R-2
Certificate.
CLASS R CERTIFICATE: Collectively or singularly, the Class R-1 and/or
Class R- 2 Certificates, as applicable.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X ACCELERATED DISTRIBUTION AMOUNT: For any Remittance Date until
the Class Principal Balance of the Class AF-6 Certificates is reduced to zero,
an amount equal to the lesser of (i) the excess, if any, of (A) the amount of
interest received on or with respect to the Pool I Mortgage Loans during the
related Due Period (including, without limitation, from Monthly Payments,
Monthly Advances and Compensating Interest) over (B) the sum of the Pool Current
Interest Requirement for the Pool I Certificates and the Pool I Transaction Fees
and (ii) the Class AF-6 Supplemental Interest Amount.
CLASS X CERTIFICATE: A Certificate denominated as a Class X
Certificate.
CLASS X REMITTANCE AMOUNT: As of any Remittance Date, an amount equal
to the sum of (i) the Pool I Strip Amount, (ii) the Pool II Strip Amount, (iii)
the Class X Accelerated Distribution Amount, (iv) the Pool Remaining Amount
Available for each Pool, and (iv) the Remainder Excess Spread Amount, net of
reimbursements to the Servicer or the Representative of Reimbursable Amounts
pursuant to Section 5.04(f).
CLOSING DATE: December 31, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 6.12.
CONTINGENCY FEE: As to each Mortgage Loan, the annual fee which is, in
addition to the Servicing Fee, payable to the Servicer pursuant to Section 7.03
of this Agreement. Such fee shall be calculated and payable monthly only from
the amounts received in respect of interest on such Mortgage Loan, shall accrue
at the rate of .25% per annum and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Contingency Fee is payable solely
from the interest portion of related (i) Monthly Payments, (ii) Liquidation
Proceeds or (iii) Released Mortgaged Property Proceeds collected by the
Servicer, or as otherwise provided in Section 5.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CONVENTIONAL HOME IMPROVEMENT LOANS: Pool III Mortgage Loans that are
not FHA Loans.
CO-TRUSTEE: First Union Trust Company, National Association, a
national banking association headquartered in Wilmington, Delaware.
CROSS-OVER DATE: The date on which the Pool Maximum Subordinated
Amounts for Pool I and Pool IV and the Pool Available Maximum Subordinated
Amounts for Pool II and Pool III have all been reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses with respect to the applicable Pool of
Mortgage Loans since the Startup Day.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
CUSTODIAL AGREEMENT: Any agreement to be entered into pursuant to
Section 12.13 for the retention of each Trustee's Mortgage File, substantially
in the form attached as Exhibit M hereto.
CUSTODIAN: Any custodian appointed pursuant to Section 12.13 herein,
provided that such custodian shall be independent of the Servicer, the
Representative and the Claims Administrator, except in the event the Trustee or
the Co-Trustee shall be the Servicer or the Claims Administrator. The initial
Custodian for the Pool III Loans shall be First Union National Bank, a national
banking association headquartered in Charlotte, North Carolina.
CUT-OFF DATE: November 30, 1997; provided, however, that for purposes
of determining characteristics of the Initial Mortgage Loans as of the Cut-Off
Date, the Cut-Off Date for those Initial Mortgage Loans originated after
November 30, 1997 shall be deemed to be the date of the applicable Mortgage
Note.
DEALER LOANS: Pool III Mortgage Loans in which a dealer-contractor
participates in the financing.
DEFAULTED MORTGAGE LOAN: Means any Mortgage Loan as to which the
related Mortgagor has failed to make unexcused payment in full of three or more
consecutive Monthly Payments.
DEFICIENCY AMOUNT: means with respect to any Remittance Date and the
Pool I or Pool IV Certificates, (i) the excess, if any, of (a) the Pool Current
Interest Requirement for such Pool over (b) the sum of the Pool Available
Remittance Amount for such Pool (minus amounts withdrawn to pay required
premiums to the Certificate Insurer), and the Monthly Excess Spread and the
Subordination Reduction Amount applicable to such Pool, plus (ii) the
Subordination Deficit, if any, for such Pool with respect to such Remittance
Date.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the United States Bankruptcy Code, as
amended from time to time (11 U.S.C.).
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by a Qualified
Substitute Mortgage Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short term rating by Moody's, and which is either
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i)
the third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class A, Class M or Class B
Certificates from time to time as a securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due
from the Mortgagor on a Mortgage Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
EVENT OF DEFAULT: As described in Section 10.01.
EVENT OF EXCESSIVE POOL LOSS: means, with respect to Pool I or Pool
IV, (a) until the 36th Remittance Date, any event that causes Cumulative
Realized Losses with respect to the related Pool to equal or exceed 1.25% of the
Pool Principal Balance of the related Pool as of the Closing Date, (b) from the
36th until the 42nd Remittance Dates, any event that causes Cumulative Realized
Losses with respect to the related Pool to equal or exceed 1.75% of the Pool
Principal Balance of the related Pool as of the Closing Date, (c) from the 42nd
until the 48th Remittance Dates, any event that causes Cumulative Realized
Losses with respect to the related Pool to equal or exceed 2.25% of the Pool
Principal Balance of the related Pool as of the Closing Date and (d) thereafter,
any event that causes Cumulative Realized Losses with respect to the related
Pool to equal or exceed 2.75% of the Pool Principal Balance of the related Pool
as of the Closing Date.
EVENT OF NONPAYMENT: An event of nonpayment with respect to Pool I or
Pool IV shall occur with respect to any Remittance Date if the amounts remitted
by the Servicer to the Trustee pursuant to Sections 5.04(a), 6.07(e), 6.11 and
6.12 for deposit in the Certificate Accounts with respect to Pool I and Pool IV
(minus the amount to be withdrawn from the applicable Certificate Account for
deposit in (i) the applicable Insurance Account pursuant to Section 6.01(b)(i)),
plus any amount transferred from the Spread Account to the applicable
Certificate Account pursuant to Section 6.05(b)(ii) will not, taken together, be
sufficient to pay all of the Pool Remittance Amounts for each such Pool
(exclusive of any Pool Carry-Forward Amounts representing amounts previously
paid to the Certificateholders of the applicable Pool as Insured Payments and
exclusive of any amount described in clause (X)(iv) of the definition of Pool
Principal Distribution Amounts with respect to such applicable Pool which have
not been paid by the Originators and exclusive of the amount, if any, by which
the Class AF-6 Supplemental Interest Amount exceeds the Class X Accelerated
Distribution Amount) in respect of such Remittance Date.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on
a Mortgage Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any
Liquidated Mortgage Loan, the excess, if any, of (a) the total Net Liquidation
Proceeds, over (b) the Principal Balance of such Mortgage Loan as of the date
such Mortgage Loan became a Liquidated Mortgage Loan plus 30 days interest
thereon at the weighted average Class Adjusted Mortgage Loan Remittance Rates
for each Class of Pool I Certificates with respect to a Pool I Mortgage Loan,
the Class Adjusted Mortgage Loan Remittance Rate for each Class of Pool II
Certificates with respect to a Pool II Mortgage Loan, the weighted average Class
Adjusted Mortgage Loan Remittance Rates for each Class of Pool III Certificates
with respect to a Pool III Mortgage Loan or the Class Adjusted Mortgage Loan
Remittance Rate for the Pool IV Certificates with respect to a Pool IV Mortgage
Loan; provided, however, that such excess shall be reduced by the amount by
which interest accrued on the advance, if any, made by the Servicer pursuant to
Section 5.14 at the related Mortgage Interest Rate exceeds interest accrued on
such advance at the applicable Class Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date and Pool of
Mortgage Loans, an amount equal to the excess of (A) the product of (i) the
aggregate Principal Balances of the applicable Pool of Mortgage Loans as of the
first day of the immediately preceding Due Period and (ii) one-twelfth of the
weighted average Mortgage Interest Rate for the applicable Pool of Mortgage
Loans, as the case may be, as of the first day of the related Due Period over
(B) the sum of (i) the Pool Current Interest Requirement for the applicable Pool
of Certificates for such Remittance Date (and, with respect to the Pool I
Certificates, the Class AF-6 Supplemental Interest Amount), (ii) amounts to be
deposited into the applicable Expense Account and Insurance Account on such
Remittance Date pursuant to Sections 6.03(a)(i) and 6.04(a)(i), respectively,
(iii) the Servicing Fee and Contingency Fee for the applicable Pool of Mortgage
Loans with respect to such Remittance Date, (iv) with respect to the Pool I
Mortgage Loans, the Remarketing Agent Fee for such Remittance Date, (v) with
respect to the Pool II Mortgage Loans, the Auction Agent Fee for such Remittance
Date and (vi) with respect to those FHA Loans in Pool III for which the FHA
Insurance Premium is paid by the related Mortgagor as part of the interest
payment, the applicable FHA Insurance Premium. With respect to the Remittance
Dates during the Funding Period, the Excess Spread for each Pool of Mortgage
Loans also will include the sum of (i) all funds to be transferred to the
applicable Certificate Account from the Capitalized Interest Account for such
Remittance Date pursuant to Section 6.02(g) and (ii) the Pool Pre-Funding
Earnings for such Pool for the applicable Remittance Date.
EXCESS SUBORDINATED AMOUNT: With respect to any Pool of Mortgage Loans
and any Remittance Date, the excess, if any, of (x) the Pool Subordinated Amount
that would apply to such respective Pool on such Remittance Date after taking
into account the payment of the Pool Remittance Amount for such respective Pool
on such Remittance Date (except for any distributions of related Subordination
Reduction Amounts on such Remittance Date) over (y) the related Specified
Subordinated Amount for such Remittance Date.
EXPENSE ACCOUNTS: The expense accounts established and maintained by
the Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHA: The Federal Housing Administration, and its successors in
interest.
FHA CUSTODIAL AGREEMENT: The Agreement dated as of November 30, 1997
by and between the Co-Trustee and the Custodian for the retention of each
Trustee's Mortgage Loan File in connection with the Pool III Loans,
substantially in the form attached as Exhibit M-1 hereto.
FHA INSURANCE PREMIUM: The premium charged by the FHA pursuant to 24
C.F.R. ss.201.31, or any successor regulation, as payment for Title I insurance
coverage for an FHA Loan, which premium shall be the responsibility of the
Servicer, who will be reimbursed from the FHA Premium Account in accordance with
Section 6.06(b)(i) hereof.
FHA LOAN: A Mortgage Loan that is partially insured by the FHA under
Title I.
FHA PAYMENT: The amount received from the FHA for a Claim filed with
respect to a 90 Day Delinquent FHA Loan.
FHA PREMIUM ACCOUNT: The account established and maintained by the
Trustee in accordance with Section 6.06 hereof.
FHA PREMIUM AMOUNT: With respect to any FHA Loan for any Remittance
Date, (i) if the FHA Insurance Premium is paid by the related Mortgagor as part
of the Mortgage Interest Rate on an FHA Loan, an amount equal to 1/12 of the
product of the Insurance Rate times the Principal Balance as of the first day of
the immediately preceding Due Period and (ii) if the related Mortgagor pays the
FHA Insurance Premium as a separate amount in addition to Monthly Payments, any
such amount received by the Servicer during the related Due Period.
FHA REGULATIONS: The regulations of the FHA with respect to Title I
home improvement loans set forth in 24 C.F.R. ss.201, as the same may be amended
during the term of this Agreement.
FHA RESERVE ACCOUNT: The account of the Co-Trustee maintained by the
FHA with respect to the FHA Loans and certain other mortgage loans registered in
the name of the Co-Trustee and insured by the FHA under Title I in accordance
with the FHA Regulations.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FITCH: Fitch IBCA Inc., or any successor thereto.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $200,000, (ii) the date on which an Event of
Default occurs and (iii) the close of business on March 30, 1998.
GLOBAL CERTIFICATES: [Reserved]
GROSS MARGIN: With respect to each Pool II Mortgage Loan and each
adjustable rate Pool IV Mortgage Loan, the number of basis points set forth in
the related Mortgage Note which is added to the LIBOR Index or the Treasury
Index, as the case may be, to determine the Mortgage Interest Rate on the
related Change Date, subject to the applicable Periodic Rate Cap and the
applicable Lifetime Cap and Lifetime Floor.
GUARANTEED SUPPLEMENTAL PAYMENT: For any Remittance Date until the
Class Principal Balance of the Class AF-6 Certificates is reduced to zero, the
Class AF-6 Supplemental Interest Amount, if any, for such Remittance Date;
provided, however, if the Certificate Insurer is not in default in payment under
the Certificate Insurance Policy relating to Pool I, the amount of the
Guaranteed Supplemental Payment required to be paid by the Certificate Insurer
shall be reduced by the Class X Accelerated Distribution Amount.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or
more in which individual fee title is held to the interior space only and all
other elements of the structure and land are held in undivided common ownership.
HUD: The United States Department of Housing and Urban Development,
and its successor in interest.
INDEX: Either the LIBOR Index or the Treasury Index, as the case may
be.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Pool I, Pool II, Pool III or Pool IV
Certificate.
INITIAL MORTGAGE LOANS: The Initial Pool I, Initial Pool II, Initial
Pool III and Initial Pool IV Mortgage Loans.
INITIAL POOL SPREAD ACCOUNT DEPOSIT: As of any Remittance Date, (A)
with respect to Pool I, the amount deposited into the Spread Account and
allocated to Pool I pursuant to Section 6.05(a)(i) and (ii); and (B) with
respect to Pool IV, the amount deposited into the Spread Account and allocated
to Pool IV pursuant to Section 6.05(a)(i) and (ii).
INITIAL POOL I MORTGAGE LOANS: The Pool I Mortgage Loans listed on
Exhibit H delivered to the Trustee on the Closing Date.
INITIAL POOL II MORTGAGE LOANS: The Pool II Mortgage Loans listed on
Exhibit H-1 delivered to the Trustee on the Closing Date.
INITIAL POOL III MORTGAGE LOANS: The Pool III Mortgage Loans listed on
Exhibit H-2 delivered to the Co-Trustee on the Closing Date.
INITIAL POOL IV MORTGAGE LOANS: The Pool IV Mortgage Loans listed on
Exhibit H-3 delivered to the Trustee on the Closing Date.
INSURANCE ACCOUNTS: The insurance accounts established and maintained
by the Trustee in accordance with Section 6.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of December 1, 1997 by and
among the Certificate Insurer, The Money Store Inc., the Originators listed in
Schedule I thereto and the Trustee, as amended from time to time by the parties
thereto.
INSURANCE PAYING AGENT: The Bank of New York or any successor as
appointed herein.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Trustee or the Servicer by any insurer (other than the Certificate Insurer)
pursuant to any insurance policy covering a Mortgage Loan, Mortgaged Property,
or REO Property, including but not limited to title, hazard, life, health and/or
accident insurance policies, and/or (ii) by the Servicer pursuant to Section
5.08, in either case, net of any expenses which are incurred by the Servicer in
connection with the collection of such proceeds and not otherwise reimbursed to
the Servicer.
INSURANCE RATE: As to any FHA Loan with respect to which the FHA
Insurance Premium is paid by the related Mortgagor as part of the Mortgage
Interest Rate, the rate of 1.0% per annum, which is used to calculate the amount
to be applied to the payment of the related FHA Insurance Premium.
INSURED PAYMENT: means (i) as of any Remittance Date, any Deficiency
Amount and (ii) any Preference Amount.
INSURER REIMBURSABLE AMOUNTS: As described in Section 6.14(a)(ii).
INTEREST DETERMINATION DATE: With respect to the Adjustable Rate
Certificates and the Auction Rate Certificates, the second LIBOR Determination
Date prior to any Remittance Date while the Adjustable Rate Certificates or
Auction Rate Certificates are outstanding.
INTEREST PERIOD: (A) With respect to the Adjustable Rate Certificates
(i) initially, the period commencing December 15, 1997 and ending on the day
immediately preceding the Remittance Date in January 1998 and (ii) thereafter,
the period commencing on a Remittance Date and ending on the day immediately
preceding the next Remittance Date and (B) with respect to the Auction Rate
Certificates, the meaning set forth in the Auction Procedures attached hereto as
Schedule II-A or Schedule II-B, as the case may be.
INTEREST RATE SERVICES AGREEMENT: That certain Interest Rate Services
Agreement dated as of December 31, 1997 between the Trustee and Morgan Stanley &
Co. Incorporated relating to the Class AF-6 Certificates, as amended or
supplemented.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance
Date and with respect to any Class of Class A, Class M or Class B Certificates
of Pool II and Pool III, the sum of (i) the amount, if any, by which (X) the sum
of (a) the Class Current Interest Requirement for such Class for such Remittance
Date plus (b) the Interest Shortfall Carryforward Amount for such Class as of
the immediately preceding Remittance Date exceeds (Y) the amount paid to the
Certificateholders of such Class on such Remittance Date pursuant to clauses
(ii), (iii), (iv), (ix), (xi), (xiii) and (xv) of Section 6.08(d)(Y) or Section
6.08(d)(Z), as applicable, of this Agreement and (ii) one month's interest on
the amount determined pursuant to clause (i)(b) at the applicable Class
Remittance Rate.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.15 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a
London Banking Day prior to the commencement of each related Interest Period.
LIBOR INDEX: The applicable London interbank offered rate for
one-month, six- month or one year U.S. dollar deposits, as specified in the
related Mortgage Note.
LIFETIME CAP: The provision in the Mortgage Note for each Pool II
Mortgage Loan, and each Pool IV Mortgage Loan that bears interst at an
adjustable rate which limits the maximum Mortgage Interest Rate over the life of
such Pool II Mortgage Loan or Pool IV Mortgage Loan, as the case may be to the
rate set forth in the applicable Mortgage Note.
LIFETIME FLOOR: The provision in the Mortgage Note for each Pool II
Mortgage Loan, and each Pool IV Mortgage Loan that bears interest at an
adjustable rate which limits the minimum Mortgage Interest Rate over the life of
such Pool II Mortgage Loan or Pool IV Mortgage Loan, as the case may be, to the
rate set forth in the applicable Mortgage Note.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan or REO Property
as to which the Servicer has determined that all amounts which it reasonably and
in good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
any REO Disposition, amounts required to be deposited in the applicable
Principal and Interest Account pursuant to Section 5.10 hereof, and any other
amounts other than FHA Payments and Related Payments received in connection with
the liquidation of defaulted Mortgage Loans, whether through trustee's sale,
foreclosure sale or otherwise.
LISTING AGENT: [RESERVED]
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, (i) the
sum of (a) the original principal balance of such Mortgage Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Mortgage Loan, less (c) that portion of the principal balance equal to the
amount of the premium for credit life insurance collected by the Originators,
divided by (ii) the value of the related Mortgaged Property, based upon the
appraisal (or, in the case of certain Mortgage Loans with original principal
balances of less than $15,000, such other method of valuation acceptable to the
related Originator) made at the time of origination of the Mortgage Loan.
LONDON BANKING DAY: Any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
LOW INTEREST MORTGAGE LOAN: A Low Interest Pool I Mortgage Loan, a Low
Interest Pool III Mortgage Loan or a Low Interest Pool IV Mortgage Loan.
LOW INTEREST POOL I MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL III MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL IV MORTGAGE LOAN: [RESERVED]
LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or less
in which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A, Class M
and Class B Certificates evidencing in excess of 50% of the aggregate Class
Principal Balances of the Class A, Class M and Class B Certificates; provided,
however, that with respect to any action or event affecting fewer than all
Classes of Class A, Class M and Class B Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of such Classes of
Class A, Class M and Class B Certificates.
MARGIN: With respect to the Class AV-1 Certificates, the rate per
annum of 0.10% (or for each Remittance Date occurring after the Optional
Servicer Termination Date, 0.20%) that is added to LIBOR to determine the Class
AV-1 Remittance Rate for each Remittance Date.
MIXED USE BUILDING: A building containing both residential dwelling
units and commercial use units, E.G., retail stores or office space.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section
6.11 hereof.
MONTHLY EXCESS SPREAD: As of any Remittance Date and for any Pool of
Mortgage Loans, an amount equal to the sum of (A) the product of (i) the amount
calculated pursuant to the first sentence of the definition of Excess Spread
with respect to such Remittance Date for such Pool of Mortgage Loans and (ii)
the then applicable Monthly Excess Spread Percentage and (B) with respect to the
Remittance Dates in January, February and March 1998, the amount calculated
pursuant to the second sentence of the definition of Excess Spread with respect
to such Remittance Date.
MONTHLY EXCESS SPREAD PERCENTAGE: As to any Remittance Date, 100%.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan, as set
forth in the related Mortgage Note.
MONTHLY PREMIUM: With respect to Pool I and Pool IV, the monthly
premium payable to the Certificate Insurer equal to the product of (i) the
applicable percentage set forth in the Insurance Agreement and (ii) the
applicable then outstanding Pool Principal Balance, rounded to the nearest
thousand dollars.
MOODY'S: Moody's Investors Service, Inc., or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
lien on the Mortgaged Property.
MORTGAGE FILE: As described in Exhibit A.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 5.08.
MORTGAGE INTEREST RATE: The fixed or adjustable rate of interest borne
by a Mortgage Note, as shown on the applicable Mortgage Loan Schedule.
MORTGAGE LOAN: An individual mortgage loan which is transferred to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee)
pursuant to this Agreement, including any Subsequent Mortgage Loan, together
with the rights and obligations of a holder thereof and payments thereon and
proceeds therefrom, the Mortgage Loans originally subject to this Agreement
being identified on the Pool I, Pool II, Pool III and Pool IV Mortgage Loan
Schedules delivered to the Trustee (or with respect to Pool III, the Co-Trustee)
as Exhibits H, H-1, H-2 and H-3, respectively. Any mortgage loan which, although
intended by the parties hereto to have been, and which purportedly was, sold to
the Trust Fund by the applicable Originator (as indicated by Exhibits H, H-1,
H-2 and H-3), in fact was not sold or otherwise transferred and assigned to the
Trust Fund for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.02(i) hereof with respect
to such mortgage loan, shall nevertheless be considered a "Mortgage Loan" for
all purposes of this Agreement.
MORTGAGE LOAN SCHEDULE: The separate schedules of Pool I, Pool II,
Pool III and Pool IV Mortgage Loans delivered to the Trustee (or with respect to
Pool III, the Co- Trustee) as Exhibits H, H-1, H-2 and H-3, respectively, such
schedules identifying each Mortgage Loan by address of the Mortgaged Property
and the name of the Mortgagor and setting forth as to each Mortgage Loan the
following information: (i) the Principal Balance as of the close of business on
the Cut-Off Date, (ii) the account number, (iii) the original principal amount,
(iv) except with respect to the Pool III Loans, the LTV as of the date of the
origination of the related Mortgage Loan, (v) the Due Date, (vi) the Mortgage
Interest Rate, (vii) the first Due Date, (viii) the Monthly Payment, (ix) the
maturity date of the Mortgage Note, (x) the remaining number of months to
maturity as of the Cut-Off Date and additionally, (xi) with respect to Exhibit
H-1, the Periodic Rate Cap, Lifetime Cap and Lifetime Floor. Also, the Mortgage
Loan Schedule for the Pool III Mortgage Loans will indicate, based upon loan
number, whether the related Pool III Mortgage Loan is an FHA Loan or a
Conventional Home Improvement Loan.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MORTGAGED PROPERTY STATES: Any one of the 50 states and the District
of Columbia and Puerto Rico, where the Mortgaged Properties are located.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as
rental apartment buildings or projects containing five or more units.
NET FUNDS CAP: (x) with respect to the Class AF-6 Certificates, as to
any Remittance Date, a percentage equal to the difference between (A) the
weighted average Mortgage Interest Rate on the Pool I Mortgage Loans and (B) the
sum of (i) the percentages used in determining the Servicing Fee, the
Contingency Fee, the premium due the Certificate Insurer and the fee due the
Trustee and (ii) the percentage used in determining the Remarketing Agent Fee
and (y) with respect to the Class MV-1, Class MV-2 and Class BV Certificates, as
to any Remittance Date, a percentage equal to the difference between (A) the
weighted average Mortgage Interest Rate on the Pool II Mortgage Loans and (B)
the sum of (i) the percentages used in determining the Servicing Fee, the
Contingency Fee and the fee due the Trustee and (ii) the percentage used in
determining the Auction Agent Fee.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.
NET MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(b) hereof.
1933 ACT: The Securities Act of 1933, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Pool III Loan that is
an FHA Loan.
90 DAY DELINQUENT POOL III LOAN: With respect to any Remittance Date,
a Pool III Mortgage Loan with respect to which four consecutive Monthly Payments
have not been received by the Servicer as of the last day of the related Due
Period unless, on or prior to the last day of the Due Period in which the fourth
Monthly Payment is due, the Servicer has received from the related Mortgagor an
amount at least equal to one unpaid Monthly Payment.
NON-ACKNOWLEDGED FHA LOANS: As defined in Section 3.02(lll) hereof.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee or
Co-Trustee, as the case may be, signed by the Chairman of the Board, the
President, a Vice President or Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Secretaries of the Representative, an
Originator, the Servicer or the Claims Administrator, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative, the Servicer or the Claims
Administrator, reasonably acceptable to the Trustee and the Certificate Insurer
and experienced in matters relating thereto; except that any opinion of counsel
relating to (a) the qualification of the Trust Fund as a REMIC or (b) compliance
with the REMIC Provisions, must be an opinion of counsel who (i) is in fact
independent of the Representative, the Servicer or the Claims Administrator,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Representative, the Servicer or the Claims
Administrator or in an affiliate thereof and (iii) is not connected with the
Representative, the Servicer or the Claims Administrator as an officer,
employee, director or person performing similar functions.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01
hereof.
ORIGINAL CLASS AF-1 PRINCIPAL BALANCE: $122,000,000.
ORIGINAL CLASS AF-2 PRINCIPAL BALANCE: $88,000,000.
ORIGINAL CLASS AF-3 PRINCIPAL BALANCE: $249,000,000.
ORIGINAL CLASS AF-4 PRINCIPAL BALANCE: $68,000,000.
ORIGINAL CLASS AF-5 PRINCIPAL BALANCE: $37,000,000.
ORIGINAL CLASS AF-6 PRINCIPAL BALANCE: $76,000,000.
ORIGINAL CLASS AF-7 PRINCIPAL BALANCE: $85,000,000.
ORIGINAL CLASS AV-1 PRINCIPAL BALANCE: $466,750,000.
ORIGINAL CLASS AV-2 PRINCIPAL BALANCE: $76,000,000.
ORIGINAL CLASS MV-1 PRINCIPAL BALANCE: $37,375,000.
ORIGINAL CLASS MV-2 PRINCIPAL BALANCE: $37,375,000.
ORIGINAL CLASS BV PRINCIPAL BALANCE: $32,500,000.
ORIGINAL CLASS AH-1 PRINCIPAL BALANCE: $84,571,000.
ORIGINAL CLASS AH-2 PRINCIPAL BALANCE: $28,024,000.
ORIGINAL CLASS AH-3 PRINCIPAL BALANCE: $19,947,000.
ORIGINAL CLASS AH-4 PRINCIPAL BALANCE: $20,457,000.
ORIGINAL CLASS MH-1 PRINCIPAL BALANCE: $13,500,000.
ORIGINAL CLASS MH-2 PRINCIPAL BALANCE: $15,000,000.
ORIGINAL CLASS BH PRINCIPAL BALANCE: $18,501,000.
ORIGINAL CLASS AMF PRINCIPAL BALANCE: $10,000,000.
ORIGINAL PRE-FUNDED AMOUNT: $207,710,066.78, representing the amount
deposited in the Pre-Funding Account on the Closing Date, $130,278,499.00 of
which relates to Pool I, $38,320,752.27 of which relates to Pool II,
$37,567,743.43 of which relates to Pool III and $1,543,122.08 of which relates
to Pool IV.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A,
Class M and Class B Certificates, the amount set forth for such Class under the
definitions of Original Class AF-1 through Original Class AMF Principal
Balances.
ORIGINATOR: Any of the entities listed on Exhibit I hereto, each of
which is a direct or indirect wholly-owned subsidiary of the Representative, and
each of which is a Subservicer as of the date hereof.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer
Date occurring in January 1998, the sum, if any, of (w), with respect to Pool I,
the difference between (i) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the weighted average Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6 and Class AF-7
Remittance Rates and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; (x) with
respect to Pool II, the difference between (i) three months' interest on the
aggregate Principal Balances of the Subsequent Pool II Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the weighted
average Class AV-1, Class AV-2, Class MV-1, Class MV-2 and Class BV Remittance
Rates and (ii) three-months' interest on the aggregate Principal Balances of the
Subsequent Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the rate at which Pre-Funding Account moneys are
invested as of such Subsequent Transfer Date; (y), with respect to Pool III, the
difference between (i) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool III Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the weighted average Class AH-1,
Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH- 2 and Class BH
Remittance Rates and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool III Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; and (z), with
respect to Pool IV, the difference between (i) three-months' interest on the
aggregate Principal Balances of the Subsequent Pool IV Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the Class AMF
Remittance Rate and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool IV Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in February
1998, the sum, if any, of (w), with respect to Pool I, the difference between
(i) two-months' interest on the aggregate Principal Balances of the Subsequent
Pool I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the weighted average Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5, Class AF-6 and Class AF-7 Remittance Rates and (ii) two-
months' interest on the aggregate Principal Balances of the Subsequent Pool I
Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre- Funding Account moneys are invested as of
such Subsequent Transfer Date; (x) with respect to Pool II, the difference
between (i) two-months' interest on the aggregate Principal Balances of the
Subsequent Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class AV-1, Class AV-2, Class
MV-1, Class MV, and Class BV Remittance Rate and (ii) two-months' interest on
the aggregate Principal Balances of the Subsequent Pool II Mortgage Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; (y) with respect to Pool III, the difference between (i)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
III Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the weighted average Class AH-1, Class AH-2, Class AH-3, Class AH-
4, Class MH-1, Class MH-2 and Class BH Remittance Rates and (ii) two-months'
interest on the aggregate Principal Balances of the Subsequent Pool III Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; and (z) with respect to Pool IV, the difference between (i)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
III Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the Class AMF Remittance Rate and (ii) two-months' interest on the
aggregate Principal Balances of the Subsequent Pool IV Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre- Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in March 1998,
the sum, if any, of (w), with respect to Pool I, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
I Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6 and Class AF-7 Remittance Rates and (ii) one-month's interest
on the aggregate Principal Balances of the Subsequent Pool I Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date; (x)
with respect to Pool II, the difference between (i) one- month's interest on the
aggregate Principal Balances of the Subsequent Pool II Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the weighted average
Class AV-1, Class AV-2, Class MV-1, Class MV-2, and Class BV Remittance Rate and
(ii) one-month's interest on the aggregate Principal Balances of the Subsequent
Pool II Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funding Account moneys are invested as of
such Subsequent Transfer Date; (y), with respect to Pool III, the difference
between (i) one-month's interest on the aggregate Principal Balances of the
Subsequent Pool III Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the weighted average Class AH-1, Class AH-2, Class AH-3,
Class AH-4, Class MH-1, Class MH-2, and Class BH Remittance Rates and (ii)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
III Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funding Account moneys are invested as of
such Subsequent Transfer Date; and (z), with respect to Pool IV, the difference
between (i) one-month's interest on the aggregate Principal Balances of the
Subsequent Pool IV Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the Class AMF Remittance Rate and (ii) one-month's interest
on the aggregate Principal Balances of the Subsequent Pool IV Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which
the related Mortgagor represented at the time of the origination of the Mortgage
Loan an intent to occupy as such Mortgagor's primary, secondary or vacation
residence.
PAYING AGENT: Initially, the Trustee or any other Person that meets
the eligibility standards for the Paying Agent specified in Section 13.13 hereof
and is authorized by the Trustee to make payments on the Certificates on behalf
of the Trustee.
PERCENTAGE INTEREST: With respect to a Certificate other than a Class
X or Class R Certificate, the portion of the respective Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Certificate and the denominator of which is the
Original Principal Balance of such Class. With respect to the Class X
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, which shall equal 100%. With respect to the Class R Certificates,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, which shall be either 99.99% or, but only with
respect to the Class R Certificates held by the Tax Matters Person, 0.01%. The
Pool I, Pool II, Pool III and Pool IV Certificates (other than the Auction Rate
Certificates) are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $1,000 and integral multiples of $1,000 in excess
thereof, except that one Pool I, Pool II, Pool III and Pool IV Certificate of
each Class may be issued in a different denomination. The Auction Rate
Certificates are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $25,000 and integral multiples of $25,000 in excess
thereof.
PERIODIC RATE CAP: The provision in the Mortgage Note for each Pool II
Loan and each adjustable rate Pool IV Loan which limits increases or decreases
in the Mortgage Interest Rate on each Change Date to the rate set forth in the
applicable Mortgage Note.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States, FHA debentures, FHLMC senior debt
obligations, Federal Home Loan Bank consolidated senior debt
obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated "A-1" or better by S&P and Prime-1 or better
by Moody's;
(iii) deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by
the BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan
association have been rated "BBB" or better by S&P and Baa3 or better
by Moody's;
(iv) commercial paper (having original maturities of not more
than 365 days) rated "A-1" or better by S&P and Prime-1 or better by
Moody's;
(v) debt obligations rated "AAA" by S&P and Aaa by Moody's (other
than any such obligations that do not have a fixed par value and/or
whose terms do not promise a fixed dollar amount at maturity or call
date);
(vi) investments in money market funds rated "AAAm" or better by
S&P or "Aaa" or better by Moody's the assets of which are invested
solely in instruments described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds issued by
or reasonably acceptable to the Certificate Insurer providing for the
investment of funds in an account or insuring a minimum rate of return
on investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or
other corporation whose debt obligations or
insurance financial strength or claims
paying ability are rated "AAA" by S&P and
"Aaa" by Moody's; and
(b) provide that the Trustee may exercise all of
the rights of the Representative under such
contract or surety bond without the
necessity of the taking of any action by the
Representative;
(viii) A repurchase agreement that satisfies the following
criteria and is acceptable to the Certificate Insurer:
(a) Must be between the Trustee and a dealer bank or
securities firm described in 1. or 2. below:
1. Primary dealers on the Federal Reserve reporting dealer
list which are rated "A" or better by S&P and Moody's,
or
2. Banks rated "A" or above by S&P and Moody's
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for the transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the full faith and credit
of the U.S. government (and FNMA & FHLMC)
2. the term of the repurchase agreement may be up to 60
days
3. the collateral must be delivered to the Trustee or
third party custodian acting as agent for the Trustee
by appropriate book entries and confirmation
statements, with a copy to the Certificate Insurer,
must have been delivered before or simultaneous with
payment (perfection by possession of certificated
securities)
4. Valuation of collateral
A. The securities must be valued weekly,
marked-to-market at current market price plus accrued
interest.
B. The value of the collateral must be equal to at
least 104% of the amount of cash transferred by the
Trustee or custodian for the Trustee to the dealer bank
or security firm under the repurchase agreement plus
accrued interest. If the value of securities held as
collateral slips below 104% of the value of the cash
transferred by the Trustee plus accrued interest, then
additional cash and/or acceptable securities must be
transferred. If, however, the securities used as
collateral are FNMA or FHLMC, then the value of
collateral must equal at least 105%.
(ix) any other investment acceptable to the Certificate Insurer
and the Rating Agencies, written confirmation of which shall be
furnished by the Certificate Insurer to the Trustee.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) a Person other than a "United States Person" as
defined in Code Section 7701(a)(30), unless the Servicer consents in writing to
the Transfer to such Person and (vi) any other Person so designated by the
Servicer based upon an Opinion of Counsel that the transfer of a Percentage
Interest in a Class R Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that the Certificates are outstanding.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Code Section 7701 or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL: With respect to the Certificates, the Pool I, Pool II, Pool III
or Pool IV Certificates, as the case may be, and with respect to the Mortgage
Loans, the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be.
POOL AMORTIZED SUBORDINATED AMOUNT REQUIREMENT: With respect to Pool I
and Pool IV and as of any date of determination, the product of (x) 6.20% and
50.00%, respectively, and (y) the aggregate Principal Balances of all Mortgage
Loans in the related Pool as of the close of business on the last day of the Due
Period immediately preceding such date; provided, however, that for any period
during which an Event of Excessive Pool Loss relating to Pool I or Pool IV
exists, the Pool Amortized Subordinated Amount Requirement for such Pool shall
equal the product of 6.20% or 50.00%, respectively, and the Pool Principal
Balance of the respective Pool as of the date such Event of Excessive Pool Loss
for such Pool first existed.
POOL APPLIED REALIZED LOSS AMOUNT: For any Remittance Date and Pool II
or Pool III, an amount equal to the excess, if any, of (i) the aggregate Class
Principal Balances of the Pool II or Pool III Class A, Class M and Class B
Certificates, as applicable, (after taking into account the distribution of
principal (including the applicable Accelerated Principal Distribution Amount)
with respect to the Pool II or Pool III Certificates, as applicable, on such
Remittance Date) over (ii) the aggregate Principal Balance of the Pool II or
Pool III Mortgage Loans, as applicable, as of the end of the prior Due Period
(after taking into account all Realized Losses relating to Pool II or Pool III
Mortgage Loans, as applicable, experienced during such Due Period).
POOL AVAILABLE AMOUNT: With respect to any Pool and each Remittance
Date, an amount equal to the sum of (i) the Pool Available Remittance Amount for
such Pool (minus the amounts withdrawn from the applicable Certificate Account
(a) for Pool I and Pool IV, pursuant to Section 6.01(b)(i) to deposit amounts
related to required premiums in the applicable Insurance Account, (b) for Pool
I, pursuant to Section 6.01(b)(iii) to pay the Remarketing Agent Fee to the
Remarketing Agent, (c) for Pool II, pursuant to Section 6.01 (b)(iii) to pay the
Auction Agent Fee to the Auction Agent and (d) for Pool III, pursuant to Section
6.01(b)(ii) to make deposits in the FHA Premium Account), (ii) any amount of
Total Monthly Excess Cashflow to be applied to the Certificates of such Pool on
such Remittance Date, and (iii) amounts transferred from the Spread Account, if
any, pursuant to Section 6.05(b)(ii) and Insured Payments and Guaranteed
Supplemental Payments, if any, made by the Certificate Insurer with respect to
Pool I and IV.
POOL AVAILABLE MAXIMUM SUBORDINATED AMOUNT: With respect to Pool II
and Pool III and any Remittance Date, the Pool Maximum Subordinated Amount for
Pool II or Pool III, as applicable, less all distributions made on Certificates
of the applicable Pool with respect to Shortfall Amounts on prior Remittance
Dates and when determining if the Pool Available Maximum Subordinated Amount
with respect to Pool II or Pool III has been reduced to zero, all distributions
on Certificates of the applicable Pool with respect to Shortfall Amounts on such
Remittance Date, in the order of priority set forth in Section 6.08, until zero
has been reached.
POOL AVAILABLE REMITTANCE AMOUNT: With respect to any Pool and any
Remittance Date, (i) the sum of all amounts relating to the Mortgage Loans of
such Pool described in clauses (i) through (viii), inclusive, of Section 5.03(b)
received by the Servicer or any Subservicer (including any amounts paid by the
Servicer and the Representative and excluding any Excess Spread and
Subordination Reduction Amounts relating to the Mortgage Loans of such Pool, any
amounts withdrawn by the Servicer with respect to the Mortgage Loans in such
Pool pursuant to Section 5.04(b), (c), (e) and (f)(i) as of the related
Determination Date and any amounts deposited into the Servicing Account with
respect to the Mortgage Loans in such Pool pursuant to Section 5.04(g) as of the
related Determination Date) during the related Due Period or, with respect to
Section 5.03(b)(vi), on the related Determination Date, and deposited into the
applicable Certificate Account as of the Determination Date, plus (ii) the
amount of any Monthly Advances and Compensating Interest payments relating to
the Mortgage Loans of such Pool, remitted by the Servicer for such Remittance
Date, plus (iii) amounts to be transferred to the applicable Certificate Account
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in January, February and March 1998, less (iv) those
amounts withdrawable from the applicable Certificate Account pursuant to Section
6.01(b)(vi). The "Pool Available Remittance Amount" does not include (i) funds
in the applicable Principal and Interest Account and available to be withdrawn
pursuant to Section 5.04(d)(ii), (ii) funds in the applicable Certificate
Account and available to be withdrawn pursuant to Section 6.01(b)(vi), (iii)
funds in the applicable Certificate Account that cannot be distributed by the
Trustee on such Remittance Date as a result of a proceeding initiated under the
United States Bankruptcy Code, as amended from time to time (11 U.S.C.) and (iv)
Insured Payments and Guaranteed Supplemental Payments.
POOL AVAILABLE REMITTANCE AMOUNT SHORTFALL: With respect to Pool I or
Pool IV and any Remittance Date, the excess, if any, of (i) the Pool Remittance
Amount for such Pool (net of amounts included in clauses (X) (vi) and (viii) and
(Y) of the definition of Pool Principal Distribution Amount) over (ii) the Pool
Available Remittance Amount for such Pool (net of the amount to be withdrawn
from the applicable Certificate Account pursuant to Section 6.01(b)(i) and
one-twelfth of the Annual Expense Escrow Amount with respect to such Pool).
POOL AVAILABLE REMITTANCE AMOUNT SURPLUS: With respect to Pool I or
Pool IV and any Remittance Date, the excess, if any, of (i) the Pool Available
Remittance Amount for such Pool (net of the amount to be withdrawn from the
applicable Certificate Account pursuant to Section 6.01(b)(i) and one-twelfth of
the Annual Expense Escrow Amount with respect to such Pool) over (ii) the Pool
Remittance Amount for such Pool (net of amounts included in clauses (X)(vi) and
(viii) and (Y) of the definition of Pool Principal Distribution Amount).
POOL CARRY-FORWARD AMOUNT: With respect to Pool I or Pool IV and any
Remittance Date, the sum of (i) the amounts, if any, by which (x) the Pool
Remittance Amount for such Pool as of the immediately preceding Remittance Date
exceeded (y) the amount of the actual distribution to the Holders of the
Certificates of such Pool (including to the Certificate Insurer, as provided in
Section 6.08), pursuant to Section 6.08 on the immediately preceding Remittance
Date, exclusive of any Insured Payment and any Guaranteed Supplemental Payment
to the Holders of the Certificates of such Pool made pursuant to Section 6.08
hereof on such immediately preceding Remittance Date, and (ii) interest on the
amounts, if any, described in clause (i) above, at one-twelfth of the weighted
average Remittance Rates of the Certificates of such Pool from such immediately
preceding Remittance Date; provided, however, that only the Certificate Insurer
shall be entitled to interest on the principal portion of the Pool Carry-Forward
Amount.
POOL CURRENT INTEREST REQUIREMENT: For each Pool, the sum of the Class
Current Interest Requirements of the Certificates of such Pool.
POOL MAXIMUM COLLATERAL AMOUNT: For each Pool, the sum of (i) the
aggregate Principal Balances as of the Cut-Off Date of all Initial Mortgage
Loans in such Pool and (ii) the aggregate Principal Balances as of the related
Subsequent Cut-Off Dates of all Subsequent Mortgage Loans transferred to the
Trust Fund and assigned to such Pool.
POOL MAXIMUM SUBORDINATED AMOUNT: The initial Pool Maximum
Subordinated Amount for Pool I and Pool IV shall be $87,000,000 and $5,000,000,
respectively, which amounts equal 12% and 50%, respectively, of the original
Pool Principal Balances of each such Pool. On any Remittance Date, the
applicable Maximum Subordinated Amount for Pool I or Pool IV shall equal the
initial applicable Pool Maximum Subordinated Amount less Cumulative Realized
Losses allocated to such respective Pool through the last day of the month
preceding such Remittance Date. The applicable Pool Maximum Subordinated Amount
for Pool I or Pool IV on any date other than a Remittance Date shall be equal to
the applicable Pool Maximum Subordinated Amount as of the immediately preceding
Remittance Date (or, prior to the first Remittance Date, the initial Pool
Maximum Subordinated Amount), provided, however, that a Pool Maximum
Subordinated Amount for Pool I or Pool IV shall never be less than zero. The
Pool Maximum Subordinated Amount for Pool II and Pool III shall be $8,635,000
and $7,472,280, respectively.
POOL ORIGINAL COLLATERAL AMOUNT: For each Pool the sum of (i) the
aggregate Principal Balances of the related Mortgage Loans as of the Cut-Off
Date and (ii) the related Original Pre-Funded Amount.
POOL PRE-FUNDING EARNINGS: With respect to each Pool and the
Remittance Dates in January, February and March 1998, the actual investment
earnings earned during the period from the Closing Date through the Business Day
immediately preceding the Determination Date in January, February and March 1998
(inclusive) on that portion of the Pre-Funding Account allocated to such Pool
during such period as calculated by the Representative pursuant to Section
2.09(e) hereof.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Certificates of such Pool. Notwithstanding the
foregoing, for purposes of determining the following definitions amounts on
deposit in the Certificate Account for Pool I or Pool II allocated to the
Holders of the Auction Rate Certificates for a Remittance Date but not being
distributed on such Remittance Date pursuant to Section 6.08(f) shall be deemed
to have been so distributed on such Remittance Date and to have reduced the Pool
Principal Balance of Pool I or Pool II accordingly: (i) Excess Subordinated
Amount, (ii) Pool Subordinated Amount, (iii) Subordinated Deficiency Amount,
(iv) Subordination Increase Amount and (v) Subordination Reduction Amount.
POOL PRINCIPAL DISTRIBUTION AMOUNT: For each Pool, on any Remittance
Date, the excess of:
(X) the sum, without duplication, of the following:
(i) each payment of principal received by the
Servicer or any Subservicer (exclusive of Curtailments,
Principal Prepayments and amounts described in clause (iii)
hereof) during the related Due Period with respect to the
Mortgage Loans of the related Pool,
(ii) all Curtailments and all Principal Prepayments
received by the Servicer or any Subservicer during the related
Due Period with respect to the Mortgage Loans of the related
Pool,
(iii) the principal portion of all Insurance
Proceeds, Released Mortgaged Property Proceeds and Net
Liquidation Proceeds received by the Servicer or any
Subservicer during the related Due Period with respect to the
Mortgage Loans of the related Pool (and, with respect to the
Pool III Loans, the principal portion of all FHA Payments
received by the Claims Administrator with respect to a 90 Day
Delinquent FHA Loan during the related Due Period),
(iv) that portion of the purchase price (as indicated
in Section 2.05(b)) for any repurchased Mortgage Loan
(including Defaulted Mortgage Loans) from the related Pool
which represents principal and any Substitution Adjustments
deposited in the applicable Principal and Interest Account
with respect to such Mortgage Loans of the related Pool and
transferred to the applicable Certificate Account as of the
related Determination Date,
(v) any proceeds representing principal on the
Mortgage Loans of the related Pool received by the Trustee in
connection with the liquidation of the Mortgage Loans of the
related Pool or the termination of the Trust,
(vi) with respect to Pool I or Pool IV, the amount of
any Subordination Deficit with respect to such Pool for such
Remittance Date,
(vii) any moneys released from the Pre-Funding
Account on the October, November and December 1997 Remittance
Date as a prepayment of the Certificates of the related Pool
for such Remittance Date,
(viii) with respect to Pool I or Pool IV the amount
of any Subordination Increase Amount with respect to the
related Pool for such Remittance Date, and
(ix) with respect to Pool III, the Pool III
Accelerated Principal Distribution Amount for such
Remittance Date, OVER
(Y) the amount of any Subordination Reduction Amount with
respect to the related Pool for such Remittance Date.
POOL PROJECTED NET MONTHLY EXCESS CASHFLOW: As of any date of
calculation, with respect to Pool I and Pool IV, five times Net Monthly Excess
Cashflow relating to such Pool, as calculated pursuant to Section 6.14(b) hereof
on the Remittance Date immediately preceding such date of calculation.
POOL REMAINING AMOUNT AVAILABLE: With respect to any Pool and as of
any Remittance Date the greater of (x) zero dollars and (y)(i) the Pool
Available Amount for the related Pool minus (ii) in the case of Pool I or Pool
IV the sum of payments made with respect to the applicable Pool pursuant to
Sections 6.08(d)(X)(i) through (iv) and amounts in the Certificate Account for
Pool I allocated to the Class AF-6 Certificates but not being distributed on
such Remittance Date pursuant to Section 6.08(f), in the case of Pool II, the
sum of payments made with respect thereto pursuant to Section 6.08(d)(Y)(i)
through (xvii) and amounts on deposit in the Certificate Account for Pool II
allocated to the Holders of the Pool II Auction Rate Certificates but not being
distributed on such Remittance Date pursuant to Section 6.08(f) and in the case
of Pool III the sum of payments made with respect thereto pursuant to Section
6.08(Z)(i) through (xvii).
POOL REMITTANCE AMOUNT: As to Pool I or Pool IV and any Remittance
Date, the amount required to be distributed on such Remittance Date to the
Holders of the Certificates of such Pool, such amount being equal to the sum of
(i) the Pool Current Interest Requirement for the related Pool and, with respect
to Pool I, the Class AF-6 Supplemental Interest Amount, (ii) the Pool Principal
Distribution Amount for the related Pool, (iii) the Pool Carry- Forward Amount
for the related Pool and (iv) any amount received by the Trustee from the
Servicer or the Originator and paid to the Holders of the Certificates of the
related Pool that constitutes a Monthly Advance and that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code, as amended from time to time (11
U.S.C.), in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above
constitute Insured Payments or any portion thereof, payment of such amounts
shall be disbursed to the trustee in bankruptcy named in the final order of the
court exercising jurisdiction and not directly to any Certificateholder of the
Certificates of such Pool unless such Certificateholder has returned principal
or interest paid on the Certificates of such Pool to such trustee in bankruptcy,
in which case payment shall be disbursed to such Certificateholder.
POOL SPREAD AMOUNT STEPDOWN DATE: Means with respect to Pool II or
Pool III the later to occur of (i) the Remittance Date occurring in January 2001
and (ii) the first Remittance Date on which the aggregate Principal Balances of
the Mortgage Loans in the related Pool as of the last day of the related Due
Period is less than 50% of the Pool Original Collateral Amount for the
respective Pool.
POOL SUBORDINATED AMOUNT: For each Pool, as of any Remittance Date,
the excess, if any, of (x) the sum of (i) the aggregate Principal Balances of
the Mortgage Loans of the related Pool as of the close of business on the last
day of the Due Period relating to such Remittance Date, (ii) any amount on
deposit in the Pre-Funding Account at such time and allocated to the related
Pool and (iii) the Spread Account Portion for the related Pool, over (y) the
Pool Principal Balance of the related Pool as of such Remittance Date (after
taking into account the payment of the Pool Remittance Amount of the related
Pool on such Remittance Date, net of amounts included in clauses (X)(vi) and
(viii) and (Y) of the definition of Pool Principal Distribution Amount).
POOL I CERTIFICATE: A Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6 or Class AF-7 Certificate.
POOL I CLASS A CERTIFICATES: Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-4, Class AF-5, Class AF-6 and Class AF-7 Certificates.
POOL I INITIAL SPECIFIED SUBORDINATED AMOUNT: $22,475,000.
POOL I MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H delivered to
the Trustee, as such Exhibit may be amended from time to time.
POOL I SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be
changed in accordance with the provisions of Section 2.09(f) hereof) the greater
of (i) the Pool I Initial Specified Subordinated Amount or (ii) the difference
between (x) one-half of the aggregate Principal Balances of all Pool I Mortgage
Loans that are 90 or more days delinquent (including REO Properties) minus (y)
the Pool Projected Net Monthly Excess Cashflow for Pool I as of such date, until
the later of the date upon which principal in the amount of one-half of the Pool
Maximum Collateral Amount for Pool I has been received in respect of the Pool I
Mortgage Loans and the 30th Remittance Date following the Closing Date, and with
respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool I Initial Specified Subordinated
Amount, (ii) the Pool Amortized Subordinated Amount Requirement for Pool I or
(iii) two times the Pool I Initial Specified Subordinated Amount stated as a
percentage of the Pool Maximum Collateral Amount for Pool I times the then
current outstanding Pool Principal Balance for Pool I plus the then current
outstanding Principal Balance of the Pool I Mortgage Loans with an original term
to stated maturity of five years and a "balloon" payment due at such stated
maturity;
(b) the difference between (i) one-half of the aggregate Principal
Balances of all Pool I Mortgage Loans that are 90 or more days delinquent
(including REO Properties) minus (ii) the Pool Projected Net Monthly Excess
Cashflow for Pool I as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for
Pool I plus 15.0% of the then current outstanding Principal Balance of the Pool
I Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool
Principal Balance of Pool I for such Remittance Date and the denominator of
which is the sum of the aggregate Pool Principal Balances of each Pool for such
Remittance Date.
Notwithstanding the foregoing, the Pool I Specified Subordinated
Amount for any date shall, in no event be greater than the then applicable Pool
Maximum Subordinated Amount for Pool I.
POOL I STRIP AMOUNT: With respect to Pool I and each Remittance Date
through the Remittance Date in October 1998, the lesser of (a) the Total Monthly
Excess Cashflow for Pool I less any Pool I Subordination Deficit and (b) an
amount equal to 30 days' interest at a rate of 2.5% per annum on a notional
amount equal to the Class Principal Balance of the Class AF-7 Certificates prior
to the distributions being made on the specified Remittance Date.
POOL I TRANSACTION FEES: For any Remittance Date, the sum of the
portion of the Servicing Fee, the Contingency Fee, the Annual Expense Escrow
Amount, the premium payable to the Certificate Insurer and the Remarketing Agent
Fee allocable to Pool I.
POOL II ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance
Date, the lesser of (i) the portion, if any, of the Pool Available Amount for
Pool II remaining after payment of amounts set forth in Section 6.08(d)(Y)(i)
through (ix) inclusive, and (ii) the Subordinated Deficiency Amount for such
Remittance Date.
POOL II CERTIFICATE: A Class AV-1, Class AV-2, Class MV-1, Class MV-2
and Class BV Certificate.
POOL II CLASS A CERTIFICATES: The Class AV-1 and Class AV-2
Certificates.
POOL II CLASS B CERTIFICATES: The Class BV Certificates.
POOL II CLASS M CERTIFICATES: The Class MV-1 and Class MV-2
Certificates.
POOL II CUMULATIVE LOSS TRIGGER: Will be in effect with respect to the
Pool II Certificates after the Remittance Date on which (i) the quotient of (A)
the Pool Applied Realized Loss Amount for Pool II since the Cut-off Date over
(B) the sum of the initial Principal Balance of the Pool II Mortgage Loans as of
the Cut-off Date and the Original Pre-Funded Amount for Pool II exceeds (ii) the
following percentages as of such Distribution Date:
DISTRIBUTION DATE PERCENTAGE
February 2001-January 2002 3.50%
February 2002-January 2003 4.00%
February 2003-January 2004 4.50%
February 2004 and thereafter 5.00%
POOL II INITIAL SPECIFIED SUBORDINATED AMOUNT: $16,250,000.
POOL II MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-1 delivered
to the Trustee, as such Exhibit may be amended from time to time, which Mortgage
Loan has a Mortgage Interest Rate which adjusts on each Change Date by reference
to the LIBOR Index or the Treasury Index, as the case may be, subject to the
applicable Periodic Rate Cap and the applicable Lifetime Floor and Lifetime Cap.
POOL II ORIGINAL COLLATERAL AMOUNT: $650,000,000.
POOL II SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: With respect to any
Remittance Date, 38.0% with respect to Pool II.
POOL II SPECIFIED SUBORDINATED AMOUNT: means (a) prior to the Pool
Spread Amount Stepdown Date for Pool II, 2.5% of the Pool Original Collateral
Amount for Pool II and (b) on and after the Pool Spread Amount Stepdown Date for
Pool II, the greater of (A) 5.0% of the then aggregate Principal Balance of the
Pool II Mortgage Loans as of the last day of the related Due Period and (B) 0.5%
of the Pool Original Collateral Amount for Pool II; provided that upon the
occurrence and during the continuance of (x) a Trigger Event or a Pool II
Cumulative Loss Trigger, no stepdown may occur and (y) an S&P Trigger Event, the
Pool II Specified Subordinated Amount will equal 5.25% of the Pool Original
Collateral Amount for Pool II on or prior to January 2001 and 10.50% of the then
current aggregate Principal Balance of the Pool II Mortgage Loans as of the last
day of the related Due Period thereafter, and in any event the Pool II Specified
Subordinated Amount shall never exceed the then Class Principal Balance of the
Pool II Certificates; PROVIDED, HOWEVER, that following the Funding Period, the
Pool II Specified Subordinated Amount may be revised with the consent of the
Rating Agencies.
POOL II STRIP AMOUNT: With respect to Pool II and each Remittance Date
through the Remittance Date in July 1998, an amount equal to 30 days' interest
at a rate of 4.0% per annum on a notional amount equal to the Class Principal
Balance of the Class MV-1 Certificates prior to the distributions being made on
the specified Remittance Date.
POOL III ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance
Date, the lesser of (i) the positive difference, if any, of (x) the Total
Monthly Excess Cashflow allocated to Pool III for such Remittance Date MINUS (y)
the Interest Shortfall Carryforward Amount for the Pool III Class A Certificates
for such Remittance Date and (ii) the Subordinated Deficiency Amount for Pool
III for such Remittance Date, calculated for this purpose without giving effect
to payment of the Pool III Accelerated Principal Distribution Amount and prior
to taking into account the Pool Applied Realized Loss Amount for Pool III for
such Remittance Date.
POOL III CERTIFICATE: A Class AH-1, Class AH-2, Class AH-3, Class
AH-4, Class MH-1, Class MH-2 or Class BH Certificate.
POOL III CLASS A CERTIFICATES: The Class AH-1, Class AH-2, Class AH-3
and Class AH-4 Certificates.
POOL III CLASS A PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance
Date (a) prior to the Stepdown Date, and for any Remittance Date on or after the
Stepdown Date on which the Trigger Event for Pool III is in effect, the lesser
of (i) 100% of the Pool Principal Distribution Amount for Pool III and (ii) the
Class Principal Balance of the Pool III Class A Certificates and (b) on or after
the Stepdown Date on which the Trigger Event for Pool III is not in effect, the
excess, if any, of (i) the Class Principal Balance of the Pool III Class A
Certificates immediately prior to such Remittance Date over (ii) the lesser of
(A) 41.5% of the outstanding Principal Balance of the Pool III Loans as of the
last day of the related Due Period and (B) the outstanding Principal Balance of
the Pool III Loans as of the last day of the related Due Period MINUS
$1,000,000.
POOL III CLASS B CERTIFICATES: The Class BH Certificates.
POOL III CLASS M CERTIFICATES: The Class MH-1 and Class MH-2
Certificates.
POOL III DELINQUENCY PERIOD: [RESERVED]
POOL III INITIAL SPECIFIED SUBORDINATED AMOUNT: $11,500,000.
POOL III MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-2
delivered to the Co-Trustee, as such Exhibit may be amended from time to time.
POOL III ORIGINAL COLLATERAL AMOUNT: $200,000,000.
POOL III SENIOR ENHANCEMENT PERCENTAGE: For any Remittance Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class Principal
Balance of the Pool III Class M Certificates and the Pool III Class B
Certificates and (ii) the Spread Amount for Pool III, in each case after giving
effect to the distribution of the Pool Principal Distribution Amount for Pool
III on such Remittance Date by (y) the aggregate Principal Balance of the Pool
III Loans as of the last day of the related Due Period.
POOL III SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: 58.5%.
POOL III SPECIFIED SUBORDINATED AMOUNT: means (a) prior to the Pool
Spread Amount Stepdown Date for Pool III, 5.75% of the Original Collateral
Amount for Pool III and (b) on and after the Pool Spread Amount Stepdown Date
for Pool III, the greater of (i) 11.50% of the then aggregate Principal Balance
of the Pool III Mortgage Loans as of the last day of the related Due Period and
(ii) 0.5% of the Pool Original Collateral Amount for Pool III; provided that
upon the occurrence and during the continuance of a Trigger Event, the Pool III
Specified Subordinated Amount will equal 6.5% of the Pool Original Collateral
Amount for Pool III and in any event, the Pool III Specified Subordinated Amount
shall never exceed the then Class Principal Balance of the Pool III
Certificates; PROVIDED, HOWEVER, that following the Funding Period, the Pool III
Specified Subordinated Amount may be revised with the consent of the Rating
Agencies.
POOL IV CERTIFICATE: A Class AMF Certificate.
POOL IV CLASS A CERTIFICATES: The Class AMF Certificates.
POOL IV INITIAL SPECIFIED SUBORDINATED AMOUNT: $2,500,000.
POOL IV MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-3 delivered
to the Trustee, as such Exhibit may be amended from time to time.
POOL IV SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be
changed in accordance with the provisions of Section 2.09(f) hereof) the Pool IV
Initial Specified Subordinated Amount until the later of the date upon which
principal in the amount of one-half of the Pool Maximum Collateral Amount for
Pool IV has been received in respect of the Pool IV Mortgage Loans and the 30th
Remittance Date following the Closing Date, and with respect to each Remittance
Date thereafter, the greatest of:
(a) the lesser of (i) the Pool IV Initial Specified Subordinated
Amount, (ii) the Pool Amortized Subordinated Amount Requirement for Pool IV or
(iii) two times the Pool IV Initial Specified Subordinated Amount stated as a
percentage of the Pool Maximum Collateral Amount for Pool IV times the then
current outstanding Pool Principal Balance for Pool IV plus the then current
outstanding Principal Balance of the Pool IV Mortgage Loans with an original
term to stated maturity of five years and a "balloon" payment due at such stated
maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool IV Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool IV as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for
Pool IV plus 15% of the then current outstanding Principal Balance of the Pool
IV Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity;
(d) $500,000 times a fraction, the numerator of which is the Pool
Principal Balance for Pool IV for such Remittance Date and the denominator of
which is the sum of the aggregate Pool Principal Balances of each Pool for such
Remittance Date; or
(e) the sum of the Principal Balances of the three largest Pool IV
Mortgage Loans.
Notwithstanding the foregoing, the Pool IV Specified Subordinated
Amount for any date shall in no event be greater than the then applicable Pool
Maximum Subordinated Amount for Pool IV.
PREFERENCE AMOUNT: means any amount previously distributed to a holder
of the Certificates (other than the Trust Fund) that is recoverable and sought
to be recovered as a voidable preference by a trustee in bankruptcy pursuant to
the United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
PRE-FUNDED AMOUNT: With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance
with Section 6.02 hereof and maintained by the Trustee.
PREMIUM DEPOSIT AMOUNT: As of any Remittance Date, an amount equal to
the Monthly Premium for such Remittance Date.
PRIME RATE: The lowest prime lending rate as published in THE WALL
STREET JOURNAL on any date of determination, or if such rate is not published in
THE WALL STREET JOURNAL on any date of determination, the lowest prime lending
rate as published in the most recently available edition of THE WALL STREET
JOURNAL preceding such date of determination.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or related REO
Property, at any date of determination, (i) the principal balance of the
Mortgage Loan (or, with respect to a Low Interest Pool I Mortgage Loan, the
product of such principal balance and the percentage set forth on Exhibit T
attached hereto) outstanding as of the Cut-Off Date or as of the applicable
Subsequent Cut-Off Date relative to Subsequent Mortgage Loans or as of the
applicable substitution date relative to Qualified Substitute Mortgage Loans,
after application of principal payments received on or before such date, minus
(ii) the sum of (a) the principal portion of the Monthly Payments received
during each Due Period ending prior to the most recent Remittance Date, which
were distributed pursuant to Section 6.08 on any previous Remittance Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property (but not including the proceeds of any Insured
Payment) to the extent applied by the Servicer as recoveries of principal in
accordance with the provisions hereof, which were distributed pursuant to
Section 6.08 on any previous Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
PRIOR LIEN: With respect to any Mortgage Loan which is not a first
priority lien, each mortgage loan relating to the corresponding Mortgaged
Property having a higher priority lien.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the
meaning set forth from time to time in the definition thereof at Section
860F(a)(2) of the Code (or any successor statute thereto).
PROJECTED EXCESS SPREAD: As of any date of determination, the amount
calculated as such with respect to Pool I and Pool IV in accordance with the
Insurance Agreement.
PUD AND DE MINIMIS PUD: A planned unit development in which individual
fee title is held to the interior and exterior of the units and underlying land
and common areas, recreational facilities and streets are held in undivided
common ownership.
QUALIFIED MORTGAGE: "Qualified mortgage" shall have the meaning set
forth from time to time in the definition thereof at Section 860G(a)(3) of the
Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.05 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates (or, in the case of a
Pool II Mortgage Loan or adjustaable rate Pool IV Mortgage Loan, a Gross Margin
and Index) of not less than (and not more than two percentage points more than)
the Mortgage Interest Rate (or Gross Margin and Index) for the Deleted Mortgage
Loan, (ii) relates or relate to the same type of Residential Dwelling or
Multifamily Property, as the case may be, as the Deleted Mortgage Loan, (iii)
matures or mature no later than (and not more than one year earlier than) the
Deleted Mortgage Loan, (iv) has or have a Loan-to-Value Ratio or Loan-to-Value
Ratios at the time of such substitution no higher than the Loan-to-Value Ratio
of the Deleted Mortgage Loan at such time, (v) has or have a principal balance
or principal balances (after application of all payments received on or prior to
the date of substitution) equal to or less than the Principal Balance (prior to
the occurrence of Realized Losses) of the Deleted Mortgage Loan as of such date,
(vi) with respect to each Deleted Mortgage Loan that is a first mortgage loan,
is a first mortgage loan, (vii) satisfies or satisfy the criteria set forth from
time to time in the definition of a "qualified replacement mortgage" at Section
860G(a)(4) of the Code (or any successor statute thereto), (viii) with respect
to Pool III, is an FHA Loan if the Deleted Mortgage Loan was an FHA Loan or a
Conventional Home Improvement Loan if the Deleted Mortgage Loan was a
Conventional Home Improvement Loan and (ix) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01(b)
and 3.02.
RATING AGENCIES: Moody's, S&P and Fitch.
REALIZED LOSS: With respect to each Liquidated Mortgage Loan
(including a 90 Day Delinquent FHA Loan as to which no Claim is eligible to be
filed with the FHA), an amount (not less than zero or greater than the related
outstanding principal balance as of the date of the final liquidation) equal to
the outstanding principal balance of the Mortgage Loan as of the date of such
liquidation, minus the Net Liquidation Proceeds relating to such Liquidated
Mortgage Loan (such Net Liquidation Proceeds to be applied first to the
principal balance of the Liquidated Mortgage Loan and then to interest thereon).
With respect to each 90 Day Delinquent FHA Loan for which a Claim is eligible to
be filed with the FHA, the Realized Loss, if any, shall be determined as of the
Determination Date following the date the related FHA Payment is received by the
Co-Trustee, and shall be an amount (not less than zero or greater than the
related outstanding principal balance as of the date the Claim relating to such
FHA Loan is filed with the FHA) equal to the outstanding principal balance of
the FHA Loan as of the date of such filing, minus amounts paid from the
Certificate Account relating to such 90 Day Delinquent FHA Loan (such amounts to
be applied first to the principal balance of such FHA Loan and then to interest
thereon). With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the Realized Loss shall be calculated as the difference
between the principal balance of the Mortgage Loan immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to any Mortgage Loan made to a Mortgagor
who has filed a petition in bankruptcy under the United States Bankruptcy Code,
as amended from time to time (11 U.S.C.), a Realized Loss shall be deemed to
have occurred whenever a withdrawal is made from the Principal and Interest
Account in respect of such Mortgage Loan pursuant to Section 5.04(c), and shall
be equal to the amount of such withdrawal.
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, February
28, 1998.
REFERENCE BANKS: Leading banks selected by the Trustee (or, with
respect to the Auction Rate Certificates, the Auction Agent or the Remarketing
Agent, as the case may be) and engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, (ii) which have been designated by the Trustee (or, with respect to
the Auction Rate Certificates, the Auction Agent or the Remarketing Agent, as
the case may be) to the Representative, the Servicer and the Claims
Administrator and (iii) which are not affiliates of the Representative.
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 Pool I, Pool II, Pool
III and Pool IV Certificates, including the Prospectus dated December 23, 1997
and the Prospectus Supplement dated December 29, 1997.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer and/or Representative with respect to (i) the payment of
any tax reimbursable pursuant to Section 5.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (iii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iv) any other amounts reimbursable to the Servicer or
the Representative prior to a distribution to the Class R Certificateholders
pursuant to this Agreement.
RELATED PAYMENTS: As described in Section 5.15(c).
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan,
proceeds received by the Servicer in connection with (a) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(b) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise, which are not
released to the Mortgagor in accordance with applicable law, the Servicer's
customary second mortgage servicing procedures and this Agreement.
REMAINDER EXCESS SPREAD AMOUNT: As of any Remittance Date, the amount
equal to the excess of the related Excess Spread over the related Monthly Excess
Spread, which amount shall be zero.
REMARKETING AGENT: Morgan Stanley & Co. Inc., and its successors and
assigns.
REMARKETING AGENT FEE: The meaning set forth in the Interest Rate
Services Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMIC I: The assets constituting the Trust Fund consisting of the
REMIC II Regular Certificates.
REMIC II: The assets constituting the Trust Fund other than the
Pre-Funding Account, the Capitalized Interest Account and the Certificate
Insurance Policy for the Pool I Certificates. Expenses and fees of the Trust
Fund shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As designated in Section 4.1.
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
January 1998; provided, however, that in no event shall the Remittance Date
occur less than three Business Days following the Determination Date.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure. The proceeds of any REO Disposition constitute part of the
definition of Liquidation Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATION LETTER: The Letter of Representations executed by the
Representative, the Trustee and the Depository with respect to the Class A,
Class M and Class B Certificates.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and
its successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of
FHA insurance available with respect to all FHA Loans. The Reserve Amount
initially will equal at least 10% of the aggregate Principal Balance of the FHA
Loans as of the Cut-Off Date and will decline as set forth in 24 C.F.R. ss.
201.32(b).
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single
Family Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller-Servicers' Guide) to the extent that it constitutes
real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee or the Co-
Trustee, any officer assigned to the Corporate Trust Department, and when used
with respect to the Co-Trustee, any officer assigned to the Corporate Trust
Department, in each case including any Vice President, Assistant Vice President,
any Assistant Secretary, any trust officer or any other officer of the Trustee
or Co-Trustee customarily performing functions similar to those performed by any
of the above designated officers and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject. When used with respect
to the Representative, an Originator or any other person, any Vice President,
Assistant Vice President, the Treasurer, or any Secretary or Assistant
Secretary.
ROW HOUSE: A single family dwelling unit attached to another dwelling
unit by common walls.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
SCHEDULE OF MORTGAGE LOANS: The schedule of Mortgage Loans attached to
the related Subsequent Transfer Agreement.
SENIOR PERCENTAGE: For any Remittance Date (a) for the Pool I and Pool
IV Class A Certificates, 100% and (b) for the Pool II Class A Certificates (i)
prior to the Class B Pool Cross-over Date for Pool II and for any Remittance
Date on or after the Class B Pool Cross-over Date for Pool II on which the
Trigger Event with respect to such Pool is in effect, 100%, or (ii) on or after
the Class B Pool Cross-over Date for Pool II on which the Trigger Event with
respect to such Pool is not in effect, a fraction, expressed as a percentage,
the numerator of which is the sum of the Class Principal Balances of the Pool II
Class A and Class M Certificates as of the immediately preceding Remittance Date
and the denominator of which is the sum of the Class Principal Balances of the
Pool II Class A, Class M and Class B Certificatesas of the immediately preceding
Remittance Date.
SERIES: 1997-D.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.10.
SERVICING ACCOUNT: The Servicing Account established and maintained by
the Servicer in accordance with Section 6.15 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Fund and
Certificateholders shall have no rights thereto.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Mortgage Interest Rate, except that any amount of such interest accrued
at a rate in excess of the weighted average Remittance Rate of the Pool I
Certificates for a Pool I Mortgage Loan, the weighted average Remittance Rate of
the Pool II Certificates for a Pool II Mortgage Loan, the weighted average
Remittance Rate of the Pool III Certificates for a Pool III Mortgage Loan or the
Class AMF Remittance Rate for a Pool IV Mortgage Loan, with respect to the
Remittance Date on which the Net Liquidation Proceeds will be distributed shall
be reimbursable only from Excess Proceeds.
SERVICING DELINQUENCY TRIGGER: Will be deemed to have occurred on any
date of determination (i) on or prior to December 31, 2001, if the Total
Expected Losses (as defined below) of the Pool I, Pool II, Pool III and Pool IV
Mortgage Loans, exceed 9.00%, 13.25%, 20.00% and 9.00%, respectively, of the
aggregate Principal Balances of the Pool I, Pool II, Pool III and Pool IV
Mortgage Loans as of the end of the first Due Period immediately following the
Funding Period and (ii) after December 31, 2001, but on or prior to December 31,
2006, if the Total Expected Losses of the Pool I, Pool II, Pool III and Pool IV
Mortgage Loans exceed 13.50%, 19.875%, 30.00% and 13.50% of the aggregate
Principal Balances of the Pool I, Pool II, Pool III and Pool IV Mortgage Loans,
respectively, as of the end of the first Due Period immediately following the
Funding Period.
For purposes of the foregoing definition, the "Total Expected Losses"
of the Pool I, Pool II, Pool III and Pool IV Mortgage Loans on any date of
determination shall equal the sum of (i) the cumulative Realized Losses on the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans from the Closing Date
through and including such date of determination and (ii) the Delinquency
Calculation (as defined below).
For purposes of the foregoing definition, the "Delinquency
Calculation" on any date of determination shall equal the sum of:
(i) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 30-59 days delinquent
multiplied by 10.75%, 10.75%, 25.00% and 10.75%, respectively;
(ii) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 60-89 days delinquent
multiplied by 21.50%, 21.50%, 50.00% and 21.50%, respectively;
and
(iii) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 90 days or more delinquent
multiplied by 43.00%, 43.00%, 100.00% and 43.00%,
respectively.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly only from the amounts
received in respect of interest on such Mortgage Loan, shall accrue at the rate
of .25% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer or Claims Administrator
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and signature appears on a list of servicing officers
furnished to the Trustee or Co-Trustee by the Servicer or Claims Administrator,
as such list may from time to time be amended.
SHORTFALL AMOUNTS: Means, as of any Remittance Date, (a) with respect
to Pool II, the sum of (i) the Interest Shortfall Carryforward Amounts with
respect to the Class MV-1, Class MV-2 and Class BV Certificates and (ii) the
Class MV-1, Class MV-2 and Class BV Realized Loss Amounts and (b) with respect
to Pool III, the sum of (i) the Interest Shortfall Carryforward Amounts with
respect to the Class MH-1, Class MH-2 and Class BH Certificates and (ii) the
Class MH-1, Class MH-2 and Class BH Realized Loss Amounts.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not
attached in any way to any other unit.
SINGLE FAMILY LOANS: Mortgage Loans secured by Mortgaged Property
consisting of one-to-four family units.
SIXTY-DAY DELINQUENCY RATIO: Means, as of any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding Principal Balances of all Mortgage Loans in a Pool that were
delinquent 60 days or more as of the end of the prior Due Period (including
Mortgage Loans in respect of which the related real estate has been foreclosed
upon but is still in inventory), and the denominator of which is the sum of the
Principal Balances of all the Mortgage Loans in such Pool as of the end of the
immediately preceding Due Period.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, or any successor thereto.
S&P TRIGGER EVENT: An S&P Trigger Event will be in effect on a
Remittance Date for Pool II if the Sixty-Day Delinquency Ratio as of such
Remittance Date exceeds 50% of the Pool II Senior Specified Enhancement
Percentage.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIAL REMITTANCE DATE: March 31, 1998.
SPECIFIED SUBORDINATED AMOUNT: As applicable, the Pool I Specified
Subordinated Amount, the Pool II Specified Subordinated Amount, the Pool III
Specified Subordinated Amount or the Pool IV Specified Subordinated Amount.
SPREAD ACCOUNT: The Spread Account that may be established and
maintained with the Trustee in accordance with Section 6.05 hereof.
SPREAD ACCOUNT PORTION: With respect to Pool I or Pool IV and any
Remittance Date, an amount equal to the product of (i) the amount on deposit in
the Spread Account immediately prior to such Remittance Date (other than amounts
deposited therein pursuant to Section 6.14(b)(iv)) and (ii) a fraction, the
numerator of which is the Initial Pool Spread Account Deposit for such Pool and
the denominator of which is the Aggregate Initial Spread Account Deposit.
SPREAD AMOUNT: Means for any Remittance Date and any Pool the excess,
if any, of (i) the aggregate Principal Balances of the Mortgage Loans in such
Pool as of the last day of the immediately preceding Due Period and any amounts
on deposit in the Pre-Funding Account with respect to such Pool over (ii) the
aggregate Class Principal Balances of the related Pool of Certificates (after
taking into account all distributions of principal on such Remittance Date).
STARTUP DAY: The day designated as such pursuant to Section 2.06
hereof.
STEPDOWN DATE: The earlier to occur of (i) the later to occur of (x)
the Remittance Date in January 2001 and (y) the first Remittance Date on which
the Pool III Senior Enhancement Percentage (after taking into account
distributions of principal on such Remittance Date) is greater than or equal to
the Pool III Senior Specified Enhancement Percentage and (ii) the Remittance
Date on which the Class Principal Balance of the Pool III Class A Certificates
has been reduced to zero.
SUBORDINATED AMOUNT: For each Pool, the Pool Subordinated Amount for
such Pool.
SUBORDINATED DEFICIENCY AMOUNT: With respect to any Pool and
Remittance Date, the excess, if any, of (i) the Specified Subordinated Amount
applicable to such Pool and Remittance Date over (ii) with respect to (a) Pool I
or Pool IV, the Subordinated Amount applicable to such Pool and Remittance Date
prior to taking into account the payment of any amounts calculated pursuant to
clauses (X)(vi) and (viii) and (Y) of the definition of Pool Principal
Distribution Amount with respect to such Remittance Date and (b) Pool II or Pool
III, the then current Spread Amount for the applicable Pool, after giving effect
to all payments previously made on such Remittance Date.
SUBORDINATION DEFICIT: With respect to Pool I or Pool IV and any
Remittance Date, the amount, if any, by which (x) the Pool Principal Balance
with respect to such Pool after taking into account the payment of the Pool
Remittance Amount for such Pool on such Remittance Date in the manner described
herein (other than amounts payable with respect to clause (X)(vi) of the
definition of Pool Principal Distribution Amount) exceeds (y) the sum of (i) the
aggregate Principal Balances of the Mortgage Loans of the related Pool as of the
close of business on the last day of the Due Period relating to such Remittance
Date, (ii) any Pre-Funding Account moneys allocable to the Mortgage Loans of
such Pool as of the close of business on the last day of the related Due Period
and (iii) the amount, if any, in the Spread Account and allocated to such Pool.
SUBORDINATION INCREASE AMOUNT: With respect to any Pool and any
Remittance Date, the lesser of (i) the Subordinated Deficiency Amount as of such
Payment Date (after taking into account the payment of the Pool Remittance
Amount for such Pool on such Remittance Date (except for any Subordination
Increase Amount)) and (ii) the aggregate amount of Net Monthly Excess Cashflow
available to be allocated to such Pool pursuant to Section 6.14(b)(ii) on such
Remittance Date.
SUBORDINATION REDUCTION AMOUNT: With respect to any Pool and any
Remittance Date, an amount equal to the lesser of (x) the Excess Subordinated
Amount for such Pool and Remittance Date and (y) the sum of the amounts
calculated pursuant to clauses (X)(i) through (v), inclusive, and (vii) and
(viii) of the definition of Pool Principal Distribution Amount with respect to
such Pool and Remittance Date.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
Mortgage Loans which are transferred and assigned to the Trust Fund pursuant to
the related Subsequent Transfer Agreement.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
pursuant to Section 2.09, which shall be listed on the Schedule of Mortgage
Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT POOL I MORTGAGE LOANS: Subsequent Mortgage Loans assigned
to Pool I.
SUBSEQUENT POOL II MORTGAGE LOANS: Subsequent Mortgage Loans assigned
to Pool II.
SUBSEQUENT POOL III MORTGAGE LOANS: Subsequent Mortgage Loans assigned
to Pool III.
SUBSEQUENT POOL IV MORTGAGE LOANS: Subsequent Mortgage Loans assigned
to Pool IV.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee (and, with
respect to Pool III Mortgage Loans, the Co-Trustee) and the Representative, by
which Subsequent Mortgage Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each
Subsequent Transfer Agreement.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 5.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and, in the case of Pool I or
Pool IV Mortgage Loans, to the Certificate Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Mortgage Loans, and (ii) in the case of Pool I and Pool IV Mortgage
Loans, the interest portion of any unreimbursed Insured Payments made by the
Certificate Insurer related to such Mortgage Loan.
TARGETED BALANCE: For the Class AF-3, Class AF-4 and Class AF-5
Certificates, the predetermined principal balance for each such Class of
Certificates for each Remittance Date as set forth in the Targeted Balance
Schedule attached as Schedule III hereto.
TAX MATTERS PERSON: The Person or Persons designated from time to time
to act as the "tax matters person" (within the meaning of the REMIC Provisions)
of the Trust Fund.
TAX MATTERS PERSON RESIDUAL INTEREST: The interest in each Class of
Class R Certificates acquired by the Tax Matters Person pursuant to Section
2.06(d) hereof.
TAX RETURN: The federal income tax return on Internal Revenue Service
Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TELERATE PAGE 3750: The display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one
roof.
TITLE I: Section 2 of Title I of the National Housing Act and the
rules and regulations promulgated thereunder.
TOTAL MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(a) hereof.
TREASURY INDEX: The applicable One-Year Constant Maturity Treasury
Index as published by the Federal Reserve Board in the applicable Federal
Reserve Board Statistical Release No. H.15.
TRIGGER EVENT: Will be in effect on a Remittance Date for Pool II if
the Sixty- Day Delinquency Ratio as of such Remittance Date exceeds 40% of the
Pool Senior Specified Enhancement Percentage for Pool II. A "Trigger Event" will
be in effect on a Remittance Date for Pool III if either (i) the Sixty-Day
Delinquency Ratio with respect to Pool III Mortgage Loans as of such Remittance
Date exceeds 50% of the Pool III Senior Enhancement Percentage; or (ii) both (A)
either (x) the Weighted Average Five-Month Sixty-Day Delinquency Ratio with
respect to Pool III Mortgage Loans as of such Remittance Date exceeds 9% or (y)
the Cumulative Realized Losses for Pool III Mortgage Loans as of such Remittance
Date exceed $24,000,000; and (B) either (x) the Weighted Average Five-Month
Sixty-Day Delinquency Ratio with respect to Pool III Mortgage Loans as of such
Remittance Date exceeds 15% or (y) the Cumulative Realized Losses for Pool III
Mortgage Loans as of such Remittance Date exceed $8,000,000.
TRUST FUND: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
such Mortgage Loans as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto and all proceeds thereof, (ii) such
assets (including any Permitted Instruments) as from time to time are identified
as REO Property relating to Mortgage Loans or are deposited in or constitute the
Certificate Accounts, Principal and Interest Account, Expense Account,
Pre-Funding Account, Capitalized Interest Account, Spread Account, FHA Premium
Account and Insurance Accounts, (iii) the Trustee's and the Co-Trustee's rights
under all insurance policies with respect to the Mortgage Loans required to be
maintained pursuant to this Agreement and any related Insurance Proceeds, (iv)
the Certificate Insurance Policies, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds, including all earnings thereon and proceeds
thereof. The Mortgage Loans included from time to time in the Trust Fund shall
be divided into four separate sub-trusts, one for the Pool I Mortgage Loans, one
for the Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for
the Pool IV Mortgage Loans.
TRUSTEE: The Bank of New York, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee or the
Custodian pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: Means with respect to Pool II or Pool III
for any Class of the respective Class M or Class B Certificates as of any
Remittance Date, the excess of (x) the aggregate cumulative amount of related
Pool Applied Realized Loss Amounts with respect to such Class for all prior
Remittance Dates over (y) the aggregate, cumulative amount of related Realized
Loss Amounts with respect to such Class for all prior Remittance Dates.
WEIGHTED AVERAGE FIVE-MONTH SIXTY-DAY DELINQUENCY RATIO: Means, as of
any Remittance Date, the average of the Sixty-Day Delinquency Ratios for such
Remittance Date and for each of the four Remittance Dates immediately preceding
such Remittance Date, weighted by the sum of the Principal Balances of the
applicable Pool of Mortgage Loans as of the ends of the related Due Periods.
<PAGE>
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND; PRIORITY AND
SUBORDINATION OF OWNERSHIP INTERESTS
(a) The Originators do hereby sell, transfer, assign, set over and
convey to the Trustee (or, with respect to the Pool III Mortgage Loans and the
Reserve Amount, the Co-Trustee) without recourse and for the benefit of the
Certificateholders of the related Pool, subject to the terms of this Agreement,
all of the right, title and interest of the Originators in and to the Initial
Pool I, Initial Pool II, Initial Pool III and Initial Pool IV Mortgage Loans,
all rights under the Reserve Amount relating to the Pool III Mortgage Loans and
all other assets included or to be included in the Trust Fund. The Mortgage
Loans that from time to time constitute part of the Trust Fund shall be divided
into four separate sub-trusts, one for the Pool I Mortgage Loans, one for the
Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for the Pool
IV Mortgage Loans.
(b) The rights of the Certificateholders to receive payments with
respect to the Mortgage Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. In this regard, all rights of the Class R Certificateholders to
receive payments in respect of the Class R Certificates and all ownership
interests of the Class R Certificateholders in and to such payments, are subject
and subordinate to the preferential rights of the Pool I, Pool II, Pool III and
Pool IV Certificateholders and Class X Certificateholders, to receive payments
in respect of the Pool I, Pool II, Pool III and Pool IV Certificates and Class X
Certificates, repectively, and the ownership interests of the Pool I, Pool II,
Pool III and Pool IV Certificateholders and Class X Certificateholders in such
payments, to the extent set forth herein. In accordance with the foregoing, the
ownership interest of the Class R Certificateholders in amounts deposited in the
Principal and Interest Account and any Account from time to time shall not vest
unless and until such amounts are distributed in respect of the Class R
Certificates in accordance with the terms of this Agreement.
Section 2.02 POSSESSION OF MORTGAGE FILES.
(a) Upon the issuance of the Certificates, the ownership of each
Mortgage Note, the Mortgage and the contents of the related Mortgage File
relating to the Initial Mortgage Loans is, and upon each Subsequent Transfer
Date the ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File relating to the applicable Subsequent Mortgage Loans will
be, vested in the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) for the benefit of the Certificateholders of the related Pool.
(b) Pursuant to Section 2.04, the Originators have delivered or caused
to be delivered each Trustee's Mortgage File relating to the Initial Mortgage
Loans to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) and on each Subsequent Transfer Date the Originators will deliver or
cause to be delivered each Trustee's Mortgage File relating to the related
Subsequent Mortgage Loans to the Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian).
Section 2.03 BOOKS AND RECORDS.
The sale of each Mortgage Loan shall be reflected on the Originator's
balance sheets and other financial statements as a sale of assets by each
Originator. Nothing in this Agreement, however, shall be deemed to create a
transfer of an FHA Loan in violation of Title I or the FHA Regulations. The
Originators shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders.
Section 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this
Agreement, has delivered or caused to be delivered to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) the Certificate Insurance
Policies for the Pool I and Pool IV Mortgage Loans and each of the following
documents for each Initial Mortgage Loan and (ii) on each Subsequent Transfer
Date, will deliver or cause to be delivered to the Trustee (or, with respect to
the Pool III Mortgage Loans, the Custodian) each of the following documents for
each Subsequent Mortgage Loan originated by such Originator:
(a) The original Mortgage Note, endorsed "Pay to the order of holder"
or "Pay to the order of __________________" and signed, by facsimile or manual
signature, in the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of recording
thereon, (ii) a copy of the Mortgage certified as a true copy by a Responsible
Officer where the original has been transmitted for recording until such time as
the original is returned by the public recording office or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(c) Either: (i) the original Assignment of Mortgage from the Person
delivering such Assignment to "The Bank of New York, as Trustee under the
Pooling and Servicing Agreement dated as of November 30, 1997, 1997-D" (or, with
respect to the Pool III Mortgage Loans, to "First Union Trust Company, National
Association, as Co-Trustee under the Pooling and Servicing Agreement dated as of
November 30, 1997, 1997-D") with evidence of recording thereon (provided,
however, that where permitted under the laws of the jurisdiction wherein the
Mortgaged Property is located, the Assignment of Mortgage may be effected by one
or more blanket assignments for Mortgage Loans secured by Mortgaged Properties
located in the same county), or (ii) a copy of such Assignment of Mortgage
certified as a true copy by a Responsible Officer where the original has been
transmitted for recording (provided, however, that where the original Assignment
of Mortgage is not being delivered to the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian), each such Responsible Officer may complete
one or more blanket certificates attaching copies of one or more Assignments of
Mortgage relating to the Mortgages originated by the related Originator);
(d) (X) Except with respect to the FHA Loans (i) the original policy
of title insurance or, if such policy has not yet been delivered by the insurer,
the commitment or binder to issue same, or if the original principal balance of
the Mortgage Loan was less than or equal to $15,000 or the Mortgage Loan was not
originated by the Originators, other evidence of the status of title, which
shall consist of an attorney's opinion of title or certificate of title, a
preliminary title report, a property search, a title search, a lot book report,
a property information report or a report entitled "prelim" or "PIRT" (property
information report), and (ii) proof of hazard insurance in the form of a hazard
insurance policy or hazard insurance policy endorsement that names the related
Originator, its successors and assigns, as a mortgagee/loss payee, and, if such
endorsement does not show the amount insured by the related hazard insurance
policy, some evidence of such amount and (Y) with respect to the FHA Loans, the
written Mortgage Loan application, title report, credit reconciliation
worksheet, credit investigation receipts and approval sheet;
(e) Either: (i) originals of all intervening assignments, if any,
showing a complete chain of title from the originator to the Person delivering
such assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments certified by the
public recording office in any instances where the original recorded assignments
have been lost;
(f) Originals of all assumption and modification agreements, if any;
and
(g) Except with respect to the FHA Loans and certain Mortgage Loans
with original principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Mortgage Loan with photographs of
the subject property and of comparable properties (if available), constituting
evidence sufficient to indicate that the Mortgaged Property relates to a
Residential Dwelling (or, with respect to Multifamily Loans, a Multifamily
Property) and identifying the type thereof.
The Originator shall, within five Business Days after the receipt
thereof, and in any event, within one year of the Closing Date (or with respect
to the Subsequent Mortgage Loans, within one year of the related Subsequent
Transfer Date), deliver or cause to be delivered to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian): (a) the original
recorded Mortgage in those instances where a copy thereof certified by a
Responsible Officer was delivered to the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian); (b) the original recorded Assignment of
Mortgage to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee), which, together with any intervening assignments of Mortgage,
evidences a complete chain of title from the originator to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) in those instances where
copies thereof certified by a Responsible Officer were delivered to the Trustee
(or, with respect to the Pool III Mortgage Loans, the Custodian); (c) any
intervening assignments of Mortgage in those instances where copies thereof
certified by a Responsible Officer were delivered to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian); and (d) except with
respect to the Pool III Mortgage Loans, the title insurance policy, or, where no
such policy is required to be provided, the other evidence of title and hazard
insurance required in clause (d) above. Notwithstanding anything to the contrary
contained in this Section 2.04, in those instances where the public recording
office retains the original Mortgage, Assignment of Mortgage or the intervening
assignments of the Mortgage after it has been recorded, the Originator shall be
deemed to have satisfied its obligations hereunder upon delivery to the Trustee
(or, with respect to the Pool III Mortgage Loans, the Custodian) of a copy of
such Mortgage, Assignment of Mortgage or assignments of Mortgage certified by
the public recording office to be a true copy of the recorded original thereof.
From time to time the Originator may forward or cause to be forwarded to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
additional original documents evidencing an assumption or modification of a
Mortgage Loan. All Mortgage Loan documents held by the Trustee (or, with respect
to the Pool III Mortgage Loans, the Custodian) as to each Mortgage Loan are
referred to herein as the "Trustee's Mortgage File."
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE AND CUSTODIAN OF THE TRUST FUND;
CERTAIN SUBSTITUTIONS; CERTIFICATION BY TRUSTEE AND CUSTODIAN.
(a) The Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian, as agent for the Co-Trustee) agrees to execute and deliver on the
Closing Date with respect to the Initial Mortgage Loans, and on each Subsequent
Transfer Date with respect to the related Subsequent Mortgage Loans, an
acknowledgment of receipt of, for each Mortgage Loan, an Assignment of Mortgage
or certified copy thereof, and a Mortgage Note, in the form attached as Exhibit
F hereto, and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of the Trust Fund and delivered to the Trustee, as Trustee in trust
upon (or, with respect to the Pool III Mortgage Loans, to the Custodian, as
agent for the Co-Trustee) and subject to the conditions set forth herein for the
benefit of the Certificateholders. The Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) agrees, for the benefit of the
Certificateholders, to review each Trustee's Mortgage File relating to the
Initial Mortgage Loans delivered to it within 60 days after the Closing Date and
each Trustee's Mortgage File relating to the Subsequent Mortgage Loans delivered
to it within 60 days after the related Subsequent Transfer Date (or, with
respect to any Qualified Substitute Mortgage Loan, within 45 days after the
assignment thereof) and, on each such date, to deliver to the Representative,
the Servicer and, with respect to the Pool I and Pool IV Mortgage Loans, the
Certificate Insurer a certification in the form attached hereto as Exhibit F-1
to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), with such exceptions, if any, as identified therein (i) all
documents required to be delivered to it pursuant to this Agreement are in its
possession (other than items listed in Section 2.04(d)(ii)), (ii) such documents
(other than items listed in Section 2.04(d)(ii)) have been reviewed by it and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Mortgage Loan Schedule
accurately reflects the information set forth in the Trustee's Mortgage File,
and (iv) each Mortgage Note has been endorsed as provided in Section 2.04 of
this Agreement. Further, for each Mortgage Loan (other than the Pool III
Mortgage Loans) with an original principal balance in excess of $15,000 for
which the documents in the possession of the Trustee indicate that the related
Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with originating such Mortgage Loan, the
Trustee shall verify whether the Trustee's Mortgage File shows that such
Mortgage Loan, (A) had an original principal balance not in excess of $35,000,
and (B) has a Loan-to Value Ratio less than 50% (based solely on the LTV
included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form
1004 was performed by the related Originator within one year prior to the
origination of such Mortgage Loan. The Trustee and the Custodian shall be under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Within 375 days after the Closing
Date, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) shall deliver to the Servicer, the Representative, the Certificate
Insurer (with respect to the Pool I and Pool IV Mortgage Loans) and any
Certificateholder who requests a copy from the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) a final certification in the form
attached hereto as Exhibit G evidencing, if such be the case, the completeness
of the Trustee's Mortgage Files (other than items listed in Section
2.04(d)(ii)).
(b) If the Certificate Insurer (with respect to the Pool I and Pool IV
Mortgage Loans) or the Trustee (or, with respect to the Pool III Mortgage Loans,
the Custodian) during the process of reviewing the Trustee's Mortgage Files
finds any document constituting a part of a Trustee's Mortgage File which is not
properly executed, has not been received, is unrelated to a Mortgage Loan
identified in the Mortgage Loan Schedule, or does not conform in a material
respect to the requirements of Section 2.04 or the description thereof as set
forth in the Mortgage Loan Schedule, the Certificate Insurer (with respect to
the Pool I and Pool IV Mortgage Loans) or the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) shall promptly so notify the Servicer,
the Representative and the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian) or the Certificate Insurer (with respect to the Pool I and
Pool IV Mortgage Loans), respectively. In performing any such review, the
Trustee and the Custodian may conclusively rely on the related Originator as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's (or, with respect to the Pool III
Mortgage Loans, the Custodian's) review of the Mortgage Files is limited solely
to confirming that the documents listed in Section 2.04 (other than the items
listed in Section 2.04(d)(ii)) appear on their face to have been executed and
received and to relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, and to verify that each Mortgaged Property appears from the
information contained in the Trustee's Mortgage File to be a Residential
Dwelling (or, with respect to the Multifamily Loans, a Multifamily Property).
The Representative agrees to use reasonable efforts to remedy a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Certificate Insurer, the Trustee or the Custodian. If, however, within 60
days after the Trustee's or the Custodian's notice to it respecting such defect
the Representative has not remedied the defect and the defect materially and
adversely affects the interest of the Certificateholders in the related Mortgage
Loan or the interests of the Certificate Insurer, the Representative will (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of the Mortgage Loan as of the date of purchase, before the occurrence of
Realized Losses, if any, plus 30 days' interest (or, in the case of a Pool II
Mortgage Loan, the actual number of days during the related interest period for
the Pool II Certificates) on such Principal Balance, computed at the weighted
average Class Adjusted Mortgage Loan Remittance Rates for the Pool I
Certificates with respect to a Pool I Mortgage Loan, the weighted average Class
Adjusted Mortgage Loan Remittance Rates for the Pool II Certificates, with
respect to a Pool II Mortgage Loan, the weighted average Class Adjusted Mortgage
Loan Remittance Rates for the Pool III Certificates, with respect to a Pool III
Mortgage Loan or the Class Adjusted Mortgage Loan Remittance Rate for the Pool
IV Certificates with respect to a Pool IV Mortgage Loan, as the case may be, as
of the next succeeding Determination Date, plus any accrued unpaid Servicing
Fees, Contingency Fees, Monthly Advances and Servicing Advances reimbursable to
the Servicer, plus the interest portion of any unreimbursed Insured Payments
made by the Certificate Insurer related to a Pool I or Pool IV Mortgage Loan,
which purchase price shall be deposited in the applicable Principal and Interest
Account on the next succeeding Determination Date except for the amount
described above relating to unreimbursed Insured Payments on a Pool I or Pool IV
Mortgage Loan, which shall be paid directly by the Representative to the
Certificate Insurer.
(c) Upon receipt by the Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) of a certification of a Servicing Officer of the
Servicer of such substitution or purchase and the deposit of the amounts
described above in the applicable Principal and Interest Account (which
certification shall be in the form of Exhibit J hereto), the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) shall release to the
Servicer for release to the Representative the related Trustee's Mortgage File
and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) shall execute, without recourse, and deliver such instruments of
transfer necessary to transfer such Mortgage Loan to the Representative
including, without limitation, for each FHA Loan, an FHA Transfer of Note Report
to be filed with the FHA. All costs of any such transfer shall be borne by the
Servicer.
If requested by either the Representative, the Servicer or the
Certificate Insurer, on the Remittance Date in June of each year, commencing
1998, the Trustee (and, with respect to the Pool III Mortgage Loans, the
Custodian) shall deliver to the Representative, the Servicer and the Certificate
Insurer a certification detailing all transactions with respect to the Mortgage
Loans for which the Trustee or the Custodian holds a Trustee's Mortgage File
pursuant to this Agreement during the prior calendar year; provided, however,
that any certification requested by the Certificate Insurer shall detail only
those transactions relating to Pool I and Pool IV Mortgage Loans. Such
certification shall list all Trustee's Mortgage Files which were released by or
returned to the Trustee or the Custodian during the prior calendar year, the
date of such release or return, the reason for such release or return, and the
person to whom the Trustee's Mortgage File was released or the person who
returned the Trustee's Mortgage File.
Section 2.06 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF
STARTUP DAY.
(a) As of the Startup Day, all Classes of Certificates except for the
Class R-1 and Class R-2 Certificates are hereby designated as the "regular
interests" in REMIC I and the Class R-1 Certificates are designated the single
class of "residual interests" in REMIC I for the purposes of the REMIC
Provisions. As of the Startup Day, the REMIC II Regular Certificates are hereby
designated as the "regular interests" in REMIC II and the Class R-2 Certificates
are designated the single class of "residual interests" in REMIC II for the
purposes of the REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code. The latest possible
maturity date of the REMIC II Regular Certificates is April 15, 2029.
(c) The latest possible maturity dates of the Pool I, Pool II, Pool
III and Pool IV Certificates and the Class X Certificates are as follows:
Latest Possible Latest Possible
CLASS MATURITY CLASS MATURITY
AF-1 July 15, 2006 MV-2 April 15, 2029
AF-2 April 15, 2010 BV April 15, 2029
AF-3 November 15, 2021 AH-1 July 15, 2008
AF-4 September 15, 2024 AH-2 October 15, 2010
AF-5 December 15, 2038 AH-3 March 15, 2017
AF-6 December 15, 2038 AH-4 March 15, 2024
AF-7 December 15, 2038 MH-1 March 15, 2024
AV-1 October 15, 2026 MH-2 March 15, 2024
AV-2 October 15, 2026 BH March 15, 2024
MV-1 April 15, 2027 AMF April 15, 2029
(d) The Servicer, at the direction of the Originators, shall acquire
and retain a 0.01% Percentage Interest in each Class of Class R Certificates so
long as it shall act as Tax Matters Person of the Trust Fund, except that, when
the Trustee is acting as successor Servicer, the Representative will hold the
Tax Matters Person Residual Interest until an entity is appointed to succeed the
Trustee as Servicer.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust Fund shall be resolved in a manner that preserves
the validity of the election that each of REMIC I and REMIC II be treated as a
REMIC.
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans
(other than the Pool III Mortgage Loans) and the delivery to it of the Trustee's
Mortgage Files relating to the Initial Mortgage Loans (other than the Pool III
Mortgage Loans), the Co-Trustee acknowledges the assignment to it of the Pool
III Mortgage Loans and the delivery to the Custodian of the Trustee's Mortgage
Files relating to the Initial Pool III Mortgage Loans and, concurrently with
such delivery, the Trustee has authenticated or caused to be authenticated and
delivered to or upon the order of the Representative on behalf of the
Originators, in exchange for the Initial Mortgage Loans, the Certificate
Insurance Policies (in the case of Pool I and Pool IV) the Trustee's Mortgage
Files and the other assets included in the definition of the Trust Fund,
Certificates duly authenticated by the Trustee in authorized denominations
evidencing the entire ownership of the Trust Fund.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE, CO-TRUSTEE AND
CUSTODIAN.
The fees and expenses of the Trustee, Co-Trustee and Custodian
including (i) the annual fees of the Trustee, Co-Trustee and Custodian, payable
annually in advance, and subject to rebate to the Servicer as additional
servicing compensation hereunder for any fraction of a year in which this
Agreement terminates, (ii) any other fees and expenses to which the Trustee,
Co-Trustee or Custodian is entitled, and (iii) reimbursements to the Servicer
for any advances made by the Servicer to the applicable Expense Accounts
pursuant to Section 6.03 hereof, shall be paid from the Expense Accounts in the
manner set forth in Section 6.03 hereof; PROVIDED, HOWEVER, that the
Representative shall be liable for any expenses of the Trust Fund incurred prior
to the Closing Date. The Servicer, the Trustee and the Co-Trustee hereby
covenant with the Certificateholders that every material contract or other
material agreement entered into by the Trustee, the Co-Trustee or the Servicer,
acting as attorney-in-fact for the Trustee or the Co-Trustee, on behalf of the
Trust Fund shall expressly state therein that no Certificateholder shall be
personally liable in its capacity as such in connection with such contract or
agreement.
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee) all right, title and interest of the applicable
Originators in and to each Subsequent Mortgage Loan listed on the Mortgage Loan
Schedule delivered by the Representative on such Subsequent Transfer Date, all
their right, title and interest in and to principal collected and interest
accruing on each such Subsequent Mortgage Loan on and after the related
Subsequent Cut- Off Date and all their right, title and interest in and to all
Insurance Policies; provided, however, that the Originators reserve and retain
all their right, title and interest in and to principal (including Principal
Prepayments) collected and interest accruing on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. The transfer by the
Originators of the Subsequent Mortgage Loans set forth on the Schedule of
Mortgage Loans to the Trustee (or, with respect to the Subsequent Pool III
Mortgage Loans, the Co-Trustee) shall be absolute and shall be intended by all
parties hereto to be treated as a sale by the Originators.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate principal balances as of the related Subsequent
Cut-Off Dates of the Subsequent Mortgage Loans so transferred; provided,
however, that the amount released from the Pre-Funding Account for a Low
Interest Mortgage Loan shall be the percentage set forth on Exhibit T attached
hereto of the aggregate principal balance thereof as of the related Subsequent
Cut-Off Date.
(b) The Originators shall transfer to the Trustee (or, with respect to
the Subsequent Pool III Mortgage Loans, the Co-Trustee) the Subsequent Mortgage
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) Except with respect to the transfer of Subsequent Mortgages
Loans on a Subsequent Transfer Date occurring in January 1998, the
Representative shall have provided the Trustee (or, with respect to
the Subsequent Pool III Mortgage Loans, the Trustee, the Co-Trustee
and the Custodian) and with respect to a Subsequent Pool I or Pool IV
Mortgage Loan, the Certificate Insurer, with a timely Addition Notice
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Originators shall have delivered to the Trustee (or,
with respect to the Subsequent Pool III Mortgage Loans, the Co-Trustee
and the Custodian) a duly executed written assignment (including an
acceptance by the Trustee (or, with respect to the Subsequent Pool III
Mortgage Loans, the Co-Trustee and the Custodian)) that shall indicate
whether such Subsequent Mortgage Loan is a Subsequent Pool I Mortgage
Loan, a Subsequent Pool II Mortgage Loan, a Subsequent Pool III or a
Subsequent Pool IV Mortgage Loan and which shall include Schedules of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Originators shall have deposited in the Principal and
Interest Account all collections in respect of the Subsequent Mortgage
Loans received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the related
Originator, the Servicer or the Representative shall be insolvent nor
will any of them have been made insolvent by such transfer nor is any
of them aware of any pending insolvency;
(v) the transfer of the Subsequent Mortgage Loans to the Trust
will not result in any Class of Certificates receiving a lower credit
rating from any Rating Agency upon termination of the Funding Period
than the rating obtained from such Rating Agency at the time of the
initial issuance of the Certificates by the Trust;
(vi) solely as a result of pre-funding, the weighted average
annual percentage interest rate for all Mortgage Loans in the related
Pool at the end of the Funding Period will not be more than 100 basis
points lower than the average interest rate of the Initial Mortgage
Loans of the applicable Pool;
(vii) the characteristics of any Subsequent Pool I or Subsequent
Pool IV Mortgage Loans are being monitored by the Certificate Insurer;
(viii) such addition will not result in a material adverse tax
consequence to the Trust Fund or the Holders of the Certificates;
(ix) the Pre-Funding Period shall not have terminated;
(x) the Representative shall have delivered to the Trustee and,
if Subsequent Pool III Mortgage Loans are being transferred on such
Subsequent Transfer Date, the Co-Trustee, an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (b) and in the related Subsequent Transfer Agreement;
(xi) the Representative shall have delivered to the Rating
Agencies, the Trustee and if Subsequent Pool I or Pool IV Mortgage
Loans are being transferred on such Subsequent Transfer Date, the
Certificate Insurer and, if Subsequent Pool III Mortgage Loans are
being transferred on such Subsequent Transfer Date, the Co- Trustee,
Opinions of Counsel with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the Opinions of Counsel
delivered to the Certificate Insurer, the Trustee and the Co-Trustee
on the Startup Day (bankruptcy, corporate and tax opinions); and
(xii) if Subsequent Pool I or Pool IV Mortgage Loans are
transferred on such Subsequent Transfer Date, the Representative shall
have deposited into the Spread Account the amount, if any, required by
the Certificate Insurer with respect to such Mortgage Loans.
(c) The obligation of the Trust Fund to purchase a Subsequent Pool I
Mortgage Loan, a Subsequent Pool II Mortgage Loan, a Subsequent Pool III
Mortgage Loan or a Subsequent Pool IV Mortgage Loan, as the case may be, on any
Subsequent Transfer Date is subject to the requirement, as evidenced by a
certificate from a Responsible Officer of the Representative, that (i) such
Subsequent Pool I Mortgage Loan, Subsequent Pool II Mortgage Loan, Subsequent
Pool III Mortgage Loan or Subsequent Pool IV Mortgage Loan, as the case may be,
conforms in all material respects to the representations and warranties
concerning the individual Initial Pool I Mortgage Loans, Initial Pool II
Mortgage Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage
Loans, as the case may be (including, if such Subsequent Pool III Mortgage Loan
is an FHA Loan, the representations and warranties concerning the FHA Loans),
set forth in Sections 3.01 and 3.02 (except that any reference therein to the
Cut-Off Date shall be deemed a reference to the applicable Subsequent Cut-Off
Date) and that the inclusion of all Subsequent Pool I Mortgage Loans, Subsequent
Pool II Mortgage Loans, Subsequent Pool III Mortgage Loans or Subsequent Pool IV
Mortgage Loans, as the case may be, being transferred to the Trust Fund on such
Subsequent Transfer Date will not change, in any material respect, the
characteristics of the Initial Pool I Mortgage Loans, Initial Pool II Mortgage
Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage Loans, as the
case may be, in the aggregate, set forth in Sections 3.01 and 3.02 or in the
Prospectus Supplement dated December 29, 1997 forming a part of the Registration
Statement under the headings "Summary of Terms -- The Pools -- Pool I and Pool
II," "-- Pool III," "-- Pool IV" and "The Loan Pools -- Home Equity Loans," "--
Home Improvement Loans" and "-- Multifamily Loans", (ii) the Subsequent Pool II
Mortgage Loans, in the aggregate, conform to the following standards: (x) the
weighted average margin of the Initial plus the Subsequent Pool II Mortgage
Loans shall be no less than 6.0%, (y) the weighted average credit score of the
Subsequent Pool II Mortgage Loans shall be no less than 5 points below the
weighted average credit score of the Initial Pool II Mortgage Loans and (z) the
weighted average LTV of the Initial plus the Subsequent Pool II Mortgage Loans
shall be no more than approximately 80% and (iii) the Subsequent Pool III
Mortgage Loans, in the aggregate, conform to the following standards: (x) the
weighted average Mortgage Interest rate of the Initial plus the Subsequent Pool
III Mortgage Loans shall be no less than 12.75%, (y) the weighted average credit
score of the Subsequent Pool III Mortgage Loans shall be no less than 5 points
below the weighted average credit score of the Initial Pool III Mortgage Loans
and (z) no more than 17% of the Initial plus the Subsequent Pool III Mortgage
Loans are FHA Loans.
(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the
Remittance Dates in January, February and March 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 Requirement for each Pool, the Overfunded Interest Amounts
for each Pool, the Pool Pre-Funding Earnings for each Pool, the amounts of Pre-
Funding Account moneys allocated to each Pool and (ii) any other necessary
matters in connection with the administration of the Pre-Funding Account and of
the Capitalized Interest Account. If any amounts are incorrectly released to the
Holders of the Class R Certificates from the Pre-Funding Account or from the
Capitalized Interest Account, such Holders or the Representative shall
immediately repay such amounts to the Trustee.
(f) In connection with the transfer of any Subsequent Mortgage Loans
to the Trust Fund, the Representative, the Servicer and the Trustee may, with
the prior written consent of the Certificate Insurer, amend the definition of
"Specified Subordinated Amount" (or any component of the definition thereof)
with respect to Pool I or Pool IV for the purpose of changing the related
Specified Subordinated Amount (or any component of the definition thereof).
Based upon the results of any additional due diligence procedures performed by
the Certificate Insurer after the Closing Date to determine compliance with the
Registration Statement, the Certificate Insurer may require the Representative,
the Servicer and the Trustee to amend the definition of "Specified Subordinated
Amount" (or any component of the definition thereof) with respect to Pool I or
Pool IV for the purpose of changing the related Specified Subordinated Amount
(or any component of the definition thereof). Provided, however, that any
amendment of the definition of "Specified Subordinated Amount" with respect to
Pool I or Pool IV, other than an amendment increasing the related Initial
Specified Subordinated Amount (or any component of the definition thereof), as
the case may be, and accompanied by a cash deposit into the Spread Account
pursuant to Section 6.05, must comply with the provisions of Section 13.02
hereof.
(g) No later than March 31, 1998, the Representative shall obtain a
letter from an independent accountant stating whether or not the characteristics
of the Pool II and Pool III Subsequent Mortgage Loans conform to the
characteristics described in the Prospectus Supplement dated December 29, 1997
included as part of the Registration Statement.
Section 2.10 OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS.
The Servicer shall have the right, but not the obligation, to
repurchase any Defaulted Mortgage Loan for a purchase price equal to the
Principal Balance of such Mortgage Loan as of the date of repurchase, plus
accrued but unpaid interest (whether through payments by the applicable
Mortgagor, Monthly Advances or otherwise) on such Principal Balance, computed at
the applicable Mortgage Interest Rate (net of the per annum rate used in
calculating the Servicing Fee and the Contingency Fee) as of the next succeeding
Determination Date, plus any accrued unpaid Servicing Fees, Monthly Advances and
Servicing Advances reimbursable to the Servicer, which purchase price shall be
deposited in the Principal and Interest Account on the next succeeding
Determination Date. Any such repurchase shall be accomplished in the manner
specified in Section 2.05(b). In no event shall the aggregate Principal Balance
of all Defaulted Mortgage Loans purchased pursuant to this Section 2.10 exceed
10% of the aggregate Pool Original Collateral Amounts for each of the Pools.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE, SERVICER, CLAIMS
ADMINISTRATOR AND ORIGINATORS.
(a) The Representative, the Servicer and the Claims Administrator (for
the purposes of this Section 3.01(a), "The Money Store Inc.") hereby represent
and warrant to the Trustee, the Co-Trustee and the Certificateholders as of the
Closing Date:
(i) The Money Store Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good
standing in each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct business of the
type conducted by The Money Store Inc. and perform its obligations
hereunder; The Money Store Inc. has corporate power and authority to
execute and deliver this Agreement and each Subservicing Agreement and
to perform in accordance herewith and therewith; the execution,
delivery and performance of this Agreement and each Subservicing
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement and each Subservicing Agreement) by The
Money Store Inc. and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all
necessary corporate action; this Agreement and each Subservicing
Agreement evidences the valid, binding and enforceable obligation of
The Money Store Inc.; The Money Store Inc. is a Permitted Transferee;
and all requisite corporate action has been taken by The Money Store
Inc. to make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon The Money Store Inc. in accordance with
the respective terms of each, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity,
none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc., under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which The Money Store Inc. makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by The Money
Store Inc. of the documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and
effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may
be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and each Subservicing
Agreement and the other documents on the part of The Money Store Inc.
and the performance by The Money Store Inc. of its obligations under
this Agreement and each Subservicing Agreement and such of the other
documents to which it is a party;
(iii) The consummation of the transactions contemplated by this
Agreement and each Subservicing Agreement will not result in the
breach of any terms or provisions of the certificate of incorporation
or by-laws of The Money Store Inc. or result in the breach of any term
or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which The Money Store Inc. or its property is subject,
or result in the violation of any law, rule, regulation, order,
judgment or decree to which The Money Store Inc. or its property is
subject;
(iv) Neither this Agreement or any Subservicing Agreement nor any
statement, report or other document furnished or to be furnished
pursuant to this Agreement and each Subservicing Agreement or in
connection with the transactions contemplated hereby and thereby
contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading;
(v) The Money Store Inc. does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vi) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of The Money Store
Inc.'s knowledge, threatened against The Money Store Inc. which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial
condition, properties or assets of The Money Store Inc. or in any
material impairment of the right or ability of The Money Store Inc. to
carry on its business substantially as now conducted, or in any
material liability on the part of The Money Store Inc. or which would
draw into question the validity of this Agreement and each
Subservicing Agreement or the Mortgage Loans or of any action taken or
to be taken in connection with the obligations of The Money Store Inc.
contemplated herein, or which would be likely to impair materially the
ability of The Money Store Inc. to perform under the terms of this
Agreement and each Subservicing Agreement;
(vii) The Trust Fund will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(viii) The Money Store Inc. is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of The Money Store Inc.
or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under any Subservicing
Agreement;
(ix) The statements contained in the Registration Statement which
describe The Money Store Inc. or matters or activities for which The
Money Store Inc. is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to The
Money Store Inc. therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to The Money Store Inc. and
does not omit to state a material fact necessary to make the
statements contained therein with respect to The Money Store Inc. not
misleading. The Money Store Inc. is not aware that the Registration
Statement contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to The Money Store
Inc. or the Mortgage Loans and known to The Money Store Inc. that
materially adversely affects or in the future may (so far as The Money
Store Inc. can now reasonably foresee) materially adversely affect The
Money Store Inc. or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in
the Registration Statement;
(x) Each Originator received fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the
Initial Mortgage Loans, and will receive fair consideration and
reasonably equivalent value in exchange for the sale of the interest
in the Subsequent Mortgage Loans, evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial Mortgage
Loan, and no Originator will sell any interest in any Subsequent
Mortgage Loan, evidenced by the Certificates, as provided in the
Agreements, with any intent to hinder, delay or defraud any of its
respective creditors;
(xii) The Originators are solvent and the Originators will not be
rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust Fund or the sale of the Certificates; and
(xiii) No Certificateholder is subject to state licensing
requirements solely by virtue of holding the Certificates.
(b) Each Originator hereby represents and warrants to the
Certificateholders, the Trustee and the Co-Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and, except as set forth below, has all licenses
necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property
State if the laws of such state require licensing or qualification in
order to conduct business of the type conducted by such Originator and
perform its obligations hereunder; such Originator has corporate power
and authority to execute and deliver this Agreement and the
Subservicing Agreement to which it is a party and to perform in
accordance herewith and therewith; the execution, delivery and
performance of this Agreement and the Subservicing Agreement to which
it is a party (including all instruments of transfer to be delivered
pursuant to this Agreement and the Subservicing Agreement to which it
is a party) by such Originator and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action; this Agreement
and the Subservicing Agreement to which it is a party evidences the
valid, binding and enforceable obligation of such Originator; such
Originator is a Permitted Transferee; and all requisite corporate
action has been taken by such Originator to make this Agreement and
the Subservicing Agreement to which it is a party valid, binding and
enforceable upon such Originator in accordance with the respective
terms of each such agreement, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity,
none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee, or the Co-Trustee, as the case may be.
(ii) No approval of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party from
any state or federal regulatory authority having jurisdiction over
such Originator is required or, if required, such approval has been or
will, prior to the Closing Date, be obtained;
(iii) The consummation of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party will
not result in the breach of any terms or provisions of the certificate
of incorporation or by-laws of such Originator or result in the breach
of any term or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other
material instrument to which such Originator or its property is
subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which such Originator or its property is
subject;
(iv) Such Originator is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of such Originator or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the Subservicing
Agreement to which it is a party;
(v) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of such
Originator's knowledge, threatened against such Originator which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, condition
(financial or other), properties or assets of such Originator or in
any material impairment of the right or properties or assets of such
Originator to carry on its business substantially as now conducted, or
in any material liability on the part of such Originator or which
would draw into question the validity of this Agreement or the
Subservicing Agreement to which it is a party or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations
of such Originator contemplated herein, or which would be likely to
impair materially the ability of such Originator to perform under the
terms of this Agreement or the Subservicing Agreement to which it is a
party;
(vi) Neither this Agreement or the Subservicing Agreement to
which it is a party nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or the
Subservicing Agreement to which it is a party or in connection with
the transactions contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements contained herein or therein not
misleading;
(vii) The statements contained in the Registration Statement
which describe such Originator or matters or activities for which such
Originator is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to such
Originator therein are true and correct in all material respects, and
the Registration Statement does not contain any untrue statement of a
material fact with respect to such Originator or the Mortgage Loans
and does not omit to state a material fact necessary to make the
statements contained therein with respect to such Originator or the
Mortgage Loans not misleading. Such Originator is not aware that the
Registration Statement contains any untrue statement of a material
fact or omits to state any material fact necessary to make the
statements contained therein not misleading. There is no fact peculiar
to such Originator or the Mortgage Loans and known to such Originator
that materially and adversely affects or in the future may (so far as
such Originator can now reasonably foresee) materially and adversely
affect such Originator or the Mortgage Loans or the ownership
interests therein represented by the Certificates that has not been
set forth in the Registration Statement;
(viii) Upon the receipt of each Trustee's Mortgage File by the
Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian on behalf of the Co- Trustee) under this Agreement, the
Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will have good and marketable title on behalf of the
related Trust Fund to each Mortgage Loan and such other items
comprising the corpus of the related Trust Fund free and clear of any
lien (other than liens which will be simultaneously released);
(ix) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which such Originator makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of
the Certificates and the execution and delivery by such Originator of
the documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the Subservicing
Agreement to which it is a party and the other documents on the part
of such Originator and the performance by such Originator of its
obligations under this Agreement and the Subservicing Agreement to
which it is a party and such of the other documents to which it is a
party;
(x) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Originators pursuant to this Agreement are
not or, with respect to the Subsequent Mortgage Loans, will not be,
subject to the bulk transfer laws or any similar statutory provisions
in effect in any applicable jurisdiction;
(xi) The origination and collection practices used by each
Originator and the primary servicer with respect to each Mortgage Note
and Mortgage relating to the Initial Mortgage Loans have been, and the
origination and collection practices to be used by each Originator and
the primary servicer with respect to each Mortgage Note and Mortgage
relating to the Subsequent Mortgage Loans will be, in all material
respects legal, proper, prudent and customary in the mortgage
origination and servicing business;
(xii) Each Initial Mortgage Loan was selected, and each
Subsequent Mortgage Loan will be selected, from among the existing
Mortgage Loans in the respective Originator's portfolio at the date
hereof or, in the case of the Subsequent Mortgage Loans, at the
related Subsequent Cut-off Date, in a manner not designed to adversely
affect the Certificateholders;
(xiii) Such Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement and the Subservicing Agreement to
which it is a party;
(xiv) Such Originator received fair consideration and reasonably
equivalent value or, in the case of the Subsequent Mortgage Loans,
will receive fair consideration and reasonably equivalent value, in
exchange for the sale of the interest in the Mortgage Loans evidenced
by the Certificates;
(xv) Such Originator did not sell or, in the case of the
Subsequent Mortgage Loans, will not sell, any interest in any Mortgage
Loan evidenced by the Certificates with any intent to hinder, delay or
defraud any of its respective creditors;
(xvi) Such Originator is solvent, and such Originator will not be
rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust Fund or the sale of the Certificates;
(xvii) No Certificateholder is subject to state licensing
requirements solely by virtue of holding the Certificates;
(xviii) The Subservicing Agreement to which the Originator is a
party conforms to the requirements for a Subservicing Agreement
contained in this Agreement;
(xix) Each FHA Loan was selected from among the existing
FHA-insured Title I loans in such Originator's portfolio at the date
hereof in a manner not designed to adversely affect the
Certificateholders; and
(xx) Each Originator of an FHA Loan is authorized and approved by
the FHA for participation in the FHA Title I loan program and holds a
valid Contract of Insurance from the FHA for such purpose.
Section 3.02 INDIVIDUAL MORTGAGE LOANS.
Each Originator hereby represents and warrants to the Trustee, the
Co-Trustee and the Certificateholders, with respect to each Initial Mortgage
Loan, as of the Closing Date and, with respect to each Subsequent Mortgage Loan,
as of the related Subsequent Transfer Date:
(a) The information with respect to each Mortgage Loan set forth in
the Mortgage Loan Schedule and the Schedules of Mortgage Loans is true and
correct;
(b) All of the original or certified documentation set forth in
Section 2.04 (including all material documents related thereto) has been or will
be delivered to the Trustee or to the Custodian on the Closing Date or, with
respect to the Subsequent Mortgage Loans, on the related Subsequent Transfer
Date, or as otherwise provided in Section 2.04;
(c) Each Initial Mortgage Loan being transferred to the Trust Fund is,
and each Subsequent Mortgage Loan to be transferred will be, a Qualified
Mortgage;
(d) Each Mortgaged Property (other than the Multifamily Properties) is
improved by a Residential Dwelling, which, to the best of the Originator's
knowledge, does not include cooperatives or mobile homes attached to a
foundation or otherwise and does not constitute other than real property under
state law; provided, however, that up to $0 aggregate principal balance of
Mortgage Loans in each of Pool I and Pool II may be secured by Mortgaged
Properties that are cooperatives or mobile homes.
(e) Each Initial Mortgage Loan has been, and each Subsequent Mortgage
Loan will be, originated and underwritten, or purchased and re-underwritten, by
an Originator in accordance with the Representative's underwriting criteria set
forth in the Registration Statement and is being, or with respect to the
Subsequent Mortgage Loans, will be, serviced by the Servicer or one or more
Subservicers and, with respect to each Initial Mortgage Loan originated by an
Originator, there is, and with respect to each Subsequent Mortgage Loan, there
will be, only one originally executed Mortgage Note not stamped as a duplicate
copy with respect to each such Mortgage Loan;
(f) The Mortgage Note with respect to each Initial Mortgage Loan
bears, and with respect to each Subsequent Mortgage Loan will bear, a fixed
Mortgage Interest Rate with respect to the Initial Pool I Mortgage Loans and
Initial Pool III Mortgage Loans, an adjustable Mortgage Interest Rate with
respect to the Initial Pool II Mortgage Loans and either a fixed or an
adjustable Mortgage Interest Rate with respect to the Initial Pool IV Mortgage
Loans, which rate (calculated with respect to an adjustable rate Mortgage Loan
at the applicable Lifetime Floor) shall at least equal the sum of (i) the Class
Adjusted Mortgage Loan Remittance Rate for Class AF-5 in the case of the Initial
Pool I Mortgage Loans, the initial Class Adjusted Mortgage Loan Remittance Rate
for Class BV in the case of the Initial Pool II Mortgage Loans, the Class
Adjusted Mortgage Loan Remittance Rate for Class BH in the case of the Initial
Pool III Mortgage Loans, and the Class Adjusted Mortgage Loan Remittance Rate
for Class AMF in the case of the Initial Pool IV Mortgage Loans, (ii) the rate
used in calculating the Servicing Fee and (iii) the rate used in calculating the
Contingency Fee; provided, however, that (A) up to $0 aggregate principal amount
of the Initial Pool I Mortgage Loans may be Low Interest Pool I Mortgage Loans,
(B) up to $0 aggregate principal amount of the Initial Pool III Mortgage Loans
may be Low Interest Pool III Mortgage Loans, (C) up to $0 aggregate principal
amount of the Initial Pool IV Mortgage Loans may be Low Interest Pool IV
Mortgage Loans and (D) in connection with FHA Loans, if the related Mortgagor
pays the FHA Insurance Premium as a separate amount in addition to the Monthly
Payment, such extra amount shall be sufficient to pay the related FHA Insurance
Premium;
(g) (i) Except with respect to approximately 9.0% of the Initial Pool
I Mortgage Loans and approximately 8.0% of the Subsequent Pool I Mortgage Loans,
each Mortgage Note relating to the Pool I Mortgage Loans will provide for a
schedule of substantially level and equal Monthly Payments which are, if timely
paid, sufficient to fully amortize the principal balance of such Mortgage Note
on or before its maturity date, (ii) except with respect to approximately 0.5%
of the Initial Pool II Mortgage Loans and approximately 2.0% of the Subsequent
Pool II Mortgage Loans, each Mortgage Note relating to the Pool II Mortgage
Loans will provide for a schedule of Monthly Payments which are, if timely paid
as adjusted, sufficient to fully amortize the principal balance of such Mortgage
Note on or before its maturity date, (iii) each Mortgage Note relating to the
Pool III Mortgage Loans will provide for a schedule of substantially level and
equal Monthly Payments which are, if timely paid, sufficient to fully amortize
the principal balance of such Mortgage Note on or before its maturity date and
(iv) except with respect to one Mortgage Loan each Mortgage Note relating to the
Pool IV Mortgage Loans will provide for a schedule of substantially level and
equal Monthly Payments which are, if timely paid as adjusted, sufficient to
fully amortize the principal balance of such Mortgage Note on or before its
maturity date.
(h) Each Mortgage is, with respect to the Initial Mortgage Loans, and
will be, with respect to the Subsequent Mortgage Loans, a valid and subsisting
lien of record on the Mortgaged Property (with no less than approximately 70%,
90%, 5% and 100% of the Initial Pool I, Pool II, Pool III and Pool IV Mortgage
Loans, respectively (measured by Principal Balances as of the Cut-Off Date),
being secured by first liens) subject, in the case of any second or more junior
Mortgage Loan, only to any applicable Prior Liens on such Mortgaged Property and
subject in all cases to the exceptions to title set forth in the title insurance
policy or the other evidence of title enumerated in Section 2.04(d), with
respect to the related Mortgage Loan, which exceptions are generally acceptable
to banking institutions in connection with their regular mortgage lending
activities, and such other exceptions to which similar properties are commonly
subject and which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided by such
Mortgage;
(i) Immediately prior to the transfer and assignment herein
contemplated, the Originator held good and indefeasible title to, and was the
sole owner of, each Mortgage Loan conveyed by the Originator subject to no
liens, charges, mortgages, encumbrances or rights of others except as set forth
in Section 3.02(h) or other liens which will be released simultaneously with
such transfer and assignment; and immediately upon the transfer and assignment
herein contemplated, the Trustee (or, with respect to the Pool III Mortgage
Loans, the Co-Trustee) will hold good and indefeasible title, to, and be the
sole owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in Section 3.02(h) or other
liens which will be released simultaneously with such transfer and assignment;
(j) As of the Cut-Off Date, no Initial Mortgage Loan is 60 days or
more delinquent in payment and, except as provided in the next sentence, no
Initial Mortgage Loan has been delinquent 60 days or more as measured at the end
of any month during the 12 months immediately preceding the Cut-Off Date.
Approximately 3% of the Mortgage Loans in Pool I or Pool II were 60 days or more
delinquent as measured at the end of any month during the 12 months immediately
preceding the Cut-Off Date. As of the related Subsequent Cut-Off Date, no
Subsequent Mortgage Loan shall be 60 or more days delinquent in payment. As of
the Cut-Off Date, no more than 2% of the Initial Mortgage Loans (by principal
balance) will be delinquent in payment. As of each Subsequent Cut-Off Date, no
more than 2% of the Subsequent Mortgage Loans (by principal balance) being
transferred on the related Subsequent Transfer Date will be delinquent in
payment;
(k) To the best of the Originator's knowledge, there is no delinquent
tax or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(l) The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(m) Except with respect to the Pool III Loans as to which no
representation is made, there is no mechanics' lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien prior to, or
equal with, the lien of such Mortgage except those which are insured against by
the title insurance policy referred to in Section 3.02(o) below;
(n) Each Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations,
including, without limitation, usury, equal credit opportunity, disclosure and
recording laws;
(o) With respect to each Mortgage Loan with an original principal
balance greater than $15,000 other than any Initial Mortgage Loan which was not
originated by an Originator and other than the Pool III Mortgage Loans, a
lender's title insurance policy, issued in standard American Land Title
Association, California Land Title Association, New York Board of Title
Underwriters form, or other form acceptable in a particular jurisdiction, by a
title insurance company authorized to transact business in the state in which
the related Mortgaged Property is situated, together with a condominium
endorsement, if applicable, in an amount at least equal to the original
principal balance of such Mortgage Loan insuring the mortgagee's interest under
the related Mortgage Loan as the holder of a valid first or second mortgage lien
of record on the real property described in the Mortgage, subject only to
exceptions of the character referred to in Section 3.02(h) above, or, with
respect to any Mortgage Loan with an original principal balance less than or
equal to $15,000 or any Mortgage Loan which was not originated by an Originator
(other than the FHA Loans), some other evidence of the status of title, or other
evidence of title as enumerated in Section 2.04(d), was effective on the date of
the origination of such Mortgage Loan, and, as of the Closing Date, such policy
will be valid and thereafter such policy shall continue in full force and
effect;
(p) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Mortgage Loan had full legal capacity to execute all
Mortgage Loan documents and convey the estate therein purported to be conveyed;
(s) The Servicer, at the direction of the related Originator, has
caused and will cause to be performed any and all acts required to be performed
to preserve the rights and remedies of the Trustee and the Co-Trustee in any
insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Trustee and the Co-Trustee, and the Originator
of any FHA Loan has the authority and power to transfer to the Co-Trustee the
FHA Reserve Amount relating to the Mortgage Loans;
(t) No more than approximately 0.5%, 0.5%, 0.5%, and 5.0% of the
Principal Balances of the Initial Pool I, Pool II, Pool III or Pool IV Mortgage
Loans, respectively, are secured by Mortgaged Properties located within any
single zip code area;
(u) Each original Mortgage was recorded, and all subsequent
assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Originator (or, subject to Section 2.04 hereof, are
in the process of being recorded);
(v) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform, to the description thereof set forth in the Registration
Statement;
(w) [Reserved]
(x) Approximately 13.25% and 86.75% of the Initial Pool III Mortgage
Loans (measured by outstanding Principal Balance as of the Cut-Off Date) were
FHA Loans and Conventional Home Improvement Loans, respectively;
(y) All of the Initial Pool I, Initial Pool II and Initial Pool III
Mortgage Loans are Single-Family Loans (provided, however, that no more than
approximately 2.0% and 2.0% of the Initial Pool I and Initial Pool III Mortgage
Loans, measured by Principal Balances of the Cut-Off Date, may be Multifamily
Loans); and, when measured by outstanding Principal Balance as of the
Cut-Off-Date, no more than approximately 4.5%, 3.5% and 1.0% of the Initial Pool
I, Initial Pool II and Initial Pool III Mortgage Loans, respectively, are
secured by vacation homes, secondary residences, or investment properties, less
than approximately 1.5%, 2.5% and 1.0% of the Initial Pool I, Initial Pool II
and Initial Pool III Mortgage Loans, respectively, are secured by individual
units in Low-Rise Condominiums, no more than approximately 5.0%, 5.5% and 2.0%
of the Initial Pool I, Initial Pool II and Initial Pool III Mortgage Loans,
respectively, are secured by Two-, Three- or Four-Family Houses, and no more
than 0.75%, 2.0% and 0.5% of the Initial Pool I, Initial Pool II and Initial
Pool III Mortgage Loans are secured by individual units of other types,
including High- Rise Condominiums. None of the Initial Pool I, Initial Pool II
and Initial Pool III Mortgage Loans are secured by a mobile home or co-op;
(z) Each Pool IV Mortgage Loan is a Multifamily Loan with respect to
which no less than approximately 90% of the related Mortgaged Property, measured
by square footage, number of units and projected rent, being allocated to
residential units;
(aa) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Certificateholders and which has been delivered to the Trustee or, with respect
to the Pool III Mortgage Loans, the Custodian. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule and has
been approved by the primary mortgage guaranty insurer, if any;
(bb) No instrument of release or waiver has been executed in
connection with the Mortgage Loan, and no Mortgagor has been released, in whole
or in part, except in connection with an assumption agreement which has been
approved by the primary mortgage guaranty insurer, if any, and which has been
delivered to the Trustee or, with respect to the Pool III Mortgage Loans, the
Custodian;
(cc) There are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been established
in an amount sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. The Servicer has not
advanced funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor, directly or indirectly, for the payment of
any amount required by the Mortgage, except for interest accruing from the date
of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(dd) There is no proceeding pending or threatened for the total or
partial condemnation of the Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
(ee) Other than with respect to the Pool III Mortgage Loans, as to
which no representation is made, all of the improvements which were included for
the purpose of determining the appraised value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of such property,
and no improvements on adjoining properties encroach upon the Mortgaged Property
unless any such improvements are (except with respect to those Mortgage Loans
with original principal balances which were less than $15,000 or not originated
by a Originator) stated in the title insurance policy and affirmatively insured;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can be
reasonably expected to cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent or adversely affect the value or marketability of the Mortgage Loan;
(gg) Other than with respect to the Pool III Mortgage Loans, as to
which no representation is made, no improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(hh) The proceeds of the Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(ii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(jj) No Initial Mortgage Loan was, and no Subsequent Mortgage Loan
will be, originated under a buydown plan;
(kk) Except for the related FHA Premium Account in connection with any
FHA Loan, there is no obligation on the part of the Originator or any other
party to make payments in addition to those made by the Mortgagor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Mortgage File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(mm) The origination and collection practices used by the Originator
with respect to the Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing business
and, in the case of FHA Loans, legal, proper, prudent and customary in the Title
I mortgage lending and servicing business;
(nn) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(oo) No Initial Mortgage Loan has, and no Subsequent Mortgage Loan
will have, a shared appreciation feature, or other contingent interest feature;
(pp) With respect to each Mortgage Loan that is not a first mortgage
loan, the related Prior Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related Prior Lien may be
adjusted no more frequently than monthly; at the time of the origination of the
Mortgage Loan, the related Prior Lien was not 30 or more days delinquent;
(qq) With respect to each Mortgage Loan that is not a first mortgage
loan, either (i) no consent for the Mortgage Loan is required by the holder of
the related Prior Lien or (ii) such consent has been obtained and is contained
in the Mortgage File;
(rr) Other than with respect to the Pool III Mortgage Loans, as to
which no representation is made, with respect to each Mortgage Loan that is not
a first mortgage loan, to the best of the Originator's knowledge, the related
Prior Lien does not provide for negative amortization;
(ss) With respect to each Mortgage Loan that is not a first mortgage
loan, the maturity date of the Mortgage Loan is prior to the maturity date of
the related Prior Lien if such Prior Lien provides for a balloon payment;
(tt) The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a single parcel of real property with a
Residential Dwelling erected thereon (or, with respect to any Multifamily Loans,
a Multifamily Property erected thereon);
(uu) All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(vv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event the related Mortgaged Property is sold without the prior consent of
the mortgagee thereunder;
(ww) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note does not permit or obligate the Servicer to make future
advances to the Mortgagor at the option of the Mortgagor;
(xx) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(yy) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and neither the Servicer nor the Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage Note
and Mortgage have been duly and properly executed by such parties;
(aaa) The Initial Mortgage Loan was not, and the Subsequent Mortgage
Loan will not be, selected for inclusion under this Agreement from its portfolio
of comparable loans, including, in the case of FHA Loans, comparable Title I
loans, on any basis which would have a material adverse effect on a
Certificateholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Mortgage Loans have been deposited and all amounts received after the
Subsequent Cut-off Date with respect to the Subsequent Mortgage Loans will be
deposited into the applicable Principal and Interest Account and are, as of the
Closing Date with respect to the Initial Mortgage Loans, in the applicable
Principal and Interest Account;
(ccc) With respect to each Mortgage Loan (other than the Pool III
Mortgage Loans) originated by an Originator with an original principal balance
in excess of $15,000 for which the Originator conducted a drive-by appraisal
pursuant to FHLMC Form 704 or alternative FNMA Form in connection with the
origination thereof, such deposited Mortgage Loan (i) had an original principal
balance not in excess of $35,000, and (ii) has a Loan-to-Value Ratio less than
50% and/or an appraisal on FNMA/FHLMC Form 1004 was performed by the related
Originator within one year prior to the origination of such Mortgage Loan; and
(ddd) At the applicable dates of origination of the Mortgage Loans,
(i) none of the Pool I, Pool II or Pool IV Mortgage Loans, had a Loan-to-Value
Ratio which exceeded 100.0%, 100.00% and 100.00%, respectively, and (ii) for
each Pool III Mortgage Loan, after giving effect to all improvements to be made
on the related Mortgaged Property with the proceeds of such Pool III Mortgage
Loan, and based upon representations of the related Mortgagor, the value of the
related Mortgaged Property will at least be equal to the amount of such Pool III
Mortgage Loan and the outstanding amount of all other loans secured by Prior
Liens on such Mortgaged Property;
(eee) No more than approximately 22.0% and 33.0% of the Initial Pool I
and Initial Pool II Mortgage Loans, respectively (measured by outstanding
principal balance as of the Cut-Off Date), had a Debt-to-Income Ratio exceeding
44.0%. "Debt-to-Income Ratio" is that ratio, stated as a percentage, which
results from dividing a Mortgagor's monthly debt by his gross monthly income.
"Monthly debt" includes (i) the monthly payment under the Prior Liens (which
generally includes an escrow for real estate taxes), (ii) the related Mortgage
Loan Monthly Payment (which, with respect to the Initial Pool II Mortgage Loans,
is calculated with interest based on a rate equal to the Lifetime Cap), (iii)
other installment debt service payments, including, in respect of revolving
credit debt, the required monthly payment thereon, or, if no such payment is
specified, 5.0% of the balance as of the date of calculation. "Monthly debt"
does not include any of the debt (other than revolving credit debt) described
above that matures within less than 10 months from the date of the calculation.
No more than approximately 1.0% of the Initial Pool I Mortgage Loans were
originated without verifying the Mortgagor's income;
(fff) At the applicable dates of origination, each Pool I, Pool II,
Pool III and Pool IV Mortgage Loan had an original term to maturity of no
greater than 40 years, 30 years, 30 years and 30 years, respectively;
(ggg) Each Subsequent Mortgage Loan will comply with the
representations and warranties respecting Subsequent Mortgage Loans set forth in
Section 3.01(d) of the Insurance Agreement, which representations and warranties
are incorporated herein;
(hhh) Each Initial Pool I and Initial Pool III bears, and each
Subsequent Pool I and Subsequent Pool III Mortgage Loan will bear, a fixed rate
of interest, each Initial Pool II Mortgage Loan bears, and each Subsequent Pool
II Mortgage Loan will bear, an adjustable rate of interest and each Initial Pool
IV Mortgage Loan bears, and each Subsequent Pool IV Mortgage Loan will bear,
either a fixed or adjustable rate of interest;
(iii) As of the Cut-off Date, for each Initial Pool II Mortgage Loan
and adjustable rate Initial Pool IV Mortgage Loan, the Lifetime Cap is not lower
than approximately 8.0% and 15.0% per annum, respectively, the Lifetime Floor is
not lower than approximately 0% and 9.5% per annum, respectively, the Gross
Margin is not less than approximately 2.0% and 4.0%, respectively, the related
Mortgage Note does not provide for negative amortization, limits in the amount
of monthly payments or a conversion feature, the Mortgage Interest Rate is
subject to adjustment on each Change Date to equal the sum of the LIBOR Index,
or Treasury Index, as the case may be, plus the applicable Gross Margin, subject
to rounding, the Periodic Rate Cap, the applicable Lifetime Floor and the
applicable Lifetime Cap on each Change Date, the Mortgagor's new monthly payment
will be adjusted to an amount equal to the payment which, when paid in
substantially equal installments during the then remaining term of the Initial
Pool II Mortgage Loan or adjustable rate Initial Pool IV Mortgage Loan, would
amortize fully the unpaid principal balance of such Initial Pool II Mortgage
Loan or adjustable rate Initial Pool IV Mortgage Loan at the then applicable
Mortgage Interest Rate without extension of the original maturity date which
maturity date is not more than 360 months after the original Due Date therefor;
(jjj) With respect to each Initial Pool II Mortgage Loan and Initial
Pool IV Mortgage Loan that bears interest at an adjustable rate, all of the
terms of the Mortgage and Mortgage Note pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note;
(kkk) Each Initial FHA Loan is, and each Subsequent FHA Loan will be,
an FHA Title I property improvement loan (as defined in the FHA Regulations)
underwritten in accordance with applicable FHA requirements and submitted to the
FHA for insurance;
(lll) Each Initial FHA Loan has been, and each Subsequent FHA Loan
will be, submitted to the FHA for insurance pursuant to the FHA Title I loan
program and, except for no more than 25% of the Initial FHA Loans (measured by
outstanding principal balance as of the Closing Date) (the "Non-Acknowledged FHA
Loans"), each Initial FHA Loan has been acknowledged by the FHA for the FHA
Title I loan program; each Non-Acknowledged FHA Loan will be acknowledged by the
FHA within 180 days of the Closing Date and each Subsequent FHA Loan will be
acknowledged by the FHA within 180 days after the Funding Period;
(mmm) The Reserve Amount with respect to each Initial FHA Loan will be
transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Closing Date, the Reserve Amount with respect to each Subsequent FHA Loan will
be transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Funding Period, and the Originators will give the Certificate Insurer, the
Trustee, the Co-Trustee and the Rating Agencies prompt notice of their receipt
of confirmation of such transfers;
(nnn) Assuming sufficient coverage remains available in the Reserve
Amount, each Claim filed by the Claims Administrator with respect to a 90 Day
Delinquent FHA Loan will be honored by the FHA in accordance with the FHA
Regulations;
(ooo) Substantially all the proceeds of each Pool III Mortgage Loan
(including each Subsequent Pool III Mortgage Loan) have been or will be used to
acquire or to improve or protect an interest in real property that, at the
origination date of such Pool III Mortgage Loan, was the only security for such
Pool III Mortgage Loan;
(ppp) [Reserved];
(qqq) A portion of the Pool III Mortgage Loans are governed by the FTC
holder regulation provided in 16 C.F.R. Part 433;
(rrr) All obligations of the seller or subcontractor under each Pool
III Mortgage Loan have been completed in accordance with the terms of such Pool
III Mortgage Loans as of the Closing Date, and no additional goods or services
will be, or are required to be, provided by the seller or subcontractor under
the terms of such Pool III Mortgage Loans after the Closing Date. All
improvements and other goods and services provided under each Pool III Mortgage
Loan shall have been inspected by the Originator within the time period and in
accordance to the applicable Title I regulations and prior to the Closing Date,
and evidence of such inspection shall be included in the Mortgage File;
(sss) With respect to each Pool III Mortgage Loan that is a home
improvement loan or retail installment sales contract for goods or services, no
Mortgagor has or will have a claim, counterclaim, right of rescission, set-off
or defense under any express or implied warranty or otherwise with respect to
goods or services provided under such Pool III Mortgage Loan; and
(ttt) The Mortgage and the Mortgage Note contain the entire agreement
of the parties and all obligations of the seller or subcontractor under the
related Pool III Mortgage Loan, and no other agreement defines, modifies or
expands the obligations of the seller or subcontractor under the Pool III
Mortgage Loan.
Section 3.03 PURCHASE AND SUBSTITUTION.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates
to the Certificateholders. Upon discovery by the Representative, the Servicer,
any Subservicer, any Custodian, the Trustee, the Co- Trustee or, in the case of
any Pool I or Pool IV Mortgage Loan, the Certificate Insurer of a breach of any
of such representations and warranties (or, in the case of any Subsequent
Mortgage Loan, any additional representation or warranty set forth in Section
2.01(d) of the Insurance Agreement) which materially and adversely affects the
value of the Mortgage Loans or the interest of the Certificateholders, or which
materially and adversely affects the interests of the Certificate Insurer, in
the case of any Pool I or Pool IV Mortgage Loan, or the Certificateholders in
the related Mortgage Loan in the case of a representation and warranty relating
to a particular Mortgage Loan (notwithstanding that such representation and
warranty was made to the Representative's or Originators' best knowledge), the
party discovering such breach shall give prompt written notice to the others.
Within 60 days of the earlier of its discovery or its receipt of notice of any
breach of a representation or warranty, the Representative shall (a) promptly
cure such breach in all material respects, (b) purchase such Mortgage Loan by
depositing in the applicable Principal and Interest Account, on the next
succeeding Determination Date, an amount in the manner specified in Section
2.05(b), or (c) remove such Mortgage Loan from the Trust Fund (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans, provided such substitution is effected not later than
the date which is two years after the Startup Day or at such later date, if the
Trustee, and, in the case of any Pool I or Pool IV Mortgage Loan, the
Certificate Insurer receive an Opinion of Counsel that such substitution would
not constitute a Prohibited Transaction or cause the Trust Fund to fail to
qualify as a REMIC at any time any Certificates are outstanding.
As to any Deleted Mortgage Loan for which the Representative
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
effect such substitution by delivering to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Co-Trustee) a certification in the form attached
hereto as Exhibit J, executed by a Servicing Officer and the documents
constituting the Trustee's Mortgage File for such Qualified Substitute Mortgage
Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest
Account all payments received in connection with such Qualified Substitute
Mortgage Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Mortgage Loans on or before the
date of substitution will be retained by the Representative on behalf of the
related Originator. The Trust Fund will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Representative on
behalf of the Originators shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee, the Representative and, in the case of
any Pool I or Pool IV Mortgage Loan, the Certificate Insurer that such
substitution has taken place and shall amend the applicable Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of this Agreement in all respects, including Sections
2.04 and 2.05, and the Representative and the Originator shall be deemed to have
made with respect to such Qualified Substitute Mortgage Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Representative
will remit to the Servicer, and the Servicer will deposit into the applicable
Principal and Interest Account an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in
Section 2.05 and this Section 3.03, the Representative shall indemnify and hold
harmless the Trust Fund, the Trustee, the Co-Trustee, the Custodian, the
Certificateholders and, in the case of any Pool I or Pool IV Mortgage Loan, the
Certificate Insurer against any loss, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Representative's or any Originator's
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Representative or any Originator set forth in
Sections 2.05 and 3.03 to cure, purchase or substitute for a defective Mortgage
Loan and to indemnify the Certificateholders, the Trustee, the Co-Trustee, the
Custodian, and, in the case of any Pool I or Pool IV Mortgage Loan, the
Certificate Insurer as provided in Sections 2.05 and 3.03 constitute the sole
remedies of the Trustee, the Co-Trustee, the Custodian, the Certificate Insurer
and the Certificateholders respecting a breach of the foregoing representations
and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 (or in the case of any
Subsequent Mortgage Loan, any representation or warranty set forth in Section
2.01(d) of the Insurance Agreement) shall accrue as to any Mortgage Loan upon
(i) discovery of such breach by any party and notice thereof to the
Representative or notice thereof by the Representative to the Trustee (and, with
respect to the Pool III Mortgage Loans, the Co- Trustee), (ii) failure by the
Representative to cure such breach or purchase or substitute such Mortgage Loan
as specified above, and (iii) demand upon the Representative by the Trustee
(and, with respect to the Pool III Mortgage Loans, the Co-Trustee) for all
amounts payable in respect of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer, the Trustee
and the Co-Trustee shall act in accordance herewith to assure continuing
treatment of each of REMIC I and REMIC II as a REMIC. In particular, the Trustee
and the Co-Trustee shall not (a) sell or permit the sale of all or any portion
of the Mortgage Loans or of any Permitted Instrument unless such sale is as a
result of a repurchase of the Mortgage Loans pursuant to this Agreement or the
Trustee (or, with respect to a Pool III Mortgage Loan, the Trustee and the
Co-Trustee) has received an Opinion of Counsel to the effect that such sale (i)
is in accordance with a qualified liquidation as defined in Section 860F(a)(4)
of the Code and as described in Section 11.01 hereof, or (ii) would not be
treated as a prohibited transaction within the meaning of Section 860F(a)(2) of
the Code; and (b) except for the cash deposits into the Spread Account pursuant
to Section 6.05, accept any contribution to the Trust Fund after the Startup Day
without an Opinion of Counsel that such contribution is included within the
exceptions provided in Section 860G(d)(2) of the Code and therefore will not be
subject to the tax imposed by Section 860G(d)(1) of the Code.
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
(a) The Certificates shall be substantially in the forms annexed
hereto as Exhibit B and shall, upon original issue, be executed and delivered by
the Servicer to the Trustee for authentication and redelivery to or upon the
order of the Representative, on behalf of the Originators, upon receipt by the
Trustee of the documents specified in Section 2.04. All Certificates shall be
executed by manual or facsimile signature on behalf of the Servicer by its
President, one of its Executive Vice Presidents or Vice Presidents, or by its
Treasurer, in the denominations specified in the definition of Percentage
Interest, and shall be authenticated by manual signature on behalf of the
Trustee by one of its authorized signatories. Certificates bearing the
signatures of individuals who were at the time of the execution or
authentication of the Certificates the proper officers of the Servicer or an
authorized signatory of the Trustee, as the case may be, shall bind the Servicer
or the Trustee, as the case may be, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.
(b) The Trustee shall elect that each of REMIC I and REMIC II shall be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of this Agreement shall
be resolved in a manner that preserves the validity of such REMIC elections.
(c) REMIC II will be evidenced by (x) the REMIC II Regular
Certificates, which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class R-2
Certificates, which are hereby designated as the single "residual interest" in
REMIC II. Except as provided below, principal and interest shall be paid on the
REMIC II Regular Certificates in the same order and priority as payments are to
be made on the Classes of Certificates described in footnote 2 to the table in
Section 4.01(d).
(d) REMIC II will be evidenced by (x) the Class II-AF-1, Class
II-AF-2, Class II- AF-3, Class II-AF-4, Class II-AF-5, Class II-AF-6, Class
II-AF-7 Certificates (the "Group I Mini Certificates"); the Class II-AV-1, Class
II-AV-2, Class II-MV-1, Class II-MV-2, Class II-BV Certificates (the "Group II
Mini Certificates"); the Class II-AH-1, Class II-AH-2, Class II-AH-3, Class
II-AH-4, Class II-MH-1, Class II-MH-2, Class II-BH Certificates (the "Group III
Mini Certificates"); the Class II-AMF Certificates (the "Group IV Mini
Certificates"); and the Class II- Q1, Class II-Q2, Class II-Q3, and Class II-Q4
Certificates (the "Q Certificates") (collectively, the "REMIC II Regular
Certificates"), which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in the REMIC II and (y) the Class R-2
Certificates, which are hereby designated as the single "residual interest" in
the REMIC II (the REMIC II Regular Certificates, together with the Class R-2
Certificates, the "REMIC II Certificates"). The REMIC II Regular Certificates
shall be recorded on the records of the REMIC II as being issued to and held by
the Trustee on behalf of REMIC I. The Group I Mini Certificates and the Class
II-Q1 Certificates are sometimes referred to herein as the "Group I
Certificates"; the Group II Mini Certificates and the Class II-Q2 Certificates
are sometimes referred to herein as the "Group II Certificates"; the Group III
Mini Certificates and the Class II-Q3 Certificates are sometimes referred to
herein as the "Group III Certificates"; and the Group IV Mini Certificates and
the Class II-Q4 Certificates are sometimes referred to herein as the "Group IV
Certificates".
One percent of the Turbo Amount will be paid as a reduction of the
principal balances of the REMIC II Regular Certificates (other than the Class Q
Certificates) in the same proportions as the Turbo Amount is distributed as
principal among the REMIC I Regular Certificates (and will be accrued and added
to principal on the corresponding Class Q Certificates). The "Turbo Amount"
means the amount of interest collected on the Mortgage Loans that will be used
to pay principal on the Certificates (other than the Class R-1 or Class R-2
Certificates). Principal payments on the Pool I Mortgage Loans shall be
allocated 99% to the Class II-Q1 Certificate and 1% to the Group I Mini
Certificates (allocated among such Certificates in the same ratio as payments of
principal (other than the Turbo Amount) are made on the corresponding REMIC I
Regular Certificates) until paid in full. Principal payments on the Pool II
Mortgage Loans shall be allocated 99% to the Class II-Q2 Certificate and 1% to
the Group II Mini Certificates (allocated among such Certificates in the same
ratio as payments of principal (other than Turbo Amount) are made on the
corresponding REMIC I Regular Certificates) until paid in full. Principal
payments on the Pool III Mortgage Loans shall be allocated 99% to the Class
II-Q3 Certificate and 1% to the Group III Mini Certificates (allocated among
such Certificates in the same ratio as payments of principal (other than Turbo
Amount) are made on the corresponding REMIC I Regular Certificates) until paid
in full. Principal payments on the Pool IV Mortgage Loans shall be allocated 99%
to the Class II-Q4 Certificate and 1% to the Class II-AMF Certificates until
paid in full. Notwithstanding the above, principal payments on Mortgage Loans
from a pool shall be allocated 100% to the related Q Class to the extent that
such principal is paid on the Class X Certificates.
Realized Losses of the mortgages in any pool shall be applied such
that after all distributions have been made on such Payment Date the principal
balance of the related Q Certificate is 99% of the aggregate Loan Balances of
the Mortgage Loans in such Pool and the principal balances of the other REMIC II
Regular Certificates are each 1% of the principal balances of the REMIC I
Certificates bearing the same designation (other than the II-).
The REMIC II Certificates will have the following designations and
Pass-Through Rates, and distributions of interest thereon shall be allocated to
the Certificates in the following manner:
Pass- Allocation
REMIC II Initial Through of
CERTIFICATES BALANCE RATE INTEREST
II-Q1 $717,750,000 (1.1) (3),(4)
II-Q2 643,500,000 (1.2) (3),(4)
II-Q3 198,000,000 (1.3) (3),(4)
II-Q4 9,900,000 (1.4) (3),(4)
II-AF-1 1,220,000 (1.1) (3),(4)
II-AF-2 880,000 (1.1) (3),(4)
II-AF-3 2,490,000 (1.1) (3),(4)
II-AF-4 680,000 (1.1) (3),(4)
II-AF-5 370,000 (1.1) (3),(4)
II-AF-6 760,000 (1.1) (3),(4)
II-AF-7 850,000 (1.1) (3),(4)
II-AV-1 4,667,500 (1.2) (3),(4)
II-AV-2 760,000 (1.2) (3),(4)
II-MV-1 373,750 (1.2) (3),(4)
II-MV-2 373,750 (1.2) (3),(4)
II-BV 325,000 (1.2) (3),(4)
II-AH-1 845,710 (1.3) (3),(4)
II-AH-2 280,240 (1.3) (3),(4)
II-AH-3 199,470 (1.3) (3),(4)
II-AH-4 204,570 (1.3) (3),(4)
II-MH-1 135,000 (1.3) (3),(4)
II-MH-2 150,000 (1.3) (3),(4)
II-BH 185,010 (1.3) (3),(4)
II-AMF 100,000 (1.4) (3),(4)
R-2 0 0% N/A (5)
- -----------------
(1.1) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average Adjusted Mortgage
Interest Rate of all of the Mortgage Loans in Pool 1.
(1.2) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average Adjusted Mortgage
Interest Rate of all of the Mortgage Loans in Pool II.
(1.3) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average Adjusted Mortgage
Interest Rate of all of the Mortgage Loans in Pool III.
(1.4) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average Adjusted Mortgage
Interest Rate of all of the Mortgage Loans in Pool IV.
(2) [Reserved]
(3) Except as provided in footnote (4), interest will be allocated among
the REMIC I Regular Interests (other than the Class X Certificates) in
the same proportion as interest is payable with respect to such
interests.
(4) Any interest with respect to the Group I Certificates in excess of one
hundred times the weighted average coupon of the Group I Certificates,
where each of such Certificates, other than the Class II-Q1
Certificate, is first subject to a cap and floor equal to the
Pass-Through Rate of the REMIC I Class bearing the same designation
(without the II-) and the Class II- Q1 Certificate is subject to a cap
equal to 0 shall be allocated to the Class X Certificates as a
separate component. Any interest with respect to the Group II
Certificates in excess of one hundred times the weighted average
coupon of the Group II Certificates, where each of such Certificates,
other than the Class II-Q2 Certificate, is first subject to a cap and
floor equal to the Pass-Through Rate of the REMIC I Class bearing the
same designation (without the II-) and the Class II-Q2 Certificate is
subject to a cap equal to 0 shall be allocated to the Class X
Certificates as a separate component. Any interest with respect to the
Group III Certificates in excess of one hundred times the weighted
average coupon of the Group III Certificates, where each of such
Certificates, other than the Class II-Q3 Certificate, is first subject
to a cap and floor equal to the Pass-Through Rate of the REMIC I Class
bearing the same designation (without the II-) and the Class II-Q3
Certificate is subject to a cap equal to 0 shall be allocated to the
Class X Certificates as a separate component. Any interest with
respect to the Group IV Certificates in excess of one hundred times
the weighted average coupon of the Group IV Certificates, where each
of such Certificates, other than the Class II-Q4 Certificate, is first
subject to a cap and floor equal to the Pass-Through Rate of the REMIC
I Class bearing the same designation (without the II-) and the Class
II-Q4 Certificate is subject to a cap equal to 0 shall be allocated to
the Class X Certificates as a separate component.
(5) On each Distribution Date, available funds, if any, remaining in the
REMIC II after payments of interest and principal, as designated
above, will be distributed to the Class R-2 Certificate. There are not
expected to be any material amounts so distributed.
(e) The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5,
Class AF- 6, Class AF-7, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class
BV, Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH-2,
Class BH, Class AMF and Class X are hereby designated as "regular interests"
with respect to the REMIC I and the Class R-1 Certificate is hereby designated
as the single "residual interest" with respect to the REMIC I.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at its office, or at the office
of its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder. The Bank
of New York is initially appointed Certificate Registrar for the purpose of
registering Certificates and transfer and exchanges of Certificates as herein
provided (the "Certificate Registrar").
(b) It is intended that the Pool I, Pool II, Pool III and Pool IV
Certificates be registered so as to participate in a global book-entry system
with the Depository, as set forth herein. Each Class of Pool I, Pool II, Pool
III and Pool IV Certificates shall initially be issued in the form of a single
(and if the Class exceeds $200,000,000, additional Certificates in multiples of
$200,000,000 provided that one such Certificate may be in a denomination no
greater than $200,000,000) fully registered Certificate of such Class. The Pool
I, Pool II, Pool III and Pool IV Certificates shall have an aggregate
denomination equal to the following:
CLASS DENOMINATION
Class AF-1 $122,000,000
Class AF-2 $88,000,000
Class AF-3 $249,000,000
Class AF-4 $68,000,000
Class AF-5 $37,000,000
Class AF-6 $76,000,000
Class AF-7 $85,000,000
Class AV-1 $466,750,000
Class AV-2 $76,000,000
Class MV-1 $37,375,000
Class MV-2 $37,375,000
Class BV $32,500,000
Class AH-1 $84,571,000
Class AH-2 $28,024,000
Class AH-3 $19,947,000
Class AH-4 $20,457,000
Class MH-1 $13,500,000
Class MH-2 $15,000,000
Class BH $18,501,000
Class AMF $10,000,000
Upon initial issuance, the ownership of such Classes of Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
(c) With respect to Pool I, Pool II, Pool III or Pool IV Certificates
registered in the Register in the name of Cede & Co., as nominee of the
Depository, the Representative and the Trustee shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which the
Depository holds Pool I, Pool II, Pool III or Pool IV Certificates from time to
time as a Depository. Without limiting the immediately preceding sentence, the
Representative and the Trustee shall have no responsibility or obligation with
respect to (a) the accuracy of the records of the Depository, Cede & Co., or any
Direct or Indirect Participant with respect to the ownership interest in the
Pool I, Pool II, Pool III or Pool IV Certificates, (b) the delivery to any
Direct or Indirect Participant or any other Person, other than a registered
Holder of a Pool I, Pool II, Pool III or Pool IV Certificate or (c) the payment
to any Direct or Indirect Participant or any other Person, other than a
registered Holder of a Pool I, Pool II, Pool III or Pool IV Certificate as shown
in the Register, of any amount with respect to any distribution of principal or
interest on the Pool I, Pool II, Pool III or Pool IV Certificates. No Person
other than a registered Holder of a Pool I, Pool II, Pool III or Pool IV
Certificate as shown in the Register shall receive a certificate evidencing such
Pool I, Pool II, Pool III or Pool IV 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 Pool I, Pool II, Pool III or Pool IV Certificates appearing as
registered Owners in the Certificate Register on a Record Date, the name "Cede &
Co." in this Agreement shall refer to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Pool I, Pool II, Pool III or Pool IV Certificates and the Representative
is unable to locate a qualified successor or (ii) the Representative at its sole
option elects to terminate the book-entry system through the Depository, the
Pool I, Pool II, Pool III or Pool IV Certificates shall no longer be restricted
to being registered in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the Representative may
determine that the Pool I, Pool II, Pool III or Pool IV Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Representative, or such
depository's agent or designee but, if the Representative does not select such
alternative global book-entry system, then the Pool I, Pool II, Pool III or Pool
IV Certificates may be registered in whatever name or names registered Holders
of Pool I, Pool II, Pool III or Pool IV Certificates transferring Pool I, Pool
II, Pool III or Pool IV Certificates shall designate, in accordance with the
provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Pool I, Pool II, Pool III or Pool IV Certificates are
registered in the name of Cede & Co., as nominee of the Depository, all
distributions of principal and interest on such Pool I, Pool II, Pool III or
Pool IV Certificates and all notices with respect to such Pool I, Pool II, Pool
III or Pool IV Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
(g) The Class R and Class X Certificates shall be issued without
principal balances in minimum Percentage Interests as provided in the definition
of Percentage Interest. The Class R Certificates and Class X Certificates have
not been registered or qualified under the 1933 Act, or any state securities
law. No transfer, sale, pledge or other disposition of any Class R or Class X
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act, the Trustee or the Certificate Registrar may require, in order to assure
compliance with the 1933 Act, that the Class R or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Percentage Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Representative of any change or impending change in its
status as a Permitted Transferee.
(ii) No Percentage Interest in a Class R Certificate may be
transferred (including the sale to the initial holder) and the Trustee
shall not register the transfer of a Class R Certificate unless the
Trustee and the Representative shall have been furnished with (A) an
affidavit (a "Transfer Affidavit") of the proposed transferee in the
form attached as Exhibit K (and if required by the Transfer Affidavit,
the opinion of counsel, as therein referenced) and (B) a certificate
(a "Transfer Certificate") of the transferor to the effect that such
transferor has no actual knowledge that the proposed transferee is not
a Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage Interest in
a Class R Certificate shall agree (A) to require a Transfer Affidavit
from any other Person to whom such Person attempts to transfer its
Percentage Interest in a Class R Certificate, (B) to require a
Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any transfer of a Class R
Certificate, (C) to deliver a Transfer Certificate to the Trustee and
the Representative in connection with any such attempted transfer and
(D) not to transfer its Percentage Interest in a Class R Certificate
or to cause the transfer of a Percentage Interest in a Class R
Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee.
(iv) Any attempted or purported transfer of any Percentage
Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the
provisions of this Section 4.02, then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall notify the Representative upon
knowledge of a Responsible Officer that the registration of transfer
of a Class R Certificate was not in fact permitted by this Section
4.02. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the transfer was registered after receipt of the related Transfer
Affidavit and Transfer Certificate. The Trustee shall be entitled but
not obligated to recover from any Holder of a Class R Certificate that
was in fact not a Permitted Transferee at the time it became a Holder
or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and after
either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of
such Certificate.
(v) If any purported transferee shall become a Holder of a Class
R Certificate in violation of the restrictions in this Section 4.02,
then the Representative or its designee shall, without notice to the
Holder or any prior Holder of such Class R Certificate, as the case
may be, sell such Class R Certificate to a purchaser selected by the
Representative or its designee on such reasonable terms as the
Representative or its designee may choose. Such purchaser may be the
Representative itself or any affiliate of the Representative. The
proceeds of such sale, net of commissions, expenses and taxes due, if
any, will be remitted by the Representative to the last preceding
purported transferee of such Class R Certificate, except that in the
event that the Representative determines that the Holder or any prior
Holder of such Class R Certificate may be liable for any amount due
under this Section 4.02 or any other provision of this Agreement, the
Representative may withhold a corresponding amount from such
remittance as security for such claim. The terms and conditions of any
sale under this clause (v) shall be determined in the sole discretion
of the Representative or its designee, and it shall not be liable to
any Person having a Percentage Interest in a Class R Certificate, as
applicable, as a result of its exercise of such discretion.
No Class R or Class X Certificate or Certificates or any interest
therein shall be acquired by or on behalf of a "benefit plan investor" described
in or subject to the plan asset regulations set forth at 29 C.F.R. ss.
2510.3-101, unless an Opinion of Counsel is provided to the Representative and
the Trustee which establishes to their satisfaction that the transfer and/or the
holding of such Class R or Class X Certificates, as applicable, will not result
in the assets of the Trust Fund being deemed to be "plan assets" within the
meaning of Department of Labor Regulations ss. 2510.3-101; subject the Trustee,
the Representative or the underwriters of the Pool I, Pool II, Pool III and Pool
IV Certificates, or any of their affiliates, to the prohibited transaction rules
under ERISA or excise taxes under Section 4975 of the Code; or cause the
fiduciary investment standards of ERISA to apply to the assets of the Trust
Fund.
Subject to the preceding paragraphs, upon surrender for registration
of transfer of any Certificate at such office, the Representative shall execute
in the name of the designated transferee or transferees, a new Certificate of
the same Class and Percentage Interest and dated the date of authentication by
the Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which may include a letter of indemnity delivered by
an insurance company) as may be required by each of them to save each of them
harmless, then, in the absence of notice to the Servicer, the Trustee and the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the applicable Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Representative, the Trustee, the Certificate Insurer
and the Certificate Registrar may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.08 and for all other purposes whatsoever, and
the Representative, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar shall not be affected by notice to the contrary.
<PAGE>
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) It is intended that each of REMIC I and REMIC II hereunder shall
constitute, and that the affairs of each of REMIC I and REMIC II shall be
conducted so as to qualify as a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of REMIC I and REMIC II
and as Tax Matters Person on behalf of REMIC I and REMIC II, and that in such
capacities it shall: (i) prepare and file, or cause to be prepared and filed, in
a timely manner, U.S. Real Estate Mortgage Investment Conduit Income Tax Returns
(Form 1066) and any other Tax Return required to be filed by REMIC I or REMIC II
using a calendar year as the taxable year for each of REMIC I and REMIC II and
using the accrual method of accounting, including, without limitation,
information reports relating to "original issue discount," as defined in the
Code, based upon the Prepayment Assumption and calculated by using the issue
price of the Certificates; (ii) make, or cause to be made, an election, on
behalf of each of REMIC I and REMIC II, to be treated as a REMIC on the federal
tax return of each of REMIC I and REMIC II for their first taxable year; (iii)
prepare and forward, or cause to be prepared and forwarded, to the Trustee, the
Certificateholders and to the Internal Revenue Service and any other relevant
governmental taxing authority all information returns or reports as and when
required to be provided to them in accordance with the REMIC Provisions and any
other provision of federal, state or local income tax laws; (iv) to the extent
that the affairs of REMIC I or REMIC II are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of each of REMIC I and REMIC II as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws; (v) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of either REMIC I or REMIC II or that would
cause the imposition of a prohibited transaction tax or a tax on contributions
to REMIC I or REMIC II; (vi) pay the amount of any and all federal, state, and
local taxes, including, without limitation, prohibited transaction taxes as
defined in Section 860F of the Code imposed on each of REMIC I and REMIC II when
and as the same shall be due and payable (but such obligation shall not prevent
the Servicer or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Servicer from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (vii) ensure that any such returns or reports filed on behalf of
REMIC I and REMIC II are properly executed by the appropriate person; (viii)
represent REMIC I and REMIC II in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of REMIC I and REMIC
II, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of REMIC I or REMIC II and
otherwise act on behalf of REMIC I and REMIC II in relation to any tax matter
involving either REMIC I or REMIC II; (ix) as provided in Section 5.11 hereof,
make available information necessary for the computation of any tax imposed (1)
on transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is held by an
entity which is not a Permitted Transferee; and (x) in connection with any FHA
Loan, timely pay to the FHA the FHA Insurance Premium required to be paid for
each FHA Loan. The Trustee will cooperate with the Servicer in the foregoing
matters and will sign, as Trustee, any and all Tax Returns required to be filed
by the REMIC I and REMIC II. Notwithstanding the foregoing, at such time as the
Trustee becomes the successor Servicer, the Representative shall serve as Tax
Matters Person and as such shall perform the duties described in this Section
5.01(a) until such time as an entity is appointed to succeed the Trustee as
Servicer. The Servicer shall indemnify the Trustee and REMIC I or REMIC II, as
applicable, for any liability it may incur in connection with this Section
5.01(a) including reimbursement to the Certificate Insurer for any Insured
Payments made by the Certificate Insurer in connection with such liability with
respect to the Pool I and Pool IV Mortgage Loans, if any, which indemnification
shall survive the termination of REMIC I and REMIC II; provided, however, that
the Servicer shall not indemnify the Trustee for its negligence or willful
misconduct.
With respect to any Mortgage Note (other than a Mortgage Note relating
to a Pool III Mortgage Loan) released by the Trustee to the Servicer or to any
Subservicer in accordance with the terms of this Agreement, other than a release
or satisfaction pursuant to Section 7.02, prior to such release, the Trustee
shall (a) complete all endorsements in blank so that the endorsement reads "Pay
to the order of The Bank of New York, as Trustee under the Pooling and Servicing
Agreement dated as of November 30, 1997, 1997-D" and (b) complete a restrictive
endorsement that reads "The Bank of New York is the holder of the mortgage note
for the benefit of the Certificateholders under the Pooling and Servicing
Agreement dated as of November 30, 1997, 1997-D" with respect to those Mortgage
Notes (other than a Mortgage Note relating to a Pool III Mortgage Loan)
currently endorsed "Pay to the order of holder."
With respect to any Mortgage Note relating to a Pool III Mortgage Loan
released by the Co-Trustee to the Servicer or any Subservicer in accordance with
the terms of this Agreement, other than a release or satisfaction pursuant to
Section 7.02 or a release to the Claims Administrator pursuant to Section
5.15(b), prior to such release, the Co-Trustee shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of First
Union Trust Company, National Association, as Co-Trustee under the Pooling and
Servicing Agreement dated as of November 30, 1997, 1997-D" and (b) complete a
restrictive endorsement that reads "First Union Trust Company, National
Association is the holder of the mortgage note for the benefit of the
Certificateholders under the Pooling and Servicing Agreement dated as of
November 30, 1997, 1997-D" with respect to those Mortgage Notes relating to Pool
III Mortgage Loans currently endorsed "Pay to the order of Holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (x)
has (i) been designated an approved Seller- Servicer by FHLMC or FNMA for first
and second mortgage loans and (ii) has a net worth of at least $5,000,000 or (y)
is an Originator or another affiliate of the Servicer. The Servicer shall give
notice to the Certificate Insurer of the appointment of any Subservicer. Any
such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Mortgage Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Certificateholders and, in the case of Pool I and Pool IV Mortgage
Loans, the Certificate Insurer, for the servicing and administering of the
Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. For purposes
of this Agreement, the Servicer shall be deemed to have received payments on
Mortgage Loans when any Subservicer has received such payments. The Servicer
shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee is then permitted and
elects to terminate any Subservicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements. The Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Pool I, Pool II, Pool III and Pool IV Certificateholders or,
with respect to the Pool I and Pool IV Mortgage Loans, the Certificate Insurer,
provided, however, that (unless (x) the Mortgagor is in default with respect to
a Mortgage Loan, or such default is, in the judgment of the Servicer, imminent
and in the case of a Pool I or Pool IV Mortgage Loan the Servicer obtains
written consent of the Certificate Insurer and (y) the Servicer determines that
any modification would not be considered a new mortgage loan for federal income
tax purposes) the Servicer may not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, defer (subject to
Section 5.12), or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan), or extend the
final maturity date on such Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall for the purposes of
distributions to Certificateholders be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, and
subject to the consent of the Certificate Insurer, the Servicer shall continue,
and is hereby authorized and empowered, to execute and deliver on behalf of the
Trustee, the Co-Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer, the
Trustee and Co- Trustee shall furnish the Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties under this Agreement.
The Servicer, in servicing and administering the Mortgage Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
REO Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, in accordance with accepted second mortgage servicing
practices (or, in the case of FHA Loans, in accordance with accepted Title I
servicing practices or, in the case of Multifamily Loans, in accordance with
accepted multifamily loan servicing practices) of prudent lending institutions
and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Servicer.
(g) On and after such time as the Trustee and the Co-Trustee receive
the resignation of, or notice of the removal of, the Servicer from its rights
and obligations under this Agreement, and with respect to resignation pursuant
to Section 9.04, after receipt of the Opinion of Counsel required pursuant to
Section 9.04, the Trustee or its designee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee or its designee) shall assume all of the rights
and obligations of the Servicer, subject to Section 10.02 hereof. The Servicer
shall, upon request of the Trustee but at the expense of the Servicer, deliver
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
all documents and records (including computer tapes and diskettes) relating to
the Mortgage Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(h) In the event that any tax is imposed on REMIC I or REMIC II, such
tax shall be charged against amounts otherwise distributable to the Holders of
the Class R-1 or Class R-2 Certificates, respectively. Notwithstanding anything
to the contrary contained herein, the Servicer is hereby authorized to retain
from the Pool Remaining Amount Available for the respective Pool sufficient
funds to reimburse the Servicer for the payment of such tax (to the extent that
the Servicer has paid any such tax and has not been previously reimbursed or
indemnified therefor). The Servicer agrees to first seek indemnification for any
such tax payment from any indemnifying parties before reimbursing itself from
amounts otherwise distributable to the Holders of the Class R- 1 or Class R-2
Certificates.
(i) After the Closing Date, the Servicer shall confirm, or cause to be
confirmed, whether all on-site or off-site improvements on the Mortgaged
Properties relating to FHA Loans have been completed and, if such improvements
have not been completed, to submit the appropriate filings to the FHA.
Section 5.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interests of the Certificate Insurer (if such Liquidated Mortgage
Loan is a Pool I or Pool IV Mortgage Loan) and the Certificateholders, as the
case may be. The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee for the benefit of the
Certificateholders, as the case may be, of Mortgaged Properties relating to
defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of delinquent payments in accordance with the provisions of
Section 5.10 and, in the case of FHA Loans, for which a Claim is not required to
be submitted to the FHA pursuant to Section 5.15. In connection with such
foreclosure or other conversion, the Servicer shall exercise collection and
foreclosure procedures with the same degree of care and skill in its exercise or
use as it would exercise or use under the circumstances in the conduct of its
own affairs. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Mortgaged Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of a Mortgaged
Property. Any amounts advanced in connection with such foreclosure or other
action shall constitute "Servicing Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the
Servicer shall promptly prepare and forward to the Trustee, the Certificate
Insurer (if such Liquidated Mortgage Loan is a Pool I or Pool IV Mortgage Loan)
and, upon request, any Certificateholder, a Liquidation Report, in the form
attached hereto as Exhibit N, detailing the Liquidation Proceeds received from
the Liquidated Mortgage Loan, expenses incurred with respect thereto, and any
Realized Loss incurred in connection therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS;
DEPOSITS IN PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or
more Principal and Interest Accounts for the Trust Fund, in one or more
Designated Depository Institutions, in the form of time deposit or demand
accounts, which may be interest-bearing or such accounts may be trust accounts
wherein the moneys therein are invested in Permitted Instruments, titled "The
Money Store Inc., in trust for the registered holders of The Money Store Asset
Backed Certificates, Series 1997-D and various Mortgagors." Each such Principal
and Interest Account shall be insured by the BIF or SAIF administered by the
FDIC to the maximum extent provided by law. The creation of any Principal and
Interest Account shall be evidenced by a letter agreement in the form of Exhibit
C hereto.
A copy of such letter agreement shall be furnished to the Trustee, the
Certificate Insurer and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within 24 hours of receipt thereof) in the applicable Principal and
Interest Account and retain therein:
(i) all payments received after the Cut-Off Date on
account of principal on the Pool I, Pool II, Pool III or Pool
IV Mortgage Loans, as the case may be, including all Excess
Payments, Principal Prepayments and Curtailments received
after the Cut-Off Date and all payments in respect of the
applicable FHA Insurance Premium;
(ii) all payments received after the Cut-Off Date on
account of interest on the Pool I, Pool II, Pool III or Pool
IV Mortgage Loans, as the case may be;
(iii) all Net Liquidation Proceeds received with
respect to the Pool I, Pool II, Pool III or Pool IV Mortgage
Loans, as the case may be;
(iv) all Insurance Proceeds received with respect to
the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as
the case may be (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property, or to
be released to the Mortgagor in accordance with customary
second mortgage servicing procedures);
(v) all Released Mortgaged Property Proceeds received
with respect to the Pool I, Pool II, Pool III or Pool IV
Mortgage Loans, as the case may be;
(vi) any amounts paid in connection with the purchase
of any Pool I, Pool II, Pool III or Pool IV Mortgage Loan, as
the case may be, and the amount of any
Substitution Adjustment received with respect to the Pool I,
Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be, paid pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the
applicable Principal and Interest Account pursuant to Section
5.04, 5.08, 5.10 or 5.15(c); and
(viii) the amount of any credit life insurance
premium refund which is not due to the related Mortgagor.
Also, for each Mortgage Loan delivered to the Trustee or Co-Trustee on
the Closing Date that was originated on or after December 1, 1997, the Servicer
shall deposit in the applicable Principal and Interest Account 30 days' interest
on the original principal balance of each such Mortgage Loan calculated at the
applicable Mortgage Interest Rate.
(c) The foregoing requirements for deposit in the Principal and
Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, the Servicing Fee and the
Contingency Fee with respect to each Mortgage Loan, and payments in the nature
of prepayment penalties or premiums, late payment charges and assumption fees,
to the extent received and permitted by Sections 7.01 and 7.03, together with
the difference between any Liquidation Proceeds and the related Net Liquidation
Proceeds, need not be deposited by the Servicer in the Principal and Interest
Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the applicable Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Pool Available Remittance Amounts for the related Pool to the Trustee. Any
reference herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNTS.
The Servicer shall withdraw funds from the Principal and Interest
Accounts for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date
as follows: the portion of the Excess Spread relating to the Mortgage Loans of
the related Pool and the portion of the Pool Available Remittance Amounts of the
related Pool, that are net of Compensating Interest and Monthly Advances for the
related Remittance Date to the Trustee for deposit in the Certificate Account.
For the purposes of this Section 5.04(a), the calculation of the Pool Available
Remittance Amounts shall be made without reference to the actual deposit of
funds in the respective Certificate Accounts;
(b) to reimburse itself for any accrued unpaid Servicing Fees, unpaid
Contingency Fees, unreimbursed Monthly Advances and for unreimbursed Servicing
Advances to the extent that funds relating to such amount have been deposited in
the applicable Principal and Interest Account (and not netted from Monthly
Payments received). The Servicer's right to reimbursement for unpaid Servicing
Fees, unpaid Contingency Fees and, except as provided in the following sentence,
Servicing Advances and Monthly Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such unreimbursed
amounts are owed. The Servicer's right to reimbursement for Servicing Advances
and Monthly Advances in excess of such amounts shall be limited to any late
collections of interest received on the related Pool of Mortgage Loans,
generally, including Liquidation Proceeds, Released Mortgaged Property Proceeds
and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or Class R Certificateholders; PROVIDED, HOWEVER,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the applicable Class A, Class M and/or Class B
Certificateholders to receive the Shortfall Carryforward Amounts and the right
of the Certificate Insurer to receive the Pool Carry-Forward Amounts relating to
Pool I and Pool IV;
(c) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay
to itself, as permitted by Section 5.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) (i) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds or (ii)
to pay the Remainder Excess Spread Amount with respect to any Remittance Date to
itself and/or the Representative for any Reimbursable Amounts and the remainder
to the Trustee for remittance to the Class X Certificateholders, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing
Account pursuant to Section 6.15(a).
(h) to clear and terminate each Principal and Interest Account upon
the termination of the related Trust Fund.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained as an interest-bearing accounts
meeting the requirements set forth in Section 5.03(a), or the funds held therein
may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store Inc.
in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1997-D." All interest or other earnings from funds on
deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from either Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
applicable Principal and Interest Account in Permitted Instruments shall be
deposited in the applicable Principal and Interest Account by the Servicer from
its own funds immediately as realized without reimbursement therefor.
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan which is a first Mortgage Loan, or
as to which the Servicer has advanced the outstanding principal balance of any
Prior Lien pursuant to Section 5.14 or as to which the Servicer maintains escrow
accounts, the Servicer shall maintain accurate records reflecting the status of
ground rents, taxes, assessments, water rates and other charges which are or may
become a lien upon the Mortgaged Property and the status of primary mortgage
guaranty insurance premiums, if any, and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage (provided, however, that to the extent the Servicer
advances its own funds, such advances shall constitute "Servicing Advances"). To
the extent that a Mortgage does not provide for escrow payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Mortgage Loan that are
required to be remitted to the Trust Fund would not be reduced, as a result of
such failure to timely pay, from the amount that would otherwise be remitted to
the Trust Fund; provided further, however, that this provision shall not have
the effect of permitting the Servicer to take, or fail to take, any action in
respect of the payments described herein that would adversely affect the
interest of the Trust Fund in any Mortgaged Property.
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written prior notice to the Trustee and the
Certificate Insurer, transfer the Principal and Interest Account to a different
Designated Depository Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall cause to be maintained, subject to the provisions
of Section 5.08 hereof, fire and hazard insurance with extended coverage
customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the least of (a) the outstanding principal balance
owing on the Mortgage Loan and any Prior Lien, (b) the full insurable value of
the premises securing the Mortgage Loan and (c) the minimum amount required to
compensate for damage or loss on a replacement cost basis. If the Mortgaged
Property is in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) the Servicer will cause to be purchased a flood insurance
policy with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the outstanding principal balance of the
Mortgage Loan and any Prior Lien, (ii) the full insurable value of the Mortgaged
Property, or (iii) the maximum amount of insurance available under the National
Flood Insurance Act of 1968, as amended. The Servicer shall also maintain, to
the extent such insurance is available, on REO Property, fire and hazard
insurance in the amounts described above, liability insurance and, to the extent
required and available under the National Flood Insurance Act of 1968, as
amended, flood insurance in an amount equal to that required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Mortgagor in accordance with customary second mortgage servicing
procedures) shall be deposited in the applicable Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Mortgagor or maintained on REO Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against fire and hazards of extended coverage on all of the
Mortgage Loans, then, to the extent such policy names the Trustee or the
Co-Trustee on behalf of the Certificateholders as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal balance on the
Mortgage Loans without co-insurance, and otherwise complies with the
requirements of Section 5.07, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance coverage
under Section 5.07, it being understood and agreed that such blanket policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.07, and there shall have been a loss which would have
been covered by such policy, deposit in the applicable Principal and Interest
Account from the Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with Section 5.07 and the
amount paid under such blanket policy. Upon the request of the Certificate
Insurer, the Trustee, the Co-Trustee or any Certificateholder, the Servicer
shall cause to be delivered to the Trustee, the Co-Trustee or such
Certificateholder, as the case may be, a certified true copy of such policy. The
current issuer of such policy is Lloyds of London.
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the
Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, the Co-Trustee and their respective officers, and employees, against
losses resulting from forgery, theft, embezzlement or fraud, by such Servicer
Employees. The errors and omissions policy shall insure against losses resulting
from the errors, omissions and negligent acts of such Servicer Employees. No
provision of this Section 5.09 requiring such fidelity bond and errors and
omissions insurance shall relieve the Servicer from its duties as set forth in
this Agreement. Upon the request of the Trustee, the Co-Trustee, the Certificate
Insurer or any Certificateholder, the Servicer shall cause to be delivered to
the Trustee, the Co-Trustee, the Certificate Insurer or such Certificateholder a
certified true copy of such fidelity bond and insurance policy. The current
issuer of such fidelity bond and insurance policy is National Union Fire
Insurance Company of Pittsburgh, Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee (or, with respect
to the Pool III Mortgage Loans, the Co-Trustee) for the benefit of the
applicable Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Certificate Insurer (with respect to
any REO Property that was a Pool I or Pool IV Mortgage Loan) solely for the
purpose of its prudent and prompt disposition and sale. The Servicer shall,
either itself or through an agent selected by the Servicer, manage, conserve,
protect and operate the REO Property in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed. The Servicer shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as the Servicer deems to
be in the best interest of the Certificate Insurer (with respect to any REO
Property that was a Pool I or Pool IV Mortgage Loan) and the Pool I, Pool II,
Pool III or Pool IV Certificateholders, as the case may be.
The Servicer shall cause to be deposited in the applicable Principal
and Interest Account, no later than five Business Days after the receipt
thereof, all revenues received with respect to the conservation and disposition
of the related REO Property net of funds necessary for the proper operation,
management and maintenance of the REO Property and the fees of any managing
agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
at such price, and upon such terms and conditions, as the Servicer deems to be
in the best interest of the Pool I, Pool II, Pool III or Pool IV
Certificateholders, as the case may be and (with respect to any REO Property
that was a Pool I or Pool IV Mortgage Loan) the Certificate Insurer. The
proceeds of sale of the REO Property shall be promptly deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid, the Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees, unpaid Contingency Fees and
unreimbursed Monthly Advances, and the Servicer shall deposit in the Principal
and Interest Account the net cash proceeds of such sale to be distributed to the
Pool I, Pool II, Pool III or Pool IV Certificateholders, as the case may be, in
accordance with Section 6.08 hereof.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel also
addressed to the Certificate Insurer (if such Mortgage Loan is a Pool I or Pool
IV Mortgage Loan) to the effect that the holding of such Mortgaged Property
subsequent to two years after its acquisition will not result in the imposition
of taxes on "prohibited transactions" as defined in section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any Pool I,
Pool II, Pool III, Pool IV or Class X Certificates are outstanding.
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Servicer pursuant to this Section shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund, and no construction shall take place on such Mortgaged
Property, in such a manner or pursuant to any terms that would cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust
Fund of any "income from non-permitted assets" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period
greater than two years is permitted under this Agreement and is necessary to
sell any REO Property, the Servicer shall give appropriate notice to the Trustee
(and, with respect to a Pool I or Pool IV Mortgage Loan, the Certificate Insurer
and, with respect to a Pool III Mortgage Loan, the Co-Trustee) and shall report
monthly to the Trustee (and, with respect to a Pool III Mortgage Loan, the
Co-Trustee) as to the progress being made in selling such REO Property.
Section 5.11 CERTAIN TAX INFORMATION.
The Servicer shall furnish (a) any information which may be required
under the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, comply with
the terms and provisions of any applicable hazard insurance policy. Consistent
with the foregoing, the Servicer may in its discretion waive or permit to be
waived any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as servicing
compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment
provided that the Servicer determines such extension would not be considered a
new mortgage loan for federal income tax purposes. In the event the Servicer
shall consent to the deferment of the due dates for payments due on a Mortgage
Note, the Servicer shall nonetheless make payment of any required Monthly
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 5.04(b) hereof.
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS.
The Servicer shall provide to the Trustee, the Co-Trustee, the
Certificateholders, the Certificate Insurer, the FDIC, the Office of Thrift
Supervision and the supervisory agents
and examiners of each of the foregoing access to the documentation regarding the
Mortgage Loans required by applicable local, state and federal regulations, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Section 5.14 SUPERIOR LIENS.
The Servicer shall file of record a request for notice of any action
by a superior lienholder under a Prior Lien for the protection of the Trustee's
interest (or, with respect to a Pool III Mortgage Loan, the Co-Trustee), where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. The Servicer
must also notify any superior lienholder in writing of the existence of the
Mortgage Loan and request notification of any action (as described below) to be
taken against the Mortgagor or the Mortgaged Property by the superior
lienholder.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by any Prior Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and the Certificate Insurer, in the
case of Pool I or Pool IV Mortgage Loans, and/or to preserve the security of the
related Mortgage Loan, subject to the application of the REMIC Provisions. The
Servicer shall immediately notify the Trustee (and, with respect to a Pool I or
Pool IV Mortgage Loan, the Certificate Insurer and, with respect to a Pool III
Mortgage Loan, the Co-Trustee) of any such action or circumstances. The Servicer
will advance the necessary funds to cure the default or reinstate the superior
lien, if such advance is in the best interests of the Certificate Insurer, in
the case of Pool I or Pool IV Mortgage Loans, and the related
Certificateholders. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 5.15 DUTIES OF THE CLAIMS ADMINISTRATOR.
(a) In connection with each FHA Loan, the Representative, the
Servicer, the Claims Administrator and the Originators will comply at all times
with the provisions of Title I and the rules and regulations promulgated
thereunder in servicing each FHA Loan and making claims for reimbursement with
respect to each FHA Loan, and will at all times hold a valid Contract of
Insurance from the FHA for such purposes (unless such Contract of Insurance is
terminated so as not to affect the obligation of FHA to provide insurance
coverage with respect to the FHA Loans).
(b) If any FHA Loan becomes a 90 Day Delinquent FHA Loan, and if
sufficient coverage is available in the Reserve Amount to make an FHA Payment
with respect to such FHA Loan, the Claims Administrator may, in its sole
discretion, during any subsequent Due Period, determine to file a Claim with the
FHA with respect to such 90 Day Delinquent FHA Loan. If the Claims Administrator
determines to file such a Claim, the Claims Administrator will notify the Co-
Trustee and the Custodian no later than the Determination Date following such
determination by an Officer's Certificate in the form of Exhibit J-1 hereto and
shall request delivery of the related Trustee's Mortgage File. Upon receipt of
such certification and request, the Custodian shall, no later than the related
Remittance Date, release to the Claims Administrator the related Trustee's
Mortgage File and the Co-Trustee and the Custodian shall execute and deliver
such instruments necessary to enable the Claims Administrator to file a Claim
with the FHA on behalf of the Co-Trustee. Within 120 days of its receipt of the
related Trustee's Mortgage File, the Claims Administrator shall, in its sole
discretion, either file a Claim with the FHA for an FHA Payment with respect to
such 90 Day Delinquent FHA Loan or, if the Claims Administrator determines not
to file such a Claim, return to the Custodian on behalf of the Co-Trustee the
related Trustee's Mortgage File.
(c) With respect to any 90 Day Delinquent FHA Loan transferred to the
Claims Administrator pursuant to clause (b) above, the Claims Administrator
shall deposit (or, if the Claims Administrator is not also the Servicer, the
Claims Administrator shall instruct the Servicer to deposit) in the Principal
and Interest Account within 24 hours of receipt the following amounts (such
amounts to be net of any amounts that would be reimbursable to the Servicer
under Section 5.04(b) with respect to amounts in the Principal and Interest
Account): (i) any FHA Payments; (ii) the amount, if any, by which the FHA
Payment was reduced in accordance with FHA Regulations due to the Claims
Administrator enforcing a lien on the Mortgaged Property prior to the lien of
the related 90 Day Delinquent FHA Loan; and (iii) any principal and interest
payments received with respect to a 90 Day Delinquent FHA Loan after the Due
Period in which the FHA Loan is transferred to the Claims Administrator and
before either the related FHA Payment is paid or the related Trustee's Mortgage
File is returned to the Custodian on behalf of the Co-Trustee, as the case may
be (the amounts referred to in (ii) and (iii) above are referenced to herein as
"Related Payments").
(d) If an FHA Loan becomes a 90 Day Delinquent FHA Loan when there is
insufficient coverage in the Reserve Amount, or if the Claims Administrator
determines not to file a Claim with the FHA with respect to such 90 Day
Delinquent FHA Loan, the Co-Trustee will not transfer such FHA Loan to the
Claims Administrator, no Claim will be made to the FHA and the Servicer may take
other action, including the commencement of foreclosure proceedings on the
related Mortgaged Property.
(e) If a Claim is rejected by the FHA and if the Claims Administrator
is no longer The Money Store Inc., the Claims Administrator shall promptly
notify the Servicer and the Representative of such rejection. Further, if a
Claim is rejected by the FHA, other than as a result of depletion of the Reserve
Amount, the related Originator shall be deemed to have breached its
representation and warranty contained in Section 3.02 (nnn) and the
Representative shall be required to repurchase the related 90 Day Delinquent FHA
Loan by depositing in the Principal and Interest Account, on the next succeeding
Determination Date, an amount and in the manner specified in Section 2.05(b).
Section 5.16 [RESERVED]
<PAGE>
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS IN
CERTIFICATE ACCOUNTS; PERMITTED WITHDRAWALS FROM CERTIFICATE Accounts.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself in its trust department four separate trust accounts, which
shall not be interest-bearing, titled "TMS Certificate Account 1997-D-I," "TMS
Certificate Account 1997-D-II," "TMS Certificate Account 1997-D-III" and "TMS
Certificate Account 1997-D-IV (each a "Certificate Account" and together, the
"Certificate Accounts"). The Trustee shall, promptly upon receipt, deposit in
the applicable Certificate Account and retain therein:
(i) the Pool Available Remittance Amount of the
related Pool (net of the amount of Monthly Advances and
Compensating Interest deposited pursuant to subclause (ii)
below) plus the Excess Spread and any Subordination Reduction
Amounts with respect to the Mortgage Loans of the related Pool
remitted by the Servicer;
(ii) the Compensating Interest and the portion of the
Monthly Advance based on the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool I Certificates, in
the case of Pool I, the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool II Certificates, in
the case of Pool II, the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool III Certificates, in
the case of Pool III, and the Class Adjusted Mortgage Loan
Remittance Rate for Class AMF Certificates, in the case of
Pool IV, remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account
pursuant to Section 6.05(b)(iii) and Insured Payments and
Guaranteed Supplemental Payments received by the Trustee after
a claim pursuant to Section
6.08(c);
(iv) amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on
investments of amounts in the applicable Certificate Account;
(v) amounts transferred from the Pre-Funding Account
and the Capitalized Interest Account on the Special Remittance
Date pursuant to Sections 6.02(c) and (h), respectively; and
(vi) amounts, if any, received from TMS-CAP Trust
1997-1 to be applied as an Insured Payment or Guaranteed
Supplemental Payment pursuant to Section
6.08(c).
(b) Amounts on deposit in each Certificate Account shall be withdrawn
on each Remittance Date by the following parties in the following order of
priority (provided that only amounts on deposit in the Certificate Account
relating to (x) Pool I and Pool IV shall be withdrawn to make deposits pursuant
to subclause (i), (y) Pool I and Pool II shall be withdrawn to make deposits
pursuant to subclause (iii) and (z) Pool III shall be withdrawn pursuant to
subclause (ii) below):
(i) by the Trustee, to make deposits in the
applicable Insurance Account pursuant to Section
6.04(a)(i);
(ii) by the Trustee, to make deposits in the FHA
Premium Account pursuant to Section 6.06(a)(i);
(iii) by the Trustee, to pay the Remarketing Agent
the required Remarketing Agent Fee pursuant to the Interest
Rate Services Agreement and the Auction Agent the required
Auction Agent Fee pursuant to the terms of the Auction Agent
Agreement;
(iv) by the Trustee, or the Paying Agent on its
behalf, to effect the applicable distributions described in
Section 6.08(d);
and also, in no particular order of priority:
(v) by the Trustee, to invest amounts on deposit
in the applicable Certificate Account in Permitted
Instruments pursuant to Section 6.07;
(vi) by the Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid
and earnings realized on Permitted Instruments;
(vii) by the Trustee, to withdraw any amount not
required to be deposited in the applicable Certificate Account
or deposited therein in error; and
(viii) by the Trustee, to clear and terminate the
applicable Certificate Account upon the termination of the
related Trust Fund in accordance with the terms of Section
11.01 hereof.
Section 6.02 ESTABLISHMENT OF PRE-FUNDING ACCOUNT AND CAPITALIZED
INTEREST ACCOUNT; DEPOSITS IN PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT; PERMITTED WITHDRAWALS FROM PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT.
(a) No later than the Closing Date, the Representative shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "TMS Pre-Funding Account 1997-D" (the
"Pre-Funding Account"). The Pre-Funding Account shall constitute part of the
Trust Fund but not be asset of the REMIC I or REMIC II. It is an outside reserve
fund, the owners of which are the Class R-1 Certificateholders and for Federal
tax purposes, amounts, if any, transferred by REMIC I to the Pre-Funding Account
are treated as distributed by REMIC I to the Class R-1 Certificateholders. The
Trustee shall, promptly upon receipt, deposit into the Pre-Funding Account and
retain therein the Original Pre-Funded Amount in an amount equal to the sum of
(i) $130,278,449.00 from the proceeds of the sale of the Pool I Certificates,
(ii) $38,320,752.27 from the proceeds of the sale of the Pool II Certificates,
(iii) $37,567,743.43 from the proceeds of the sale of the Pool III Certificates
and (iv) $1,543,122.08 from the proceeds of the sale of the Pool IV
Certificates.
(b) On each Subsequent Transfer Date, the Representative shall
instruct the Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Principal Balances of the Subsequent Mortgage Loans (or,
with respect to the Low Interest Mortgage Loans, an amount equal to the product
of the percentage set forth on Exhibit T attached hereto determined by referring
to the columns entitled "Coupon" and "Remaining Term" and the aggregate
Principal Balances of such Subsequent Mortgage Loans) sold to the Trust Fund on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Representative with respect to such transfer; in connection with such
instruction, the Representative shall additionally inform the Trustee whether
such Subsequent Mortgage Loans are being transferred in respect of Pool I, Pool
II, Pool III or Pool IV. In no event shall the Representative be permitted to
instruct the Trustee to release from the Pre-Funding Account with respect to
subsequent Mortgage Loans to be transferred to Pool I, Pool II, Pool III or Pool
IV an amount in excess of $130,278,449.00, $38,320,752.27, $37,567,743.43 and
$1,543,122.08, respectively.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
in the appropriate Certificate Account any Pre- Funded Amount relating to the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans, as the case may be, then
remaining in the Pre-Funding Account. However, if at the close of business on
March 30, 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 applicable Certificate Account any
Pre-Funded Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in January, February and March
1998, the Trustee shall transfer from the Pre-Funding Account to the appropriate
Certificate Account the Pool Pre-Funding Earnings for the related Pool, if any,
applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "TMS Capitalized Interest Account 1997-D"
(the "Capitalized Interest Account"). The Capitalized Interest Account shall
constitute part of the Trust Fund but not a part of REMIC I or REMIC II. It is
an outside reserve fund, the owners of which are the Class R-1
Certificateholders and for Federal tax purposes amounts, if any, transferred by
REMIC I to the Capitalized Interest Account are treated as distributed by REMIC
I to the Class R Certificateholders. The Trustee shall, promptly upon receipt,
deposit into the Capitalized Interest Account $2,200,366.51. If prior to the end
of the Funding Period the funds on deposit in the Pre-Funding Account are
invested in a guaranteed investment contract, repurchase agreement or other
arrangement acceptable to the Certificate Insurer, that constitutes a Permitted
Instrument, the Trustee shall, within one Business Day of its receipt of written
notification from the Certificate Insurer, withdraw from the Capitalized
Interest Account and pay to the Owners of the Class R-1 Certificates the amount
set forth in such written notification.
(f) On each Subsequent Transfer Date the Representative may instruct
the Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R-1 Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Representative pursuant to Section 2.09(e) hereof.
(g) On the Remittance Dates occurring in January, February and March
1998, the Trustee shall transfer from the Capitalized Interest Account to the
appropriate Certificate Account the Capitalized Interest Requirement for the
related Pool, if any, for such Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from
the Capitalized Interest Account to the Certificate Account the Capitalized
Interest Requirement, if any, for such Special Remittance Date. Any amounts
remaining in the Capitalized Interest Account after taking into account such
transfer shall be paid on such Special Remittance Date to the Holders of the
Class R-1 Certificates, and the Capitalized Interest Account shall be closed.
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with
itself in its trust department four separate trust accounts, which shall not be
interest-bearing, titled "TMS Expense Account 1997-D-I," "TMS Expense Account
1997-D-II," "TMS Expense Account 1997- D-III" and "TMS Expense Account
1997-D-IV" (each, an "Expense Account" and together the "Expense Accounts"). The
Trustee shall deposit into the applicable Expense Account:
(i) on each Remittance Date from the amounts on
deposit in the applicable Certificate Account an amount equal
to one-twelfth of that portion of the Annual Expense Escrow
Amount relating to the Pool I, Pool II, Pool III or Pool IV
Mortgage Loans, as the case may be, subject to the provisions
of Section 6.08(d); and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Accounts
shall be insufficient to pay in full the fees and expenses of the Trustee, the
Co-Trustee and the Custodian then due with respect to the Trust Fund, the
Trustee shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount to the
Trustee for deposit in the Expense Accounts, pro rata in accordance with the
amounts then on deposit in each such Expense Account. Thereafter, the Servicer
shall be entitled to reimbursement from the applicable Expense Account for the
amount of any such advance from any excess funds available pursuant to subclause
(c)(ii) below. Without limiting the obligation of the Servicer to advance such
insufficiency, in the event the Servicer does not advance the full amount of
such insufficiency by the Business Day immediately preceding the Determination
Date, the amount of such insufficiency shall be deposited into the applicable
Expense Account for payment to the Trustee, the Co-Trustee or the Custodian, as
the case may be, pursuant to Section 6.08(d)(X)(i), 6.08(d)(Y)(i) or
6.08(d)(Z)(i), as the case may be, to the extent of available funds in the
applicable Certificate Account.
(b) The Trustee may invest amounts on deposit in each Expense Account
in Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the applicable Expense Account to:
(i) pay the Trustee's, Co-Trustee's and Custodian's
fees and expenses with respect to the Trust Fund as described
in Section 2.08 hereof (amounts shall be withdrawn from each
Expense Account pro rata in accordance with the then aggregate
Principal Balances of the Pool I, Pool II, Pool III and Pool
IV Mortgage Loans);
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) to withdraw any amounts not required to be
deposited in the applicable Expense Account or deposited
therein in error; and
(iv) to clear and terminate the applicable Expense
Account upon the termination of the Trust Fund in accordance
with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on
each twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the applicable Expense
Account, the Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the
Representative, for reimbursable advances made pursuant
to Section 9.01;
(ii) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in any Expense Account
after payments made pursuant to subclauses (b)(i), (b)(ii),
(b)(iii), (c)(i) and (c)(ii), above.
Section 6.04 ESTABLISHMENT OF INSURANCE ACCOUNTS; DEPOSITS IN
INSURANCE ACCOUNTS; PERMITTED WITHDRAWALS FROM INSURANCE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with
itself in its trust department two separate trust accounts for the benefit of
the Certificate Insurer, titled "TMS MBIA Insurance Account 1997-D-I" and "TMS
MBIA Insurance Account 1997-D-IV" (each an "Insurance Account, and together, the
"Insurance Accounts"). The Trustee shall deposit into the applicable Insurance
Account:
(i) on each Remittance Date, prior to making the
remittances required pursuant to Section 6.08(d)(X), from the
applicable Certificate Account an amount equal to the Premium
Deposit Amount relating to the Pool I or Pool IV Certificates,
as the case may be; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the applicable Insurance Account.
If at any time that a Monthly Premium is due, the aggregate amount then on
deposit in the Insurance Accounts is insufficient to pay in full the Monthly
Premium then due with respect to the Pool I and Pool IV Certificates pursuant to
the terms of the Insurance Agreement, the Certificate Insurer shall make demand
on the Servicer to advance the amount of such insufficiency, and the Servicer
shall promptly advance such amount to the Trustee for deposit in the Insurance
Accounts, pro rata in accordance with the amounts then on deposit in each such
Insurance Account. Thereafter, the Servicer shall be entitled to reimbursement
from the applicable Insurance Account for the amount of any such advance from
moneys on deposit therein not related to the Premium Deposit Amount necessary to
make timely payment of the next Monthly Premium.
(b) The Trustee may invest amounts on deposit in each Insurance
Account in Permitted Instruments pursuant to Section 6.07, and the Trustee shall
withdraw amounts on deposit in the applicable Insurance Account to:
(i) remit on a monthly basis sufficient funds to the
Insurance Paying Agent to pay the Certificate Insurer the
Monthly Premium with respect to the Pool I or Pool IV
Certificates, as the case may be, on each Remittance Date
commencing in February 1998 as required by the Insurance
Agreement;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the applicable Insurance Account or deposited therein in
error; and
(iv) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above to the
extent such funds are not needed to pay the Monthly Premium.
If sufficient funds are available in the Insurance Account to timely
pay the Monthly Premium, the Trustee has received from the Servicer any
information necessary to determine the amount of the Monthly Premium and the
Trustee and the Insurance Paying Agent (if the Insurance Paying Agent and the
Trustee are the same party) fail to timely remit the Monthly Premium to the
Certificate Insurer from funds on deposit in the Insurance Account in accordance
with subsections (a) and (b) above, the Trustee shall, contemporaneous with the
payment of the Monthly Premium, pay to the Certificate Insurer from its own
funds, for which reimbursement shall not be available, interest on the Monthly
Premium at the Prime Rate published in the most recent Wall Street Journal plus
3.0% for each day that the Monthly Premium is not paid to the Certificate
Insurer.
Section 6.05 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD
ACCOUNT; PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) The Representative shall, no later than the Closing Date,
establish and maintain with the Trustee in its trust department a trust account,
which shall not be interest-bearing, titled "TMS Spread Account 1997-D" (the
"Spread Account"). The Spread Account shall constitute part of the Trust Fund
but shall not be an asset of either REMIC I or REMIC II. It is an outside
reserve fund, the owners of which are the Holders of the Class X Certificates
and for federal tax purposes, amounts, if any, transferred by REMIC I to the
Spread Account are treated as distributed by REMIC I to the Holders of the Class
X Certificates. If during or after the Funding Period the Certificate Insurer
determines to increase the Pool I or Pool IV Initial Specified Subordinated
Amount pursuant to the terms of the Insurance Agreement, the Representative
shall give the Trustee written notice thereof, which notice shall include the
new Pool I or Pool IV Initial Specified Subordinated Amount for the related
Pool. The Trustee shall, promptly upon receipt, deposit into the Spread Account:
(i) on the Closing Date, an amount equal to $0 ($0 of
which will be allocated to Pool I and $0 of which will be
allocated to Pool IV);
(ii) up to the difference, if any, between the
revised Pool I or Pool IV Initial Specified Subordinated
Amount and the original Pool I or Pool IV Initial Specified
Subordinated Amount, as the case may be;
(iii) [Reserved];
(iv) [Reserved];
(v) amounts, if any, received pursuant to Section
2.09(b)(xii); and
(vi) amounts, if any, received pursuant to Section
6.14(b)(v).
(b) The Trustee may invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the Spread Account to:
(i) [Reserved];
(ii) deposit in the applicable Certificate Account on
any Remittance Date an amount equal to (x) the amount of any
Insured Payment or, with respect to Pool I, any Guaranteed
Supplemental Payments otherwise required with respect to such
Remittance Date and (y) the aggregate Subordinated Deficiency
Amounts for Pool I and Pool IV for such Remittance Date (to be
allocated pro rata based upon such amounts);
(iii) on any Remittance Date for which the Pool
Subordinated Amount for Pool I and Pool IV exceeds its
respective Specified Subordinated Amount, including any
increases thereto during or after the Funding Period, and the
amount deposited into the Spread Account pursuant to Section
6.14(b)(iv) equals the full amount required to be deposited
pursuant thereto, distribute the excess, if any, of the Pool
Subordinated Amounts for Pool I and Pool IV for such
Remittance Date over the Pool I and Pool IV Specified
Subordinated Amounts, respectively, including any increases
thereto after the Funding Period, for such Remittance Date, to
the Holders of the Class X Certificates (provided, however,
that any such excess shall be applied first to the payment of
the Certificateholders of the other such Pool in an amount up
to the Subordinated Deficiency Amount with respect to such
Pool (allocated among the Certificates in Pool I in the same
order principal payments are made with respect to Pool I)
pursuant to Section 6.14(b)(vii) and then to the payment of
any Subordination Deficit with respect to Pool I and/or Pool
IV and/or any current Realized Loss which would otherwise be
allocated to Pool II and/or Pool III in reduction of the Class
Principal Balances of the Certificates thereof, pro rata based
upon the amounts so required by each such Pool of
Certificates) in accordance with Section 6.14(b)(viii)
hereof);
(iv) distribute to the Holders of the Class X
Certificates such amounts then remaining on deposit in the
Spread Account as the Certificate Insurer may consent to in
writing;
(v) withdraw any amounts not required to be deposited
in the Spread Account or deposited therein in error; and
(vi) subject to subsection (c) below, distribute to
the Holders of the Class X Certificates any amounts remaining
in the Spread Account upon the termination of this Agreement
in accordance with Section 11.01 hereof.
(c) [Reserved].
(d) [Reserved].
(e) [Reserved].
(f) [Reserved].
Section 6.06 ESTABLISHMENT OF FHA PREMIUM ACCOUNT; DEPOSITS IN FHA
PREMIUM ACCOUNT; PERMITTED WITHDRAWALS FROM FHA PREMIUM ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish with
itself in its trust department a trust account, which shall not be interest
bearing, titled "TMS FHA Premium Account 1997-D" (the "FHA Premium Account").
The FHA Premium Account shall not be available for payment of Certificates. The
Trustee shall deposit into the FHA Premium Account:
(i) on each Remittance Date, prior to making the
remittances required pursuant to Section 6.08(c), upon receipt
an amount equal to the FHA Premium Amount; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the FHA Premium Account.
If the Servicer fails to pay the FHA Insurance Premium with respect to an FHA
Loan in accordance with Section 5.01 hereof, the Trustee shall, upon written
instructions from the Servicer, withdraw an amount from the FHA Premium Account
sufficient to pay in full the FHA Insurance Premium then due.
(b) The Trustee may invest amounts on deposit in the FHA Premium
Account in Permitted Instruments pursuant to Section 6.07, and the Trustee shall
withdraw amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification of payment made to the
FHA, funds requested by the Servicer (including any successor
to the Servicer appointed pursuant to Section 10.02) as
reimbursement for the FHA Insurance Premiums paid by the
Servicer, or remit to the FHA amounts payable in respect of
FHA Insurance Premiums pursuant to the last paragraph of
subclause (a) above;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the FHA Premium Account or deposited therein in error; and
(iv) [Reserved]
(v) clear and terminate the FHA Premium Account upon
the termination of this Agreement in accordance with the terms
of Section 11.01 hereof.
Section 6.07 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and
be continuing, and consistent with any requirements of the Code, all or a
portion of any Account held by the Trustee shall be invested and reinvested by
the Trustee as directed in writing by the Servicer, in one or more Permitted
Instruments bearing interest or sold at a discount. No such investment in the
Certificate Accounts shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Insurance
Accounts, Expense Accounts, Pre- Funding Account, Capitalized Interest Account,
FHA Premium Account or Spread Account shall mature later than the Business Day
immediately preceding the date such funds will be needed to pay fees or premiums
or be transferred to the applicable Certificate Account, as the case may be;
PROVIDED, HOWEVER, the Trustee or any affiliate thereof may be the obligor on
any investment which otherwise qualifies as a Permitted Instrument and any
investment on which the Trustee is the obligor may mature on such Remittance
Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held
by the Trustee to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account, immediately on receipt, and the
Trustee shall notify the Servicer of any loss resulting from such investments.
The Servicer shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment by the next Determination Date
following receipt by the Servicer of such notice.
Section 6.08 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from
the proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Class X and Class R
Certificateholders to receive distributions in respect of the Class X and Class
R Certificates, respectively, and all ownership interests of the Class X and
Class R Certificateholders in and to such distributions, shall be subject and
subordinate to the preferential rights of the Class A, Class M and Class B
Certificateholders, to receive distributions in respect of the Class A, Class M
and Class B Certificates, respectively, and the ownership interests of the Class
A, Class M and Class B Certificateholders, respectively, in such distributions,
as described herein. In accordance with the foregoing, the ownership interests
of the Class X and Class R Certificateholders in amounts deposited in the
applicable Principal and Interest Account or in any Accounts from time to time
shall not vest unless and until such amounts are distributed in respect of the
Class X and Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Class
X and Class R Certificateholders shall not be required to refund any amount
properly distributed on the Class X and Class R Certificates.
(b) [Reserved]
(c) As soon as possible, and in no event later than 10:00 a.m. New
York time on the Business Day immediately preceding each Remittance Date, the
Trustee shall furnish the Certificate Insurer and the Servicer with a completed
notice in the form set forth as Exhibit L (the "Notice") hereto, which will be
based upon the information set forth in the Servicer's Certificate, in the event
that an Event of Nonpayment will occur, or a Guaranteed Supplemental Payment is
owing, with respect to such Remittance Date. The Notice shall specify the total
amount of the Insured Payment and Guaranteed Supplemental Payment to be paid on
the applicable Remittance Date, stated separately for each Class of Pool I or
Pool IV Certificates, as applicable, and shall constitute a claim for an Insured
Payment or Guaranteed Supplemental Payment, as the case may be, pursuant to the
applicable Certificate Insurance Policy. The Certificate Insurer shall remit or
cause to be remitted to the Insurance Paying Agent the amount of the Insured
Payment or Guaranteed Supplemental Payment, as the case may be; provided,
however, if the Certificate Insurer is not in default with regard to payment
under the Certificate Insurance Policies (i) the amount of the Guaranteed
Supplemental Payment required to be paid by the Certificate Insurer shall be
reduced by the Class X Accelerated Distribution Amount and (ii) any remaining
Guaranteed Supplemental Payment or Insured Payment may be funded in whole or in
part, by amounts transferred to the Certificate Account from TMS-CAP Trust
1997-1. Upon receipt of such Insured Payment or Guaranteed Supplemental Payment
by the Insurance Paying Agent on behalf of the Holders of the respective Class
of Pool I or Pool IV Certificates under the applicable Certificate Insurance
Policy, it shall remit such amounts to the Trustee who shall deposit such
Insured Payment or Guaranteed Supplemental Payment, as the case may be, in the
applicable Certificate Account and shall distribute such Insured Payment or
Guaranteed Supplemental Payment, as the case may be, in accordance with Sections
6.08(d)(X) and (e) hereof.
Notwithstanding the foregoing, if an Event of Nonpayment with respect
to Pool I or Pool IV will occur with respect to a Remittance Date and funds are
on deposit in the Spread Account, the amount of the Insured Payment shall be
reduced up to the amount then on deposit in the Spread Account. Pursuant to
Section 6.05(b)(ii), the Trustee shall, on such Remittance Date, transfer such
amount to the applicable Certificate Account from the Spread Account.
The Trustee shall serve as Insurance Paying Agent hereunder for so
long as a Certificate Insurance Policy shall remain in effect; PROVIDED,
HOWEVER, that the Insurance Paying Agent may be located in another jurisdiction
with the written consent of the Certificate Insurer. The Insurance Paying Agent
shall act as the agent of the Trustee and shall (i) pay amounts required by
Section 6.04(b)(i) hereof to the Certificate Insurer, (ii) pay Insured Payments
or Guaranteed Supplemental Payments received from the Certificate Insurer as the
Trustee shall direct and (iii) take such other actions with respect to the
Certificate Insurer and the Certificate Insurance Policies as the Trustee shall
direct. The Trustee shall act initially as the Insurance Paying Agent.
The Trustee shall receive through the Insurance Paying Agent, as
attorney-in-fact of each Holder of Pool I or Pool IV Certificates, any Insured
Payment or Guaranteed Supplemental Payment from the Certificate Insurer and
disburse the same to each Holder of Pool I or Pool IV Certificates in accordance
with the provisions of this Section 6.08. Insured Payments or Guaranteed
Supplemental Payments disbursed by the Trustee from proceeds of the Certificate
Insurance Policies shall not be considered payment by the Trust Fund nor shall
such payments discharge the obligation of the Trust Fund with respect to such
Pool I or Pool IV Certificates, and the Certificate Insurer shall become the
owner of such unpaid amounts of Insured Payments and Guaranteed Supplemental
Payments due from the Trust Fund in respect of such Certificates. The Trustee
hereby agrees on behalf of each Holder of Pool I or Pool IV Certificates for the
benefit of the Certificate Insurer that it recognizes that to the extent the
Certificate Insurer makes Insured Payments or Guaranteed Supplemental Payments,
either directly or indirectly (as by paying through the Insurance Paying Agent),
to the Pool I or Pool IV Certificateholders, the Certificate Insurer will be
subrogated to the rights of the such Pool I or Pool IV Certificateholders with
respect to such Insured Payment or Guaranteed Supplemental Payments, shall be
deemed to the extent of the payments so made to be a registered
Certificateholder of the related Class, and shall receive the Pool Carry-Forward
Amounts of the related Pools in accordance with Section 6.08(d)(X) below until
all such Insured Payments and Guaranteed Supplemental Payments by the
Certificate Insurer have been fully reimbursed (including reimbursements
received from TMS-Cap Trust 1997-1). To evidence such subrogation, the Trustee
shall, or shall cause the Certificate Registrar to, note the Certificate
Insurer's rights as subrogee on the registration books maintained by the Trustee
or the Certificate Registrar upon receipt from the Certificate Insurer of proof
of payment of any Insured Payment or Guaranteed Supplemental Payments.
Each Pool I or Pool IV Certificateholder shall promptly (i) notify the
Trustee in writing upon the receipt of a court order to the effect that any
amounts described in Clause (iv) of the definition of Pool Remittance Amount
constitute a voidable preference pursuant to the United States Bankruptcy Code
and (ii) shall enclose a certified copy of such order with such notice to the
Trustee.
(d) (X) With respect to Pool I and Pool IV, on each Remittance Date,
and after making the allocations set forth in Section 6.14 (including provision
for the Pool I Strip Amount), the Trustee shall withdraw from the applicable
Certificate Account the sum of (i) the Pool Available Amount for each such Pool
and (ii) the Remainder Excess Spread Amount for each such Pool, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 5.04(f) and net of amounts withdraws pursuant to Section
6.01(b)(iii) to pay the Remarketing Agent Fee and make distributions thereof in
the following order of priority (based solely upon information provided by the
Servicer):
(i) to the Expense Account relating to Pool I or Pool
IV, an amount equal to one-twelfth of the Annual Expense
Escrow Amount with respect to the Mortgage Loans of the
related Pool, plus any amount required to be paid to the
Trustee , the Co-Trustee or the Custodian pursuant to Section
6.03(a) resulting from insufficiencies in the applicable
Expense Account;
(ii) then to the Certificateholders of each such
Pool, the lesser of the Pool Available Amount for the related
Pool less the amount applied under clause (i) with respect to
such Pool and the Pool Remittance Amount for the related Pool
first in payment of the applicable Class Current Interest
Requirements (and, for the Class AF-6 Certificates, the Class
AF-6 Supplemental Interest Amount) and then in reduction of
the applicable Class Principal Balances of the applicable
Certificates;
(iii) then to the Servicer and/or the Representative,
an amount, if any, equal to the Reimbursable Amounts with
respect to the applicable Pool to the extent the Servicer has
not previously netted such amounts from Monthly Payments;
(iv) [Reserved];
(v) then to the Class X Certificateholders, an amount
equal to the lesser of (a) the sum of the Pool I Strip Amount
and the Pool Remaining Amount Available for Pool I and Pool IV
and (b) any interest accrued (and yet unpaid) with respect to
the Class X Certificates in accordance with footnote (4) of
Section 4.01(d); and
(vi) then to the Class R Certificateholders, any
remainder.
On each Remittance Date, the amount to be distributed to the Pool I
Certificates pursuant to clause (ii) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of
Pool I Certificates, the applicable Class Current Interest Requirement for such
Remittance Date, pro rata in accordance with such Class Current Interest
Requirements, and then, if the Certificate Insurer is not in default in payment
under the Certificate Insurance Policy for Pool I, to the Class AF-6
Certificateholders, the Class AF-6 Supplemental Interest Amount;
(B) second, to the Class AF-7 Certificateholders, an amount equal to
the Class AF-7 Principal Distribution Amount for such Remittance Date;
(C) third, to the Class AF-1 and Class AF-2 Certificateholders,
sequentially in that order, the excess, if any, of the amount to be distributed
to the Pool I Certificates on such Remittance Date over the amount distributed
pursuant to (A) and (B) above, until the Class Principal Balance of each such
Class (in ascending order of numerical designation) is reduced to zero and such
Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders;
(D) fourth, to the Class AF-3, Class AF-4 and Class AF-5
Certificateholders, sequentially in that order, the excess, if any, of the
amount to be distributed to the Pool I Certificates on such Remittance Date over
the amount distributed pursuant to (A), (B) and (C) above, until the Class
Principal Balance of each such Class (in ascending order of numerical
designation) is reduced to the Targeted Balance for such Class for such
Remittance Date as set forth on the Targeted Balance Schedule attached as
Schedule III hereto;
(E) fifth, to the Class AF-6 Certificateholders the excess, if any, of
the amount to be distributed to the Pool I Certificates on such Remittance Date
over the amount distributed pursuant to (A), (B), (C) and (D) above, until the
Class Principal Balance of such Class is reduced to zero and such
Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders;
(F) sixth, to the Class AF-3, Class AF-4 and Class AF-5
Certificateholders sequentially in that order, the excess, if any, of the amount
to be distributed to the Pool I Certificates on such Remittance Date over the
amount distributed pursuant to (A), (B), (C), (D) and (E) above, until the Class
Principal Balance of each such Class (in ascending order of numerical
designation) is reduced to zero and such Certificateholders have received an
amount equal to the amount described in clause (iv) of the definition of Pool
Remittance Amount that is recovered from such Certificateholders; and
(G) seventh, to the Class AF-7 Certificateholders, the excess, if any,
of the amount to be distributed to the Pool I Certificates on such Remittance
Date over the amount distributed pursuant to (A), (B), (C), (D), (E) and (F)
above, until the Class Principal Balance of such Class is reduced to zero and
such Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders.
Additionally, on the Special Remittance Date, the Trustee shall
withdraw from the Certificate Account the amount, if any, deposited therein
pursuant to Section 6.01(a)(v) with respect to Pool I and Pool IV and make
distributions thereof as follows: (i) from amounts transferred from the
Pre-Funding Account, distributions of principal to the Classes of Pool I or Pool
IV Certificates, as applicable, and in the case of the Pool I Certificates
allocated to the Classes thereof then entitled to receive distributions of
principal in the priority and proportions set forth in this Section
6.08(d)(X)(B) and (C) and (ii) from amounts transferred from the Capitalized
Interest Account, distributions of interest to such Classes of Pool I or Pool IV
Certificates equal to the applicable Capitalized Interest Requirement for such
Pool.
(Y) With respect to Pool II, on each Remittance Date, and after making
the allocations set forth in Section 6.14 (including provision for the Pool II
Strip Amount), the Trustee shall withdraw from the applicable Certificate
Account the Pool Available Amount for such Pool, net of reimbursements to the
Servicer or the Representative for the Reimbursable Advances pursuant to Section
5.04(f) and net of amounts withdrawn pursuant to Section 6.01(b)(iii) to pay the
Auction Agent Fee and make distributions thereof in the following order of
priority (based solely upon information provided by the Servicer):
(i) to the Expense Account, an amount equal to one-twelfth of
the Annual Expense Escrow Amount with respect to the Pool II Mortgage
Loans, plus any amount required to be paid to the Trustee, the
Co-Trustee or the Custodian pursuant to Section 6.03(a) resulting from
insufficiencies in the Expense Account;
(ii) after the payment of the amounts specified in clause (i)
above, to pay the Class Current Interest Requirement concurrently to
the Holders of the Pool II Class A Certificates;
(iii) after payment of the amounts specified in clauses (i)
and (ii) above, to pay the Class Current Interest Requirement for the
Pool II Class M Certificates as follows and in the following order of
priority:
(A) the Class Current Interest Requirement applicable
to the Class MV-1 Certificates to the Holders of the Class MV-1
Certificates; and
(B) the Class Current Interest Requirement applicable
to the Class MV-2 Certificates to the Holders of the Class MV-2
Certificates;
(iv) after payment of the amounts specified in clauses (i),
(ii) and (iii) above, to pay the Class Current Interest Requirement
applicable to the Pool II Class B Certificates to
the Holders of the Class BV Certificates;
(v) after payment of the amounts specified in clauses (i)
through (iv) above, to pay the Class A Pool Principal Distribution
Amount for the Pool II Class A Certificates (X) first, to the Holders
of the Class AV-2 Certificates, an amount up to the Class AV-2
Principal Distribution Amount for such Remittance Date, (Y) second, to
the Holders of the Class AV-1 Certificates until the Class Principal
Balance of such Class is reduced to zero and (Z) third, to the Holders
of the Class AV-2 Certificates, until the Class Principal Balance of
such Class is reduced to zero; provided, however, that on any
Remittance Date on which the Class Principal Balances of the Pool II
Class M and Pool II Class B Certificates have been reduced to zero,
amounts paid to the Pool II Class A Certificates pursuant to this
clause (v) shall be paid pro rata to each Class of Pool II Class A
Certificates based upon the Class Principal Balance of each such Class
of Pool II Class A Certificates;
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class MV-1 Principal Distribution Amount
to the Holders of the Class MV-1 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MV-1 Certificates to zero;
(vii) after payment of the amounts specified in clauses (i)
through (vi) above, to pay the Class MV-2 Principal Distribution Amount
to the Holders of the Class MV-2 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MV-2 Certificates to zero;
(viii) after payment of the amounts specified in clauses (i)
through (vii) above, to pay the Class B Pool Principal Distribution
Amount for Pool II to the Holders of the Class BV Certificates, but in
no event more than is necessary to reduce the Class Principal Balance
of the Class BV Certificates to zero;
(ix) after payment of the amounts specified in clauses (i)
through (viii) above, to pay any Interest Shortfall Carryforward
Amounts applicable to the Pool II Class A Certificates to the Holders
of the Class AV Certificates.
(x) after payment of the amounts specified in clauses (i)
through (ix) above, to pay any Accelerated Principal Distribution
Amount to the Holders of the Pool II Class A, Pool II Class M and Pool
II Class B Certificates, in the order and priority that amounts are
being distributed as set forth in clauses (v), (vi), (vii) and (viii)
above, inclusive;
(xi) after payment of the amounts specified in clauses (i)
through (x) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MV-1 Certificates to the Holders of the Class
MV-1 Certificates;
(xii) after payment of the amounts specified in clauses (i)
through (xi) above, to pay the Class MV-1 Realized Loss Amount to the
Holders of the Class MV-1 Certificates;
(xiii) after payment of the amounts specified in clauses (i)
through (xii) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MV-2 Certificates to the Holders of the Class
MV-2 Certificates;
(xiv) after payment of the amounts specified in clauses (i)
through (xiii) above, to pay the Class MV-2 Realized Loss Amount to the
Holders of the Class MV-2 Certificates;
(xv) after payment of the amounts specified in clauses (i)
through (xiv) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class BV Certificates to the Holders of the Class BV
Certificates;
(xvi) after payment of the amounts specified in clauses (i)
through (xv) above, to pay the Class B Pool Realized Loss Amount for
Pool II to the Holders of the Class BV Certificates;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, to the Class X Certificateholders, the lesser of
(i) the sum of the Pool II Strip Amount and the Pool Remaining Amount
Available for Pool II and (ii) any interest accrued (and yet unpaid)
with respect to the Class X Certificates in accordance with footnote
(4) of Section 4.01(d); and
(xix) after payment of the amounts specified in clauses (i)
through (xviii) above, to the Class R Certificateholders, any
remainder.
Additionally, on the Special Remittance Date, the Trustee shall
withdraw from the Certificate Account the amount, if any, deposited therein
pursuant to Section 6.01(a)(v) with respect to Pool II and make distributions
thereof as follows: (i) from amounts transferred from the Pre- Funding Account,
distributions of principal to the Classes of Pool II Certificates then entitled
to receive distributions of principal in the priority and proportions set forth
in this Section 6.08(d)(Y) and (ii) from amounts transferred from the
Capitalized Interest Account, distributions of interest to such Classes of Pool
II Certificates equal to the applicable Capitalized Interest Requirement for
Pool II. Notwithstanding the foregoing and Section 6.08(f), if on the Special
Remittance Date the amount of principal allocated to a Class of Auction Rate
Certificates is not equal to $25,000 or an integral multiple of $25,000 in
excess thereof, the entire amount (if less than $25,000) or the amount exceeding
an integral multiple of $25,000 will, instead, be distributed to the Class AV-1
Certificates.
(Z) With respect to Pool III, on each Remittance Date, and after
making the allocations set forth in Section 6.14 the Trustee shall withdraw from
the applicable Certificate Account the Pool Available Amount for such Pool, net
of reimbursements to the Servicer or the Representative for Reimbursable
Advances pursuant to Section 5.04(f) and net of amounts withdrawn pursuant to
Section 6.01(b)(ii) to make deposits to the FHA Premium Account, and make
distributions thereof in the following order of priority (based solely upon
information provided by the Servicer):
(i) to the Expense Account, an amount equal to one-twelfth of
the Annual Expense Escrow Amount with respect to the Pool III Mortgage
Loans, plus any amount required to be paid to the Trustee, the
Co-Trustee or the Custodian pursuant to Section 6.03(a) resulting from
insufficiencies in the Expense Account;
(ii) after the payment of the amounts specified in clause (i)
above, to pay the Class Current Interest Requirement concurrently to
the Holders of the Pool III Class A Certificates, pro rata to each
Class of Pool III Class A Certificates in accordance with their
respective Class Current Interest Requirements;
(iii) after payment of the amounts specified in clauses (i)
and (ii) above, to pay the Class Current Interest Requirement for the
Pool III Class M Certificates as follows and in the following order of
priority:
(A) the Class Current Interest Requirement applicable
to the Class MH-1 Certificates to the Holders of the Class MH-1
Certificates; and
(B) the Class Current Interest Distribution
Requirement applicable to the Class MH-2 Certificates to the Holders of
the Class MH-2 Certificates;
(iv) after payment of the amounts specified in clauses (i),
(ii) and (iii) above, to pay the Class Current Interest Requirement
applicable to the Pool III Class B Certificates to the Holders of the
Class BH Certificates;
(v) after payment of the amounts specified in clauses (i)
through (iv) above, to pay the Class A Pool Principal Distribution
Amount for the Pool III Class A Certificates sequentially to the Class
AH-1, Class AH-2, Class AH-3 and Class AH-4 Certificateholders, in that
order of priority, but in no event will any Class of Pool III Class A
Certificates be paid more than is necessary to reduce the Class
Principal Balance of such Class to zero; PROVIDED, HOWEVER, that on
each Remittance Date on and after the Remittance Date on which the
Class Principal Balances of the Pool III Class M and Pool III Class B
Certificates have been reduced to zero, amounts paid to the Pool III
Class A Certificateholders pursuant to this clause (v) shall be paid
pro rata to each Class of Pool III Class A Certificates based upon the
Class Principal Balance of each such Class of Pool III Class A
Certificates;
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class MH-1 Principal Distribution Amount
to the Holders of the Class MH-1 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MH-1 Certificates to zero;
(vii) after payment of the amounts specified in clauses (i)
through (vi) above, to pay the Class MH-2 Principal Distribution Amount
to the Holders of the Class MH-2 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MH-2 Certificates to zero;
(viii) after payment of the amounts specified in clauses (i)
through (vii) above, to pay the Class BH Principal Distribution Amount
for Pool III to the Holders of the Class BH Certificates, but in no
event more than is necessary to reduce the Class Principal Balance of
the Class BH Certificates to zero;
(ix) after payment of the amounts specified in clauses (i)
through (viii) above, to pay any Interest Shortfall Carryforward
Amounts applicable to the Pool III Class A Certificates concurrently to
the Holders of the Class AH-1, Class AH-2, Class AH-3 and Class AH-4
Certificates, pro rata to each Class of Pool III Class A Certificates
in accordance with their respective Interest Shortfall Carryforward
Amounts;
(x) [Reserved];
(xi) after payment of the amounts specified in clauses (i)
through (x) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MH-1 Certificates to the Holders of the Class
MH-1 Certificates;
(xii) after payment of the amounts specified in clauses (i)
through (xi) above, to pay the Class MH-1 Realized Loss Amount to the
Holders of the Class MH-1 Certificates;
(xiii) after payment of the amounts specified in clauses (i)
through (xii) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MH-2 Certificates to the Holders of the Class
MH-2 Certificates;
(xiv) after payment of the amounts specified in clauses (i)
through (xiii) above, to pay the Class MH-2 Realized Loss Amount to the
Holders of the Class MH-2 Certificates;
(xv) after payment of the amounts specified in clauses (i)
through (xiv) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class BH Certificates to the Holders of the Class BH
Certificates;
(xvi) after payment of the amounts specified in clauses (i)
through (xv) above, to pay the Class B Pool Realized Loss Amount for
Pool III to the Holders of the Class BH Certificates;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, to the Class X Certificateholders, the lesser of
(i) the Pool Remaining Amount Available for Pool III and (ii) any
interest accrued (and yet unpaid) with respect to the Class X
Certificates in accordance with footnote (4) of Section 4.01(d); and
(xix) after payment of the amounts specified in clauses (i)
through (xviii) above, to the Class R Certificateholders, any
remainder.
Additionally, on the Special Remittance Date, the Trustee shall
withdraw from the Certificate Account the amount, if any, deposited therein
pursuant to Section 6.01(a)(v) with respect to Pool III and make distributions
thereof as follows: (i) from amounts transferred from the Pre- Funding Account,
distributions of principal to the Classes of Pool III Certificates then entitled
to receive distributions of principal in the priority and proportions set forth
in this Section 6.08(d)(Z) and (ii) from amounts transferred from the
Capitalized Interest Account, distributions of interest to such Classes of Pool
III Certificates equal to the applicable Capitalized Interest Requirement for
such Pool.
(e) All distributions made to the Certificateholders on each
Remittance Date and the Special Remittance Date will be made on a pro rata basis
(except with respect to payments of principal to the Auction Rate
Certificateholders) among the Certificateholders of the respective Class of
record on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and shall, except for the final
payment on such Certificates, be made by wire transfer of immediately available
funds to the account of such Certificateholder as shall appear on the
Certificate Register without the presentation or surrender of the Certificate or
the making of any notation thereon, at a bank or other entity having appropriate
facilities therefor, at the expense of each such Certificateholder unless such
Certificateholder shall own of record Certificates which have original principal
amounts aggregating (i) at least $5,000,000 or (ii) one of the two highest
outstanding amounts less than $5,000,000.
(f) Notwithstanding the foregoing, principal payments will be made to
each Class of Auction Rate Certificates only in amounts equal to $25,000 and
integral multiples in excess thereof. If the amount in the Certificate Account
for Pool I or Pool II otherwise required to be applied as a payment of principal
on the Auction Rate Certificates either (i) is less than $25,000 or (ii) exceeds
an integral multiple of $25,000, then, in the case of (i), such entire amount
or, in the case of (ii), such excess amount, will not be paid as principal on
the upcoming Remittance Date, but will be retained in the Certificate Account
for Pool I or Pool II, as the case may be, until the amount therein available
for payment of principal on the Auction Rate Certificates equals $25,000 or any
integral multiple thereof. In no event, however, shall amounts remain in the
Certificate Account for Pool I or Pool II more than 13 months after the related
payments are deposited into the Trust Fund. The amount being distributed to a
Class of Auction Rate Certificates in Pool II as principal will be allocated to
the specific Certificates of such Class selected no later than 5 Business Days
prior to the related Remittance Date by lot or such other manner as may be
determined, which allocations will be made only in amounts equal to $25,000 and
integral multiples of $25,000 in excess thereof.
Section 6.09 ALLOCATION OF REALIZED LOSSES.
(a) With respect to Pool I and Pool IV, prior to each Determination
Date, the Servicer shall determine the total amount of Realized Losses, if any,
that occurred in the related Due Period for Pool I and Pool IV. The amount of
each Realized Loss shall be evidenced by an Officers' Certificate, stated
separately for each Pool of Mortgage Loans, and, to the extent paid by the
Certificate Insurer as an Insured Payment, shall constitute a Pool Carry-Forward
Amount for the related Pool. Any Realized Losses relating to the Mortgage Loans
of Pool I or Pool IV shall be allocated to each outstanding Class of
Certificates of such Pool (pro rata in the case of Pool I in accordance with the
respective Class Principal Balances of each such Class), but only if and to the
extent that the Certificateholders of such Pool did not receive Insured Payments
in connection with the related Unrecovered Pool Portions on the Remittance Date
on which a Subordination Deficit occurs. Further, any allocation of Realized
Losses among a Class of Certificates shall be made on a pro rata basis among the
Certificateholders of record of such Class on the next preceding Record Date
based on the Percentage Interest represented by their respective Certificates by
reducing their respective Principal Balances by the amount so allocated, which
allocation shall be deemed to have occurred on the related Remittance Date.
(b) With respect to Pool II and Pool III, on and after the Remittance
Date on which the Pool Available Maximum Subordinated Amount for Pool II or Pool
III has been reduced to zero, (i) no further Interest Shortfall Carryforward
Amounts or Unpaid Realized Loss Amounts for the Pool II or Pool III Class M or
Class B Certificates, respectively, shall be carried forward to succeeding
Remittance Dates or be created as a result of shortfalls in the Pool Available
Remittance Amount, and (ii) interest shall cease to accrue on all Interest
Shortfall Carryforward Amounts remaining outstanding at the time the related
Pool Available Maximum Subordinated Amount becomes zero.
If on any Remittance Date after taking into account all Realized
Losses experienced during the prior Due Period and after taking into account the
distribution of principal (including the applicable Accelerated Principal
Distribution Amount) with respect to the Pool II or Pool III Certificates, as
applicable on such Remittance Date, the aggregate Class Principal Balance of the
Pool II or Pool III Certificates, as applicable exceeds the aggregate Principal
Balance of the Pool II or Pool III Mortgage Loans, respectively, as of the end
of the related Due Period, then the Class Principal Balance of the Pool II or
Pool III Class M and/or Class B Certificates, as applicable, will be reduced (in
effect, "written down") such that the level of the Spread Amount is zero, rather
than negative. The resulting Pool Applied Realized Loss Amount for the
applicable Class will be applied as a reduction in the Class Principal Balance
of the related Pool II or Pool III Class M and/or Class B Certificates in
reverse order of seniority, I.E., first against the Pool II or Pool III, as
applicable, Class B Class Principal Balance until it is reduced to zero, then
against the Class MV-2 or MH-2 Class Principal Balance, as applicable, until it
is reduced to zero and then against the Class MV-l or Class MH-1 Class Principal
Balance, as applicable, until it is reduced to zero. In no event shall the Class
Principal Balance of any Class A Certificate be written down as a result of
applying Realized Losses.
Once the Class Principal Balance of a Class of Pool II or Pool III
Class M and/or Class B Certificates, as applicable, has been "written down," the
amount of such write down will no longer bear interest, nor will such amount
thereafter be "reinstated" or "written up," although the amount of such write
down may, on future Remittance Dates, be paid to Holders of the Pool II or Pool
III Class M and/or Class B Certificates which experienced the write down, in
direct order of seniority as distributions on account of the related Class MV-1,
Class MV-2 or Class BV Realized Loss Amounts or Class MH-1, Class MH-2 or Class
BH Realized Loss Amounts, as applicable.
Section 6.10 STATEMENTS.
Each month for so long as a Class of Auction Rate Certificates is
Outstanding, not later than 12:00 noon New York time on the Auction Reporting
Date, the Servicer shall deliver to the Trustee, by telecopy, the receipt and
legibility of which shall be confirmed telephonically, with hard copy thereof to
be delivered on the Business Day following the Determination Date, a certificate
signed by a Servicing Officer stating the date (day, month and year), the Series
number of the Certificates, the date of this Agreement, and the amount to be
distributed on the upcoming Remittance Date to each Class of Auction Rate
Certificates as a payment of principal.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver to the Certificate Insurer and to
the Trustee, by telecopy, for distribution to the Certificateholders, the
receipt and legibility of which shall be confirmed telephonically, with hard
copy thereof and the Servicer's Monthly Computer Tape in the form attached
hereto as Exhibit R (both in hard copy and in computer tape form) to be
delivered on the Business Day following the Determination Date, a certificate
signed by a Servicing Officer (a "Servicer's Certificate") stating the date
(day, month and year), the Series number of the Certificates, the date of this
Agreement, and the following:
(i) the Pool Available Remittance Amounts for each
Pool for the related Remittance Date;
(ii) the Class Principal Balances for each Class of
Pool I, Pool II, Pool III and Pool IV Certificates as reported
in the prior Servicer's Certificate pursuant to
subclause (xv) below, or, in the case of the first
Determination Date, the Original Principal Balance for each
Class of Pool I, Pool II, Pool III and Pool IV
Certificates;
(iii) the Pool Principal Distribution Amounts for
each Pool for the related Remittance Date, in the aggregate
and listed separately for the portions relating to each Class
of Pool I, Pool II, Pool III and Pool IV Certificates;
(iv) the total amount of any Insured Payments and
Guaranteed Supplemental Payments included in the Pool
Available Remittance Amount for Pool I or Pool IV for the
related Remittance Date;
(v) the Subordinated Amount and Specified
Subordinated Amount for the related Remittance Date, listed
separately for each Pool and the Pool Available Maximum
Subordinated Amount for Pool II and Pool III;
(vi) the number and Principal Balances of all
Mortgage Loans in each Pool which were the subject of
Principal Prepayments during the Due Period;
(vii) the amount of all Curtailments which were
received during the Due Period, stated separately for each
Pool;
(viii) the aggregate amount of all Excess Payments
and the amounts of Monthly Payments in respect of principal
received during the Due Period, stated separately for each
Pool;
(ix) the amount of interest received on the Mortgage
Loans, stated separately for each Pool;
(x) the amount of the Monthly Advances to be made on
the Determination Date, the portion of the Monthly Advances to
be deposited in the Certificate Accounts pursuant to Section
6.01(a)(ii), and the Compensating Interest payment to be made
on the Determination Date, in each case stated separately for
each Pool;
(xi) the delinquency and foreclosure information set
forth in the form attached hereto as Exhibit O, stated
separately for each Pool;
(xii) the amount of any Realized Losses incurred
during the related Due Period, stated separately for each
Pool;
(xiii) the Pool Remittance Amounts for Pool I and
Pool IV and the Class Current Interest Requirement and the
Pool Principal Distribution Amount for Pool II and Pool III
for the Remittance Date, in the aggregate and by component and
listed separately for the portions relating to each Class of
Certificates in the related Pool, any Interest Shortfall
Carryforward Amount relating to each Class of Certificates
and, with respect to the Auction Rate Certificates, the amount
otherwise required to be distributed thereon with respect to
principal and retained in the Certificate Account for Pool II
pursuant to Section 6.08(f);
(xiv) the Reimbursable Amounts, the Pool I and Pool
II Strip Amounts and the Class X Remittance Amount payable
pursuant to Section 6.08(d)(X)(v), Section 6.08(d)(Y)(xviii)
and Section 6.08(d)(Z)(xviii) with respect to the Remittance
Date;
(xv) the Class Principal Balance for each Class of
Certificates and the Pool Principal Balance for each Pool
after giving effect to the distribution to be made on the
Remittance Date and after allocation of Realized Losses made
on such Remittance Date;
(xvi) the Monthly Excess Spread Percentage, the
Excess Spread, and the Remainder Excess Spread Amount (in each
case, in the aggregate and stated separately for each Pool);
(xvii) the Cumulative Realized Losses, stated
separately for each Pool, with respect to the
Remittance Date;
(xviii) the weighted average maturity and weighted
average Interest Rate, stated separately for each Pool;
(xix) the Servicing Fees, the Contingency Fees, the
Auction Agent Fees, the Remarketing Agent Fee and amounts to
be deposited to the Expense Accounts, the Insurance Accounts
and the FHA Premium Account, in each case, as applicable,
stated separately for each Pool;
(xx) the amount of all payments and reimbursements to
the Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e)
and (f)(i), stated separately with respect to each Pool;
(xxi) the Class Pool Factor for each Class determined
using the balances in subclause (xv) above;
(xxii) the weighted average Mortgage Interest Rate
and Adjusted Mortgage Interest Rate of the Mortgage Loans for
each Pool and the weighted average Class Adjusted Loan
Remittance Rates for each Pool, in each case for the related
Remittance Date, and the weighted average Mortgage Interest
Rate for the prior three month period;
(xxiii) the Class AF-6, Class AV-1, Class MV-1, Class
MV-2 and Class BV Remittance Rates with respect to the
Remittance Date and if any of the Class AF-6, Class AV-1,
Class MV-1, Class MV-2 and Class BV Remittance Rates was based
on the applicable Net Funds Cap for the related Pool, what it
would have been if based on LIBOR plus the applicable Margin
or the Auction Rate, as the case may be;
(xxiv) the rate of LIBOR and the Auction Rate with
respect to the Remittance Date;
(xxv) the Net Funds Cap for the Class AF-6, Class
AV-1, Class MV-1, Class MV-2 and Class BV Certificates with
respect to the Remittance Date;
(xxvi) if the Remittance Rate for any Class of
Certificates for such Remittance Date is based on the Net
Funds Cap, the amount of any Certificateholders' Interest
Carryover for such Class for such Remittance Date;
(xxvii) the amount of the distribution, if any,
allocable to Certificateholders' Interest Carryover and the
amount of any Certificateholders' Interest Carryover for all
prior Remittance Dates after giving effect to such
distribution (in each case, stated separately by
Class and in the aggregate);
(xxviii) whether the Trigger Event for Pool II and
Pool III and the S&P Trigger and the Pool II Cumulative Loss
Trigger for Pool II is in effect;
(xxix) the Senior Percentage and the Class B
Percentage for the current Remittance Date;
(xxx) the amount of any Applied Realized Loss Amount,
Realized Loss Amount and Unpaid Realized Loss Amount for each
Class of Pool II and Pool III Certificates as of the close of
such Remittance Date;
(xxxi) the Accelerated Principal Distribution
Amount for Pool II and Pool III for such Remittance
Date;
(xxxii) the amount to be deposited into the FHA
Premium Account on the related Remittance Date and the amount
reimbursable to the Servicer and/or the Certificate Insurer
from the FHA Premium Account pursuant to Section 6.06(b)(i);
(xxxiii) The amount of FHA Payments and Related
Payments received during the related Due Period, stated
separately for each Pool;
(xxxiv) The Reserve Amount for the related
Remittance Date;
(xxxv) Claims filed during the Due Period;
(xxxvi) Claims paid during the Due Period;
(xxxvii) Claims denied by the FHA during the Due
Period;
(xxxviii) Claims pending payment by the FHA during
the Due Period;
(xxxix) The number and Principal Balance of all
Defaulted Mortgage Loans purchased during the Due Period,
stated separately for each pool;
(xl) The Class X Accelerated Distribution Amount
and Class AF-6 Supplemental Interest Amount for such
Remittance Date; and
(xli) Such other information as the Certificate
Insurer and the Certificateholders may reasonably
require.
The Trustee shall forward such report to the Certificateholders and,
with respect to the report on the Pool I and Pool IV Mortgage Loans, to the
Certificate Insurer on the Remittance Date, together with a separate report
indicating the amount of funds deposited in each Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Representative, as appropriate, pursuant to Sections 6.03(c)(i),
6.03(c)(ii), 6.04(b)(iv), 6.08(d)(X)(iii), 6.08(d)(Y) and 6.08(d)(Z) (all
reports prepared by the Trustee of such withdrawals and deposits will be based
in whole or in part upon the information provided to the Trustee by the Servicer
or the Claims Administrator).
To the extent that there are inconsistencies between the telecopy of
the Servicer's Certificate and the hard copy thereof, the Trustee shall be
entitled to rely upon the telecopy. In the discretion of the Servicer, in the
case of certain information furnished pursuant to the above provisions, the
amounts shall be expressed in a separate section of the report as a dollar
amount for each Class per $1,000 (or, in the case of the Auction Rate
Certificates, per $25,000) original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based
upon information received from the Servicer, forward to the Certificateholders
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, and to the Certificate Insurer, a report setting forth such
information only with respect to the Pool I and Pool IV Certificates.
(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 the amount of
interest and principal distributed with respect to each Class of Certificates
plus such other customary information as the Servicer determines to be necessary
and/or required by the Internal Revenue Service to enable the Certificateholders
to prepare their tax returns for such calendar year. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) On each Remittance Date and the Special Remittance Date, the
Trustee shall forward to the Class X and Class R Certificateholders a copy of
the report forwarded to the Certificateholders of each Pool in respect of such
Remittance Date or the Special Remittance Date, as the case may be, and a
statement setting forth the amounts actually distributed to the Class X and
Class R Certificateholders, on such Remittance Date together with such other
information as the Servicer provides and deems necessary or appropriate.
(c) Within a reasonable period of time after the end of each calendar
year, the Servicer shall furnish to the Trustee for distribution to each Person
who at any time during the calendar year was a Class X or Class R
Certificateholder such information as is reasonably necessary to provide to such
Person a statement containing the information provided pursuant to the previous
paragraph aggregated for such calendar year or applicable portion thereof during
which such Person was a Class X or R Certificateholder, as applicable. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time in force.
(d) Upon reasonable advance notice in writing, the Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and access to information and documentation
regarding the Mortgage Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Certificates.
(e) The Servicer shall furnish to each Certificateholder and the
Certificate Insurer, during the term of this Agreement, such periodic, special,
or other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Certificateholder or
the Certificate Insurer, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions as the Certificateholder or the
Certificate Insurer may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder or the Certificate Insurer
for the Servicer's actual expenses incurred in providing such reports if such
reports are not producible in the ordinary course of the Servicer's business.
Section 6.11 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the applicable Certificate
Account an amount (as indicated in the Servicer's Certificate prepared pursuant
to Section 6.10), to be distributed on the related Remittance Date pursuant to
Section 6.08, equal to the amount, if any, by which (a) the sum of (i) the
amount equal to 30 days' interest (or, with respect to the Adjustable Rate and
Auction Rate Certificates, the actual number of days since the last Remittance
Date or, in the case of the January 1998 Remittance Date, from December 15, 1997
with respect to the Adjustable Rate Certificates) and from the Closing Date with
respect to the Auction Rate Certificates at the weighted average Class Adjusted
Mortgage Loan Remittance Rates for Certificates in the applicable Pool on the
related Pool Principal Balance immediately prior to the related Remittance Date
plus (ii) the Monthly Excess Spread relating to the Mortgage Loans of the
related Pool with respect to such Remittance Date exceeds (b) the amount
received by the Servicer as of the related Record Date in respect of interest on
the Mortgage Loans of the related Pool (and, with respect to the Remittance
Dates in January, February and March 1998, the sum of (i) all funds to be
transferred to the applicable Certificate Account from the Capitalized Interest
Account for such Remittance Date pursuant to Section 6.02(g) and (ii) the
related Pool Pre-Funding Earnings for the applicable Remittance Date). The sum
of such excess calculated for each Pool is defined herein as the "Monthly
Advance." The Servicer may reimburse itself for Monthly Advances made pursuant
to Section 5.04.
Section 6.12 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest
for each Mortgage Loan for any month during which a Principal Prepayment or
Curtailment is received on such Mortgage Loan. Not later than the close of
business on each Determination Date, with respect to each Mortgage Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the applicable
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.10) equal to the difference between
(a) 30 days' interest (or, with respect to a Pool II Loan, the actual number of
days since the last Remittance Date to but not including the upcoming Remittance
Date or, with respect to the January 1998 Remittance Date, from December 15,
1997) at the then weighted average Class Adjusted Mortgage Loan Remittance Rates
for the applicable Pool on the Principal Balance of each such Mortgage Loan and
(b) the amount of interest actually received on each such Mortgage Loan for such
Due Period as of the beginning of the Due Period applicable to the Remittance
Date on which such amount will be distributed.
Section 6.13 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED
PROPERTY.
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Trustee and the Certificate Insurer
reports relating to each instance occurring during the previous calendar year in
which the Servicer (i) on behalf of the Trust Fund acquires an interest in a
Mortgaged Property through foreclosure or other comparable conversion in full or
partial satisfaction of the Mortgage Loan, or (ii) knows or has reason to know
that a Mortgaged Property has been abandoned. The reports from the Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by such Section 6050J. The Servicer will deliver
to the Trustee an aggregate summary of all information needed by the Trustee to
prepare such Section 6050J reports.
Section 6.14. ALLOCATION OF TOTAL MONTHLY EXCESS CASHFLOW.
(a) On each Remittance Date, for each Pool of Mortgage Loans the
Trustee shall, based upon information provided in the related Servicer's
Certificate delivered pursuant to Section 6.10, allocate an amount equal to the
sum of (x) the Monthly Excess Spread with respect to each such Pool and
Remittance Date (less, with respect to Pool I, the Class X Accelerated
Distribution Amount, if any, for such Remittance Date) plus (y) any
Subordination Reduction Amount with respect to each such Pool and Remittance
Date plus (z) with respect to Pool I or Pool IV any Pool Available Remittance
Amount Surplus with respect to each such Pool (such sum being the "Total Monthly
Excess Cashflow" with respect to such Pool and Remittance Date), in the
following order of priority:
(i) FIRST, to the related Pool in an amount up to (A)
the Pool Available Remittance Amount Shortfall for such Pool
in the case of Pool I and Pool IV and (B) the excess of (x)
the sum of the aggregate Current Interest Requirements for the
Certificates of such respective Pool, plus the Class A, Class
B, Class MV-1 and Class MV-2 Principal Distribution
Amounts with respect to Pool II and the Pool III Class A,
Class MH-1, Class MH-2 and Class BH Formula Principal
Distribution Amounts with respect to Pool III over (y) the
Pool Available Amount for the respective Pool calculated
without giving effect to the addition of any Total Monthly
Excess Cashflows pursuant to clause (ii) of the definition of
Pool Available Amount;
(ii) SECOND, with respect to Pool I and Pool IV to
the Certificate Insurer in respect of amounts owed on account
of any Insured Payments and, provided the Certificate Insurer
is not in default on payment under the Certificate Insurance
Policies, Guaranteed Supplemental Payments, theretofore made
with respect to the related Pool of Mortgage Loans (any such
amount so owed to the Certificate Insurer and not theretofore
paid, together with accrued interest thereon, the "Insurer
Reimbursable Amount" with respect to the related Pool of
Mortgage Loans); and
(iii) THIRD, with respect to Pool I and Pool IV to
the Certificate Insurer in respect of any Insurer Reimbursable
Amount with respect to the other such Pool;
(b) The amount, if any, of the Total Monthly Excess Cashflow with
respect to a Pool of Mortgage Loans on a Remittance Date remaining after the
allocations described in (a) above is the "Net Monthly Excess Cashflow" with
respect to such Pool for such Remittance Date; such amount is required to be
applied in the following order of priority:
(i) FIRST, in the case of Pool II and Pool III,
to reduce the related Class A Interest Shortfall Carryforward
Amounts;
(ii) SECOND, in the case of Pool I and Pool II, the
Pool I Strip Amount and the Pool II Strip Amounts,
respectively, for allocation to the Class X Certificateholders
pursuant to Sections 6.08(d)(X)(v) and 6.08(d)(Y)(xviii);
(iii) THIRD, to the related Pool, in an amount up to
the Subordinated Deficiency Amount for such Pool as of such
Remittance Date;
(iv) FOURTH, in the case of Pool II and Pool III to
reduce the related Class M and Class B Interest Shortfall
Carryforward Amounts and then the Class Realized Loss Amounts
in the order provided under Section 6.08(d)(Y)(xi)-(xvi) and
Section 6.08(d)(Z)(xi)- (xvi), respectively;
(v) FIFTH, in the case of Pool I and Pool IV to the
Spread Account until the amount deposited therein is at its
required level;
(vi) SIXTH, to the Servicer to the extent of any
unreimbursed Servicing Advances and accrued and unpaid
Servicing Fees;
(vii) SEVENTH, to the Pool II Certificateholders to
the extent of any Certificateholders' Interest Carryover owing
for such Remittance Date and all prior Remittance Dates (to
the extent such Net Monthly Excess Cashflow is attributable
to Pool II Mortgage Loans);
(viii) EIGHTH, in the case of Pool I and Pool IV, to
pay the Certificateholders of the other such Pool (in the
order provided for the payment of principal in the case of
Pool I) an amount up to the amount of any Subordinated
Deficiency Amount until its Specified
Subordination Amount is reached;
(ix) NINTH, to provide funds to Pool I and/or Pool IV
to cover any Subordination Deficit with respect to such
respective Pool prior to a claim being made against the
applicable Certificate Insurance Policy and/or to Pool II
and/or Pool III to cover current Realized Losses which would
otherwise be allocated in reduction of the Class Principal
Balances of one or
more Classes of Certificates of such Pool on such Remittance
Date, pro rata, based on the amount so required by each such
Pool; and
(x) TENTH, any excess to the Holders of the Class X
Certificates.
Section 6.15 ESTABLISHMENT OF SERVICING ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.
(a) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Servicing Accounts. The Servicer will
deposit and retain, or cause to be deposited and retained, therein all
collections from the Mortgagors for the payment of taxes, assessments, insurance
premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Servicer or a Subservicer acting on its
own behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Mortgagors any sums as may be determined to be overages,
to pay interest, if required, to Mortgagors on balances in the Servicing
Accounts, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement.
<PAGE>
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 ASSUMPTION AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law or if such enforcement
would materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. In such event, the Servicer shall
enter into an assumption and modification agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Mortgage Note;
provided, however, that if any such Mortgaged Property shall constitute a part
of either Pool I or Pool IV, the Servicer must obtain the prior approval of the
Certificate Insurer. The Servicer shall notify the Trustee (and, with respect to
Pool III Mortgage Loans, the Co-Trustee and the Custodian and, with respect to
Pool I or Pool IV Mortgage Loans, the Certificate Insurer, that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee (and, with respect to the Pool III Mortgage Loans, the Custodian) the
original of such substitution or assumption agreement and in the case of Pool I
and Pool IV Mortgage Loans, a duplicate thereof to the Certificate Insurer,
which original shall be added by the Trustee (and, with respect to the Pool III
Mortgage Loans, the Custodian) to the related Trustee's Mortgage File and shall,
for all purposes, be considered a part of such Trustee's Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
In connection with any assumption or substitution agreement entered into
pursuant to this Section 7.01, the Servicer shall not change the Mortgage
Interest Rate or the Monthly Payment, defer or forgive the payment of principal
or interest, reduce the outstanding principal amount or extend the final
maturity date on such Mortgage Loan. Any fee collected by the Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, (i) the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever; and (ii) the
Servicer shall not take any action which would adversely affect the coverage of
an FHA Loan for insurance by the FHA under Title I.
Section 7.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments, subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian), by an
Officers' Certificate in the form of Exhibit J attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the applicable Principal and Interest Account pursuant to Section
5.03 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Trustee's Mortgage File. Upon receipt of such
certification and request, the Trustee (and, with respect to the Pool III
Mortgage Loans, the Custodian) shall promptly release the related Trustee's
Mortgage File to the Servicer. Expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be payable only from
and to the extent of servicing compensation and shall not be chargeable to the
Principal and Interest Account or the Certificate Accounts.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee (and, with respect to the Pool
III Mortgage Loans, the Custodian) shall, upon request of the Servicer and
delivery to the Trustee (and, with respect to the Pool III Mortgage Loans, the
Custodian) of a certification in the form of Exhibit J attached hereto signed by
a Servicing Officer, release the related Trustee's Mortgage File to the
Servicer, and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian and the Co-Trustee) shall execute such documents as shall be necessary
to the prosecution of any such proceedings. Such servicing receipt shall
obligate the Servicer to return the Mortgage File to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the applicable Principal and Interest Account and remitted to the Trustee for
deposit in the applicable Certificate Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian) a certificate
of a Servicing Officer certifying as to the name and address of the Person to
which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated, the servicing receipt shall be
released by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) to the Servicer.
The Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings, the Servicer shall deliver to
the Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co- Trustee) and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale. The Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) by the
Servicer or take any other action requested in such request, that is, in the
opinion of the Servicer as evidenced by such request, required by any state or
other jurisdiction to discharge the lien of a Mortgage upon the satisfaction
thereof and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will sign and post, but will not guarantee receipt of, any such
documents to the Servicer, or such other party as the Servicer may direct,
within five Business Days of the Trustee's (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee's) receipt of such certificate or documents. Such
certificate or documents shall establish to the Trustee's (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee's) satisfaction that the related
Mortgage Loan has been paid in full by or on behalf of the Mortgagor and that
such payment has been deposited in the applicable Principal and Interest
Account.
Section 7.03 SERVICING COMPENSATION AND CONTINGENCY Fee.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the applicable Principal and Interest Account or to
retain from interest payments on the Mortgage Loans the Servicer's Servicing
Fee. Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Sections
6.03(c)(iii) and 6.04(b)(ii) and late payment charges shall be retained by or
remitted to the Servicer to the extent not required to be remitted to the
Trustee for deposit in the applicable Certificate Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) The Servicer shall be entitled to withdraw from the applicable
Principal and Interest Account or to retain from interest payments on the
Mortgage Loans the Contingency Fee. In the event that The Money Store Inc. is
terminated as Servicer pursuant to this Agreement, any duly appointed successor
to the Servicer shall also be entitled to withdraw from the applicable Principal
and Interest Account or to retain from interest payments on the Mortgage Loans
the successor Servicer's Contingency Fee.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Certificate Insurer, the Trustee, the
Co-Trustee and each of the Rating Agencies, on or before March 31 of each year
beginning March 31, 1999, an Officers' Certificate stating that (i) the Servicer
has fully complied with the provisions of Articles V and VII and the Claims
Administrator has fully complied with Section 5.15, (ii) a review of the
activities of the Servicer and the Claim Administrator during the preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (iii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof and the action being taken by the
Servicer and the Claims Administrator, as applicable, to cure such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year beginning March 31, 1999, the
Servicer, at its expense, shall cause a firm of independent public accountants
reasonably acceptable to the Trustee and the Certificate Insurer to furnish a
letter or letters to the Certificate Insurer, the Trustee, the Co- Trustee and
the Rating Agencies to the effect that such firm has with respect to the
Servicer's overall servicing operations examined such operations in accordance
with the requirements of the Uniform Single Audit Program for Mortgage Bankers,
and stating such firm's conclusions relating thereto.
Section 7.06 TRUSTEE'S, CO-TRUSTEE'S AND CERTIFICATE INSURER'S RIGHT
TO EXAMINE SERVICER RECORDS AND AUDIT OPERATIONS.
The Trustee, the Co-Trustee and the Certificate Insurer shall have the
right upon reasonable prior notice, during normal business hours and as often as
reasonably required, to examine and audit any and all of the books, records or
other information of the Servicer and the Claims Administrator, whether held by
the Servicer or by another on behalf of the Servicer and the Claims
Administrator, which may be relevant to the performance or observance by the
Servicer and the Claims Administrator of the terms, covenants or conditions of
this Agreement. The Certificate Insurer shall have the right upon reasonable
prior notice, during normal business hours and as often as reasonably required
to perform ongoing diligence of the Servicer's operations through loans reviews,
re-appraisals or other reasonable review of Servicer operations. No amounts
payable in respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE AND THE CERTIFICATE INSURER;
PRINCIPAL AND INTEREST ACCOUNT STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall
forward to the Trustee a statement, certified by a Servicing Officer, setting
forth the status of each Principal and Interest Account as of the close of
business on the preceding Record Date and showing, for the period covered by
such statement, the aggregate of deposits into each Principal and Interest
Account for each category of deposit specified in Section 5.03, the aggregate of
withdrawals from each Principal and Interest Account for each category of
withdrawal specified in Section 5.04, the aggregate amount of permitted
withdrawals not made in the related Due Period, and the amount of any Monthly
Advances or payments of Compensating Interest, in each case, for the related Due
Period. The Servicer shall also forward a copy of such report containing such
information for Pool I and Pool IV to the Certificate Insurer. In addition, the
Servicer shall deliver to the Certificate Insurer on a quarterly basis,
beginning in April 1998, a computer diskette containing a quarterly summary of
the information provided in the statement forwarded to the the Certificate
Insurer pursuant to the previous sentence, and also containing information
similar to the information provided in the Mortgage Loan Schedule delivered to
the Trustee as Exhibits H and H-3.
<PAGE>
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied.
<PAGE>
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the
Co-Trustee, the Custodian, the Certificate Insurer and each Certificateholder
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee, the Co-Trustee, the Custodian, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the Servicer
and the Claims Administrator to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Trustee, the Co-Trustee, the Custodian, the Certificate
Insurer and each Certificateholder if a claim is made by a third party with
respect to this Agreement, and the Servicer shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Claims Administrator, the Trustee, the Co-Trustee, the Custodian, the
Certificate Insurer and/or Certificateholder in respect of such claim. The
Trustee may reimburse the Servicer from the related Expense Account pursuant to
Section 6.03(c)(i), and, if necessary, from amounts otherwise payable to the
Holders of the Class X Certificates from the Pool Remaining Amount Available
with respect to each Pool for all amounts advanced by it pursuant to the
preceding sentence with respect to the Trust Fund except when the Claim relates
directly to the failure of the Servicer or the Claims Administrator to service
and administer the Mortgages in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Co-Trustee, the Custodian, the Certificate Insurer and each Certificateholder
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee, the Co-Trustee, the Custodian, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the Servicer,
if it is an affiliate thereof, or the failure of the Representative to perform
their respective duties in compliance with the terms of this Agreement and in
the best interests of the Certificate Insurer and the Certificateholders. The
Representative shall immediately notify the Trustee, the Co-Trustee, the
Custodian, the Certificate Insurer and each Certificateholder if a claim is made
by a third party with respect to this Agreement, and the Representative shall
assume (with the consent of the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Representative, the Trustee, the Co-Trustee, the
Custodian, the Certificate Insurer and/or Certificateholder in respect of such
claim. The Trustee may reimburse the Representative from the related Expense
Account pursuant to Section 6.03(c)(i), and, if necessary, from amounts
otherwise payable to the Holders of the Class X Certificates from the Pool
Remaining Amount Available with respect to each Pool for all amounts advanced by
it pursuant to the preceding sentence with respect to the Trust Fund except when
the claim relates directly to the Representative's indemnification pursuant to
Section 2.05 and Section 3.03 or to the failure of the Servicer, if it is an
affiliate of the Representative, to perform its obligations to service and
administer the Mortgages in compliance with the terms of this Agreement, or the
failure of the Representative to perform its duties in compliance with the terms
of this Agreement and in the best interests of the Certificate Insurer and the
Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE, THE
SERVICER AND THE CLAIMS ADMINISTRATOR.
The Servicer, the Representative and the Claims Administrator will
each keep in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer, the Representative may be merged
or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer, the Representative or the Claims
Administrator shall be a party, or any Person succeeding to the business of the
Servicer, the Representative or the Claims Administrator, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and a valid Contract of Insurance and shall be the successor of the
Servicer, the Representative or the Claims Administrator, as applicable,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer, the Representative or the Claims Administrator
shall send notice of any such merger or consolidation to the Trustee, the
Co-Trustee and the Certificate Insurer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and the Claims Administrator and any director, officer,
employee or agent of the Servicer and the Claims Administrator may rely on any
document of any kind which it in good faith reasonably believes to be genuine
and to have been adopted or signed by the proper authorities respecting any
matters arising hereunder. Subject to the terms of Section 9.01 herein, the
Servicer and the Claims Administrator shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 SERVICER AND CLAIMS ADMINISTRATOR NOT TO RESIGN.
The Servicer and the Claims Administrator shall not assign this
Agreement nor resign from the obligations and duties hereby imposed on it except
by mutual consent of the Servicer, the Claims Administrator, the Certificate
Insurer, the Trustee and the Majority Certificateholders, or upon the
determination that the Servicer's or Claims Administrator's duties hereunder are
no longer permissible under applicable law and such incapacity cannot be cured
by the Servicer or the Claims Administrator. Any such determination permitting
the resignation of the Servicer and the Claims Administrator shall be evidenced
by a written Opinion of Counsel (who may be counsel for the Servicer and the
Claims Administrator) to such effect delivered to the Trustee, the Co-Trustee,
the Certificate Insurer and to each Certificateholder, which Opinion of Counsel
shall be in form and substance acceptable to the Trustee and the Certificate
Insurer. No such resignation shall become effective until a successor has
assumed the Servicer's or the Claims Administrator's responsibilities and
obligations hereunder in accordance with Section 10.02.
Section 9.05 APPOINTMENT OF ASSISTANT CLAIMS ADMINISTRATOR.
The Claims Administrator hereby appoints TMS Mortgage Inc., a New
Jersey corporation, as Assistant Claims Administrator and, in such capacity, the
Assistant Claims Administrator shall have all the rights, powers, obligations
and duties of the Claims Administrator in acting in such capacity.
Notwithstanding such appointment, the Claims Administrator shall remain
obligated to the Trustee, the Co-Trustee and the Certificateholders in
accordance with the provisions of this Agreement.
Section 9.06 RIGHT OF CERTIFICATE INSURER TO REPLACE SERVICER AND
CLAIMS ADMINISTRATOR.
From and after the occurrence of a Servicing Delinquency Trigger (i)
with respect to Pool I or Pool IV, the Certificate Insurer or (ii) with respect
to Pool II or Pool III, the Majority Certificateholders of Pool II and Pool III
Certificates taken together may, upon written notice to the Trustee, the
Co-Trustee and the Rating Agencies and in the case of clause (ii) with the
consent of the Certificate Insurer, replace the Servicer and/or the Claims
Administrator with a successor. No such replacement shall become effective until
a successor has assumed the Servicer's and/or the Claims Administrator's
responsibilities and obligations hereunder in accordance with Section 10.02.
<PAGE>
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default shall occur
and be continuing, that is to say:
(i) (A) an Event of Nonpayment; (B) the failure by
the Servicer to make any required Servicing Advance, to the
extent such failure materially and adversely affects the
interests of the Certificate Insurer or the
Certificateholders; (C) the failure by the Servicer to make
any required Monthly Advance; (D) the failure by the Servicer
to remit any Compensating Interest; (E) the failure by the
Servicer to pay the FHA Insurance Premium relating to any FHA
Loan or (F) any failure by the Servicer or the Claims
Administrator to remit to Certificateholders, or to the
Trustee for the benefit of the Certificateholders, any payment
required to be made under the terms of this Agreement which,
except with respect to FHA Payments to which no grace period
shall apply, continues unremedied after the date upon which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee
or to the Servicer and the Trustee by any Certificateholder or
the Certificate Insurer; or
(ii) failure by the Servicer, the Claims
Administrator or the Representative duly to observe or
perform, in any material respect, any other covenants,
obligations or agreements of the Servicer, the Claims
Administrator or the Representative as set forth in this
Agreement, which failure continues unremedied for a period of
60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Servicer, the Claims Administrator or the
Representative, as the case may be, by the Trustee or to the
Servicer, the Claims Administrator or the Representative, as
the case may be, and the Trustee by any Certificateholder or
the Certificate Insurer; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Servicer or
the Claims Administrator and such decree or order shall have
remained in force, undischarged or unstayed for a period of 60
days; or
(iv) the Servicer or the Claims Administrator shall
consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or the Claims Administrator or
of or relating to all or substantially all of the Servicer's
or the Claims Administrator's property; or
(v) the Servicer or the Claims Administrator shall
admit in writing its inability to pay its debts as they become
due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment
of its obligations;
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(C) or, with respect to FHA Payments, clause (i)(F)), if
such Event of Default shall not have been remedied within 30 days after the
Servicer or the Claims Administrator has received notice of such Event of
Default, (x) with respect solely to clause (i)(C) above, if such Monthly Advance
is not made earlier than 4:00 p.m. New York time on the Determination Date, the
Trustee shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer or the Claims Administrator, as the case may be, and,
unless such failure is cured, either by receipt of payment or receipt of
evidence satisfactory to the Certificate Insurer (E.G., a wire reference number
communicated by the sending bank) that such funds have been sent, by 12:00 Noon
New York time on the following Business Day, the Trustee (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee) shall immediately assume, pursuant
to Section 10.02 hereof, the duties of a successor Servicer and the Claims
Administrator; and (y) in the case of clauses (i)(A), (i)(B), (i)(D), (i)(E),
(i)(F), (ii), (iii), (iv) and (v), the Certificate Insurer or the Majority
Certificateholders, subject to the prior written consent of the Certificate
Insurer, which consent may not be unreasonably withheld, by notice in writing to
the Servicer and the Claims Administrator, may, in addition to whatever rights
such Certificateholders or the Certificate Insurer may have at law or equity
including damages, injunctive relief and specific performance, in each case
commence termination of all the rights and obligations of the Servicer and the
Claims Administrator under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, as Servicer and the Claims Administrator. Upon receipt by
the Servicer and the Claims Administrator of a second written notice from the
Certificate Insurer or the Majority Certificateholders stating that they or it
intend to terminate the Servicer and the Claims Administrator as a result of
such Event of Default, all authority and power of the Servicer and the Claims
Administrator under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall, subject to Section 10.02, pass to and be vested in the
Trustee or its designee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee or its designee) and the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer and the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Mortgage Loans and related
documents. The Servicer and the Claims Administrator agree to cooperate with the
Trustee and the Co-Trustee in effecting the termination of the Servicer's and
the Claims Administrator's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to each Principal and Interest Account or thereafter received with
respect to the Mortgage Loans.
Section 10.02 TRUSTEE AND CO-TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer or the Claims Administrator
receives a notice of termination pursuant to Section 10.01 or the Trustee
receives the resignation of the Servicer and the Claims Administrator evidenced
by an Opinion of Counsel pursuant to Section 9.04 or the Servicer and the Claims
Administrator are removed as servicer and claims administrator pursuant to this
Article X, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) shall be the successor in all respects to the Servicer in its
capacity as servicer and the Claims Administrator in its capacity as claims
administrator under this Agreement and the transactions set forth or provided
for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer and the Claims Administrator
by the terms and provisions hereof, provided, however, that the Trustee and the
Co-Trustee shall not be liable for any actions of any servicer or claims
administrator prior to it, and that the Trustee and the Co-Trustee shall not be
obligated to make advances or payments pursuant to Sections 6.03, 6.04, 6.11,
6.12, 5.05, 5.10 or 5.14 but only to the extent the Trustee or the Co-Trustee,
as the case may be, determines reasonably and in good faith that such advances
would not be recoverable, such determination to be evidenced with respect to
each such advance by a certification of a Responsible Officer of the Trustee or
the Co-Trustee, as the case may be. As compensation therefor, the Trustee (or,
with respect to the Pool III Mortgage Loans, the Co-Trustee) shall be entitled
to all funds relating to the Mortgage Loans which the Servicer and Claims
Administrator would have been entitled to receive from the Principal and
Interest Account pursuant to Section 5.04 if the Servicer had continued to act
as servicer and claims administrator hereunder, together with other servicing
compensation in the form of assumption fees, late payment charges, the
Contingency Fee or otherwise as provided in Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee or the Co-Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act or if the
Majority Certificateholders or the Certificate Insurer so request in writing to
the Trustee or the Co-Trustee, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Certificate Insurer, which acceptance shall not be
unreasonably withheld, that has a net worth of not less than $15,000,000 and
which is approved as a servicer by FNMA and FHLMC (and, in the case of FHA
Loans, is a Title I approved lender pursuant to FHA Regulations) as the
successor to the Servicer and the Claims Administrator hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer and the Claims Administrator hereunder. Any collections received by
the Servicer and the Claims Administrator after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer and claims administrator (including, without limitation, the
Trustee and Co-Trustee) so appointed shall be the aggregate Servicing Fees,
together with the Contingency Fee and other servicing compensation in the form
of assumption fees, late payment charges or otherwise. In the event the Trustee
or Co- Trustee is required to solicit bids as provided herein, the Trustee or
Co-Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer and claims administrator shall be entitled to, with respect
to the Mortgage Loans each would be servicing, the full amount of the aggregate
Servicing Fees and Contingency Fee relating to such Mortgage Loans as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee or Co-Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee or Co-Trustee shall deduct from any sum received by the Trustee or
Co-Trustee from the successor to the Servicer and Claims Administrator in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Monthly Advances. After such deductions, the remainder of
such sum shall be paid by the Trustee or Co-Trustee to the Servicer and Claims
Administrator at the time of such sale, transfer and assignment to the
Servicer's and Claims Administrator's successor. The Trustee or Co-Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The Servicer and Claims
Administrator agree to cooperate with the Trustee or Co-Trustee and any
successor servicer and claims administrator in effecting the termination of the
Servicer's and Claims Administrator's servicing responsibilities and rights
hereunder and shall promptly provide the Trustee or Co-Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's and Claims Administrator's functions
hereunder and shall promptly also transfer to the Trustee or Co-Trustee or such
successor servicer and claims administrator, as applicable, all amounts which
then have been or should have been deposited in the Principal and Interest
Account or Spread Account by the Servicer and Claims Administrator or which are
thereafter received with respect to the Mortgage Loans. Neither the Trustee, the
Co-Trustee nor any other successor servicer or claims administrator shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer and Claims Administrator to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer and Claims Administrator
hereunder. No appointment of a successor to the Servicer and Claims
Administrator hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the Certificate Insurer, the Trustee and Co-Trustee shall have consented
thereto. Neither the Trustee nor the Co-Trustee shall resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed.
Pending appointment of a successor to the Servicer and the Claims
Administrator hereunder, the Trustee and the Co-Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee and the Co-Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer and Claims Administrator pursuant to
Section 7.03 or otherwise as provided in this Agreement. The Servicer, the
Claims Administrator, the Trustee, the Co-Trustee, any Custodian and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
Section 10.03 WAIVER OF DEFAULTS.
The Certificate Insurer or the Majority Certificateholders may, on
behalf of all Certificateholders, and subject to the consent of the Certificate
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer and the Claims Administrator as servicer
pursuant to this Article X, provided, however, that the Majority
Certificateholders or the Certificate Insurer may not waive a default in making
a required distribution on a Certificate without the consent of the holder of
such Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived.
Section 10.04 TRANSFER OF TAX MATTERS PERSON RESIDUAL INTEREST.
Upon any termination of, or appointment of any successor to, the
Servicer hereunder, the Servicer shall promptly upon the request of the Trustee
transfer all of the Tax Matters Person Residual Interest to the Representative,
for such time as the Trustee shall serve as successor Servicer and thereafter
the Representative shall transfer such Tax Matters Person Residual Interest to
the entity that is appointed to succeed the Trustee as Servicer.
Section 10.05 CONTROL BY MAJORITY CERTIFICATEHOLDERS.
The Certificate Insurer or the Majority Certificateholders with the
consent of the Certificate Insurer, which consent may not be unreasonably
withheld, may direct the time, method and place of conducting any proceeding
relating to the Trust Fund or the Certificates or for any remedy available to
the Trustee or the Co-Trustee with respect to the Certificates or exercising any
trust or power conferred on the Trustee or the Co-Trustee with respect to the
Certificates or the Trust Fund provided that:
(i) such direction shall not be in conflict with
any rule of law or with this Agreement;
(ii) the Trustee or the Co-Trustee, as the case may
be, shall have been provided with indemnity satisfactory to
it; and
(iii) the Trustee and the Co-Trustee may take any
other action deemed proper by the Trustee and the Co-Trustee
which is not inconsistent with such direction; PROVIDED,
HOWEVER, that the Trustee and the Co-Trustee need not take any
action which it determines might involve it in liability or
may be unjustly prejudicial to the Holders not so directing.
<PAGE>
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
Subject to Section 11.03, this Agreement shall terminate upon notice
to the Trustee of either: (a) the latter of the final payment or other
liquidation of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder, or (b) mutual consent of the
Servicer, the Certificate Insurer and all Certificateholders in writing;
provided, however, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the United
States to the Court of St. James, alive as of the date hereof.
Subject to Section 11.03, the Servicer may, at its option, and in the
absence of the exercise thereof by the Servicer, the Certificate Insurer may, at
its option, on any date on which the aggregate Principal Balances of the
Mortgage Loans are less than ten percent of the sum of (i) the aggregate
Principal Balances of the Initial Mortgage Loans as of the Cut-Off Date and (ii)
the Original Pre-Funded Amount (such date, the "Optional Servicer Termination
Date"), purchase on the next succeeding Remittance Date, all of the Mortgage
Loans and any related REO Properties at a price equal to the sum of (x) 100% of
the Principal Balances of the Mortgage Loans before the occurrence of Realized
Losses, and any related REO Property, and including the portion of the principal
balance of each 90 Day Delinquent FHA Loan for which the Certificateholders have
not received payment and for which a Claim was submitted to the FHA (y) accrued
but unpaid interest thereon (whether through payments by the applicable
Mortgagor, Monthly Advances or otherwise) at the weighted average Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6 and Class AF-7
Remittance Rates in the case of the Pool I Mortgage Loans, the weighted average
Class AV-1, Class AV-2, Class MV-1, Class MV-2 and Class BV Remittance Rates in
the case of the Pool II Mortgage Loans, the weighted average Class AH-1, Class
AH-2, Class AH-3, Class AH- 4, Class MH-1, Class MH-2 and Class BH Remittance
Rates in the case of the Pool III Mortgage Loans and the Class AMF Remittance
Rate in the case of the Pool IV Mortgage Loans, and (z) with respect to the Pool
I and Pool IV Mortgage Loans, the interest portion of any unreimbursed Insured
Payments and Guaranteed Supplemental Payments made by the Certificate Insurer
(the "Termination Price").
On any Remittance Date on or after the Cross-Over Date when Pool I
and/or Pool IV Mortgage Loans with aggregate original Principal Balances that
equal or exceed 25% of the sum of (i) the aggregate Principal Balance of the
Initial Mortgage Loans as of the Cut-Off Date and (ii) the Original Pre-Funded
Amount, in each case with respect to Pool I and Pool IV Mortgage Loans, have
become Liquidated Mortgage Loans, the Certificate Insurer may determine to
purchase and may cause the purchase from the Trust Fund of all Mortgage Loans
and REO Properties at a price equal to the sum of the Termination Price with
respect to the Trust Fund and the outstanding and unpaid fees and expenses of
the Trustee, the Co-Trustee, the Custodian and the Servicer. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the applicable Principal and Interest Account for deposit to the
applicable Certificate Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
In connection with any purchase pursuant to this Section 11.01, the
Certificate Insurer shall provide to the Trustee and the Co-Trustee an opinion
of counsel experienced in federal income tax matters in form and substance
satisfactory to the Trustee and the Co-Trustee to the effect that such purchase
constitutes a "Qualified Liquidation," as such term is defined in the REMIC
Provisions.
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer or the Certificate Insurer
by letter to the Certificateholders mailed during the month of such final
distribution before the Determination Date in such month, specifying (i) the
Remittance Date upon which final payment of the Certificates will be made upon
presentation and surrender of such Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Remittance Date is not applicable,
payments being made only upon presentation and surrender of such Certificates at
the office of the Trustee therein specified. The Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to Certificateholders. The obligations
of the Certificate Insurer hereunder with respect to the Trust Fund shall
terminate upon the deposit by the Servicer or the Certificate Insurer with the
Trustee of the Termination Price with respect to the Trust Fund. Any obligation
of the Servicer to pay amounts due to the Certificate Insurer and the Trustee
shall survive the termination of the Trust Fund.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to such remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the eastern
edition of THE WALL STREET JOURNAL notice that such money remains unclaimed. If
within six months after the second notice all of such Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.
Section 11.02. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service,
or by a court of competent jurisdiction, in either case, from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either of REMIC I or REMIC II does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination, (i) the Majority Certificateholders may
direct the Trustee and the Co-Trustee on behalf of REMIC I and REMIC II to adopt
a "plan of complete liquidation" (within the meaning of Section 860F(a)(4) of
the Code) and (ii) the Certificate Insurer may notify the Trustee of the
Certificate Insurer's determination to purchase from REMIC II all Mortgage Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in
REMIC II at a price equal to the Termination Price for the REMIC II. Upon
receipt of such direction by the Majority Certificateholders or of such notice
from the Certificate Insurer, the Trustee shall notify the Class R
Certificateholders of such election to liquidate or such determination to
purchase, as the case may be (the "Termination Notice"). The Holders of a
majority of the Percentage Interest of the Class R Certificates then outstanding
may, within 60 days from the date of receipt of the Termination Notice (the
"Purchase Option Period"), at their option, purchase from REMIC II all Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in
REMIC II at a purchase price equal to the Termination Price for REMIC II.
(b) If, during the Purchase Option Period, the Class R
Certificateholders have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period (i)
in the event that the Majority Certificateholders have given the Trustee and the
Co-Trustee the direction described in clause (a)(i) above, the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall sell the Mortgage
Loans and distribute the proceeds of the liquidation of REMIC II in accordance
with the plan of complete liquidation, such that, if so directed, the
liquidation of REMIC II, the distribution of the proceeds of the liquidation and
the termination of this Agreement occur no later than the close of the 60th day,
or such later day as the Class A, Class M and Class B Certificateholders shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase from REMIC II the assets
described in clause (a)(ii) preceding, the Certificate Insurer shall so purchase
such assets from REMIC II within 60 days after the expiration of the Purchase
Option Period. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Trustee and the Certificate Insurer of an
opinion of nationally recognized tax counsel selected by the Holders of the
Class R Certificates which opinion shall be reasonably satisfactory in form and
substance to the Majority Certificateholders and the Certificate Insurer to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of REMIC II will be subject to federal
taxation, purchase from REMIC II all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in REMIC II at a purchase price equal to the
Termination Price for REMIC II. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the applicable Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Majority
Certificateholders give the Holders of a majority of the Percentage Interest of
the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.
Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Servicer or the Certificate Insurer exercises its
purchase option as provided in Section 11.01 or 11.02, each of REMIC I and REMIC
II shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 11.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on REMIC I or REMIC II as defined in Section 860F of the Code, or
(ii) cause REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) Within 90 days prior to the final Remittance
Date, the holders of the Class R-1 and Class R-2 Certificates
shall adopt a plan of complete liquidation of REMIC I and
REMIC II, respectively, meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan
of complete liquidation and at or prior to the final
Remittance Date, the Trustee (or, with respect to the Pool III
Mortgage Loans the Co-Trustee) shall sell for cash all of the
assets of REMIC I and REMIC II to the Servicer, the
Certificate Insurer or the Certificate Insurer's designee; and
(iii) At the time of the making of the final payment
on the Certificates, the Trustee shall (x) deposit into and
withdraw from the Certificate Accounts the amount of such
final payment and shall distribute or credit, or cause to be
distributed or credited, to the Certificateholders of each
Class, the related Class Principal Balance, plus 30 days'
interest thereon (or, with respect to the Adjustable Rate
Certificates and the Auction Rate Certificates, interest on
the actual number of days since the last Remittance Date up to
but not including the upcoming Remittance Date) at the related
Class Remittance Rate, and (y) to the Class R-1
Certificateholders, distribute all cash on hand after such
payment to the respective Certificateholders, and REMIC I and
REMIC II shall terminate at such time.
(b) By their acceptance of the Class R Certificates the holders
thereof hereby (i) agree to adopt such a plan of complete liquidation upon the
written request of the Servicer or Certificate Insurer and to take such other
action in connection therewith as may be reasonably requested by the Servicer
and (ii) appoint the Servicer as their attorney-in-fact, with full power of
substitution, for purposes of adopting such a plan of complete liquidation.
Section 11.04 [OMITTED]
Section 11.05 ACCOUNTING UPON TERMINATION OF SERVICER AND CLAIMS
ADMINISTRATOR.
Upon termination of the Servicer and Claims Administrator under
Article X hereof, the Servicer and Claims Administrator shall:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) all Mortgage Files and related documents and statements held by it
hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans and administering of the Claims to their
successor and to more fully and definitively vest in such successor all rights,
powers, duties, responsibilities, obligations and liabilities of the Servicer
and the Claims Administrator under this Agreement.
<PAGE>
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Representative, the Claims Administrator or any
Originator hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default which may
have occurred, the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for
an error of judgment made in good faith by officers of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
Certificate Insurer or the Class A, Class M and Class B
Certificateholders, relating to the time, method and place of
conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the
Trustee, under this Agreement;
(iv) In the absence of actual knowledge of an Event
of Default other than an Event of Nonpayment, the Trustee
shall not be required to take notice or be deemed to have
notice or knowledge of any default or Event of Default unless
the Trustee shall be specifically notified in writing by the
Servicer or the Certificate Insurer or any of the
Certificateholders. In the absence of actual knowledge or
receipt of such notice, the Trustee may conclusively assume
that there is no default or Event of Default; and
(v) The Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability for
the performance of any of its duties hereunder or the exercise
of any of its rights or powers if there is reasonable ground
for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or
document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any
opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such opinion of counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Agreement or to institute, conduct or defend by litigation
hereunder or in relation hereto at the request, order or
direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders or the Certificate
Insurer, as applicable, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same
degree of care and skill in its exercise as a prudent person
would exercise or use under the circumstances in the conduct
of such person's own affairs;
(iv) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by the Certificate Insurer, Holders of Class A, Class M and
Class B Certificates evidencing Percentage Interests
aggregating not less than 25% of the Class Principal Balances
of all Class A, Class M and Class B Certificates; provided,
however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action.
The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(v) The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful
misconduct in the performance of such act;
(vi) The Trustee shall not be required to give any
bond or surety in respect of the execution of the trust
created hereby or the powers granted hereunder; and
(vii) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys.
(b) Following the Startup Day, except for deposits into the
Spread Account pursuant to Section 6.05, the Trustee shall not knowingly accept
any contribution of assets to the Trust Fund, unless the Trustee shall have
received an Opinion of Counsel to the effect that the inclusion of such assets
in the Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject the Trust Fund to any
tax under the REMIC Provisions or other applicable provisions of federal, New
York State or New York City law or ordinances.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S, CO-TRUSTEE'S AND CUSTODIAN'S
FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee, the
Co-Trustee and the Custodian from time to time compensation for their services
in accordance with separate agreements or fee schedules between the Servicer and
the Trustee, the Co-Trustee and the Custodian, respectively (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). The Servicer will pay or reimburse the Trustee, Co-Trustee and
Custodian upon request for all reasonable expenses, disbursements and advances
incurred or made in accordance with any of the provisions of this Agreement or
the Custodial 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, the Co-Trustee and the
Custodian shall have no lien on the Trust Fund, other than the Expense Accounts,
for the payment of its fees and expenses. To the extent that actual fees and
expenses of the Trustee, the Co-Trustee or the Custodian exceed the amount
available for payment thereof on deposit in the Expense Accounts as of the date
such fees and expenses are due and payable, the Servicer shall reimburse the
respective party for such shortfall out of its own funds without reimbursement
therefor, except as provided in Section 6.03. The Trustee, the Co-Trustee and
the Custodian and any director, officer, employee or agent of the Trustee, the
Co-Trustee and the Custodian shall be indemnified by the Servicer and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement, the Custodial 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 thereunder or by reason of reckless disregard of obligations and
duties hereunder or thereunder. The obligations of the Servicer under this
Section 12.05 shall survive payment of the Certificates.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a banking association
organized and doing business under the laws of any state or the United States of
America, (i) authorized under such laws to exercise corporate trust powers, (ii)
having a combined capital and surplus of at least $30,000,000, (iii) except in
the case of The Bank of New York, whose unsecured and unguaranteed long-term
debt obligations shall be rated at least "A" by S&P, or such other rating as is
acceptable to the Certificate Insurer, (iv) subject to supervision or
examination by federal or state authority, and (v) is reasonably acceptable to
the Certificate Insurer. If such banking association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section its combined capital and surplus shall be deemed to be as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign, upon the request of the Certificate Insurer
or the Majority Certificateholders, in the manner and with the effect specified
in Section 12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall with the consent of the Certificate Insurer
promptly appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the 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 Certificate Insurer may,
after such 60 day period, petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 12.06 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Servicer
may remove the Trustee and appoint, subject to the approval of the Certificate
Insurer, a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Servicer.
The Majority Certificateholders with the consent of the Certificate
Insurer, which consent will not be unreasonably withheld, or the Certificate
Insurer may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08.
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements held by it hereunder, and
the Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, and the Certificate Insurer pursuant to the procedure set forth below,
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Fund, and to vest
in such Person or Persons, in such capacity, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 12.10,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. Any co-trustee with respect to the FHA
Loans must at all times have a valid FHA Contract of Insurance. The Trustee
shall notify the Certificate Insurer prior to the appointment of any
co-trustee(s) or separate trustee(s) and the Certificate Insurer shall have four
Business Days from its receipt of such notice to notify the Trustee whether it,
in its reasonable judgment, disapproves of such co-trustee(s) or separate
trustee(s). If the Certificate Insurer does not notify the Trustee within such
time frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the Certificate Insurer notifies the Trustee within such time
frame that it, in its reasonable judgment, disapproves of such co-trustee(s) or
separate trustee(s) (which notice shall be accompanied by the name(s) of the
Certificate Insurer's alternative proposed co-trustee(s) or separate
trustee(s)), such appointments shall not be effective.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 12.10, all rights, powers, duties and obligations
conferred or imposed upon the trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
The Servicer and the Trustee hereby appoint First Union Trust Company,
National Association, as Co-Trustee with respect to all Pool III Mortgage Loans
that constitute, or may in the future constitute, part of the Trust Fund. Except
as otherwise specifically provided herein, whenever action, consent, approval or
delivery to or from the Trustee is required under this Agreement in connection
with a Pool III Mortgage Loan, such action, consent, approval or delivery to or
from shall be taken or made by the Co-Trustee. Also, any obligations of or
benefits, protection and indemnities provided to, the Trustee with respect to
the Mortgage Loans shall be obligations of, and benefits, protection and
indemnities provided to, the Co-Trustee with respect to the Pool III Mortgage
Loans.
Notwithstanding any contrary provision contained herein, the
Co-Trustee shall be responsible hereunder solely for the express duties and
functions specified for it herein with respect to the acceptance, ownership,
servicing compliance oversight, FHA Title I insurance coverage, substitution,
sale, release and discharge of Pool III Mortgage Loans, and shall not be
responsible for, and shall incur no liability in connection with, the actions,
duties and functions of the Trustee, including without limitation the payment of
Certificates or the oversight of servicing compliance for Mortgage Loans not
constituting Pool III Mortgage Loans.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, with power to act on the Trustee's behalf and subject to
its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of REMIC I and REMIC II and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
REMIC I and REMIC II any Tax Return that the Trustee is required to sign
pursuant to applicable federal, state or local tax laws, and (ii) cause such Tax
Return to have been returned to the Servicer for filing.
For Federal income tax purposes, the taxable year of the Trust Fund
shall be a calendar year and the Servicer shall maintain or cause the
maintenance of the books of REMIC I and REMIC II on the accrual method of
accounting.
The Servicer shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to REMIC I
and REMIC II and the Certificates containing such information and at the times
and in the manner as may be required by the Code or applicable Treasury
regulations, and shall furnish to each Holder of Certificates at any time during
the calendar year for which such returns or reports are made such statements or
information at the times and in the manner as may be required thereby. In
connection with the foregoing, the Servicer shall provide the name, address and
telephone number of the person who can be contacted to obtain information
required to be reported to the holders of regular interests in REMIC I and REMIC
II (the "REMIC Reporting Agent") as required by IRS Form 8811. The Servicer
shall indicate the election to treat each of REMIC I and REMIC II as a REMIC
(which election shall apply to the taxable period ending December 31, 1998 and
each calendar year thereafter) in such manner as the Code or applicable Treasury
regulations may prescribe. The Trustee shall sign all tax information returns
filed pursuant to this Section and any other returns as may be required by the
Code, and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Servicer. The
Representative is hereby designated as the Tax Matters Person (within the
meaning of Section 1.860F-4(d) of the Regulations) for each of REMIC I and REMIC
II. Any Holder of a Class R Certificate will by acceptance thereof so appoint
the Representative as agent and attorney-in-fact for the purpose of acting as
Tax Matters Person for the related REMIC. In the event that the Code or
applicable Treasury Regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Representative from acting as
Tax Matters Person (as an agent or otherwise), the Trustee or the Representative
shall take whatever action that in its sole good faith judgment is necessary for
the proper filing of such information returns or for the provision of a tax
matters person, including designation of the Holder of a Class R Certificate to
sign such returns or act as tax matters person. Each Holder of a Class R
Certificate shall be bound by this Section.
The Trustee shall provide upon request such information as required in
Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any Person
purporting to transfer a Class R Certificate.
Section 12.13 APPOINTMENT OF CUSTODIANS.
The Trustee may (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee may), with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee),
by entering into a Custodial Agreement. Subject to this Article XII, the Trustee
(or, with respect to the Pool III Mortgage Loans, the Co-Trustee) agrees to
comply with the terms of each Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders and the Certificate Insurer. Each Custodian (other than First
Union National Bank) shall be a depository institution subject to supervision by
federal or state authority and shall be qualified to do business in the
jurisdiction in which it holds any Mortgage File.
The Co-Trustee and the Servicer hereby appoint First Union National
Bank as Custodian with respect to the Trustee's Mortgage Files relating to all
Pool III Mortgage Loans that constitute, or may in the future constitute, part
of the Trust Fund. The Custodian shall be responsible hereunder solely for the
express duties and functions specified for it herein with respect to the
custody, review and confirmation, safekeeping, substitution and release of the
Trustee's Mortgage Files relating to the Pool III Mortgage Loans.
Section 12.14. PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund in trust for the benefit of
the Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Representative, will from time to time execute and deliver all such supplements
and amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any
portion of the Trust Fund;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this
Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and
the rights of the Trustee, and the ownership interests of the
Owners represented thereby, in the Trust Fund against the
claims of all Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Representative to take any action pursuant to this
Section 12.14 to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, by action, suit or proceeding at law
or equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Holders; provided, however, that nothing in this Section 12.14 shall require
any action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested to take such action by the Majority Certificateholders, the
Certificate Insurer or the Representative in accordance with the terms of this
Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.15. CALCULATION OF LIBOR.
(a) On each Interest Determination Date, the Trustee will determine
LIBOR based on the rate for one-month U.S. dollar deposits (the "One Month Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date in determining the Class AV-1 Remittance Rate for the Remittance Date
in the following month. If such LIBOR rate does not appear on Telerate Page
3750, the LIBOR rate for that day will be determined on the basis of the rates
at which deposits in United States dollars, having the One-Month Index Maturity
and in a principal amount of not less than U.S. $1,000,000, are offered at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market by the Reference Banks. The Trustee will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
the rate for that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Trustee, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks having a One-Month Index Maturity and in a principal amount equal
to an amount of not less than U.S. $1,000,000; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable Interest Period will be LIBOR in effect for the
previous Interest Period.
Neither the Representative, Servicer nor the Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the Class
AV-1 Remittance Rate, the Trustee may conclusively rely and shall be protected
in relying upon the rates appearing on Telerate Page 3750 or the offered
quotations (whether written, oral or on Telerate Page 3750) from Reference
Banks, as appropriate, in effect from time to time. Neither of the
Representative, the Servicer, the Certificate Insurer nor the Trustee shall have
liability or responsibility to any Person for (i) the Trustee's selection of
Reference Banks for purposes of determining LIBOR or (ii) the Trustee's or the
Servicer's inability, as applicable, following a good-faith reasonable effort,
to obtain such quotations from Reference Banks or such New York City banks or to
determine such arithmetic mean, all as provided for in this Section 12.15.
The establishment of LIBOR and the Class AV-1 Remittance Rate by the
Trustee shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate, the Representative and the Servicer.
The Trustee is not responsible for determining (or for the failure of
the Servicer to determine) the Net Funds Cap.
<PAGE>
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Servicer
and the Trustee by written agreement, upon the prior written consent of the
Certificate Insurer, without notice to or consent of the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, any Custodial Agreement or
the Insurance Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
the interests of any Certificateholder in any material respect or any other
party and further provided that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the
Originators, the Representative, the Servicer and the Trustee, with the prior
written consent of the Certificate Insurer, the Majority Certificateholders and
the Holders of the majority of the Percentage Interest in each of the Class X,
Class R-1 and Class R-2 Certificates for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders; provided, however, that
no such amendment shall be made unless the Trustee receives an Opinion of
Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of either REMIC I or REMIC II as a REMIC or
cause a tax to be imposed on REMIC I or REMIC II, and provided further, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or reduce the percentage for each
Class the Holders of which are required to consent to any such amendment without
the consent of the Holders of 100% of each Class of Certificates affected
thereby.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
(d) Any amendment to this Agreement shall also require the consent of
the Custodian and/or the Co-Trustee if such proposed amendment affects any of
their respective rights, duties or obligations hereunder.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 13.05 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer, the Claims Administrator, and each
Originator, The Money Store Inc., 2840 Morris Avenue, Union, New Jersey 07083,
Attention: Executive Vice President, or such other addresses as may hereafter be
furnished to the Certificateholders in writing by the Representative and the
Servicer, (ii) in the case of the Trustee, The Bank of New York, 101 Barclay
Street, 12th Floor East, New York, New York 10286, Attention: Corporate Trust
MBS Administration, (iii) in the case of the Certificateholders, as set forth in
the Certificate Register, (iv) in the case of Moody's, to Moody's Investors
Service, Home Equity Group, 99 Church Street, 4th Floor, New York, New York
10007, (v) in the case of S&P, to Standard & Poor's Investors Services, 25
Broadway, 20th Floor, New York, New York 10004, Attention: Residential
Mortgages, (vi) in the case of Fitch, to Fitch Investors Service, L.P., One
State Street Plaza, New York, New York 10004, Attention: Residential Mortgage
Loan Structured Finance, and (vii) in the case of the Co-Trustee, First Union
Trust Company, National Association, One Rodney Square, First Floor, 920 King
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Department. Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Originators, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 13.12 THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer shall be suspended
during any period in which the Certificate Insurer is in default in its payment
obligations under a Certificate Insurance Policy. At such time as the Pool I and
Pool IV Certificates are no longer outstanding hereunder, and no amounts owed to
the Certificate Insurer hereunder remain unpaid, the Certificate Insurer's
rights hereunder shall terminate. The notice address of the Certificate Insurer
is MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: Surveillance Department (The Money Store).
Section 13.13 PAYING AGENT.
The Trustee may, subject to the eligibility requirements for the
Trustee set forth in Section 12.06 hereof, other than Section 12.06(iv), appoint
one or more successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.06, that such Paying Agent
will:
(i) allocate all sums received for distribution to the
Holders of Certificates of each Class for which it is
acting as Paying Agent on each Remittance Date among
such Holders in the proportion specified by the
Trustee; and
(ii) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust
for the benefit of the Holders entitled thereto until
such sums shall be paid to such Holders or otherwise
disposed of as herein provided and pay such sums to
such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the
Certificateholders by mailing notice thereof to their addresses appearing on the
Certificate Register.
Section 13.14 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any appointment of a
Custodian (other than First Union National Bank), (3) any change of the Trustee
or the Servicer (4) any Event of Default, and (5) the final payment of all the
Certificates. The Servicer shall promptly deliver to the Rating Agencies a copy
of each of the Servicer's Certificates. Further, the Representative shall give
prompt notice to the Rating Agencies if the Representative or any of its
affiliates acquire any Pool I or Pool IV Certificates, which notice shall
acknowledge that the Representative, or such affiliate understands that such
Pool I or Pool IV Certificates so acquired will not be entitled to the benefits
of the Certificate Insurance Policy and, accordingly, will not be rated by the
Rating Agencies so long as such Pool I or Pool IV Certificates are owned by the
Representative or any such affiliate.
Section 13.15 THIRD PARTY RIGHTS.
The Trustee, the Representative, the Servicer and each of the
Originators listed herein agree that each of the Certificate Insurer, the
Co-Trustee and the Custodian shall be deemed a third-party beneficiary of this
Agreement entitled to all the rights and benefits set forth herein as fully as
if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the Representative, the Servicer, the Claims
Administrator, the Trustee and each Originator have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
THE MONEY STORE INC., as
Representative, Servicer
and Claims Administrator
By:/S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
THE BANK OF NEW YORK, as Trustee
By: /S/ ROBERT P. MULLER
Name: Robert P. Muller
Title: Assistant Treasurer
THE ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Senior Vice President
<PAGE>
ACCEPTANCE OF ASSISTANT CLAIMS ADMINISTRATOR
TMS Mortgage Inc., a New Jersey corporation, hereby accepts its
appointment pursuant to Section 9.05 of the within instrument to serve as
Assistant Claims Administrator. In connection therewith, TMS Mortgage Inc.
agrees to be bound by all applicable provisions of such instrument.
TMS MORTGAGE INC.,
as Assistant Claims
Administrator
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Senior Vice President
<PAGE>
ACCEPTANCE OF CO-TRUSTEE
First Union Trust Company, National Association hereby accepts its
appointment pursuant to Section 12.10 of the within instrument to serve as
Co-Trustee with respect to the Pool III Mortgage Loans. In connection therewith,
First Union Trust Company, National Association agrees to be bound by all
applicable provisions of such instrument.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Co-Trustee
By: /S/ ROBERT ASHBAUGH
Name: Robert Ashbaugh
Title: Vice President
<PAGE>
ACCEPTANCE OF CUSTODIAN
First Union National Bank hereby accepts its appointment pursuant to
Section 12.13 of the within instrument to serve as Custodian with respect to the
Pool III Mortgage Loans. In connection therewith, First Union National Bank
agrees to be bound by all applicable provisions of such instrument.
FIRST UNION NATIONAL BANK, as
Custodian
By: /S/ ROBIN M. BELANGER
Name: Robin M. Belanger
Title: Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 31st day of December 1997 before me, a Notary Public in and for
said State, personally appeared Robert P. Muller known to me to be an
officer of The Bank of New York, a New York banking corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said New York banking corporation, and acknowledged to me that such
New York banking corporation, executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ ANASTASIA P. DODSON
Anastasia P. Dodson
Notary Public
My Commission expires July 7, 1999
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF NEW JERSEY )
On the 31st day of December 1997 before me, a Notary Public in and for
the State of New Jersey, personally appeared Michael Benoff known to me to be
the Executive Vice President of The Money Store Inc., one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ ELEONORE FERRO
Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF NEW JERSEY )
On the 31st day of December 1997 before me, a Notary Public in and for
the State of New Jersey, personally appeared Michael Benoff known to me to be
the Senior Vice President of each Originator listed on Exhibit I to the within
instrument, and also known to me to be the person who executed it on behalf of
each such corporation, and acknowledged to me that each such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ ELEONORE FERRO
Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
<PAGE>
SCHEDULE II-A
POOL I AUCTION PROCEDURES
ARTICLE 1.
Except as otherwise specified herein, or as the context may require,
capitalized terms used but not otherwise defined herein have the meanings
ascribed in the Pooling and Servicing Agreement dated as of November 30, 1997
(the "Pooling and Servicing Agreement") among the Bank of New York, as trustee,
The Money Store Inc., as representative, servicer and claims administrator and
the Originators listed therein.
SECTION 1.1. DEFINITIONS.
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION DATE" means, initially, January 14, 1998, and thereafter, the
Business Day immediately preceding the first day of each Auction Period for each
Class of Pool I Auction Rate Certificates, other than each Auction Period
commencing after the ownership of such Class of Pool I Auction Rate Certificates
is no longer maintained in Book-Entry Form by the Depository.
"AUCTION PERIOD" means, with respect to each Class of Pool I Auction
Rate Certificates, the Interest Period applicable to such Class of Certificates
during which time the applicable Class Remittance Rate is determined pursuant to
Section 2.1 hereof, which Auction Period (after the Initial Period for such
Class of Certificates) initially shall commence on each Remittance Date and
shall continue through the day immediately preceding the next Remittance Date.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means, with respect to each Class of Pool I Auction
Rate Certificates, the rate of interest per annum that results from the
implementation of the Auction Procedures and is determined as described in
Section 2.1 hereof.
"CERTIFICATE INSURER DEFAULT" means a payment default by the
Certificate Insurer under the Certificate Insurance Policy relating to the Pool
I Auction Rate Certificates.
"CLASS INITIAL RATE" means for the Class AF-6 Certificates, 5.9375%
per annum.
"CLASS INITIAL RATE ADJUSTMENT DATE" means, with respect to the Pool I
Auction Rate Certificates, January 15, 1998.
"CLASS RATE ADJUSTMENT DATE" means the date on which a Class
Remittance Rate is effective and means, with respect to the Pool I Auction Rate
Certificates, the date of commencement of each Auction Period.
"CLASS RATE DETERMINATION DATE" means, with respect to any Class of
Pool I Auction Rate Certificates, the Auction Date, or if no Auction Date is
applicable to such Class of Pool I Auction Rate Certificates, the Business Day
immediately preceding the date of commencement of an Auction Period.
"ESTIMATED RANGE OF INTEREST RATE" has the meaning as set forth in
Section 2.1.1 hereof.
"INITIAL PERIOD" means, as to any Class of Pool I Auction Rate
Certificates, the period commencing on the Closing Date of such Class and
continuing through the day immediately preceding the Class Initial Rate
Adjustment Date.
"INTEREST PERIOD" means, with respect to a Class of Pool I Auction
Rate Certificates, the Initial Period and each period commencing on a Class Rate
Adjustment Date for such Class and ending on the day before (i) the next Class
Rate Adjustment Date for such Class or (ii) the Final Maturity Date of such
Class, as applicable.
"INTEREST RATE SERVICES AGREEMENT" means the initial Interest Rate
Services Agreement unless and until a substitute Interest Rate Services
Agreement is entered into, after which "Interest Rate Services Agreement" shall
mean such substitute Interest Rate Services Agreement.
"MAXIMUM AUCTION RATE" generally means the lesser of (i) either (A)
One-Month LIBOR plus 0.60% (if both ratings assigned by the Rating Agencies to
the Pool I Auction Rate Certificates are "Aa3" or "AA-" or better) or (B)
One-Month LIBOR plus 1.25% (if any one of the ratings assigned by the Rating
Agencies to the Pool I Auction Rate Certificates is less than "Aa3" or "AA- ")
or (ii) 14.00%. For purposes of the Remarketing Agent and the Auction
Procedures, the ratings referred to in this definition shall be the last ratings
of which the Remarketing Agent has been given notice pursuant to the Interest
Rate Services Agreement.
"NON-PAYMENT RATE" means the then applicable Maximum Auction Rate.
"ONE-MONTH LIBOR" means the London interbank offered rate for deposits
in U.S. dollars having a maturity of one month commencing on the related
Interest Determination Date (the "One-Month Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such Interest Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the One Month Index Maturity and in a principal amount of not less than
U.S. $1,000,000, are offered at approximately 11:00 a.m., London time, on such
Interest Determination Date to prime banks in the London interbank market by the
Reference Banks. The Remarketing Agent will request the principal London office
of each of such Reference Bank to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that day will be the arithmetic
mean of the quotations. If fewer than two quotations are provided, the rate for
that day will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Remarketing Agent, at approximately 11:00 a.m., New
York City time, on such Interest Determination Date for loans in U.S. dollars to
leading European banks having the One Month Index Maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000; provided that if the
banks selected as aforesaid are not quoting as mentioned in this sentence,
One-Month LIBOR in effect for the applicable Interest Period will be One-Month
LIBOR in effect for the previous Interest Period.
"POOL I AUCTION RATE CERTIFICATES" means the Class AF-6 Certificates.
"REMARKETING AGENT" means the initial remarketing agent under the
initial Interest Rate Services Agreement unless and until a substitute Interest
Rate Services Agreement becomes effective, after which "Remarketing Agent" shall
mean the substitute remarketing agent.
"REMARKETING AGENT FEE" has the meaning set forth in the Interest Rate
Services Agreement.
"THREE-MONTH LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of three months commencing on the
related Interest Determination Date (the "Three-Month Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such Interest
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Three Month Index Maturity and in a principal amount of
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such Interest Determination Date to prime banks in the London interbank
market by the Reference Banks. The Remarketing Agent will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Remarketing Agent, at
approximately 11:00 a.m., New York City time, on such Interest Determination
Date for loans in U.S. dollars to leading European banks having the Three Month
Index Maturity and in a principal amount equal to an amount of not less than
U.S. $1,000,000; provided that if the banks selected as aforesaid are not
quoting as mentioned in this sentence, Three-Month LIBOR in effect for the
applicable Interest Period will be Three-Month LIBOR in effect for the previous
Interest Period.
"TELERATE PAGE 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
SECTION 1.2. GENERAL PROVISIONS.
During the Initial Period, each Class of Pool I Auction Rate
Certificates shall bear interest at applicable Class Initial Rate. Thereafter,
each Class of Pool I Auction Rate Certificates shall bear interest at a Class
Remittance Rate, as determined pursuant to this Section 1.2 and Section 2.1
hereof.
For the Initial Period and each Auction Period thereafter, interest at
the Class Remittance Rate shall accrue daily and shall be computed for the
actual number of days elapsed on the basis of a year consisting of 360 days.
The Class Remittance Rate to be borne by the Pool I Auction Rate
Certificates after such Initial Period for each Auction Period shall be
determined as herein described. Each such Auction Period shall commence on and
include the first day following the expiration of the immediately preceding
Auction Period and terminate on and include the day immediately preceding the
next Remittance Day. The Class Remittance Rate for the Pool I Auction Rate
Certificates for each Auction Period shall be the lesser of (i) the Auction Rate
in effect for such Auction Period as determined in accordance with Section 2.1
hereof and (ii) 14.00% per annum; provided that if, on any Class Rate
Determination Date, an Auction is not held for any reason, then the Class
Remittance Rate on the Pool I Auction Rate Certificates for the next succeeding
Auction Period shall be the Maximum Auction Rate.
Notwithstanding the foregoing:
a) if the ownership of the Pool I Auction Rate Certificates is no
longer maintained in Book-Entry Form, the Class Remittance Rate for any Interest
Period commencing after the delivery of certificates representing such
Certificates shall equal the Maximum Auction Rate on the Business Day
immediately preceding the first day of such subsequent Interest Period; or
b) if a Certificate Insurer Default shall have occurred, the Class
Remittance Rate on the Pool I Auction Rate Certificates for the Interest Period
commencing on or immediately after such Certificate Insurer Default, and for
each Interest Period thereafter, to and including the Interest Period, if any,
during which, or commencing less than two Business Days after, such Certificate
Insurer Default is cured, shall equal to Non-Payment Rate on the first day of
each such Interest Period.
The Remarketing Agent shall promptly give written notice to the
Trustee, the Representative and the Certificate Insurer of the Class Remittance
Rate. The Trustee shall notify the Certificateholders of the Class Remittance
Rate applicable to the Pool I Auction Rate Certificates for each Auction Period
on the second Business Day of such Auction Period.
In the event that the Remarketing Agent no longer determines, or fails
to determine, when required, the Class Remittance Rate with respect to the Pool
I Auction Rate Certificates, or, if for any reason such manner of determination
shall be held to be invalid or unenforceable, the Class Remittance Rate for the
next succeeding Interest Period for the Pool I Auction Rate Certificates shall
be the Class Remittance Rate for the preceding Interest Period.
ARTICLE 2.
AUCTION PROCEDURES
SECTION 2.1. CLASS REMITTANCE RATE.
SECTION 2.1.1. DETERMINING THE CLASS REMITTANCE RATE FOR THE POOL I
AUCTION RATE CERTIFICATES.
Promptly after the Remarketing Agent has made the determinations
described in Section 2.1.3, the Remarketing Agent is to advise the Trustee of
the Maximum Auction Rate, the All Hold Rate and the components thereof on the
Auction Date, and based on such determinations, the Auction Rate for the next
succeeding Interest Period for the Pool I Auction Rate Certificates.
Promptly after the Remarketing Agent has determined the Auction Rate,
the Remarketing Agent will determine and advise the Trustee of such Auction Rate
for the Pool I Auction Rate Certificates, which rate will be the lesser of (a)
the Maximum Auction Rate for the Pool I Auction Rate Certificates and (b) the
rate established by the Remarketing Agent for the Class AF-6 Certificates no
later than 1:00 p.m., New York City time, on the Auction Date immediately
preceding each Interest Period for the Class AF-6 Certificates as being the
minimum rate of interest that would be necessary, in the best professional
judgment of the Remarketing Agent, taking into account prevailing market
conditions, to sell all of the Class AF-6 Certificates for the next succeeding
Interest Period on such date in the secondary market at a price equal to the
principal amount thereof for settlement on the next succeeding Remittance Date
for the Class AF-6 Certificates (or, in the case of the Initial Rate Adjustment
Date for the Class AF-6 Certificates, the rate announced as such for such period
on or prior to delivery of the Class AF-6 Certificates).
In the process of taking into account prevailing market conditions,
the Remarketing Agent shall take, among other actions it may deem appropriate,
the following actions. Not more than one Business Day before the Auction Date,
the Remarketing Agent shall make available to all interested parties an
estimated range of interest rates for the Class AF-6 Certificates for the next
ensuing Interest Period (the "Estimated Range of Interest Rate"). The
Remarketing Agent shall then inquire of owners of the Class AF-6 Certificates
that communicate with the Remarketing Agent as to whether or not such owners
choose to continue to hold their Class AF-6 Certificates at the Estimated Range
of Interest Rate or, if not, as to the specific interest rate, if any, at which
such owners would choose to continue to hold such Class AF-6 Certificates. The
Remarketing Agent shall thereupon establish the Auction Rate for the Class AF-6
Certificates for the next ensuing Auction Period or Periods and communicate the
same to the parties and in the manner required by the Auction Procedures.
For each Auction Date, the Trustee shall notify the Remarketing Agent
of the principal amount of Pool I Auction Rate Certificates outstanding not
later than the Business Day preceding each Auction Date. The Remarketing Agent
will accept bids that satisfy the lowest possible bid for all outstanding Pool I
Auction Rate Certificates and will allocate payments accordingly. In accordance
with DTC's normal procedures, on the Business Day after the Auction Date, the
transactions described above will be executed through DTC, so long as DTC is the
depository, and the accounts of the respective Participants at DTC will be
debited and credited and Pool I Auction Rate Certificates delivered as necessary
to effect the purchases and sales of Pool I Auction Rate Certificates as
determined in the Auction. Purchasers are required to make payment through their
Participants in same-day funds to DTC against delivery through their
Participants. DTC will make payment in accordance with its normal procedures,
which now provide for payment against delivery by its Participants in
immediately available funds.
SECTION 2.1.2. CERTIFICATE INSURER DEFAULT; REMARKETING AGENT FEES AND
EXPENSES.
(a) The Trustee shall determine not later than
2:00 p.m., eastern time, on the Business Day succeeding a Remittance Date,
whether a Certificate Insurer Default has occurred. If a Certificate Insurer
Default has occurred, the Trustee shall, not later than 2:15 p.m., eastern time,
on such Business Day, send a notice thereof in substantially the form of Annex A
attached hereto to the Remarketing Agent, the Representative and the Certificate
Insurer by telecopy or similar means and, if such Certificate Insurer Default is
cured, the Trustee shall immediately send a notice in substantially the form of
Annex B attached hereto to the Remarketing Agent, the Representative and the
Certificate Insurer by telecopy or similar means.
(b) Not later than 2:00 p.m., eastern time, on
each Remittance Date , the Trustee shall pay to the Remarketing Agent, in
immediately available funds out of amounts in the Expense Account an amount
equal to the Remarketing Agent Fee as calculated in the Interest Rate Services
Agreement. The Representative shall from time to time at the request of the
Remarketing Agent reimburse the Remarketing Agent for its reasonable expenses as
provided in the Interest Rate Services Agreement.
SECTION 2.1.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE,
THREE-MONTH LIBOR AND NON-PAYMENT RATE.
The Remarketing Agent will calculate the Maximum Auction Rate, the All
Hold Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, on each
Auction Date. If the ownership of a Class of Pool I Auction Rate Certificate is
no longer maintained in Book-Entry Form, the Trustee will calculate the Maximum
Auction Rate, on the Business Day immediately preceding the first day of each
Interest Period commencing after delivery of such Class of Pool I Auction Rate
Certificates. If the Certificate Insurer is in default under the Certificate
Insurance Policies, the Trustee will calculate the Non-Payment Rate on the Class
Rate Determination Date for (i) each Interest Period commencing after the
occurrence and during the continuance of such Payment Default and (ii) any
Interest Period commencing less than two Business Days after the cure of such
Event of Default. The Remarketing Agent will determine One-Month LIBOR or
Three-Month LIBOR, as applicable, for each Interest Period other than the
Initial Period for a Class of Pool I Auction Rate Certificates; provided, that
if the ownership of the Pool I Auction Rate Certificates is no longer maintained
in Book-Entry Form, or if an Event of Default has occurred, then the Trustee
will determine One-Month LIBOR or Three-Month LIBOR, as applicable, for each
such Interest Period. The determination by the Trustee or the Remarketing Agent,
as the case may be, of One-Month LIBOR or Three-Month LIBOR, as applicable, will
(in the absence of manifest error) be final and binding upon the
Certificateholders and all other parties. If calculated or determined by the
Remarketing Agent, the Remarketing Agent will promptly advise the Trustee of
One-Month LIBOR or Three-Month LIBOR, as applicable.
SECTION 2.1.4. NOTIFICATION OF RATES, AMOUNTS OF REMITTANCE DATES.
Promptly after the Closing Date and after the beginning of each
subsequent Interest Period relating to each Class of Pool I Auction Rate
Certificates, and in any event at least 10 days prior to any Remittance Date
relating to a Class of Pool I Auction Rate Certificates, the Trustee shall
confirm with the Remarketing Agent, so long as no Certificate Insurer Default
has occurred and is continuing and the ownership of the Pool I Auction Rate
Certificates is maintained in Book- Entry Form by the Depository, (1) the date
of such next Remittance Date relating to a Class of Pool I Auction Rate
Certificates and (2) the amount payable to the Remarketing Agent on the Auction
Date pursuant to Section 2.1.2(b) hereof.
If any day scheduled to be a Remittance Date shall be changed after
the Trustee shall have given the notice or confirmation referred to in the
preceding sentence, the Trustee shall, not later than 9:15 a.m., eastern time,
on the Business Day next preceding the earlier of the new Remittance Date or the
old Remittance Date, by such means as the Trustee deems practicable, give notice
of such change to the Remarketing Agent, so long as no Certificate Insurer
Default has occurred and is continuing and the ownership of the Pool I Auction
Rate Certificates is maintained in Book-Entry Form by the Depository.
SECTION 2.1.5. REMARKETING AGENT. Morgan Stanley & Co. Incorporated is
hereby appointed as initial Remarketing Agent to serve as agent for the
Representative in connection with Auctions. The Trust will, and the Trustee is
hereby directed to, enter into the initial Interest Rate Services Agreement with
Morgan Stanley & Co. Incorporated. The Remarketing Agent may, with the consent
of the Representative and the Certificate Insurer and notice to the Trustee and
designation of the party authorized to direct the Trustee, enter into an
agreement with one or more co-remarketing agents under which certain duties of
the Remarketing Agent may be delegated to the co-remarketing agent. The
Remarketing Agent, any successors to the Remarketing Agent and any
co-remarketing agent shall be members of the National Association of Securities
Dealers, Inc. having a capitalization acceptable to the Representative and the
Rating Agencies and authorized by laws to perform all the duties imposed upon
them hereunder, under the Pooling and Servicing Agreement and under the Interest
Rate Services Agreement. The Remarketing Agent may at any time resign and be
discharged of the duties and obligations created by the Pooling and Servicing
Agreement and the Interest Rate Servicing Agreement by giving at least sixty
(60) days' written notice to the Representative, the Certificate Insurer and the
Trustee. The Remarketing Agent may be removed upon at least sixty (60) days'
written notice to the Remarketing Agent, at the direction of the Representative
and with the prior written consent of the Trustee and the Certificate Insurer,
by an instrument signed by the Representative and filed with the Remarketing
Agent, the Trustee and the Certificate Insurer. Notwithstanding the foregoing,
no resignation or removal of the Remarketing Agent shall be effective unless and
until a successor shall have been appointed; provided that such resignation by
the Remarketing Agent shall be effective upon such sixty (60) days' written
notice whether or not a successor has been appointed if and when the Remarketing
Agent reasonably determines that any one of the following shall obtain: (i) the
Representative is not diligently pursuing the appointment of a successor
Remarketing Agent at the level of compensation then generally paid in the
marketplace for the services to be performed by the successor Remarketing Agent,
(ii) events have occurred which materially adversely affect the Remarketing
Agent's ability to fulfill its duties as Remarketing Agent, including the
elimination of the Remarketing Agent's capacity to fulfill the duties of the
Remarketing Agent or a determination by counsel to the Remarketing Agent that
continuation of performance as such hereunder would be contrary to law or would
expose the Remarketing Agent to material risk of illegality, (iii) the Pooling
and Servicing Agreement has been amended, modified or terminated in such manner
as would affect the Remarketing Agent or its duties without the consent of the
Remarketing Agent, or (iv) any condition to performance by the Remarketing Agent
hereunder shall not be satisfied. Any subsequent Remarketing Agent shall be
selected by the Representative, with the prior written consent of the
Certificate Insurer with notice to the Trustee, provided, however, that, with
the Representative's consent, the co-remarketing agent (or one of them, at the
Representative's discretion and the prior written consent of the Certificate
Insurer) shall become the Remarketing Agent automatically if the Remarketing
Agent ceases to act as Remarketing Agent for any reason.
In the event of the resignation or removal of the Remarketing Agent,
the Remarketing Agent shall pay over, assign and deliver any Pool I Auction Rate
Certificates held by it in such capacity to its successor. In the event that the
Representative shall fail to appoint a Remarketing Agent hereunder, the Trustee
may do so at direction and with the written consent of the Certificate Insurer.
SECTION 2.2. CHANGES IN AUCTION TERMS.
SECTION 2.2.1. CHANGES IN THE AUCTION DATE.
The Remarketing Agent, at the written direction of the Representative,
may specify an earlier Auction Date (but in no event more than five Business
Days earlier) than the Auction Date that would otherwise be determined in
accordance with the definition of "Auction Date" with respect to one or more
specified Auction Periods in order to conform with then current market practice
with respect to similar securities or to accommodate economic and financial
factors that may affect or be relevant to the day of the week constituting an
Auction Date and the interest rate borne on the Pool I Auction Rate
Certificates. The Representative will not consent to such change in the Auction
Date unless the Representative will have received from the Remarketing Agent not
less than three days nor more than 20 days prior to the effective date of such
change a written request for consent together with a certificate demonstrating
the need for change in reliance on such factors. The Remarketing Agent will
provide notice of its determination to specify an earlier Auction Date for one
or more Auction Periods by means of a written notice delivered at least 10 days
prior to the proposed changed Auction Date to the Trustee, the Remarketing
Agent, the Certificate Insurer and the Representative.
Subject to the prior written consent of the Certificate Insurer, the
changes in Auction terms described above may be made with respect to any Class
of Pool I Auction Rate Certificates. In connection with any change in Auction
Terms described above, the Remarketing Agent is to provide such further notice
to such parties as is specified in the Interest Rate Services Agreement.
<PAGE>
ANNEX A
THE MONEY STORE ASSET BACKED CERTIFICATES SERIES
1997-D, CLASS AF-6
NOTICE OF CERTIFICATE INSURER DEFAULT
NOTICE IS HEREBY GIVEN that a Certificate Insurer Default has occurred
and is continuing with respect to the Certificates identified above. The next
Auction for the Series 1997- D, Class AF-6 Certificates will not be held. The
Auction Rate for the Series 1997-D, Class AF-6 Certificates for the next
succeeding Interest Period shall be the Non-Payment Rate.
THE BANK OF NEW YORK,
as Trustee
Dated: By: ____________________________
Name:
Title:
<PAGE>
ANNEX B
THE MONEY STORE ASSET BACKED CERTIFICATES
SERIES 1997-D, CLASS AF-6
NOTICE OF CURE OF CERTIFICATE INSURER DEFAULT
NOTICE IS HEREBY GIVEN that a Certificate Insurer Default with respect
to the Certificates identified above has been waived or cured. The next
Remittance Date is ________ and the next Auction Date is ___________.
THE BANK OF NEW YORK,
as Trustee
Dated: By: _________________________
Name:
Title:
<PAGE>
SCHEDULE II-B
POOL II AUCTION PROCEDURES
ARTICLE 1.
Except as otherwise specified herein, or as the context may require,
capitalized terms used but not otherwise defined herein have the meanings
ascribed in the Pooling and Servicing Agreement dated as of November 30, 1997
(the "Pooling and Servicing Agreement") among the Bank of New York, as trustee,
The Money Store Inc., as representative, servicer and claims administrator and
the Originators listed therein.
SECTION 2.1. DEFINITIONS.
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"AUCTION DATE" means, initially, January 14, 1997, and thereafter, the
Business Day immediately preceding the first day of each Auction Period for each
Class of Pool II Auction Rate Certificates, other than each Auction Period
commencing after the ownership of such Class of Pool II Auction Rate
Certificates is no longer maintained in Book-Entry Form by the Depository.
"AUCTION PERIOD" means, with respect to each Class of Pool II Auction
Rate Certificates, the Interest Period applicable to such Class of Certificates
during which time the related Class Remittance Rate is determined pursuant to
Section 2.1.1 hereof, which Auction Period (after the Initial Period for such
Class) initially shall commence on each Remittance Date and shall continue
through the day immediately preceding the next Remittance Date.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.1.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means with respect to each Class of Pool II Auction
Rate Certificates the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.1.1(c)(ii) hereof.
"AUTHORIZED DENOMINATIONS" means, with respect to the Pool II Auction
Rate Certificates, $25,000 and integral multiples of $25,000 in excess thereof.
"AVAILABLE POOL II AUCTION RATE CERTIFICATES" has the meaning set
forth in Section 2.1.1(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"BIDDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Depository or its nominee as registered owner, with the securities
"immobilized" to the custody of the Depository, and (iii) the book entry is the
record that identifies the owners of beneficial interests in that principal and
interest.
"BROKER-DEALER" means Smith Barney Inc. or any other broker or dealer
(each as defined in the Securities Exchange Act of 1934, as amended), commercial
bank or other entity permitted by law to perform the functions required of a
Broker-Dealer set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the
Representative pursuant to Section 2.1.6 hereof and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Representative, pursuant to which
the Broker-Dealer agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreement
dated as of December 31, 1997 between Bankers Trust Company, as Auction Agent,
and Smith Barney Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"CLASS INITIAL RATE" means for the Class MV-1 Certificates, One-Month
LIBOR plus 0.09% per annum, for the Class MV-2 Certificates, One-Month LIBOR
plus 0.14% per annum and for the Class BV Certificates, One-Month LIBOR plus
0.54% per annum.
"CLASS INITIAL RATE ADJUSTMENT DATE" means, with respect to the Pool
II Auction Rate Certificates, January 15, 1998.
"CLASS REMITTANCE RATE LIMITATION" means a per annum rate equal to
14%.
"CLASS RATE ADJUSTMENT DATE" means the date on which a Class
Remittance Rate is effective, and means, with respect to the Pool II Auction
Rate Certificates, the date of commencement of each related Auction Period.
"CLASS RATE DETERMINATION DATE" means, with respect to any Class of
Pool II Auction Rate Certificates, the related Auction Date, or if no Auction
Date is applicable to such Pool II Auction Rate Certificates, the Business Day
immediately preceding the date of commencement of the related Auction Period.
"CLASS REMITTANCE RATE" means, with respect to the Initial Period and
each Class of Pool II Auction Rate Certificates, the applicable Class Initial
Rate, and thereafter, each variable rate of interest per annum borne by a Class
of Pool II Auction Rate Certificates for each Interest Period and determined in
accordance with the provisions of Sections 1.2 and 2.1 hereof; provided,
however, that such Class Remittance Date shall in no event exceed the Class
Remittance Rate Limitation.
"EXISTING CERTIFICATEHOLDER" means (i) with respect to and for the
purpose of dealing with the Auction Agent in connection with an Auction, a
Person who is a Broker-Dealer listed in the Existing Certificateholder Registry
at the close of business on the Business Day immediately preceding such Auction
and (ii) with respect to and for the purpose of dealing with the Broker- Dealer
in connection with an Auction, a Person who is a beneficial owner of any Class
of Pool II Auction Rate Certificates.
"EXISTING CERTIFICATEHOLDER REGISTRY" means the registry of Persons
who are owners of the Pool II Auction Rate Certificates, maintained by the
Auction Agent as provided in the Auction Agent Agreement.
"FAILED AUCTION" means the scenario described under Section
2.1.1(c)(ii)(b).
"FINAL MATURITY DATE" means April 15, 2029 with respect to the Class
MV-1 Certificates, Class MV-2 Certificates and the Class BV Certificates.
"HOLD ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York
banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means the Auction Agent Agreement
dated as of December 31, 1997, by and among the Trustee and the Initial Auction
Agent, including any amendment thereof or supplement thereto.
"INITIAL PERIOD" means, with respect to any Class of Pool II Auction
Rate Certificates, the period commencing on the Closing Date and continuing
through the day immediately preceding the Class Initial Rate Adjustment Date.
"INTEREST PERIOD" means, with respect to a Class of Pool II Auction
Rate Certificates, the applicable Initial Period and each period commencing on a
Class Rate Adjustment Date for such Class and ending on the day before (i) the
next Class Rate Adjustment Date for such Class or (ii) the Final Maturity Date
of such Class, as applicable.
"LIBOR DETERMINATION DATE" means, with respect to a Class of Pool II
Auction Rate Certificates, the date which is both a Business Day and a London
Banking Day prior to the commencement of each related Interest Period.
"LONDON BANKING DAY" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"MARKET AGENT" means Smith Barney Inc., in such capacity hereunder, or
any successor to it in such capacity hereunder.
"MAXIMUM AUCTION RATE" means, for each Class of Pool II Auction Rate
Certificates, either (i) One-Month LIBOR plus 0.70% (if the ratings assigned to
such Class of Pool II Auction Rate Certificates by Moody's and S&P are "Aa3" or
better and "AA-" or better, respectively); (ii) One-Month LIBOR plus 1.25% (if
the rating assigned to such Class of Pool II Auction Rate Certificates by either
Moody's or S&P is below "Aa3" or "AA-," respectively, but the ratings assigned
to such Class of Pool II Auction Rate Certificates by both Moody's and S&P are
equal to or better than "A3" and "A-," respectively); (iii) One-Month LIBOR plus
2.00% (if the rating assigned to such Class of Pool II Auction Rate Certificates
by either Moody's or S&P is below "A3" or "A-," respectively, but the ratings
assigned to such Class of Pool II Auction Rate Certificates by both Moody's and
S&P are equal to or better than "Baa3" and "BBB-," respectively); or (iv)
One-Month LIBOR plus 3.50% (if the rating assigned to such Class of Pool II
Auction Rate Certificates by either Moody's or S&P is below "Baa3" or "BBB-,"
respectively); provided, however, that (A) in the case of the first Failed
Auction, the Maximum Auction Rate for each class of Pool II Auction Rate
Certificates shall be the rate calculated pursuant to clauses (i), (ii), (iii)
or (iv) above, as applicable, minus 0.10% and (B) in the case of two or more
consecutive Failed Auctions, the rate to be applied will be the Maximum Auction
Rate for each class of Pool II Auction Rate Certificates as calculated pursuant
to clauses (i), (ii), (iii) or (iv) above, as applicable. If a successful
auction is completed, the rate to the next Failed Auction shall be the rate
calculated pursuant to clause (A) above.
For purposes of the Auction Agent and the Auction Procedures, the ratings
referred to in this definition shall be the last ratings of which the Auction
Agent has been given notice pursuant to the Auction Agent Agreement.
"NON-PAYMENT RATE" means the Maximum Auction Rate.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement.
"ONE-MONTH LIBOR" means the London interbank offered rate for deposits
in U.S. dollars having a maturity of one month commencing on the related LIBOR
Determination Date (the "Index Maturity") which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such LIBOR Determination Date. If such rate does
not appear on Telerate Page 3750, the rate for that day will be determined on
the basis of the rates at which deposits in U.S. dollars, having the Index
Maturity and in a principal amount of not less than U.S. $1,000,000, are offered
at approximately 11:00 a.m., London time, on such LIBOR Determination Date to
prime banks in the London interbank market by the Reference Banks. The Auction
Agent will request the principal London office of each of such Reference Banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that day will be the arithmetic mean of the quotations.
If fewer than two quotations are provided, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Auction Agent, at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount equal to an amount of not
less than U.S. $1,000,000; provided that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, One-Month LIBOR in effect for the
applicable Interest Period will be One-Month LIBOR in effect for the previous
Interest Period.
"ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"OUTSTANDING" means, as of the date of determination, all Pool II
Auction Rate Certificates theretofore authenticated and delivered under the
Pooling and Servicing Agreement except:
(i) Pool II Auction Rate Certificates theretofore cancelled by
the Note Registrar or delivered to the Note Registrar for cancellation;
(ii) Pool II Auction Rate Certificates or portions thereof the
payment for which money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the
Certificateholders thereof; and
(iii) Pool II Auction Rate Certificates in exchange for or in
lieu of other Pool II Auction Rate Certificates which have been
authenticated and delivered pursuant to the Pooling and Servicing
Agreement unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser.
"PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"POOL II AUCTION RATE CERTIFICATES" means the Class MV-1, Class MV-2
and Class BV Certificates.
"POTENTIAL CERTIFICATEHOLDER" means any Person (including an Existing
Certificateholder that is (i) a Broker-Dealer when dealing with the Auction
Agent and (ii) a potential beneficial owner when dealing with a Broker-Dealer)
who may be interested in acquiring Pool II Auction Rate Certificates (or, in the
case of an Existing Certificateholder thereof, an additional principal amount of
Auction Rate Certificates).
"REFERENCE BANKS" means leading banks selected by the Auction Agent
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market.
"SELL ORDER" has the meaning set forth in Section 2.1.1(a)(i) hereof.
"SUBMISSION DEADLINE" means 12:30 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"SUBMITTED BID" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.1.1(c)(i) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.1.1(c)(i) hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Trustee
enters into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section 2.1.5
of these Auction Procedures agrees with the Trustee and the Representative to
perform the duties of the Auction Agent under this Agreement.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.1.1(c)(i)
hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
SECTION 1.2 GENERAL PROVISIONS.
During the Initial Period, each class of Pool II Auction Rate
Certificates shall bear interest at applicable Class Initial Rate. Thereafter,
each class of Pool II Auction Rate Certificates shall bear interest at a Class
Remittance Rate, as determined pursuant to this Section 1.2 and Section 2.1
hereof.
For the Initial Period and each Auction Period thereafter, interest at
the Class Remittance Rate shall accrue daily and shall be computed for the
actual number of days elapsed on the basis of a year consisting of 360 days.
The Class Remittance Rate to be borne by the Pool II Auction Rate
Certificates after such Initial Period for each Auction Period shall be
determined as herein described. Each such Auction Period shall commence on and
include the first day following the expiration of the immediately preceding
Auction Period and terminate on and include the day immediately preceding the
next Remittance Day; provided, however, that in the case of the Auction Period
that immediately follows the Initial Period for the Certificates, such Auction
Period shall commence on and include the Initial Rate Adjustment Date. The Class
Remittance Rate for each Auction Period shall be the lesser of the (i)
applicable Net Funds Cap in effect for such Auction Period and (ii) the Auction
Rate in effect for such Auction Period as determined in accordance with Section
2.1.1 hereof; provided that if, on any Class Rate Determination Date, an Auction
is not held for any reason, then the Class Remittance Rate on the Pool II
Auction Rate Certificates for the next succeeding Auction Period shall be the
lesser of (A) the Maximum Auction Rate or (B) the Net Funds Cap applicable to
the Pool II Auction Rate Certificates, but in no event exceeding the Class
Remittance Rate Limitation.
Notwithstanding the foregoing:
a) if the ownership of the Pool II Auction Rate Certificates is no
longer maintained in Book-Entry Form, the Class Remittance Rate for any Interest
Period commencing after the delivery of certificates representing such
Certificates shall equal the lesser of (i) the Maximum Auction Rate and (ii) the
applicable Net Funds Cap on the Business Day immediately preceding the first day
of such subsequent Interest Period; or
b) [Reserved]
The Auction Agent shall promptly give written notice to the Trustee
and the Representative of the Class Remittance Rate (unless the Class Remittance
Rate is the Non-Payment Rate) and either the Auction Rate or the Net Funds Cap,
as the case may be, when such rate is not the Class Remittance Rate. The Trustee
shall notify the Certificateholders of the Class Remittance Rate applicable to
the Pool II Auction Rate Certificates for each Auction Period on the second
Business Day of such Auction Period.
Notwithstanding any other provision of the Pool II Auction Rate
Certificates or the Pooling and Servicing Agreement, interest payable on the
Pool II Auction Rate Certificates for an Auction Period shall never exceed for
such Auction Period the amount of interest payable at the applicable Net Funds
Cap (subject to the Class Remittance Rate Limitation) in effect for such Auction
Period.
If the Auction Rate for any class of Pool II Auction Rate Certificates
is greater than the applicable Net Funds Cap, then the Class Remittance Rate
applicable to such Class of Certificates for that Interest Period will be the
Net Funds Cap (subject to the Class Remittance Rate Limitation). If the Class
Remittance Rate applicable to such Class of Certificates for any Interest Period
is the Net Funds Cap, the Trustee shall determine the Certificateholders'
Interest Carryover, if any, with respect to such Certificates. Such
Certificateholders' Interest Carryover shall bear interest calculated at a rate
equal to the then applicable Class Remittance Rate, without giving effect to the
Net Funds Cap, but in no event exceeding the Class Remittance Rate Limitation,
from the Remittance Date for the Interest Period with respect to which such
Certificateholders' Interest Carryover was calculated, until paid. For purposes
of the Pooling and Servicing Agreement, any reference to "principal" or
"interest" herein shall not include within the meaning of such words
Certificateholders' Interest Carryover or any interest accrued on any such
Certificateholders' Interest Carryover.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Class Remittance Rate with respect to the Pool II
Auction Rate Certificates, or, if for any reason such manner of determination
shall be held to be invalid or unenforceable, the Class Remittance Rate for the
next succeeding Interest Period for the Pool II Auction Rate Certificates shall
be the applicable Net Funds Cap for such next succeeding Auction Period.
ARTICLE 2.
AUCTION PROCEDURES
SECTION 2.1. CLASS REMITTANCE RATE.
SECTION 2.1.1. DETERMINING THE CLASS REMITTANCE RATE FOR THE POOL II
AUCTION RATE CERTIFICATES.
By purchasing Pool II Auction Rate Certificates, whether in an Auction
or otherwise, each purchaser of the Pool II Auction Rate Certificates, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described herein, (ii) to have its
beneficial ownership of the Pool II Auction Rate Certificates maintained at all
times in Book-Entry Form for the account of its Participant, which in turn will
maintain records of such beneficial ownership and (iii) to authorize such
Participant to disclose to the Auction Agent such information with respect to
such beneficial ownership as the Auction Agent may request.
So long as the ownership of a Class of Pool II Auction Rate
Certificates is maintained in Book-Entry Form, an Existing Certificateholder may
sell, transfer or otherwise dispose of Pool II Auction Rate Certificates only
pursuant to a Bid or Sell Order placed in an Auction or otherwise sell, transfer
or dispose of Pool II Auction Rate Certificates through a Broker-Dealer,
provided that, in the case of all transfers other than pursuant to Auctions,
such Existing Certificateholder, its Broker-Dealer or its Participant advises
the Auction Agent of such transfer. Auctions shall be conducted on each Auction
Date, if there is an Auction Agent on such Auction Date, in the following
manner:
(a) (i) Prior to the Submission Deadline on each Auction Date relating
to a Class of the Pool II Auction Rate Certificates:
(A) each Existing Certificateholder of the applicable
Class of Pool II Auction Rate Certificates may submit to a
Broker-Dealer by telephone or otherwise any information as to:
(1) the principal amount of Outstanding Pool
II Auction Rate Certificates of such Class, if any, owned by
such Existing Certificateholder which such Existing
Certificateholder desires to continue to own without regard to
the Class Remittance Rate for the next succeeding Auction
Period;
(2) the principal amount of Outstanding Pool
II Auction Rate Certificates of such Class, if any, which such
Existing Certificateholder offers to sell if the Class
Remittance Rate for the next succeeding Auction Period shall
be less than the rate per annum specified by such Existing
Certificateholder; and/or
(3) the principal amount of Outstanding Pool
II Auction Rate Certificates of such Class, if any, owned by
such Existing Certificateholder which such Existing
Certificateholder offers to sell without regard to the Class
Remittance Rate for the next succeeding Auction Period;
and
(B) one or more Broker-Dealers may contact Potential
Certificateholders to determine the principal amount of Pool II Auction
Rate Certificates of such Class which each Potential Certificateholder
offers to purchase, if the Class Remittance Rate for the next
succeeding Auction Period shall not be less than the rate per annum
specified by such Potential Certificateholder.
The statement of an Existing Certificateholder or a Potential
Certificateholder referred to in (A) or (B) of this paragraph (i) is herein
referred to as an "Order," and each Existing Certificateholder and each
Potential Certificateholder placing an Order is herein referred to as a
"Bidder"; an Order described in clause (A)(1) is herein referred to as a "Hold
Order"; an Order described in clauses (A)(2) and (B) is herein referred to as a
"Bid"; and an Order described in clause (A)(3) is herein referred to as a "Sell
Order."
(ii) (A) Subject to the provisions of
Section 2.1.1(b) hereof, a Bid by an Existing Certificateholder shall
constitute an irrevocable offer to sell:
(1) the principal amount of
Outstanding Pool II Auction Rate Certificates specified in
such Bid if the Class Remittance Rate determined as provided
in this Section 2.1.1 shall be less than the rate specified
therein; or
(2) such principal amount, or a
lesser principal amount of Outstanding Pool II Auction Rate
Certificates to be determined as set forth in Section
2.1.1(d)(i)(D) hereof, if the Class Remittance Rate determined
as provided in this Section 2.1.1 shall be equal to the rate
specified therein; or
(3) such principal amount, or a
lesser principal amount of Outstanding Pool II Auction Rate
Certificates to be determined as set forth in Section
2.1.1(d)(ii)(C) hereof, if the rate specified therein shall be
higher than the Class Remittance Rate and Sufficient Bids have
not been made.
(B) Subject to the provisions of Section
2.1.1(b) hereof, a Sell Order by an Existing Certificateholder shall
constitute an irrevocable offer to sell:
(1) the principal amount of
Outstanding Pool II Auction Rate Certificates
specified in such Sell Order; or
(2) such principal amount, or a
lesser principal amount of Outstanding Pool II Auction Rate
Certificates set forth in Section 2.1.1(d)(ii)(C) hereof, if
Sufficient Bids have not been made.
(C) Subject to the provisions of Section
2.1.1(b) hereof, a Bid by a Potential Certificateholder shall
constitute an irrevocable offer to purchase:
(1) the principal amount of
Outstanding Pool II Auction Rate Certificates specified in
such Bid if the Class Remittance Rate determined as provided
in this Section 2.1.1 shall be higher than the rate specified
in such Bid; or
(2) such principal amount, or a
lesser principal amount of Outstanding Pool II Auction Rate
Certificates set forth in Section 2.1.1(d)(i)(E) hereof, if
the Class Remittance Rate determined as provided in this
Section 2.1.1 shall be equal to the rate specified in such
Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders obtained
by such Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Class of
Pool II Auction Rate Certificates that are the subject of such
Order;
(C) to the extent that such Bidder is an
Existing Certificateholder:
(1) the principal amount and Class
of Pool II Auction Rate Certificates, if any, subject
to any Hold Order placed by such Existing
Certificateholder;
(2) the principal amount and Class
of Pool II Auction Rate Certificates, if any, subject
to any Bid placed by such Existing Certificateholder
and the rate specified in such Bid; and
(3) the principal amount and Class
of Pool II Auction Rate Certificates, if any, subject
to any Sell Order placed by such Existing
Certificateholder;
and
(D) to the extent such Bidder is a
Potential Certificateholder, the rate specified in such Potential
Certificateholder's Bid.
(ii) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next higher one thousandth (.001) of one
percent.
(iii) If an Order or Orders covering all Outstanding Pool II
Auction Rate Certificates of the applicable Class owned by an Existing
Certificateholder is not submitted to the Auction Agent prior to the
Submission Deadline, the Auction Agent shall deem a Hold Order to have
been submitted on behalf of such Existing Certificateholder covering
the principal amount of Outstanding Pool II Auction Rate Certificates
of such Class owned by such Existing Certificateholder and not subject
to an Order submitted to the Auction Agent.
(iv) Neither the Representative, the Trustee nor the Auction
Agent shall be responsible for any failure of a Broker-Dealer to submit
an Order to the Auction Agent on behalf of any Existing
Certificateholder or Potential Certificateholder.
(v) If any Existing Certificateholder submits through a
Broker-Dealer to the Auction Agent one or more Orders covering in the
aggregate more than the principal amount of the Class of Outstanding
Pool II Auction Rate Certificates owned by such Existing
Certificateholder, such Orders shall be considered valid as follows and
in the following order of priority:
(A) All Hold Orders shall be considered
valid, but only up to the aggregate principal amount of the Class of
Outstanding Pool II Auction Rate Certificates owned by such Existing
Certificateholder, and if the aggregate principal amount of the Class
of Pool II Auction Rate Certificates subject to such Hold Orders
exceeds the aggregate principal amount of the Class of Pool II Auction
Rate Certificates owned by such Existing Certificateholder, the
aggregate principal amount of the Class of Pool II Auction Rate
Certificates subject to each such Hold Order shall be reduced pro rata
so that the aggregate principal amount of the Class of Pool II Auction
Rate Certificates subject to such Hold Order equals the aggregate
principal amount of the Class of Pool II Outstanding Auction Rate
Certificates owned by such Existing Certificateholder.
(B) (1) any Bid shall be considered valid
up to an amount equal to the excess of the principal amount of the
Class of Outstanding Pool II Auction Rate Certificates owned by such
Existing Certificateholder over the aggregate principal amount of the
Class of Pool II Auction Rate Certificates subject to any Hold Order
referred to in clause (A) of this paragraph (v);
(2) subject to subclause (1) of this
clause (B), if more than one Bid with the
same rate is submitted on behalf of such
Existing Certificateholder and the aggregate
principal amount of the Class of Outstanding
Pool II Auction Rate Certificates subject to
such Bids is greater than such excess, such
Bids shall be considered valid up to an
amount equal to such excess;
(3) subject to subclauses (1) and
(2) of this clause (B), if more than one Bid
with different rates are submitted on behalf
of such Existing Certificateholder, such
Bids shall be considered valid first in the
ascending order of their respective rates
until the highest rate is reached at which
such excess exists and then at such rate up
to the amount of such excess; and
(4) in any such event, the amount of
the Class of Outstanding Pool II Auction
Rate Certificates, if any, subject to Bids
not valid under this clause (B) shall be
treated as the subject of a Bid by a
Potential Certificateholder at the rate
therein specified; and
(C) All Sell Orders shall be considered
valid up to an amount equal to the excess of the principal amount of
the Class of Outstanding Pool II Auction Rate Certificates owned by
such Existing Certificateholder over the aggregate principal amount of
the Class of Pool II Auction Rate Certificates subject to Hold Orders
referred to in clause (A) of this paragraph (v) and valid Bids referred
to in clause (B) of this paragraph (v).
(vi) If more than one Bid for a Class of Auction Rate
Certificates is submitted on behalf of any Potential Certificateholder,
each Bid submitted shall be a separate Bid with the rate and principal
amount therein specified.
(vii) An Existing Certificateholder of a Class of Auction Rate
Certificates that offers to purchase additional Auction Rate
Certificates is, for purposes of such offer, treated as a Potential
Certificateholder.
(viii) Any Bid or Sell Order submitted by an Existing
Certificateholder covering an aggregate principal amount of a Class of
Pool II Auction Rate Certificates not equal to an Authorized
Denomination shall be rejected and shall be deemed a Hold Order. Any
Bid submitted by a Potential Certificateholder covering an aggregate
principal amount of a Class of Pool II Auction Rate Certificates not
equal to an Authorized Denomination shall be rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction
Rate will (a) be treated as a Sell Order if submitted by an Existing
Certificateholder and (b) not be accepted if submitted by a Potential
Certificateholder.
(x) Any Order submitted in an Auction by a Broker-Dealer to the
Auction Agent at the Submission Deadline on any Auction Date shall be
irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date,
the Auction Agent shall assemble all valid Orders submitted or deemed submitted
to it by the Broker-Dealers (each such Order as submitted or deemed submitted by
a Broker-Dealer being herein referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order," and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders")
and shall determine for the applicable Class of Pool II Auction Rate
Certificates:
(A) the excess of the total principal
amount of Outstanding Pool II Auction Rate Certificates of such Class
over the sum of the aggregate principal amount of Outstanding Pool II
Auction Rate Certificates of such Class subject to Submitted Hold
Orders (such excess being herein referred to as the "Available Pool II
Auction Rate Certificates" of such Class), and
(B) from the Submitted Orders whether:
(1) the aggregate principal
amount of Outstanding Pool II Auction Rate
Certificates of such Class subject to
Submitted Bids by Potential
Certificateholders specifying one or more
rates equal to or lower than the Maximum
Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal
amount of Outstanding Pool II Auction Rate
Certificates of such Class subject to
Submitted Bids by Existing
Certificateholders specifying one or more
rates higher than the Maximum Auction Rate;
and
(3) the aggregate principal
amount of Outstanding Pool II Auction Rate
Certificates of such Class subject to
submitted Sell Orders;
(in the event such excess or such equality exists, other than because
all of the Outstanding Pool II Auction Rate Certificates of such Class
are subject to Submitted Hold Orders, such Submitted Bids described in
subclause (1) above shall be referred to collectively as "Sufficient
Bids"); and
(C) if Sufficient Bids exist, the "Bid
Auction Rate", which shall be the lowest rate specified in such
Submitted Bids such that if:
(1) (x) each Submitted Bid from
Existing Certificateholders specifying such
lowest rate and (y) all other Submitted Bids
from Existing Certificateholders specifying
lower rates were rejected, thus entitling
such Existing Certificateholders to continue
to own the principal amount of Pool II
Auction Rate Certificates of such Class
subject to such Submitted Bids; and
(2) (x) each such Submitted Bid from
Potential Certificateholders specifying such
lowest rate and (y) all other Submitted Bids
from Potential Certificateholders specifying
lower rates were accepted;
the result would be that such Existing Certificateholders described in
subclause (1) above would continue to own an aggregate principal amount
of Outstanding Pool II Auction Rate Certificates of the applicable
Class which, when added to the aggregate principal amount of
Outstanding Pool II Auction Rate Certificates of such Class to be
purchased by such Potential Certificateholders described in subclause
(2) above, would equal not less than the Available Pool II Auction Rate
Certificates of such Class.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 2.1.1(c)(i) hereof, the Auction Agent shall advise
the Trustee of the applicable Net Funds Cap (as provided by the
Servicer pursuant to Section 2.1.3 hereof), the Maximum Auction Rate
and the All Hold Rate and the components thereof on the Auction Date
and, based on such determinations, the Auction Rate for the next
succeeding Interest Period for such Class of Pool II Auction Rate
Certificates as follows:
(A) if Sufficient Bids exist, that the
Auction Rate for the next succeeding Interest Period for such Class
shall be equal to the Bid Auction Rate so determined;
(B) if Sufficient Bids do not exist (other
than because all of the Outstanding Pool II Auction Rate Certificates
of such Class are subject to Submitted Hold Orders), that the Auction
Rate for the next succeeding Interest Period shall be equal to the
Maximum Auction Rate; or
(C) if all Outstanding Pool II Auction Rate
Certificates of such Class are subject to Submitted Hold Orders, that
the Auction Rate for the next succeeding Interest Period shall be
equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction
Rate, the Auction Agent shall determine and advise the Trustee of the
applicable Class Remittance Rate, which rate shall be the lesser of (a)
the Auction Rate and (b) the applicable Net Funds Cap; provided,
however, that in no event shall the Class Remittance Rate exceed the
Class Remittance Rate Limitation.
(d) Existing Certificateholders shall continue to own the principal
amount of Pool II Auction Rate Certificates of such Class that are subject to
Submitted Hold Orders. If the applicable Net Funds Cap is equal to or greater
than the Bid Auction Rate and if Sufficient Bids have been received by the
Auction Agent, the Bid Auction Rate will be the Class Remittance Rate, and
Submitted Bids and Submitted Sell Orders will be accepted or rejected and the
Auction Agent will take such other action as described below in subparagraph
(i).
If the applicable Net Funds Cap is less than the Auction Rate, the Net
Funds Cap will be the Class Remittance Rate. If the Auction Rate and the Net
Funds Cap are both greater than the Class Remittance Rate Limitation, the Class
Remittance Rate shall be equal to the Class Remittance Rate Limitation. If the
Auction Agent has not received Sufficient Bids (other than because all of the
Outstanding Pool II Auction Rate Certificates of such Class are subject to
Submitted Hold Orders), the Class Remittance Rate will be the lesser of the
Maximum Auction Rate and the applicable Net Funds Cap. In any of the cases
described above, Submitted Orders will be accepted or rejected and the Auction
Agent will take such other action as described below in subparagraph (ii).
(i) if Sufficient Bids have been made and the Net Funds Cap is
equal to or greater than the Bid Auction Rate (in which case the Class
Remittance Rate shall be the Bid Auction Rate), all Submitted Sell
Orders shall be accepted and, subject to the provisions of paragraphs
(iv) and (v) of this Section 2.1.1(d), Submitted Bids shall be accepted
or rejected as follows in the following order of priority, and all
other Submitted Bids shall be rejected:
(A) Existing Certificateholders' Submitted
Bids specifying any rate that is higher than the Class Remittance Rate
shall be accepted, thus requiring each such Existing Certificateholder
to sell the aggregate principal amount of Pool II Auction Rate
Certificates subject to such Submitted Bids;
(B) Existing Certificateholders' Submitted
Bids specifying any rate that is lower than the Class Remittance Rate
shall be rejected, thus entitling each such Existing Certificateholder
to continue to own the aggregate principal amount of Auction Rate
Certificates subject to such Submitted Bids;
(C) Potential Certificateholders' Submitted
Bids specifying any rate that is lower than the Class Remittance Rate
shall be accepted;
(D) Each Existing Certificateholders'
Submitted Bid specifying a rate that is equal to the Class Remittance
Rate shall be rejected, thus entitling such Existing Certificateholder
to continue to own the aggregate principal amount of Pool II Auction
Rate Certificates subject to such Submitted Bid, unless the aggregate
principal amount of Outstanding Pool II Auction Rate Certificates
subject to all such Submitted Bids shall be greater than the principal
amount of Pool II Auction Rate Certificates of the applicable Class
(the "remaining principal amount") equal to the excess of the
Available Pool II Auction Rate Certificates of such Class over the
aggregate principal amount of Pool II Auction Rate Certificates of
such Class subject to Submitted Bids described in clauses (B) and (C)
of this Section 2.1.1(d)(i), in which event such Submitted Bid of such
Existing Certificateholder shall be rejected in part, and such
Existing Certificateholder shall be entitled to continue to own the
principal amount of such Class of Pool II Auction Rate Certificates
subject to such Submitted Bid, but only in an amount equal to the
aggregate principal amount of Pool II Auction Rate Certificates of
such Class obtained by multiplying the remaining principal amount by a
fraction, the numerator of which shall be the principal amount of
Outstanding Pool II Auction Rate Certificates of such Class owned by
such Existing Certificateholder subject to such Submitted Bid and the
denominator of which shall be the sum of the principal amount of
Outstanding Pool II Auction Rate Certificates of such Class subject to
such Submitted Bids made by all such Existing Certificateholders that
specified a rate equal to the Class Remittance Rate; and
(E) Each Potential Certificateholder's
Submitted Bid specifying a rate that is equal to the Class Remittance
Rate shall be accepted, but only in an amount equal to the principal
amount of Pool II Auction Rate Certificates of the applicable Class
obtained by multiplying the excess of the aggregate principal amount
of Available Pool II Auction Rate Certificates of such Class over the
aggregate principal amount of Pool II Auction Rate Certificates of
such Class subject to Submitted Bids described in clauses (B), (C) and
(D) of this Section 2.1.1(d)(i) by a fraction the numerator of which
shall be the aggregate principal amount of Outstanding Pool II Auction
Rate Certificates of such Class subject to such Submitted Bid and the
denominator of which shall be the sum of the principal amount of Pool
II Outstanding Auction Rate Certificates of such Class subject to
Submitted Bids made by all such Potential Certificateholders that
specified a rate equal to the Class Remittance Rate.
(ii) If Sufficient Bids have not been made (other than because
all of the Outstanding Auction Rate Certificates of the applicable
Class are subject to submitted Hold Orders), or if the applicable Net
Funds Cap is less than the Bid Auction Rate (in which case the Class
Remittance Rate shall be the Net Funds Cap), or if the Class Remittance
Rate Limitation applies, subject to the provisions of Section
2.1.1(d)(iv) hereof, Submitted Orders shall be accepted or rejected as
follows in the following order of priority and all other Submitted Bids
shall be rejected:
(A) Existing Certificateholders' Submitted
Bids specifying any rate that is equal to or lower than the Class
Remittance Rate shall be rejected, thus entitling such Existing
Certificateholders to continue to own the aggregate principal amount
of Pool II Auction Rate Certificates subject to such Submitted Bids;
(B) Potential Certificateholders' Submitted
Bids specifying (1) any rate that is equal to or lower than the Class
Remittance Rate shall be accepted and (2) any rate that is higher than
the Class Remittance Rate shall be rejected; and
(C) each Existing Certificateholder's
Submitted Bid specifying any rate that is higher than the Class
Remittance Rate and the Submitted Sell Order of each Existing
Certificateholder shall be accepted, thus entitling each Existing
Certificateholder that submitted any such Submitted Bid or Submitted
Sell Order to sell the Pool II Auction Rate Certificates subject to
such Submitted Bid or Submitted Sell Order, but in both cases only in
an amount equal to the aggregate principal amount of Auction Rate
Certificates of the applicable Class obtained by multiplying the
aggregate principal amount of Pool II Auction Rate Certificates
subject to Submitted Bids described in clause (B) of this Section
2.1.1(d)(ii) by a fraction the numerator of which shall be the
aggregate principal amount of Outstanding Pool II Auction Rate
Certificates of such Class owned by such Existing Certificateholder
subject to such submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate principal amount of
Outstanding Pool II Auction Rate Certificates of such Class subject to
all such Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Pool II Auction Rate Certificates of
such Class are subject to Submitted Hold Orders, all Submitted Bids
shall be rejected.
(iv) If, as a result of the procedures described in paragraph (i)
or (ii) of this Section 2.1.1(d), any Existing Certificateholder would
be entitled or required to sell, or any Potential Certificateholder
would be entitled or required to purchase, a principal amount of Pool
II Auction Rate Certificates of the applicable Class that is not equal
to an Authorized Denomination, the Auction Agent shall, in such manner
as in its sole discretion it shall determine, round up or down the
principal amount of Pool II Auction Rate Certificates to be purchased
or sold by any Existing Certificateholder or Potential
Certificateholder so that the principal amount of Pool II Auction Rate
Certificates purchased or sold by each Existing Certificateholder or
Potential Certificateholder shall be equal to an Authorized
Denomination or an integral multiple of $25,000 in excess thereof.
(v) If, as a result of the procedures described in paragraph (ii)
of this Section 2.1.1(d), any Potential Certificateholder would be
entitled or required to purchase less than an Authorized Denomination
of Pool II Auction Rate Certificates of the applicable Class, the
Auction Agent shall, in such manner as in its sole discretion it shall
determine, allocate Pool II Auction Rate Certificates of such Class for
purchase among Potential Certificateholders so that only Pool II
Auction Rate Certificates of such Class in Authorized Denominations or
integral multiples of $25,000 in excess thereof are purchased by any
Potential Certificateholder, even if such allocation results in one or
more of such Potential Certificateholders not purchasing any Pool II
Auction Rate Certificates of such Class.
(e) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Pool II Auction Rate Certificates of
the applicable Class to be purchased and the aggregate principal amount of Pool
II Auction Rate Certificates of the applicable Class to be sold by Potential
Certificateholders and Existing Certificateholders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of Pool II
Auction Rate Certificates of the applicable Class to be sold differs from such
aggregate principal amount of Pool II Auction Rate Certificates of the
applicable Class to be purchased, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers such Broker-Dealer shall
deliver, or from which other Broker-Dealer or Broker-Dealers acting for one or
more sellers such Broker-Dealer shall receive, as the case may be, Pool II
Auction Rate Certificates of the applicable Class.
(f) Any calculation by the Auction Agent, the Servicer or the Trustee,
as applicable, of the Class Remittance Rate, One-Month LIBOR, the Maximum
Auction Rate, the All Hold Rate, the Net Funds Cap and the Non-Payment Rate
shall, in the absence of manifest error, be binding on all other parties.
SECTION 2.1.2. AUCTION AGENT FEES AND EXPENSES.
(a) [Reserved]
(b) Not later than 2:00 p.m., eastern time, on the first Remittance
Date for any Class of Certificates occurring in each month, the Trustee shall
pay to the Auction Agent, in immediately available funds out of amounts in the
Expense Account an amount equal to the Auction Agent Fee (which shall include
the Broker-Dealer Fee) as calculated in the Auction Agent Agreement. The
Representative shall from time to time at the request of the Auction Agent
reimburse the Auction Agent for its reasonable expenses as provided in the
Auction Agent Agreement.
SECTION 2.1.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE, NET
FUNDS CAP, ONE-MONTH LIBOR AND NON-PAYMENT RATE.
The Servicer shall calculate the Net Funds Cap applicable to the Pool
II Auction Rate Certificates and inform the Auction Agent thereof in writing no
later than the Business Day preceding each Auction Date. The Auction Agent shall
calculate the Maximum Auction Rate, the All Hold Rate and One-Month LIBOR, on
each Auction Date and shall notify the Trustee, the Representative and the
Broker-Dealers of the Net Funds Cap, the Maximum Auction Rate, the All Hold Rate
and One-Month LIBOR, as provided in the Auction Agent Agreement. If the
ownership of the Pool II Auction Rate Certificates is no longer maintained in
Book-Entry Form by the Depository, the Trustee shall calculate the Maximum
Auction Rate, and the Servicer will report to the Trustee in writing the Net
Funds Cap, on the Business Day immediately preceding the first day of each
Interest Period commencing after the delivery of certificates representing the
Pool II Auction Rate Certificates. The Auction Agent shall determine One-Month
LIBOR for each Interest Period other than the first Interest Period; provided,
that if the ownership of the Pool II Auction Rate Certificates is no longer
maintained in Book-Entry Form, then the Trustee shall determine One-Month LIBOR
for each such Interest Period. The determination by the Trustee or the Auction
Agent, as the case may be, of One-Month LIBOR shall (in the absence of manifest
error) be final and binding upon all parties.
SECTION 2.1.4. NOTIFICATION OF RATES, AMOUNTS AND REMITTANCE DATES.
Promptly after the Closing Date and after the beginning of each
subsequent Interest Period relating to each Class of Pool II Auction Rate
Certificates, and in any event at least 10 days prior to any Remittance Date
relating to a Class of Pool II Auction Rate Certificates, the Trustee shall
confirm with the Auction Agent, so long as the ownership of the Pool II Auction
Rate Certificates is maintained in Book-Entry Form by the Depository, (1) the
date of such next Remittance Date relating to a Class of Pool II Auction Rate
Certificates and (2) the amount payable to the Auction Agent on the Auction Date
pursuant to Section 2.1.2(b) hereof.
If any day scheduled to be a Remittance Date shall be changed after
the Trustee shall have given the notice or confirmation referred to in the
preceding sentence, the Trustee shall, not later than 9:15 a.m., eastern time,
on the Business Day next preceding the earlier of the new Remittance Date or the
old Remittance Date, by such means as the Trustee deems practicable, give notice
of such change to the Auction Agent, so long as the ownership of the Pool II
Auction Rate Certificates is maintained in Book-Entry Form by the Depository.
SECTION 2.1.5. AUCTION AGENT.
(a) Bankers Trust Company is hereby appointed as Initial Auction Agent
to serve as agent for the Representative in connection with Auctions. The
Trustee will, and the Trustee is hereby directed to, enter into the Initial
Auction Agent Agreement with Bankers Trust Company, as the Initial Auction
Agent. Any Substitute Auction Agent shall be (i) a bank, national banking
association or trust company duly organized under the laws of the United States
of America or any state or territory thereof having its principal place of
business in the Borough of Manhattan, New York, or such other location as
approved by the Trustee and the Market Agent in writing and having a combined
capital stock or surplus of at least $50,000,000, or (ii) a member of the
National Association of Securities Dealers, Inc., having a capitalization of at
least $50,000,000, and, in either case, authorized by law to perform all the
duties imposed upon it hereunder and under the Auction Agent Agreement. The
Auction Agent may at any time resign and be discharged of the duties and
obligations created by these Auction Procedures by giving at least 90 days'
notice to the Trustee, the Representative and the Market Agent. The Auction
Agent may be removed at any time by the Trustee or the Certificateholders of
66-2/3% of the aggregate principal amount of the Pool II Auction Rate
Certificates then Outstanding, and if by such Certificateholders, by an
instrument signed by such Certificateholders or their attorneys and filed with
the Auction Agent, the Representative, the Market Agent and the Trustee upon at
least 90 days' notice. Neither resignation nor removal of the Auction Agent
pursuant to the preceding two sentences shall be effective until and unless a
Substitute Auction Agent has been appointed and has accepted such appointment.
If required by the Certificateholders of 66-2/3% of the aggregate principal
amount of the Pool II Auction Rate Certificates then outstanding or by the
Market Agent, a Substitute Auction Agent Agreement shall be entered into with a
Substitute Auction Agent. Notwithstanding the foregoing, the Auction Agent may
terminate the Auction Agent Agreement if, within 25 days after notifying the
Trustee, the Representative and the Market Agent in writing that it has not
received payment of any Auction Agent Fee due it in accordance with the terms of
the Auction Agent Agreement, the Auction Agent does not receive such payment.
(b) If the Auction Agent shall resign or be removed or be dissolved,
or if the property or affairs of the Auction Agent shall be taken under the
control of any state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, the Trustee, at the direction
of the Representative (after receipt of a certificate from the Market Agent
confirming that any proposed Substitute Auction Agent meets the requirements
described in the immediately preceding paragraph), shall use its best efforts to
appoint a Substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Representative in
connection with Auctions. In the absence of bad faith or negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered or omitted
in good faith or for any error of judgment made by it in the performance of its
duties under the Auction Agent Agreement. The Auction Agent shall not be liable
for any error of judgment made in good faith unless the Auction Agent shall have
been negligent in ascertaining the pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate pursuant to
Section 6.4(b) of the Auction Agent Agreement, the Auction Agent shall give a
Notice of Fee Rate Change to the Trustee and the Representative in accordance
with the Auction Agent Agreement.
SECTION 2.1.6. BROKER-DEALERS.
(a) The Auction Agent will enter into a Broker-Dealer Agreement with
Salomon Smith Barney ("Salomon") as the initial Broker-Dealer. A Responsible
Officer of the Representative may, from time to time, approve one or more
additional persons to serve as Broker-Dealers under Broker-Dealer Agreements and
shall be responsible for providing such Broker-Dealer Agreements to the Trustee
and the Auction Agent, provided, however that while Salomon is serving as
Broker-Dealer, Salomon shall have the right to consent to the approval of any
additional Broker-Dealers, which consent will not be unreasonably withheld. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
(b) Any Broker-Dealer may be removed at any time, at the request of a
Responsible Officer of the Representative, but there shall, at all times, be at
least one Broker-Dealer appointed and acting as such.
SECTION 2.1.7. CHANGES IN THE AUCTION DATE.
The Market Agent, at the written direction of a Responsible Officer of
the Representative, may specify an earlier or later Auction Date (but in no
event more than five Business Days earlier) than the Auction Date that would
otherwise be determined in accordance with the definition of "Auction Date" in
Article I of these Auction Procedures with respect to one or more specified
Auction Periods in order to conform with then current market practice with
respect to similar securities or to accommodate economic and financial factors
that may affect or be relevant to the day of the week constituting an Auction
Date and the Class Remittance Rate borne on a Class of Pool II Auction Rate
Certificates. The Market Agent shall deliver a written request for consent to
such change in the length of the Auction Date to the Representative not less
than three days nor more than 20 days prior to the effective date of such change
together with a certificate demonstrating the need for change in reliance on
such factors. The Market Agent shall provide notice of its determination to
specify an earlier Auction Date for one or more Auction Periods by means of a
written notice delivered at least 10 days prior to the proposed changed Auction
Date to the Trustee, the Auction Agent, the Trust, the Representative and the
DTC. Such notice shall be substantially in the form of, or contain substantially
the information contained in, Annex C to these Auction Procedures.
In connection with any change described in this Section 2.1.7, the
Auction Agent shall provide such further notice to such parties as is specified
in Section 2.5 of the Auction Agent Agreement.
SECTION 2.2. ADDITIONAL PROVISIONS REGARDING THE CLASS REMITTANCE
RATES ON THE POOL II AUCTION RATE CERTIFICATES.
The determination of a Class Remittance Rate by the Auction Agent, the
Trustee or any other Person pursuant to the provisions of the applicable Section
of this Article II shall be conclusive and binding on the Certificateholders of
the Class of Pool II Auction Rate Certificates to which such Class Remittance
Rate applies, and the Representative and the Trustee may rely thereon for all
purposes.
In no event shall the cumulative amount of interest paid or payable on
a Class of Pool II Auction Rate Certificates (including interest calculated as
provided herein, plus any other amounts that constitute interest on the Pool II
Auction Rate Certificates of such Class under applicable law, which are
contracted for, charged, reserved, taken or received pursuant to the Auction
Rate Certificates of such Class or related documents) calculated from the date
of issuance of the Pool II Auction Rate Certificates of such Class through any
subsequent day during the term of the Auction Rate of such Class or otherwise
prior to payment in full of the Pool II Auction Rate Certificates of such Class
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under the
Pool II Auction Rate Certificates of such Class or related documents or
otherwise contracted for, charged, reserved, taken or received in connection
with the Pool II Auction Rate Certificates of such Class, or if the acceleration
of the maturity of the Pool II Auction Rate Certificates of such Class results
in payment to or receipt by the Certificateholder or any former
Certificateholder of the Pool II Auction Rate Certificates of such Class of any
interest in excess of that permitted by applicable law, then, notwithstanding
any provision of the Pool II Auction Rate Certificates of such Class or related
documents to the contrary, all excess amounts theretofore paid or received with
respect to the Pool II Auction Rate Certificates of such Class shall be credited
on the principal balance of the Pool II Auction Rate Certificates of such Class
(or, if the Pool II Auction Rate Certificates of such Class have been paid or
would thereby be paid in full, refunded by the recipient thereof), and the
provisions of the Pool II Auction Rate Certificates of such Class and related
documents shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Pool II Auction Rate Certificates of such Class and under the related
documents.
SECTION 2.3. QUALIFICATIONS OF MARKET AGENT.
The Market Agent shall be a member of the National Association of
Securities Dealers, Inc., have a capitalization of at least $50,000,000 and be
authorized by law to perform all the duties imposed upon it by these Auction
Procedures. The Market Agent may resign and be discharged of the duties and
obligations created by these Auction Procedures by giving at least 30 days'
notice to the Representative and the Trustee, provided that such resignation
shall not be effective until the appointment of a successor market agent by the
Representative and the acceptance of such appointment by such successor market
agent. The Market Agent may be replaced at the direction of the Representative,
by an instrument signed by an officer of the Representative, filed with the
Market Agent and the Trustee at least 30 days before the effective date of such
replacement, provided that such replacement shall not be effective until the
appointment of a successor market agent by the Representative and the acceptance
of such appointment by such successor market agent.
In the event that the Market Agent shall be removed or be dissolved,
or if the property or affairs of the Market Agent shall be taken under the
control of any state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, and there is no Market Agent
and the Representative shall not have appointed its successor as Market Agent,
the Trustee, notwithstanding the provisions of the first paragraph of this
Section, shall be deemed to be the Market Agent for all purposes of these
Auction Procedures until the appointment by the Representative of the successor
Market Agent. Nothing in this Section shall be construed as conferring on the
Trustee additional duties other than as set forth herein.
<PAGE>
ANNEX A
[Reserved].
<PAGE>
ANNEX B
[Reserved].
<PAGE>
ANNEX C
THE MONEY STORE ASSET BACKED CERTIFICATES
SERIES 1997-D, CLASS MV-1, CLASS MV-2 and CLASS BV
NOTICE OF CHANGE IN AUCTION DATE
Notice is hereby given by _____________________, as Market Agent for
the captioned Certificates, that with respect to the captioned Certificates, the
Auction Date is hereby changed as follows:
l. With respect to the captioned Certificates, the definition of
"Auction Date" shall be deemed amended by substituting "_________________
(number) Business Day" in the second line thereof.
2. This change shall take effect on ______________ which shall be the
Auction Date for the Auction Period commencing on ________________.
3. The Auction Date for the captioned Certificates shall be subject to
further change hereafter as provided in the Auction Procedures.
4. Terms not defined in this Notice shall have the meanings set forth
in the Auction Procedures relating to the captioned Certificates.
__________________
as Market Agent
Dated: By: ________________________
Name:
Title:
<PAGE>
SCHEDULE III
TARGETED BALANCE SCHEDULES FOR
CLASS AF-3, CLASS AF-4 AND CLASS AF-5
CLASS AF-3
Per Date Balance
0 12/15/1997 $249,000,000.00
1 01/15/1998 249,000,000.00
2 02/15/1998 249,000,000.00
3 03/15/1998 249,000,000.00
4 04/15/1998 249,000,000.00
5 05/15/1998 249,000,000.00
6 06/15/1998 249,000,000.00
7 07/15/1998 249,000,000.00
8 08/15/1998 249,000,000.00
9 09/15/1998 249,000,000.00
10 10/15/1998 249,000,000.00
11 11/15/1998 249,000,000.00
12 12/15/1998 249,000,000.00
13 01/15/1999 249,000,000.00
14 02/15/1999 249,000,000.00
15 03/15/1999 249,000,000.00
16 04/15/1999 239,788,268.81
17 05/15/1999 227,049,684.60
18 06/15/1999 214,609,525.74
19 07/15/1999 202,460,908.46
20 08/15/1999 190,597,106.43
21 09/15/1999 179,011,547.16
22 10/15/1999 167,697,808.49
23 11/15/1999 156,649,615.22
24 12/15/1999 145,860,835.69
25 01/15/2000 135,325,478.57
26 02/15/2000 125,037,689.66
27 03/15/2000 114,991,748.72
28 04/15/2000 105,182,066.49
29 05/15/2000 95,603,181.64
30 06/15/2000 86,249,757.91
31 07/15/2000 77,116,581.22
32 08/15/2000 68,559,796.40
33 09/15/2000 60,391,833.24
34 10/15/2000 52,416,451.34
35 11/15/2000 44,629,192.89
36 12/15/2000 37,025,702.20
37 01/15/2001 30,538,829.37
38 02/15/2001 24,217,814.44
39 03/15/2001 18,058,691.97
40 04/15/2001 12,057,588.72
41 05/15/2001 6,210,721.48
42 06/15/2001 514,395.07
43 07/15/2001 $ 0.00
TOTAL
<PAGE>
CLASS AF-4
Per Date Balance
0 12/15/1997 $68,000,000.00
1 01/15/1998 68,000,000.00
2 02/15/1998 68,000,000.00
3 03/15/1998 68,000,000.00
4 04/15/1998 68,000,000.00
5 05/15/1998 68,000,000.00
6 06/15/1998 68,000,000.00
7 07/15/1998 68,000,000.00
8 08/15/1998 68,000,000.00
9 09/15/1998 68,000,000.00
10 10/15/1998 68,000,000.00
11 11/15/1998 68,000,000.00
12 12/15/1998 68,000,000.00
13 01/15/1999 68,000,000.00
14 02/15/1999 68,000,000.00
15 03/15/1999 68,000,000.00
16 04/15/1999 68,000,000.00
17 05/15/1999 68,000,000.00
18 06/15/1999 68,000,000.00
19 07/15/1999 68,000,000.00
20 08/15/1999 68,000,000.00
21 09/15/1999 68,000,000.00
22 10/15/1999 68,000,000.00
23 11/15/1999 68,000,000.00
24 12/15/1999 68,000,000.00
25 01/15/2000 68,000,000.00
26 02/15/2000 68,000,000.00
27 03/15/2000 68,000,000.00
28 04/15/2000 68,000,000.00
29 05/15/2000 68,000,000.00
30 06/15/2000 68,000,000.00
31 07/15/2000 68,000,000.00
32 08/15/2000 68,000,000.00
33 09/15/2000 68,000,000.00
34 10/15/2000 68,000,000.00
35 11/15/2000 68,000,000.00
36 12/15/2000 68,000,000.00
37 01/15/2001 68,000,000.00
38 02/15/2001 68,000,000.00
39 03/15/2001 68,000,000.00
40 04/15/2001 68,000,000.00
41 05/15/2001 68,000,000.00
42 06/15/2001 68,000,000.00
43 07/15/2001 62,965,000.26
44 08/15/2001 57,559,011.83
45 09/15/2001 52,292,986.67
46 10/15/2001 47,163,561.83
47 11/15/2001 42,167,452.74
48 12/15/2001 37,301,451.37
49 01/15/2002 32,562,424.50
50 02/15/2002 27,947,312.01
51 03/15/2002 23,453,125.18
52 04/15/2002 19,076,945.03
53 05/15/2002 14,815,920.78
54 06/15/2002 10,667,268.23
55 07/15/2002 6,628,268.27
56 08/15/2002 2,696,265.34
57 09/15/2002 $ 0.00
TOTAL
<PAGE>
CLASS AF-5
Per Date Balance
0 12/15/1997 $37,000,000.00
1 01/15/1998 37,000,000.00
2 02/15/1998 37,000,000.00
3 03/15/1998 37,000,000.00
4 04/15/1998 37,000,000.00
5 05/15/1998 37,000,000.00
6 06/15/1998 37,000,000.00
7 07/15/1998 37,000,000.00
8 08/15/1998 37,000,000.00
9 09/15/1998 37,000,000.00
10 10/15/1998 37,000,000.00
11 11/15/1998 37,000,000.00
12 12/15/1998 37,000,000.00
13 01/15/1999 37,000,000.00
14 02/15/1999 37,000,000.00
15 03/15/1999 37,000,000.00
16 04/15/1999 37,000,000.00
17 05/15/1999 37,000,000.00
18 06/15/1999 37,000,000.00
19 07/15/1999 37,000,000.00
20 08/15/1999 37,000,000.00
21 09/15/1999 37,000,000.00
22 10/15/1999 37,000,000.00
23 11/15/1999 37,000,000.00
24 12/15/1999 37,000,000.00
25 01/15/2000 37,000,000.00
26 02/15/2000 37,000,000.00
27 03/15/2000 37,000,000.00
28 04/15/2000 37,000,000.00
29 05/15/2000 37,000,000.00
30 06/15/2000 37,000,000.00
31 07/15/2000 37,000,000.00
32 08/15/2000 37,000,000.00
33 09/15/2000 37,000,000.00
34 10/15/2000 37,000,000.00
35 11/15/2000 37,000,000.00
36 12/15/2000 37,000,000.00
37 01/15/2001 37,000,000.00
38 02/15/2001 37,000,000.00
39 03/15/2001 37,000,000.00
40 04/15/2001 37,000,000.00
41 05/15/2001 37,000,000.00
42 06/15/2001 37,000,000.00
43 07/15/2001 37,000,000.00
44 08/15/2001 37,000,000.00
45 09/15/2001 37,000,000.00
46 10/15/2001 37,000,000.00
47 11/15/2001 37,000,000.00
48 12/15/2001 37,000,000.00
49 01/15/2002 37,000,000.00
50 02/15/2002 37,000,000.00
51 03/15/2002 37,000,000.00
52 04/15/2002 37,000,000.00
53 05/15/2002 37,000,000.00
54 06/15/2002 37,000,000.00
55 07/15/2002 37,000,000.00
56 08/15/2002 37,000,000.00
57 09/15/2002 35,868,666.00
58 10/15/2002 32,142,937.52
59 11/15/2002 28,516,606.43
60 12/15/2002 24,987,257.20
61 01/15/2003 22,123,620.50
62 02/15/2003 19,335,050.78
63 03/15/2003 16,619,676.93
64 04/15/2003 13,975,673.07
65 05/15/2003 11,401,257.46
66 06/15/2003 8,894,691.50
67 07/15/2003 6,454,278.64
68 09/15/2003 4,078,363.45
69 09/15/2003 1,765,330.61
70 10/15/2003 $ 0.00
TOTAL
<PAGE>
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include a
copy of any of the following items delivered to the Trustee and an original of
any of the other following items, all of which shall be available for inspection
by the Certificateholders:
1. The original Mortgage Note, endorsed "Pay to the order of
holder" or "Pay to the order of ______________" and signed in
the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to such
Person.
2. Either: (i) the original recorded Mortgage, with
evidence of recording thereon, (ii) a copy of the
Mortgage certified as a true copy by a Responsible
Officer where the original has been transmitted for
recording until such time as the original is
returned by the public recording office or (iii) a
copy of the Mortgage certified by the public
recording office in those instances where the
original recorded Mortgage has been lost.
3. Either (i) the original Assignment of Mortgage from
the Person delivering such Assignment to "The Bank
of New York, as Trustee under the Pooling and
Servicing Agreement, dated as of November 30, 1997,
Asset Backed Certificates Series 1997-D" or, in the
case of the Pool III Mortgage Loans, to "First Union
Trust Company, National Association, as Co-Trustee
under the Pooling and Servicing Agreement dated as
of November 30, 1997, Series 1997-D" with evidence
of recording thereon (provided, however, that where
permitted under the laws of the jurisdiction wherein
the Mortgaged Property is located, the Assignment of
Mortgage may be effected by one or more blanket
assignments for Mortgage Loans secured by Mortgaged
Properties located in the same county) or (ii) a
copy of the Assignment of Mortgage certified as a
true copy by a Responsible Officer of the Originator
where the original was transmitted for recording
(provided, however, that where the original
Assignment of Mortgage is not being delivered to the
Trustee, each such Responsible Officer may complete
one or more blanket certificates attaching copies of
one or more of such Assignments of Mortgage relating
to the Mortgages originated by the related
Originator).
4. The original policy of title insurance or, if such
policy has not yet been delivered by the insurer,
the commitment or binder to issue same, or if the
original principal balance of the Mortgage Loan was
less than or equal to $15,000 or the Mortgage Loan
was not originated by a Originator, other evidence of
the status of title, which shall consist of an
attorney's opinion of title or certificate of title,
a preliminary title report, a property search, a
title search, a lot book report, a property
information report or a report entitled "prelim" or
"PIRT" (property information report), and (ii) proof
of hazard insurance in the form of a hazard
insurance policy or hazard insurance policy
endorsement that names the related Originator, its
successors and assigns, as a mortgagee/loss payee,
and, if such endorsement does not show the amount
insured by the related hazard insurance policy, some
evidence of such amount.
5. Originals of all assumption and modification
agreements, if any.
6. Either: (i) original intervening assignments, if
any, showing a complete chain of title from the
originator to the Person delivering such Assignment,
including warehousing assignments, with recording
information thereon, if such assignments were
recorded, (ii) copies of any assignments certified as
true copies by a Responsible Officer of the
Originator where the original has been transmitted
for recording until such time as the originals are
returned by the public recording office, or
(iii) copies of any assignments certified by the public
recording office in those instances where the
original recorded assignments have been lost.
7. Mortgage Loan closing statement and any other truth-in-lending
or real estate settlement procedure forms required by law.
8. Residential loan application.
9. Verification of employment and income, and tax
returns, if any.
10. Credit report on the mortgagor.
11. Except with respect to certain Mortgage Loans with
original principal balances of less than $15,000,
the appraisal made in connection with the origination
of the related Mortgage Loan with photographs of the
subject property and of comparable properties (if
available), constituting evidence sufficient to
indicate that the Mortgaged Property relates to a
Residential Dwelling and identifying the type
thereof.
12. Copy of any Prior Lien.
13. All other papers and records developed or originated by the
Originator or others, required to document the Mortgage Loan
or to service the Mortgage Loan.
<PAGE>
EXHIBIT B
[FORMS OF CERTIFICATES]
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
December 31, 1997
To: First Union National Bank
One First Union Center, TW-19
Charlotte, North Carolina 28288 (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
November 30, 1997, The Money Store Asset Backed Certificates, Series 1997-D,
Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class
AF-7, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV, Class AH-1,
Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH-2, Class BH, Class AMF,
Class X, Class R-1 and Class R-2 (the "Agreement"), we hereby authorize and
request you to establish an account, as a Principal and Interest Account
pursuant to Section 5.03 of the Agreement, to be designated as "The Money Store
Inc., in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1997-D, Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class AF-7, Class AV-1, Class AV-2, Class MV-1, Class
MV-2, Class BV, Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class MH-1,
Class MH-2, Class BH, Class AMF, Class X, Class R-1 and Class R-2, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
The Money Store Inc.
By: ___________________________
Name:
Title:
<PAGE>
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ________________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation through the Bank Insurance Fund.
First Union National Bank
(Name of Depository)
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT D
RESALE CERTIFICATION
_______________, 19__
[Representative]
[Servicer]
[Trustee]
[Co-Trustee]
[Certificate Insurer]
[Certificate Registrar]
Re: Class [R-1][R-2][X] Certificate issued under the
Pooling and Servicing Agreement, The Money Store
Asset Backed Certificates, Series 1997-D dated as of
November 30, 1997 among The Bank of New York, as
Trustee, The Money Store Inc. (the "Representative"),
and certain subsidiaries of the Representative
Dear Sirs:
___________________________________________ ("Seller") intends to
transfer the captioned Certificate to _______________ ("Purchaser"), for
registration in the name of
____________________________________________________.
1. In connection with such transfer, and in accordance with Section
4.02 of the captioned Agreement, Seller hereby certifies to you the following
facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Certificate under the Securities Act of 1933,
as amended (the "1933 Act"), or which would render the disposition of the
Certificate a violation of Section 5 of the 1933 Act or require registration
pursuant thereto.
2. The Purchaser warrants and represents to, and covenants with, the
Seller, the Trustee and the Servicer pursuant to Section 4.02 of the Pooling and
Servicing Agreement that:
a. The Purchaser agrees to be bound, as Certificateholder, by all of
the terms, covenants and conditions of the Pooling and Servicing Agreement and
the Certificate, and from and after the date hereof, the Purchaser assumes for
the benefit of each of the Servicer and the Seller all of the Seller's
obligations as Certificateholder thereunder;
b. The Purchaser understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;
c. The Purchaser is acquiring the Certificate for investment for its
own account or the account of another qualified institutional buyer (within the
meaning of Rule 144A) only and not for any other person;
d. The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;
e. The Purchaser has been furnished with all information regarding the
Certificate that it has requested from the Seller, the Trustee or the Servicer;
and
f. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person
(other than a qualified institutional buyer within the meaning of Rule 144A) in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.
[The following is to be completed if transfer is being made pursuant
to Rule 144A].
3. The Purchaser understands and agrees with the Seller that the
Seller is transferring the Certificate pursuant to the exemption from
registration under the 1933 Act provided by Rule 144A thereunder ("Rule 144A")
and the Purchaser hereby represents and warrants to the Seller, the Trustee and
the Servicer that the Purchaser is a "qualified institutional buyer" as defined
in Rule 144A because (i) the Purchaser owned and/or invested on a discretionary
basis $_________1 in securities (except for the excluded securities referred to
below) as of the end of the Purchaser's most recent fiscal year (such amount
being calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies
the criteria in the category marked below.
/ / CORPORATION, ETC. The Purchaser is a corporation other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
/ / BANK. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
/ / SAVINGS AND LOAN. The Purchaser (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a state or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
/ / BROKER-DEALER. The Purchaser is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
/ / INSURANCE COMPANY. The Purchaser is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
The term "SECURITIES" as used herein DOES NOT INCLUDE (i) securities
of issuers that are affiliated with the Purchaser, (ii) securities that are part
of an unsold allotment to or subscription by the Purchaser (if the Purchaser is
a dealer), (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participation, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
- --------------
1 The Purchaser must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Purchaser, the Purchaser used
the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may have
included securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investment of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority owned,
consolidated subsidiary of another enterprise and the Purchaser is not itself a
reporting company under the Securities Exchange Act of 1934.
The Purchaser acknowledges that it is familiar with Rule 144A and
understands that you are and will continue to rely on the statements made
herein.
The Purchaser agrees to notify you of any changes in the information
and conclusions herein. Until such notice is given to you, the Purchaser's
purchase of the Certificate will constitute a reaffirmation of the foregoing
certifications and acknowledgments as of the date of such purchase.
Further, if the Purchaser is a bank or savings and loan as provided
above, the Purchaser agrees that it will furnish the Seller with updated annual
financial statements promptly after they become available.
4. The Purchaser warrants and represents to, and covenants with, the
Seller, the Servicer, the Trustee and the Representative that:
a. The Purchaser agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement; and
b. Either: (1) the Purchaser is not an employee benefit plan within
the meaning of section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), ("Plan") or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code") (also a "Plan"), and
the Purchaser is not directly or indirectly purchasing the Certificates on
behalf of, as investment manager of, as named fiduciary of, as trustee of, or
with assets of a Plan; or (2) Purchaser shall deliver the opinion of counsel
required pursuant to Section 4.02(c) of the Pooling and Servicing Agreement.
5. This Certification may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Resale Certification
to be executed by their duly authorized officers as of the date first above
written.
______________________________, ____________________________________,
Seller Purchaser
By:____________________________ By:_________________________________
Its:___________________________ Its:________________________________
Taxpayer Taxpayer
Identification No._____________ Identification No.__________________
<PAGE>
EXHIBIT E
[RESERVED]
<PAGE>
EXHIBIT E-1
[RESERVED]
<PAGE>
EXHIBIT F
FORM OF [TRUSTEE] [CUSTODIAN] INITIAL CERTIFICATION
______________, 1997
MBIA Insurance Corporation Morgan Stanley & Co. Incorporated
113 King Street 1585 Broadway
Armonk, New York 10504 New York, New York 10036
The Money Store, Inc. Merrill Lynch & Co.
2840 Morris Avenue World Financial Center
Union, New Jersey 07083 North Tower, 10th Floor
New York, New York 10281-1310
TMS Special Holdings, Inc. Salomon Brothers Inc
2840 Morris Avenue 7 World Trade Center
Union, New Jersey 07083 New York, New York 10048
Prudential Securities Incorporated Nomura Securities International, Inc.
One New York Plaza 2 World Financial Center Inc.
New York, New York 10292 Building B
New York, New York 10081
Lehman Brothers Inc. Smith Barney Inc.
Three World Financial Center 390 Greenwich Street
New York, NY 10285 New York, New York 10013
Re: Pooling and Servicing Agreement The Money Store Asset
Backed Certificates, Series 1997-D, dated as of November 30,
1997 among The Money Store Inc. as Representative, Servicer
and Claims Administrator, the Originators and
The Bank of New York, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, if any (the "Loan Exception
Report"), it has received an Assignment of Mortgage, or a certified copy
thereof, and a Mortgage Note with respect to each [Initial] [Subsequent]
[Mortgage Loan] [Pool III Mortgage Loan] listed in the Mortgage Loan Schedule
and the documents contained therein appear to bear original signatures.
The [Trustee] [Custodian] has made no independent examination of any
such documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The [Trustee] [Custodian] makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any such documents or any of the [Mortgage Loans] [Pool III
Mortgage Loans] identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such [Mortgage
Loan] [Pool III Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[THE BANK OF NEW YORK,
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By: ________________________
Name: ______________________
Title: _______________________
<PAGE>
EXHIBIT F-1
FORM OF [TRUSTEE] [CUSTODIAN] INTERIM CERTIFICATION
_______________, 1997
MBIA Insurance Corporation Morgan Stanley & Co. Incoporated
113 King Street 1585 Broadway
Armonk, New York 10504 New York, New York 10036
The Money Store, Inc. Merrill Lynch & Co.
2840 Morris Avenue World Financial Center
Union, New Jersey 07083 North Tower, 10th Floor
New York, New York 10281-1310
TMS Special Holdings, Inc. Salomon Brothers Inc
2840 Morris Avenue 7 World Trade Center
Union, New Jersey 07083 New York, New York 10048
Prudential Securities Incorporated Nomura Securities International, Inc.
One New York Plaza 2 World Financial Center Inc.
New York, New York 10292 Building B
New York, New York 10081
Lehman Brothers Inc. Smith Barney Inc.
Three World Financial Center 390 Greenwich Street
New York, NY 10285 New York, New York 10013
Re: Pooling and Servicing Agreement The Money Store Asset
Backed Certificates, Series 1997-D, dated as of
November 30, 1997 among The Money Store Inc. as
Representative, Servicer and Claims Administrator,
the Originators and The Bank of New York, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that as to each [Initial] [Subsequent] [Mortgage Loan] [Pool III Mortgage Loan]
listed in the Mortgage Loan Schedule (other than any [Initial] [Subsequent]
[Mortgage Loan] [Pool III Mortgage Loan] paid in full or any [Initial]
[Subsequent] [Mortgage Loan] [Pool III Mortgage Loan] listed on the attachment
hereto), it has reviewed the documents delivered to it pursuant to Section 2.04
(other than items listed in Section 2.04(d)(ii)) of the Pooling and Servicing
Agreement and has determined that (i) all such documents are in its possession,
(ii) such documents have been reviewed by it and have not been mutilated,
damaged, torn or otherwise physically altered and relate to such [Mortgage Loan]
[Pool III Mortgage Loan], (iii) based on its examination and only as to the
foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such [Initial] [Subsequent] [Mortgage Loan] [Pool III Mortgage Loan]
is correct and (iv) each Mortgage Note has been endorsed as provided in Section
2.04 of the Pooling and Servicing Agreement. Further, [except for Mortgaged
Properties relating to [Mortgage Loans] [Pool III Mortgage Loans] identified on
the Mortgage Loan Schedule by an account number beginning with __________ or
________,] each Mortgaged Property is a Residential Dwelling of the type set
forth in the appraisal obtained in connection with the origination of the
related [Mortgage Loan] [Pool III Mortgage Loan], and for each [Mortgage Loan]
[Pool III Mortgage Loan] with an original principal balance in excess of $15,000
for which the documents in the possession of the [Trustee] [Custodian] indicate
that the related Originator conducted a drive-by appraisal pursuant to FHLMC
Form 704 or alternative FNMA Form in connection with originating such [Mortgage
Loan] [Pool III Mortgage Loan], such [Mortgage Loan] [Pool III Mortgage Loan]
(A) had an original principal balance not in excess of $35,000, and (B) has a
Loan-to-Value Ratio less than 50% (based solely on the LTV included on the
Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form 1004 was
performed by the related Originator within one year prior to the origination of
such [Mortgage Loan] [Pool III Mortgage Loan]. The [Trustee] [Custodian] has
made no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The [Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the [Mortgage Loans] [Pool III Mortgage Loans] identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such [Mortgage Loan] [Pool III Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[THE BANK OF NEW YORK
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By: _________________________
Name:________________________
Title:________________________
<PAGE>
EXHIBIT G
FORM OF [TRUSTEE] [CUSTODIAN] FINAL CERTIFICATION
[date]
[Certificate Insurer]
[Servicer]
[Certificateholders]
[Representative]
Re: Pooling and Servicing Agreement dated as of November
30, 1997 among The Money Store Inc. as
Representative, Servicer and Claims Administrator,
the Originators and The Bank of New York, as
Trustee, The Money Store Asset Backed Certificates,
Series 1997-D
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, as to each [Mortgage Loan] [Pool
III Mortgage Loan] listed in the Mortgage Loan Schedule (other than any
[Mortgage Loan] [Pool III Mortgage Loan] paid in full or listed on the
attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the Pooling and
Servicing Agreement and has determined that (i) all such documents are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
[Mortgage Loan] [Pool III Mortgage Loan], (iii) based on its examination, and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule respecting such [Mortgage Loan] [Pool III Mortgage Loan] is
correct and (iv) each Mortgage Note has been endorsed as provided in Section
2.04 of the Pooling and Servicing Agreement. Further, [except for Mortgaged
Properties relating to [Mortgage Loans] [Pool III Mortgage Loans] identified on
the Mortgage Loan Schedule by an account number beginning with _______ or
_______,] each Mortgaged Property is a Residential Dwelling of the type set
forth in the appraisal obtained in connection with the origination of the
related [Mortgage Loan] [Pool III Mortgage Loan], and for each [Mortgage Loan]
[Pool III Mortgage Loan] with an original principal balance in excess of $15,000
for which the documents in the possession of the [Trustee] [Custodian] indicate
that the related Originator conducted a drive-by appraisal pursuant to FHLMC
Form 704 or alternative FNMA Form in connection with originating such [Mortgage
Loan] [Pool III Mortgage Loan], such [Mortgage Loan] [Pool III Mortgage Loan]
(A) had an original principal balance not in excess of $35,000, and (B) has a
Loan-to-Value Ratio less than 50% (based solely on the LTV included on the
Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form 1004 was
performed by the related Originator within one year prior to the origination of
such [Mortgage Loan] [Pool III Mortgage Loan]. The [Trustee] [Custodian] has
made no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The [Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the [Mortgage Loans] [Pool III Mortgage Loans] identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such [Mortgage Loan] [Pool III Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[THE BANK OF NEW YORK
as Trustee]
[FIRST UNION NATIONAL BANK,
as Custodian]
By: ________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
EXHIBIT H-1
POOL I MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT H-2
POOL II MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT H-3
POOL III MORTGAGE LOAN SCHEDULE
[To Be Delivered to Co-Trustee]
<PAGE>
EXHIBIT H-4
POOL IV MORTGAGE LOAN SCHEDULE
[To Be Delivered to Trustee]
<PAGE>
EXHIBIT I
LIST OF ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee]
[Custodian]
Re: Pooling and Servicing Agreement, The Money Store Asset
Backed Certificates, Series 1997-D, dated as of November 30,
1997
In connection with the administration of the pool of Mortgage Loans
held by you as [Trustee] [Custodian] for the Certificateholders, we request the
release, and acknowledge receipt, of the (Trustee's Mortgage File/[specify
document]) for the Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
/ / 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Principal and
Interest Account and remitted to the Trustee for deposit into
the Certificate Account pursuant to the Pooling and Servicing
Agreement.)
/ / 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Principal and Interest Account and remitted to
the Trustee for deposit into the Certificate Account pursuant
to the Pooling and Servicing Agreement.)
/ / 3. Mortgage Loan in Foreclosure
/ / 4. Mortgage Loan Purchased Pursuant to Section 11.01 of
the Pooling and Servicing Agreement.
/ / 5. Mortgage Loan Repurchased or Substituted Pursuant to
Article II or III of the Pooling and Servicing
Agreement (Servicer hereby certifies that the
repurchase price or Substitution Adjustment has been
credited to the Principal and Interest Account and
remitted to the Trustee for deposit into the
Certificate Account pursuant to the Pooling and
Servicing Agreement.)
/ / 6. Other (explain)____________________________________
___________________________________________________
If box 1 or 2 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the
above documents to you as [Trustee][Custodian] please acknowledge your receipt
by signing in the space indicated below, and returning this form.
THE MONEY STORE INC.
By: ___________________________
Name:_______________________
Title:______________________
Documents returned to [Trustee][Custodian]:
_________________________________________
[Trustee] [Custodian]
By: ___________________________
Date:__________________________
<PAGE>
EXHIBIT J-1
REQUEST FOR RELEASE OF DOCUMENTS OF
90 DAY DELINQUENT FHA LOANS
To: [Custodian]
Re: Pooling and Servicing Agreement, The Money Store
Asset-Backed Certificates, Series 1997-D, dated as of November
30, 1997
In connection with the administration of the pool of Mortgage Loans
held by you as Custodian and agent for the Co-Trustee, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the 90 Day Delinquent FHA Loan described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Upon receipt of this request, please execute and deliver such 90 Day
Delinquent FHA Loan to us.
THE MONEY STORE INC.
By: ____________________________
Name:
Title:
Documents returned to Custodian:
___________________________________
Custodian
By:
Date:
<PAGE>
EXHIBIT K
TRANSFER AFFIDAVIT
STATE OF )
) : ss:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is a _____________ of ___________, the proposed
transferee (the "Transferee") of a Percentage Interest in a Class R Certificate
(the "Certificate") issued pursuant to the Pooling and Servicing Agreement, The
Money Store Asset Backed Certificates, Series 1997-D, Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7, Class AV-1, Class
AV-2, Class MV-1, Class MV-2, Class BV, Class AH-1, Class AH-2, Class AH-3,
Class AH-4, Class MH-1, Class MH-2, Class BH, Class AMF, Class X, Class R-1 and
Class R-2, dated as of November 30, 1997 (the "Agreement"), among The Money
Store Inc., as Representative and Servicer (the "Servicer"), the Originators and
The Bank of New York, as Trustee. Capitalized terms used, but not defined herein
shall have the meanings ascribed to such terms in the Agreement. The Transferee
has authorized the undersigned to make this affidavit on behalf of the
Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the transfer, a Permitted Transferee. The Transferee is acquiring its
Percentage Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass- through entity a Person that is not a
Permitted Transferee is a record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement (incorporated herein by reference) and understands the legal
consequences of the acquisition of a Percentage Interest in the Certificate
including, without limitation, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the transfer to the Transferee contemplated hereby
null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to transfer its Percentage Interest in
the Certificate, and in connection with any transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
transfer its Percentage Interest or cause any Percentage Interest to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transfer
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the transfer is to be made is not a Permitted Transferee.
7. The Transferee's taxpayer identification number is
___________________.
8. Section references and defined terms not defined herein have the
meanings ascribed thereto in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of , 19__.
[NAME OF TRANSFEREE]
By: __________________________________
Name:__________________________________
Title:___________________________________
[Corporate seal]
ATTEST:
_________________________
[Assistant] Secretary
<PAGE>
STATE OF )
) : ss:
COUNTY OF )
Personally appeared before me the above-named ______, known or proved
to me to be the same person who executed the foregoing instrument and to be the
of the Transferee, and acknowledged that he executed the same as his free act
and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 19__.
NOTARY PUBLIC
My Commission expires the ____
day of __________, 19__.
<PAGE>
EXHIBIT L-1
FORM OF NOTICE UNDER CERTIFICATE GUARANTY INSURANCE POLICY RELATING TO
THE CLASS AF CERTIFICATES
<PAGE>
EXHIBIT L-2
FORM OF NOTICE UNDER CERTIFICATE GUARANTY INSURANCE POLICY RELATING TO
THE CLASS AMF CERTIFICATES
<PAGE>
EXHIBIT M
CUSTODIAL AGREEMENT
Dated __________, 199__
[THE BANK OF NEW YORK, a New York banking corporation, as Trustee (the
"Trustee") [FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Co-Trustee] and
____________________________, a ____________________________ (the "Custodian"),
agree as follows:
WHEREAS, the Trustee, the Originators and The Money Store Inc. ("The
Money Store") have entered into a Pooling and Servicing Agreement dated as of
November 30, 1997 relating to The Money Store Asset Backed Certificates, Series
1997-D, Class AF-1, Class AF-2, Class AF- 3, Class AF-4, Class AF-5, Class AF-6,
Class AF-7, Class AV-1, Class AV-2, Class MV-1, Class MV-2, Class BV, Class
AH-1, Class AH-2, Class AH-3, Class AH-4, Class MH-1, Class MH-2, Class BH,
Class AMF, Class X, Class R-1 and Class R-2, (the "Pooling Agreement"), the
terms defined therein being used herein with the same meaning) pursuant to which
the Originators transferred, assigned, set-over and otherwise conveyed to the
Trustee, without recourse, all of the Originators' right, title and interest in
and to the mortgage loans identified in Exhibits H-1, H-2, H-3 and H-4 to the
Pooling Agreement (the "Mortgage Loans"); and
WHEREAS, in connection with such transfer and assignment and pursuant
to the Pooling Agreement, the Trustee holds, directly or pursuant to a custodial
agreement, the Mortgage Files:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Custodian and the Trustee agree as follows:
1. APPOINTMENT AS CUSTODIAN; ACKNOWLEDGMENT OF RECEIPT. Subject to the
terms and conditions herein, the Trustee hereby appoints the Custodian, and the
Custodian hereby accepts such appointment, as its Custodian to maintain custody
of the Trustee's Mortgage Files. The Custodian hereby acknowledges receipt of
the Mortgage Notes, the Mortgages, the assignments and other documents relating
to the Mortgage Loans referred to in Section 2.04, except for the items referred
to in Section 2.04(d)(ii), of the Pooling Agreement. The Trustee shall be liable
for all of the Custodian's fees under this Agreement.
2. MAINTENANCE OF OFFICE. The Custodian agrees to maintain each
Trustee's Mortgage File identified in Section 2.04 of the Pooling Agreement,
said Exhibit being incorporated herein by reference, at the office of the
Custodian located at ________ ___________________ or at such other office of the
Custodian in New York, New York as the Custodian shall designate from time to
time after giving the Trustee 30 days' prior written notice.
3. DUTIES OF CUSTODIAN. As Custodian, the Custodian shall have and
perform the following powers and duties:
(a) SAFEKEEPING. To segregate the Trustee's Mortgage Files from all
other mortgages and mortgage notes and similar records in its possession, to
identify the Trustee's Mortgage Files as being held and to hold the Trustee's
Mortgage Files for and on behalf of the Trustee for the benefit of all present
and future Certificateholders, to maintain accurate records pertaining to each
Mortgage Note and Mortgage in the Trustee's Mortgage Files as will enable the
Trustee to comply with the terms and conditions of the Pooling Agreement, to
maintain at all times a current inventory thereof and to conduct periodic
physical inspections of the Trustee's Mortgage Files held by it under this
Agreement in such a manner as shall enable the Trustee and the Custodian to
verify the accuracy of such record-keeping, inventory and physical possession.
The Custodian will promptly report to the Trustee any failure on its part to
hold the Trustee's Mortgage Files as herein provided and promptly take
appropriate action to remedy any such failure.
(b) RELEASE OF DOCUMENTS. To release any Mortgage Note and Mortgage in
the Trustee's Mortgage Files as provided in the Pooling Agreement.
(c) ADMINISTRATION; REPORTS. In general, to attend to all
non-discretionary details in connection with maintaining custody of the
Trustee's Mortgage Files on behalf of the Trustee. In addition, the Custodian
shall assist the Trustee generally in the preparation of reports to
Certificateholders or to regulatory bodies to the extent necessitated by the
Custodian's custody of the Trustee's Mortgage Files.
4. ACCESS TO RECORDS. The Custodian shall permit the Trustee or its
duly authorized representatives, attorneys or auditors and those persons
permitted access pursuant to Section 5.13 of the Pooling Agreement to inspect
the Trustee's Mortgage Files and the books and records maintained by the
Custodian pursuant hereto at such times as they may reasonably request, subject
only to compliance with the terms of the Pooling Agreement.
5. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to
have received proper instructions with respect to the Trustee's Mortgage Files
upon its receipt of written instructions signed by a Responsible Officer of the
Trustee. A certified copy of a resolution of the Board of Directors of the
Trustee may be accepted by the Custodian as conclusive evidence of the authority
of any such officer to act and may be considered as in full force and effect
until receipt of written notice to the contrary by the Custodian from the
Trustee. Such instructions may be general or specific in terms.
6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify
the Trustee for any and all liabilities, obligations, losses, damages, payments,
costs or expenses, including attorneys' fees, of any kind whatsoever which may
be imposed on, incurred by or asserted against the Trustee as the result of any
act or omission in any way relating to the maintenance and custody by the
Custodian of the Trustee's Mortgage Files; provided, however, that the Custodian
shall not be liable for any portion of any such amount resulting from the gross
negligence or willful misconduct of the Trustee.
7. ADVICE OF COUNSEL. The Custodian and the Trustee further agree that
the Custodian shall be entitled to rely and act upon advice of counsel with
respect to its performance hereunder as Custodian and shall be without liability
for any action reasonably taken pursuant to such advice, provided that such
action is not in violation of applicable Federal or State law. This paragraph
shall not negate the Custodian's obligations under paragraph 6 above.
8. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT, AND INTERPRETIVE AND
ADDITIONAL PROVISIONS. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, and may be amended at any time by mutual agreement of the
parties hereto. This Agreement may be terminated by either party in a writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after, the termination of
this Agreement, the Custodian shall redeliver the Trustee's Mortgage Files to
the Trustee at such place as the Trustee may reasonably designate. In connection
with the administration of this Agreement, the Custodian and the Trustee may
agree from time to time upon the interpretation of the provisions of this
Agreement as may in their opinion by consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed and annexed
hereto.
9. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
10. NOTICES. Notices and other writings shall be delivered or mailed,
postage prepaid, to the Trustee at 101 Barclay Street, 12th Floor West, New
York, New York 10286, Attention: Corporate Trust Administration - MBS, or to the
Custodian at, _________________________________________, Attention: __________;
or to such other address as the Trustee or the Custodian may hereafter specify
in writing. Notices or other writings shall be effective only upon actual
receipt by the parties.
11. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the Trustee and the Custodian and their respective
successors and assigns. Concurrently with the appointment of a successor trustee
as provided in Section 12.08 of the Pooling Agreement, the Trustee and the
Custodian shall amend this Agreement to make said successor trustee the
successor to the Trustee hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
THE BANK OF NEW YORK
as Trustee under the Pooling
Agreement referred to above
By: _____________________________________
Name:____________________________________
Title:___________________________________
______________________________________, as
Custodian
By: _____________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT M-1
CUSTODIAL AGREEMENT
<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $ _______
Property Sale Proceeds _______
Insurance Proceeds _______
Other (Itemize) _______
Total Proceeds $________
2. Servicing Advances $ ________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
EXHIBIT O
FORM OF DELINQUENCY REPORT
<TABLE>
<CAPTION>
DELINQUENCY AND FORECLOSURE INFORMATION
REO FORECLOSURES
-------------------------------------------------------------------
OUTSTANDING # # OF # OF OUTSTANDING # OF OUTSTANDING
INVESTOR DOLLARS ACCT RANGES AMOUNT ACCTS. PCT ACCTS DOLLARS % ACCTS DOLLARS %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 AND OVER
TOTALS
</TABLE>
<PAGE>
EXHIBIT P
[OMITTED]
<PAGE>
EXHIBIT Q
[OMITTED]
<PAGE>
EXHIBIT R
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section
6.10 shall contain the following information for each Mortgage Loan as of the
related Record Date:
1. Name of the Mortgagor, address of the Mortgaged
Property and Account Number.
2. The LTV as of the origination date of the
Mortgage Loan.
3. The Due Date.
4. The Mortgage Loan Original Principal Balance.
5. The Mortgage Interest Rate.
6. The Monthly Payment.
7. The date on which the last payment was received and
the amount of such payment segregated into the following
categories; (a) total interest received (including Servicing
Fee, Contingency Fee and Excess Spread); (b) Servicing Fee and
Contingency Fee; (c) Excess Spread; (d) The amount equal to
total interest received minus Servicing Fee, Contingency Fee
and Excess Spread; (e) principal and Excess Payments received;
(f) Curtailments received; and (g) Principal
Prepayments received.
8. The Mortgage Loan Principal Balance.
9. The Mortgage Note maturity date.
10. A "Delinquency Flag" noting that the Mortgage Loan is
current or delinquent. If delinquent, state the date on which
the last payment was received.
11. A "Foreclosure Flag" noting that the Mortgage Loan is
the subject of foreclosure proceedings.
12. An "REO Flag" noting that the Mortgage Loan is an REO
Property.
13. A "Liquidated Mortgage Loan Flag" noting that the
Mortgage Loan is a Liquidated Mortgage Loan and the Net
Liquidation Proceeds received in connection therewith.
14. Lifetime Cap.
15. Lifetime Floor.
16. Periodic Cap.
17. Net Funds Cap.
18. Any additional information reasonably requested by
the Trustee.
<PAGE>
EXHIBIT S
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the 31st day of
December 1997, by and between The Money Store Inc., a New Jersey corporation
(the "Servicer") whose principal business address is 2840 Morris Avenue, Union,
New Jersey 07083, and each of the entities listed on Schedule A hereto (each an
"Originator", and collectively the "Originators").
RECITALS
1. Each Originator is a wholly-owned subsidiary of the Servicer.
2. The Servicer, the Originators and The Bank of New York, as trustee
(the "Trustee"), are parties to that certain Pooling and Servicing Agreement
dated and effective as of November 30, 1997 (the "Pooling and Servicing
Agreement").
3. Pursuant to the terms of the Pooling and Servicing Agreement, each
Originator has transferred those certain Mortgage Loans (as defined in the
Pooling and Servicing Agreement) listed next to each Originator's name on
Schedule B hereto to the Trustee (or in the case of the Pool III Mortgage Loans,
the Co-Trustee) for the benefit of Certificateholders (as defined in the Pooling
and Servicing Agreement).
4. The Originators desire to convey to the Servicer the right to
service the Mortgage Loans. As authorized by the Pooling and Servicing
Agreement, the Servicer desires to enter into a subservicing agreement with each
Originator so that each Originator will perform subservicing functions for the
Mortgage Loans transferred by it to the Trustee, such subservicing functions to
be rendered in compliance with the terms of the Pooling and Servicing Agreement.
5. Each Originator desires to undertake such subservicing and
supervision of the Mortgage Loans on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the agreements of the parties
herein and other good and valuable consideration, the receipt and sufficiency of
which each party hereby acknowledges, and in order in part to induce the Trustee
to enter into the Pooling and Servicing Agreement and perform its obligations
thereunder, the parties agree as follows:
1. ASSIGNMENT OF SERVICING; SUBSERVICING AGREEMENT. Each Originator
hereby assigns, transfers, conveys and sets over to the Servicer, its successors
and assigns, all of such Originator's right, title and interest to service the
Mortgage Loans listed next to such Originator's name on the schedule furnished
by each Originator to the Servicer and dated the date hereof, to have and to
hold such rights hereby assigned, conveyed and transferred to the Servicer, for
its own use and benefit, and that of its successors and assigns, forever. In
consideration of the foregoing assignment, the Servicer hereby appoints each
Originator as subservicer with respect to the Mortgage Loans conveyed by each
such Originator to the Trustee (or, in the case of the Pool III Loan, to the
Co-Trustee) each such Originator to service and supervise such Mortgage Loans as
provided for herein, such subservicing to commence on the effective date of this
Agreement and to terminate as provided for herein. As compensation for such
subservicing and supervision, each Originator shall be entitled to an annual fee
for each Mortgage Loan serviced, such fee to be computed and paid as set forth
on Schedule B hereto. Each Originator, as contract subservicer, shall service
and administer the Mortgage Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Originator may deem necessary or desirable; PROVIDED,
HOWEVER, that each Originator shall conduct its servicing activities (i) in
compliance with and pursuant to the servicing requirements set out in the
Pooling and Servicing Agreement, as such requirements relate to subservicing
rendered thereunder, and (ii) to the extent not inconsistent with such
Originator's obligations as an authorized subservicer under the Pooling and
Servicing Agreement, (x) in accordance with the provisions of Section 3 hereof
and (y) otherwise in accordance with the standards and requirements set forth on
Schedule C hereto and subject to applicable Federal, state and local laws and
regulations. On or after the date hereof, each Originator shall deliver such
appropriately executed and authenticated instruments of sale, assignment,
transfer and conveyance to the Servicer, if any, including limited powers of
attorney, as the Servicer or its counsel determine to be reasonable in order to
accomplish the transfer to the Servicer of such Originator's rights with respect
to the servicing.
2. REPRESENTATIONS AND WARRANTIES. Each Originator represents and
warrants as follows:
2.1 Such Originator is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Originator is
and at all relevant times has been properly licensed and qualified to transact
business in all appropriate jurisdictions, to conduct all activities performed
with respect to origination and servicing of the Mortgage Loans and is in good
standing in each jurisdiction in which the failure to be in such good standing
would have a material, adverse effect on the consummation of the transactions
contemplated hereby.
2.2 Originator has all requisite corporate power, authority and
capacity to enter into this Agreement and to perform the obligations required of
it hereunder. The execution and delivery of this Agreement by the Originator,
and the consummation of the transactions contemplated hereby, have each been
duly and validly authorized by all necessary corporate action. This Agreement
constitutes the valid and legally binding agreement of Originator enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance of this Agreement, subject to laws respecting bankruptcy,
receivership, insolvency and other laws affecting creditors' rights generally.
2.3 The execution, delivery and performance of this Agreement by
Originator, its compliance with the terms hereof and consummation of the
transactions contemplated will not violate, conflict with, result in a breach
of, constitute a default under, be prohibited by or require any additional
approval under its certificate of incorporation, bylaws, or any instrument or
agreement to which it is a party or by which it is bound or which affects the
servicing conveyed hereunder.
2.4 Such Originator is the lawful owner of the servicing, has the sole
right and authority to transfer the servicing as contemplated hereby, and is not
contractually obligated to sell the servicing to any other party. The transfer,
assignment and delivery of the servicing in accordance with the terms and
conditions of this Agreement shall vest in the Servicer all rights as servicer
free and clear of any and all claims, charges, defenses, offsets and
encumbrances of any kind or nature whatsoever, including but not limited to
those of Originator.
2.5 With respect to each individual Mortgage Loan for which servicing
rights are assigned hereunder, such Originator makes to the Servicer those
representations and warranties that are contained in Section 3.02 of the Pooling
and Servicing Agreement.
3. ORIGINATOR'S DUTIES. Until the principal, interest and any other
amounts due on each Mortgage Loan are paid in full, each Originator shall:
A. Proceed diligently to collect all payments due under the
terms of each Mortgage Loan as they become due.
B. Keep a complete and accurate account of and properly apply
all sums collected by it from the mortgagor on account of each such
Mortgage Loan for principal and interest, and upon request, furnish
evidence acceptable to the Servicer of all expenditures for taxes,
assessments and other public charges and hazard insurance premiums. In
the event any Mortgagor fails to make a payment to an Originator
required to be made under the terms of any such Mortgage Loan, such
Originator will notify the Servicer of such fact within 20 days after
the same shall have become due and payable.
C. Deposit all funds received in respect of each Mortgage Loan
in an account in an institution the accounts of which are insured by an
agency of the United States government. Unless directed otherwise by
the Servicer such account shall be held by a Originator, which shall
maintain or shall cause to be maintained detailed records to show the
respective interest of each individual mortgagor in the account.
D. Pay into the related Principal and Interest Accounts (as
defined in the Pooling and Servicing Agreement) all amounts of
principal and interest collected under the Mortgage Loans.
E. Submit to the Servicer at least annually an
accounting of the balances in each such account, if any.
F. Perform such other customary duties, furnish such other
reports and execute such other documents in connection with its duties
hereunder as the Servicer from time to time reasonably may require.
4. ADVANCES BY ORIGINATOR. In the event an Originator, on behalf of
the Servicer, makes any advance of principal and/or interest to the holder of a
mortgage serviced hereunder before such Originator has received the applicable
mortgage payment from any mortgagor, or makes any other advance to protect the
security of a mortgage or otherwise (including but not limited to property
taxes, special assessments, and hazard insurance premiums), EXCEPT advances
related to foreclosure or real estate owned losses (which are covered by Section
8), then the Servicer, promptly upon being billed therefore, shall, at its
option, either (i) reimburse such Originator the full amount of all such
advances, (ii) credit such amount as a set-off against amounts such Originator
may then owe to the Servicer pursuant to this Agreement, (iii) use a combination
of such reimbursement and crediting to fully discharge such amount or (iv)
forego such reimbursement or crediting with respect to all or a portion of such
amount, in which case the amount not reimbursed or offset shall be deemed
currently due and payable and, until paid to such Originator, shall bear
interest on the average monthly balance thereof at the underlying Mortgage Loan
Rate.
5. ORIGINATOR'S RECORDS; MONITORING OF PROPERTY. Each Originator will
during regular business hours make all of its records and files relating to
Mortgage Loans covered by this Agreement available for inspection by the
Servicer and its authorized agents. In addition, an Originator will use ordinary
diligence to ascertain, and will forthwith notify the Servicer of any of the
following which might come to the attention of such Originator:
A. The vacating of or any change in the occupancy of
any premises securing a mortgage.
B. The sale or transfer of any such premises.
C. The death, bankruptcy, insolvency or other disability of a
mortgagor which might impair ability to repay the Mortgage Loan.
D. Any loss or damage in excess of $10,000 to any such
premises, in which event, in addition to notifying the Servicer, an
Originator shall see to it that the insurance companies concerned are
promptly notified. For losses or damages of $10,000 or less, the
Servicer hereby authorizes an Originator to endorse insurance checks or
drafts on behalf of the Servicer. For losses or damages in excess of
$10,000, an Originator shall make a report to the Servicer and the
Servicer retains the right to endorse any insurance drafts related to
such loss or damage.
E. Any lack of repair or any other deterioration or waste
suffered or committed in respect to the premises covered by any
mortgage.
It is understood and agreed, however, that no notice need be given to the
Servicer of any facts other than those of which an Originator has actual notice,
or those of which an Originator would, except for its negligence, have had
actual notice.
6. NO WAIVER, RELEASE OR CONSENT BY ORIGINATOR. An Originator will not
waive, modify, release or consent to postponement on the part of the mortgagor
of any term or provision of any Mortgage Loan without the consent of the
Servicer.
7. HAZARD INSURANCE. An Originator shall cause to be maintained such
fire and hazard insurance as shall be requested by the Servicer pursuant to
Sections 5.07 and 5.08 of the Pooling and Servicing Agreement.
8. FORECLOSURE AND REAL ESTATE OWNED. An Originator will assist in the
foreclosure or other acquisition of the property securing any Mortgage Loan and
the transfer of such property, pursuant to instruction of the Servicer given
under Section 5.10 of the Pooling and Servicing Agreement.
9. TERM; TERMINATION. This Agreement shall commence on the date hereof
and shall, subject to earlier termination pursuant to the provisions of this
Section 9, terminate upon the termination of the Pooling and Servicing
Agreement. This Agreement may be canceled and terminated (i) at any time
hereunder by the Servicer on 10 days notice to an Originator, or (ii) by the
Trustee or the Co-Trustee on notice to an Originator, at any time after the
Trustee or the Co-Trustee, as the case may be, shall have become the successor
servicer with respect to the Mortgage Loans or the Pool III Loans, as the case
may be, pursuant to Sections 10.01 and 10.02 of the Pooling and Servicing
Agreement. In addition, this Agreement may be canceled and terminated by the
Servicer, by notice to an Originator, if:
A. An Originator fails in a material respect to perform its
obligations hereunder and (i) does not cure or rectify such failure
within 45 days or, (ii) if the character of such cure or rectification
is such that it cannot reasonably be effected within 45 days, does not
commence such cure or rectification within 45 days and complete the
same within a commercially reasonable time thereafter, given the
circumstances.
B. An Originator becomes insolvent or bankrupt or is
placed under conservatorship or receivership.
C. An Originator assigns or attempts to assign its rights and
obligations hereunder, without written consent of the Servicer,
provided that any assignment, transfer or other conveyance of an
Originator's rights and obligations hereunder that occurs as a result
of a merger, consolidation, reorganization, name change or acquisition
of or involving an Originator shall not be construed as an assignment
(or attempted assignment) under the provisions of this Section 9.C.
Upon termination of this Agreement, an Originator will account for and turn over
to the Servicer all funds collected under each Mortgage Loan for which said
termination is effective, less only the compensation, fees and reimbursements
then due an Originator, and will deliver to the Servicer or its designee all
records and documents relating to each such mortgage.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Each Originator will
comply with, and will use all reasonable efforts to cause each Mortgagor to
comply with, all applicable state and federal rules and regulations or
requirements including those requiring the giving of notices.
11. FIDELITY, ERRORS AND OMISSIONS INSURANCE, ETC. Each Originator
agrees to be responsible, at no expense to the Servicer, for seeing to it that
at all times, while this Agreement is in force, policies of fidelity, fire, and
extended coverage, theft, forgery, and errors and omissions insurance are
maintained in conformity with the Pooling and Servicing Agreement. Each
Originator will, without demand therefore, provide the Servicer annually, on a
date agreeable to the Servicer, a certificate or binder of insurance delineating
the various types of insurance carried by such Originator.
12. MISCELLANEOUS. This document contains the entire agreement between
the parties hereto and cannot be modified in any respect except by an amendment
in writing signed by each party. The invalidity of any portion of this Agreement
shall in no way affect the balance thereof. Any notice permitted or required
hereunder shall be in writing and shall be deemed given when hand delivered to
an officer or authorized agent of, or when mailed, registered or certified mail,
postage prepaid, to Servicer or an Originator at the address of the Servicer set
forth above. The captions and headings used in this Agreement are for
convenience only, and do not define or limit the terms and provisions of this
Agreement. Notwithstanding any provision in this Agreement to the contrary,
nothing contained herein shall be deemed an attempt to assign or an assignment
of any servicing rights by an Originator to the Servicer if an attempted
assignment of the same without the consent of any agency or instrumentality of
the United States or a state thereof (a "Regulatory Authority") with
jurisdiction over such assignment would constitute a breach of an applicable
regulatory requirement or agreement between an Originator and such Regulatory
Authority unless and until such consent shall have been obtained. In the event
the consent of any Regulatory Authority is required to authorize the conveyance
of any or all of the servicing to be conveyed hereunder and such consent shall
not have been granted prior to the occurrence of an Event of Default under
Section 10.01 of the Pooling and Servicing Agreement, then upon the occurrence
of an Event of Default, each Originator shall enter into an agreement with the
Trustee (or, in the case of the Pool III Loans, the Co-Trustee), which agreement
shall be in form and substance satisfactory to the Trustee (or, in the case of
the Pool III Loans, the CoTrustee) and its counsel, which recognizes the Trustee
(or, in the case of the Pool III Loans, the Co-Trustee) as the successor
servicer of the Mortgage Loans as provided for by such Section 10.01, and shall
continue to subservice the Mortgage Loans or shall convey such subservicing at
the election and upon the direction of the Trustee (or, in the case of the Pool
III Loans, the Co-Trustee).
<PAGE>
IN WITNESS WHEREOF, each party has caused this instrument to be signed
in its corporate name on its behalf by its proper officials duly authorized as
of the day and year first above written.
SERVICER:
ATTEST: The Money Store Inc.
By: ______________________ By: ________________________
Philip Arem
Assistant Secretary
ORIGINATORS:
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
ATTEST:
By: ______________________ By: ____________________________
Philip Arem
Assistant Secretary
<PAGE>
SCHEDULE A
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
SCHEDULE B
Each Originator shall receive 25 basis points as compensation for
servicing hereunder as well as other servicing fees as permitted.
ORIGINATORS MORTGAGE LOANS TRANSFERRED
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
SCHEDULE C
1. Make telephone contact with any Mortgagor whose account is either a
first payment default or delinquent 9-29 days.
2. Confirm telephone contacts as necessary.
3. Contact, in writing, each Mortgagor who can not be contacted.
4. Send a "default" letter to any Mortgagor who is 30 days delinquent.
5. Commence foreclosure proceedings after 60 days delinquency.
6. Obtain legal counsel where appropriate including in foreclosure
matter commenced by prior lienholders and bankruptcy matters.
7. Monitor all outside counsel and proceedings.
8. Monitor loans for continuing performance.
