SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 27, 1997
The Money Store Commercial Mortgage Inc.
(Exact name of registrant as specified in its charter)
New Jersey 333-20817 22-2378261
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
2840 Morris Avenue, Union, New Jersey 07083
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(Address of principal executive offices) (Zip
Code)
Registrant's Telephone Number,
including area code: (908) 686-2000
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N/A
- ------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits
Exhibit No.
1.1 Underwriting Agreement dated March 21,
1997 among The Money Store Commercial
Mortgage Inc., The Money Store Inc. and
Prudential Securities Incorporated and
the related Pricing Agreement.
4.1 Pooling and Servicing Agreement dated
February 28, 1997 among The Money Store
Commercial Mortgage Inc., The Money
Store Inc. as Representative, and
Marine Midland Bank, as Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Money Store Commercial Mortgage Inc.
By: /s/ Eric Elwin
-------------------------------------
Name: Eric Elwin
Title: Vice President
Dated: April 4, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
1.1 Underwriting Agreement dated March 21, 1997 among
The Money Store Commercial Mortgage
Inc., The Money Store Inc. and
Prudential Securities Incorporated and
the related Pricing Agreement.
4.1 Pooling and Servicing Agreement dated
February 28, 1997 among The Money
Store Commercial Mortgage Inc., The
Money Store Inc., as Representative,
and Marine Midland Bank, as Trustee.
<PAGE>
EXHIBIT 1.1
EXECUTION COPY
$90,000,000
THE MONEY STORE INC.
THE MONEY STORE BUSINESS LOAN BACKED CERTIFICATES
SERIES 1997-1
UNDERWRITING AGREEMENT
March 21, 1997
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company") and The
Money Store Commercial Mortgage Inc., a New Jersey corporation (the "Seller"),
hereby confirm their agreement with Prudential Securities Incorporated (the
"Underwriter") with respect to the delivery by the Seller, of certificates
entitled "The Money Store Business Loan Backed Certificates, Series 1997-1,
Class A (the "Class A Certificates"), Class M (the "Class M Certificates") and
Class B (the "Class B Certificates," and together with the Class A Certificates
and the Class M Certificates, the "Certificates"), to be issued pursuant to a
Pooling and Servicing Agreement, to be dated as of February 28, 1997 (the
"Pooling and Servicing Agreement"), among the Company, as Representative, The
Money Store Commercial Mortgage Inc. ("TMSCMI" or the "Seller"), as servicer (in
such capacity, the "Servicer"), and Marine Midland Bank, as trustee ("Marine
Midland" or, in its capacity as trustee under the Pooling and Servicing
Agreement, the "Trustee"). The initial aggregate principal amount of the Class A
Certificates shall be approximately $75,600,000, the initial aggregate principal
amount of the Class M Certificates shall be approximately $7,200,000, and the
initial aggregate principal amount of the Class B Certificates shall be
approximately $7,200,000. The Certificates represent the entire beneficial
ownership interest in a trust fund (the "Trust Fund") created by the Seller
which consists primarily of the right to receive payments and other recoveries
attributable to a certain pool of loans (the "Business Loans").
Prior to the delivery of the Certificates by the Seller, and the public
offering thereof by the Underwriter, the Seller and the Underwriter shall enter
into an agreement substantially in the form of Exhibit A hereto (the "Pricing
Agreement"). The Pricing Agreement shall be between the Seller and the
Underwriter and shall specify such applicable information as is indicated in,
and be in substantially the form of, Exhibit A hereto. The offering of the
Certificates will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
As February 28, 1997, the aggregate principal amount of the Business Loans
equaled approximately $87,808,810.42. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.
The Seller understands that the Underwriter proposes to make a public
offering of the Certificates as soon as the Underwriter deems advisable after
the Pricing Agreement has been executed and delivered.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER.
(a) The Company and the Seller represent and warrant to the Underwriter as
of the date hereof and, if the Pricing Agreement is executed on a date other
than the date hereof, as of the date of the Pricing Agreement (such latter date
being hereinafter referred to as the "Representation Date") as follows:
(i) The Seller has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement on Form S-3 (No. 333-20817) including a prospectus,
and such amendments thereto as may have been required to the
date hereof, relating to the Certificates and the offering
thereof from time to time in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "1933 Act"), and
such registration statement, as amended, has become effective.
Such registration statement, as amended, and the prospectus
relating to the sale of the Certificates constituting a part
thereof as from time to time amended or supplemented
(including any prospectus supplement (the "Prospectus
Supplement") filed with the Commission pursuant to Rule 424 of
the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and any information incorporated
therein by reference) are respectively referred to herein as
the "Registration Statement" and the "Prospectus." The
conditions of Rule 415 under the 1933 Act have been satisfied
with respect to the Company and the Registration Statement.
(ii) At the time the Registration Statement became
effective and at the Representation Date, the Registration
Statement complied and will comply in all
material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at
the Representation Date (unless the term "Prospectus" refers
to a prospectus which has been provided to the Underwriter by
the Company for use in connection with the offering of the
Certificates which differs from the Prospectus on file at the
Commission at the time the Registration Statement became
effective, in which case at the time it is first provided to
the Underwriter for such use) and at Closing Time referred to
in Section 2 hereof, will not include an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the
Company in writing by the Underwriter expressly for use in the
Registration Statement or Prospectus; and provided further,
that neither the Company nor the Seller make any
representations or warranties as to any information in any
Computational Materials (as defined
below) provided by the Underwriter to the Company pursuant to
Section 10. The conditions to the use by the Company of a
registration statement on Form S-3 under the 1933 Act, as set
forth in the General Instructions to Form S-3, have been
satisfied with respect to the Registration Statement and the
Prospectus.
(iii) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business
prospects of the Seller, whether or not arising in the
ordinary course of business, which would have a material
adverse effect on the ability of the Seller to perform its
obligations under the Basic Documents (as defined below) to
which it is a party and (B) there have been no transactions
entered into by the Seller, other than those in the ordinary
course of business, which would have a material adverse effect
on the ability of the Seller to perform its obligations under
this Agreement, the Pricing Agreement and the Pooling and
Servicing Agreement (this Agreement, the Pricing Agreement and
the Pooling and Servicing Agreement being herein referred to,
collectively, as the "Basic Documents").
(iv) The Seller has been duly organized and is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation with all requisite
power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Basic
Documents to which it is a party; and the Seller is duly
qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material
adverse effect on, (A) the Seller's ability to perform its
obligations under the Basic Documents to which it is a party,
or (B) the business, properties, financial position,
operations or results of operations of the Seller.
(v) Any person who signed this Agreement on behalf of
the Seller, was, as of the time of such signing and delivery,
and is now duly elected or appointed, qualified and acting,
and the Agreement, as so executed, is duly and validly
authorized, executed, and constitutes the valid, legal and
binding agreement of the Company and the Seller, enforceable
in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity regardless of
whether such enforcement is considered in a proceeding in
equity or at law.
(vi) Each Basic Document has been duly and validly
authorized by the Seller and, when executed and delivered by
the Seller and duly and validly authorized, executed and
delivered by the other parties thereto, will constitute, the
valid and binding agreement of such Seller, enforceable in
accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity regardless of
whether such enforcement is considered in a proceeding in
equity or at law; and such Basic Documents conform in all
material respects to the statements relating thereto contained
in the Prospectus.
(vii) The Certificates have been duly and validly
authorized by the Servicer and, when executed and delivered by
the Servicer and authenticated by the Trustee as specified in
the Pooling and Servicing Agreement and delivered to the
Underwriter pursuant to this Agreement, the Certificates will
be duly and validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement; and the
Certificates conform in all material respects to all
statements relating thereto contained in the Prospectus.
(viii) Neither the issuance or delivery of the
Certificates, nor the consummation of any other of the
transactions herein contemplated or in any other Basic
Document, nor the execution and delivery by the Seller of the
Basic Documents to which it is a party, nor the fulfillment of
the terms of the Certificates or each such Basic Document will
result in the breach of any term or provision of the charter
or by-laws of the Seller, and the Seller is not in breach or
violation of or in default (nor has an event occurred which
with notice or lapse of time or both would constitute a
default) under the terms of (A) any material obligation,
agreement, covenant or condition contained in any material
contract, indenture, loan agreement, note, lease or other
material instrument to which such Seller is a party or by
which it may be bound, or to which any of the property or
assets of such Seller is subject, or (B) any law, decree,
order, rule or regulation applicable to such Seller or
the Business Loans of any court or supervisory, regulatory,
administrative or governmental agency, body or authority, or
arbitrator having jurisdiction over such Seller or their
properties or the Business Loans, the default in or the breach
or violation of which would have a material adverse effect on
such Seller or the ability of such Seller to perform its
obligations under the Basic Documents to which it is a
party; and neither the issuance or delivery of the
Certificates, nor the consummation of any other of the
transactions herein contemplated, nor the fulfillment of the
terms of the Certificates or the Basic Documents will result
in such a breach, violation or default which would have such a
material adverse effect.
(ix) Except as described in the Prospectus, there is
no action, suit or proceeding against or investigation of the
Seller, now pending, or, to the knowledge of the Seller,
threatened against the Seller, before any court, governmental
agency or body (A) which is required to be disclosed in the
Prospectus (other than as disclosed therein) or (B) (1)
asserting the invalidity of any Basic Document or the
Certificates, (2) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by the Basic Documents, (3) which would
materially and adversely affect the performance by the Seller
of its obligations under the Basic Documents to which it is a
party, or the validity or enforceability of any Basic Document
or the Certificates or (4) seeking to adversely affect the
federal income tax attributes of the Certificates described in
the Prospectus; all pending legal or governmental proceedings
to which the Seller is a party or of which any of its property
or assets is the subject which are not described in the
Prospectus, including ordinary routine litigation incidental
to the business, are, considered in the aggregate, not
material to such Seller's ability to perform its obligations
under the Basic Documents to which it is a party.
(x) The Seller possesses such licenses, certificates,
authorities or permits issued by the appropriate state or
federal regulatory agencies or governmental bodies necessary
to conduct the businesses now conducted by it (except where
the failure to possess any such license, certificate,
authority or permit would not materially and adversely affect
the holders of the Certificates) and the Seller has not
received any notice of proceedings relating to the revocation
or modification of any such license, certificate, authority or
permit which, singly or in the aggregate, if the subject of
any unfavorable decision, ruling or finding, would materially
and adversely affect the ability of such Seller to perform its
obligations under the Basic Documents.
(xi) No authorization, approval or consent of any
court or governmental authority or agency is necessary in
connection with the issuance or sale of the Certificates
hereunder, except such as may be required under the 1933 Act
or the 1933 Act Regulations or state securities laws.
(xii) Upon delivery to the Underwriter of the
Certificates, the Underwriter will have good and marketable
title to the Certificates free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(xiii) Any taxes, fees and other governmental charges
that are assessed and due in connection with the execution,
delivery and issuance of the Basic Documents and the
Certificates which have become due or will become due on or
prior to Closing Time shall have been paid at or prior to
Closing Time.
(xiv) The Trust Fund is not required to be registered
as an "investment company" under the Investment Company Act of
1940 (the "1940 Act").
(b) Any certificate signed by any officer of the Seller and delivered to
the Underwriter or counsel for the Underwriter shall be deemed a representation
and warranty by such Seller as to the matters covered thereby.
Section 2. DELIVERY TO THE UNDERWRITER; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Seller agrees to
deliver the Certificates to the Underwriter. In the event that the initial
remittance rates and prices for each Class of Certificates have not been agreed
upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed upon by the
Underwriter and the Seller.
(b) Delivery of the Certificates shall be made at the offices of Stroock &
Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, or at such other
place as shall be agreed upon by the Underwriter and the Seller, at 11:00 A.M.,
New York City time, on March 27, 1997, or such other time not later than ten
business days after such date as shall be agreed upon by the Underwriter and the
Seller (such time and date of payment and delivery being herein called "Closing
Time").
(c) The Certificates will initially be represented as follows:
(i) The Class A Certificates will initially be
represented by one or more certificates registered in the name
of Cede & Co., the nominee of The Depository Trust Company
("DTC").
(ii) The Class M Certificates will initially be
represented by one or more certificates registered in the name
of Cede & Co., the nominee of DTC.
(iii) The Class B Certificates will initially be
represented by one or more certificates registered in the name
of Cede & Co., the nominee of DTC.
provided, however, that one Class B Certificate in an
initial principal amount of less than $1,000 (the "Tail
Certificate") may be issued in definitive form registered in
the name of the Underwriter or its designee.
For purposes of this Agreement, all Certificates initially represented by one or
more certificates registered in the name of Cede & Co., the nominee of DTC,
shall be referred to herein, collectively, as the "DTC Certificates."
The interests of beneficial owners of the DTC Certificates will be
represented by book entries on the records of DTC and participating members
thereof. Definitive certificates evidencing the Certificates will be available
in exchange for DTC Certificates only under the limited circumstances specified
in the Pooling and Servicing Agreement. The DTC Certificates and Tail
Certificate to be purchased by the Underwriter will be delivered by the Seller
to the Underwriter (which delivery in the case of the DTC Certificates shall be
made through the facilities of DTC) against payment of the purchase price
therefor. The Underwriter hereby agrees, subject to the terms, conditions and
provisions hereof, to purchase from the Seller (x) the Class A Certificates, at
a price of 99.625%, such price being equal to 100% LESS an underwriting discount
of 0.375%, (y) the Class M Certificates, at the price of 99.50% equal to 100%
less an underwriting discount of 0.50% and (z) the Class B Certificates, at the
price of 99.50%, such price being equal to 100% less an underwriting discount of
0.50%. The purchase price shall be paid by the Underwriter by a same day federal
funds wire payable to the order of the Seller. The Certificates will be made
available for examination by the Underwriter not later than 10:00 A.M. on the
last business day prior to Closing Time.
(d) The Class A Certificates, the Class M Certificates and the Class B
Certificates shall be offered to the public from time to time for sale in
negotiated transactions or otherwise, at prices determined at the time of sale.
Section 3. COVENANTS OF THE COMPANY AND THE SELLER. The Company and the
Seller covenant with the Underwriter as follows:
(a) The Seller will promptly notify the Underwriter, and confirm the notice
in writing, (i) of any amendment to the Registration Statement; (ii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information; (iii)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation or threatening of any
proceedings for that purpose; and (iv) of the receipt by the Seller of any
notification with respect to the suspension of the qualification of the
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceedings for that purpose. The Seller will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) The Seller will give the Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (including any revised prospectus which the Seller
proposes for use by the Underwriter in connection with the offering of the
Certificates which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Underwriter with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and, unless required by law to do so, will not file any such
amendment or supplement or use any such prospectus to which the Underwriter or
counsel for the Underwriter shall reasonably object.
(c) The Seller will deliver to the Underwriter as many signed and as many
conformed copies of the Registration Statement as originally filed and of each
amendment thereto (in each case including exhibits filed therewith) as the
Underwriter may reasonably request.
(d) The Seller will furnish to the Underwriter, from time to time during
the period when the Prospectus is required to be delivered under the 1933 Act or
the Securities Exchange Act of 1934, as amended (the "1934 Act"), such number of
copies of the Prospectus (as amended or supplemented) as the Underwriter may
reasonably request for the purposes contemplated by the 1933 Act or the 1934 Act
or the respective applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary, in the
reasonable opinion of counsel for the Underwriter, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Seller
will forthwith amend or supplement the Prospectus (in form and substance
satisfactory to counsel for the Underwriter) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading, and the Seller will furnish to the Underwriter a
reasonable number of copies of such amendment or supplement.
(f) The Seller will endeavor, in cooperation with the Underwriter, to
qualify the Certificates for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Underwriter may designate; provided, however, that Seller shall not be obligated
to qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Certificates have been so
qualified, the Seller will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the date hereof.
(g) The Seller will file with the Commission such reports on Form SR as may
be required pursuant to Rule 463 under the 1933 Act.
(h) So long as any Certificates shall be outstanding, the Seller will
deliver to the Underwriter, as promptly as practicable, such information
concerning the Seller or the Certificates as the Underwriter may reasonably
request from time to time.
Section 4. PAYMENT OF EXPENSES. The Seller will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing (or other reproducing) and filing of the Registration Statement as
originally filed and of each amendment thereto (other than amendments relating
to the filing of Computational Materials pursuant to Section 10); (ii) the
reproducing of the Basic Documents; (iii) the preparation, printing, issuance
and delivery of the certificates for the DTC Certificates to the Underwriter;
(iv) the fees and disbursements of (A) the Underwriter's counsel, (B) KPMG Peat
Marwick, accountants for the Company and issuer of the comfort letter, (C) the
Trustee and its counsel and (D) DTC in connection with the book-entry
registration of the DTC Certificates; (v) the qualification of the Certificates
under state securities laws in accordance with the provisions of Section 3(f)
hereof, including filing fees and the fees and disbursements of counsel for the
Underwriter in connection therewith and in connection with the preparation of
the Blue Sky Survey; (vi) the printing (or other reproducing) and delivery to
the Underwriter of copies of the Registration Statement as originally filed and
of each amendment thereto, of each preliminary prospectus and of the Prospectus
and any amendments or supplements thereto; (vii) the fees charged by each of
Standard's & Poor's Rating Services. ("Standard's & Poor's"), Moody's Investors
Service, Inc. ("Moody's) and Duff & Phelps Credit Rating Co. ("Duff & Phelps")
for rating the Certificates; and (viii) the reproducing and delivery to the
Underwriter of copies of the Blue Sky Survey.
If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 5 or Section 9(a)(i), the Seller shall reimburse the
Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter.
Section 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of
the Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Company and the Seller herein contained, to the performance by
Seller of its obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective and, at Closing
Time, no stop order suspending the effectiveness of the Registration Statement
shall have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission. As of the Closing Time, the Prospectus shall have
been filed with the Commission in accordance with Rule 424 of the 1933 Act
Regulations.
(b) At Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of Closing Time,
of Stroock & Stroock & Lavan LLP, counsel for the Underwriter,
to the effect that:
(A) The Registration Statement is effective
under the 1933 Act, and, to the best of their
knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(B) At the time the Registration Statement
became effective and at the Representation Date, the
Registration Statement (other than the financial,
numerical, statistical and quantitative information
included therein, as to which no opinion need be
rendered) complied as to form in all material
respects with the requirements of the 1933 Act and
the Rules and Regulations thereunder.
(C) The information in the Prospectus under
"Description of the Certificates" and "The
Agreements" and the information in the Prospectus
Supplement under "Description of the Agreement and
the Certificates" insofar as they constitute
summaries of certain provisions of the Certificates
and the Pooling and Servicing Agreement, summarizes
fairly such provisions.
(D) The information in the Prospectus under
"Summary of Terms- Federal Income Tax Consequences,"
"Summary of Terms-ERISA Considerations," "Federal
Income Tax Consequences," "ERISA Considerations,"
"Legal Aspects of the SBA Loans," and "Risk
Factors-The Status of the SBA Loans in the Event of
Bankruptcy of an Originator" and in the Prospectus
Supplement under "Summary of Terms-Tax
Considerations," "Summary of Terms-ERISA
Considerations," "Federal Income Tax Consequences,"
and "ERISA Considerations," to the extent that they
constitute matters of federal, New York or California
law, summaries of legal matters, documents or
proceedings or legal conclusions, has been reviewed
by them and is correct in all material respects.
(E) TMSCMI has been duly organized and is
validly existing and is in good standing under the
law of its jurisdiction of incorporation.
(F) The Seller has the power to engage in
the transactions contemplated by this Agreement, the
Pooling and Servicing Agreement, the Pricing
Agreement, the Certificates and has all requisite
power, authority and legal right to execute and
deliver this Agreement, the Pooling and Servicing
Agreement, the Pricing Agreement, the Certificates
and, with respect to TMSCMI (and any other documents
delivered in connection therewith) and to perform and
observe the terms and conditions of such instruments.
(G) The Pooling and Servicing Agreement, the
Certificates, the Pricing Agreement and this
Agreement each have been duly authorized, executed
and delivered by the Seller. Assuming due
authorization, execution and delivery by the other
parties thereto, the Pooling and Servicing Agreement,
the Certificates, the Pricing Agreement and this
Agreement are legal, valid and binding agreements
enforceable in accordance with their respective terms
against the Seller, as the case may be, subject (a)
to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws relating
to or affecting creditors' rights generally and court
decisions with respect thereto, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any
proceeding, whether at law or in equity, and (c) to
limitations of public policy under applicable
securities laws as to rights of indemnity and
contribution thereunder.
(H) This Agreement and the Pooling and
Servicing Agreement have been duly authorized,
executed and delivered by the Company. Assuming due
authorization, execution and delivery by the other
parties thereto, this Agreement and the Pooling and
Servicing Agreement are legal, valid and binding
agreements enforceable in accordance with their terms
against the Company, subject (a) to the effect of
bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws relating to
or affecting creditors' rights generally, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any
proceeding, whether at law or in equity, and (c) to
limitations of public policy under applicable
securities laws as to rights of indemnity and
contribution thereunder.
(I) No consent, approval, authorization or
order of any court or governmental agency or body is
required for the execution, delivery and performance
by the Seller of, or compliance by the Seller with,
the Pooling and Servicing Agreement, the Pricing
Agreement and this Agreement, or the offer, issuance,
sale or delivery of the Certificates, or the
consummation of any other transactions by the Seller
contemplated by the Pooling and Servicing Agreement,
the Pricing Agreement and this Agreement, except as
may be required under the blue sky laws of any
jurisdiction (as to which such counsel need not
opine) and such other approvals as have been
obtained.
(J) Neither the consummation of the
transactions contemplated by, nor the fulfillment of
the terms of, the Pooling and Servicing Agreement,
the Pricing Agreement and this Agreement or the
Certificates, conflicts or will conflict with or
results or will result in a breach of or constitutes
or will constitute a default under (a) the
Certificate of Incorporation or Bylaws of the Seller,
(b) the terms of any material indenture or other
material agreement or instrument of which counsel
has knowledge to which the Seller is a party or by
which it is bound or to which it is subject or (c)
any statute or order, rule, regulation, writ,
injunction or decree of which counsel has knowledge
of any court, governmental authority or regulatory
body to which the Seller is subject or by which it
is bound.
(K) The sale of the Certificates and the
delivery of each Note and Mortgage as and in the
manner contemplated by the Underwriting Agreement and
the Pooling and Servicing Agreement is sufficient
fully to transfer to the Trustee for the benefit of
the Certificateholders all right, title and interest
of the Seller in and to the Business Loan, including,
without limitation, the right to enforce each such
Business Loan in accordance with its terms to the
extent enforceable by the Seller at the time of such
sale and delivery. With respect to the transfer of
the Business Loans by the Seller, such counsel need
express no opinion as to (i) whether the laws of the
State of New York would apply to the transfer of the
Business Loans or (ii) the effectiveness of the
transfer of the Business Loans under the laws of the
jurisdiction in which TMSCMI is located or the
jurisdiction in which the Business Loans were
originated or the right of the Trustee to enforce
such Business Loans.
(L) The Certificates, assuming due execution
by the Seller, due authorization by the Trustee, and
delivery and payment therefore pursuant to the
Underwriting Agreement, will be validly issued and
outstanding and entitled to the benefits of the
Pooling and Servicing Agreement.
(M) Assuming compliance with all provisions
of the Pooling and Servicing Agreement, for federal
income tax purposes, the Trust Fund will be
classified as a "grantor trust" and not as an
association taxable as a corporation. The "Spread"
(as defined in the Registration Statement) will be
treated as "Stripped Coupons" within the meaning of
Section 1286 of the Internal Revenue Code of 1986, as
amended (the "Code"). A portion of the interest
accrued on each Business Loan will be treated as a
"Stripped Coupon" purchased by the Class B and Class
M Certificateholders. Each Class A Certificateholder
will be treated as owning its pro rata percentage
interest in the principal of, and interest payable
on, each Business Loan (minus the portion of the
interest payable on such Business Loan that is
treated as Spread, as a Stripped Coupon retained by
the Servicer, or as a Stripped Coupon purchased by
the Class B and Class M Certificateholders) and such
interest in each Business Loan will be treated as a
"Stripped Bond" within the meaning of Section 1286 of
the Code. Each Class B and Class M Certificateholder
will be treated as owning its pro rata percentage
interest in the principal of each Business Loan, plus
a disproportionate share of the interest payable on
each Business Loan (not including the Spread).
Additionally, the Trust Fund will not be subject to
New York State income or franchise tax.
(N) Neither the qualification of the Pooling
and Servicing Agreement under the Trust Indenture Act
of 1939, as amended, nor the registration of the
Trust Fund created by such Agreement under the
Investment Company Act of 1940, as amended, is
presently required.
In rendering such opinion, Stroock & Stroock & Lavan
LLP may rely on certificates of responsible officers of the
Company, the Seller, the Trustee, and public officials or, as
to matters of law other than New York, California or Federal
law, on opinions of other counsel (copies of which opinions
shall be delivered to you).
(ii) The favorable opinion, dated as of Closing Time,
of corporate counsel for the Seller and the Company, in form
and substance satisfactory to counsel for the Underwriter, to
the effect that:
(A) Each of TMSCMI and the Company has been
duly organized and is validly existing and is in good
standing under the laws of the State of New Jersey.
(B) The Seller has the power to engage in
the transactions contemplated by this Agreement, the
Pooling and Servicing Agreement, the Pricing
Agreement and the Certificates and has all requisite
power, authority and legal right to execute and
deliver this Agreement, the Pooling and Servicing
Agreement, the Pricing Agreement and the Certificates
(and any other documents delivered in connection
therewith) and to perform and observe the terms and
conditions of such instruments.
(C) This Agreement, the Pooling and
Servicing Agreement, the Pricing Agreement and the
Certificates each have been duly authorized, executed
and delivered by the Seller and, assuming due
authorization, execution and delivery by the other
parties thereto, are legal, valid and binding
agreements of such Seller, as the case may be, and
assuming such agreements were governed by the laws of
the State of New Jersey, would be enforceable in
accordance with their respective terms against such
Seller, as the case may be, subject (a) to the effect
of bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors'
rights generally and court decisions with respect
thereto, (b) to the understanding that no opinion is
expressed as to the application of equitable
principles in any proceeding, whether at law or in
equity, and (c) to limitations of public policy under
applicable securities laws as to rights of indemnity
and contribution thereunder.
(D) Neither the consummation of the
transactions contemplated by, nor the fulfillment of
the terms of, this Agreement, the Pooling and
Servicing Agreement, the Pricing Agreement and the
Certificates, (A) conflicts or will conflict with or
results or will result in a breach of or constitutes
or will constitute a default under the Certificates
of Incorporation or Bylaws of the Seller, or the
terms of any material indenture or other material
agreement or instrument of which such counsel has
knowledge to which the Seller is a party or by which
it is bound or to which it is subject, or (B) results
in, or will result in the creation or imposition of
any lien or encumbrance upon the Trust Fund or upon
the related Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement,
or (C) any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental
authority or regulatory body to which the Seller is
subject or to which it is bound.
(E) Except as set forth in the Prospectus
Supplement, there is no action, suit, proceeding or
investigation pending or, to the best of such
counsel's knowledge, threatened against the Seller
which, in such counsel's judgment, either in any one
instance or in the aggregate, may result in any
material adverse change in the business, operation,
financial condition, properties or assets of the
Seller or in any material impairment of the right or
ability of the Seller to carry on its business
substantially as now conducted or result in any
material liability on the part of the Seller or which
would draw into question the validity of this
Agreement, the Pricing Agreement, the Certificates,
or the Pooling and Servicing Agreement, or of any
action taken or to be taken in connection with the
transactions contemplated thereby, or which would be
likely to impair materially the ability of the Seller
to perform under the terms of this Agreement, the
Pooling and Servicing Agreement, the Pricing
Agreement, the Certificates.
(F) No consent, approval, authorization or
order of any court or governmental agency or body is
required for the execution, delivery and performance
by the Seller of, or compliance by the Seller with,
this Agreement, the Pooling and Servicing Agreement,
the Pricing Agreement, the Certificates or the
consummation of the transactions contemplated
therein, except such as may be required under the
blue sky laws of any jurisdiction and such other
approvals as have been obtained.
(G) The delivery of each Business Loan as
and in the manner contemplated by the Pooling and
Servicing Agreement is sufficient fully to transfer
to the Trustee for the benefit of the
Certificateholders all right, title and interest of
the Seller in and to each such Business Loan
including, without limitation, the right to enforce
each such Business Loan in accordance with its terms
to the extent enforceable by the Seller at the time
of such delivery.
(iii) The favorable opinion, dated as of Closing
Time, of Winston & Strawn, counsel for the Trustee, in form
and substance satisfactory to counsel for the Underwriter.
(iv) The favorable opinion, dated as of Closing Time,
of Eric R. Elwin, Esq., counsel for the Company, relating to
the due organization, valid existence and good standing of the
Company, the corporate power and authority of the Company to
own its assets, conduct its business and perform its
obligations under this Agreement, the due execution and
binding nature of this Agreement and the non-contravention of
this Agreement with respect to the Company's organizational
documents, law, the Company's other agreements, all in
customary form.
In giving its opinion required by subsection (b)(1) of this Section,
Stroock & Stroock & Lavan LLP shall additionally state that nothing has come to
its attention that has caused it to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriter by the Company for use in connection with
the offering of the Certificates which differs from the Prospectus on file at
the Commission at the Representation Date, in which case at the time it is first
provided to the Underwriter for such use) or at Closing Time, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (other than the financial, numerical,
statistical and quantitative information contained therein as to which such
counsel need express no view).
(c) At Closing Time the Underwriter shall have received from Stroock &
Stroock & Lavan LLP, counsel for the Underwriter, a letter, dated as of Closing
Time, authorizing the Underwriter to rely upon each opinion delivered by Stroock
& Stroock & Lavan LLP to each of Standard's and Poor's, Moody's and Duff &
Phelps in connection with the issuance of the Certificates as though each such
opinion was addressed to the Underwriter and attaching a copy of each such
opinion.
(d) At Closing Time there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Seller and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Underwriter
shall have received a certificate signed by one or more duly authorized officers
of the Seller, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change; (ii) the representations and warranties in
Section 1(a) hereof are true and correct in all material respects with the same
force and effect as though expressly made at and as of Closing Time; (iii) the
Seller has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to Closing Time; and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission.
(e) At or prior to the delivery of the Prospectus Supplement, the
Underwriter shall have received from KPMG Peat Marwick a letter dated as of such
date and in form and substance satisfactory to the Underwriter, to the effect
that they have carried out certain specified procedures, not constituting an
audit, with respect to (i) certain amounts, percentages and financial
information relating to the Servicer's servicing portfolio which are included in
the Prospectus Supplement and which are specified by the Underwriter, and have
found such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of such Seller
identified in such letter and (ii) certain information regarding the Business
Loans and the Business Files which are specified by the Underwriter and
contained in the Prospectus Supplement and setting forth the results of such
specified procedures.
(f) At Closing Time, the Underwriter shall have received from the Trustee a
certificate signed by one or more duly authorized officers of the Trustee, dated
as of Closing Time, as to the due acceptance of the Pooling and Servicing
Agreement by the Trustee and the due authentication of the Certificates by the
Trustee and such other matters as the Underwriter shall request.
(g) At Closing Time, the Underwriter shall have received a certificate
signed by one or more duly authorized officers of the Seller, dated as of
Closing Time to the effect that:
(i) the representations and warranties of the Seller
in the Pooling and Servicing Agreement are true and correct in
all material respects at and on the Closing Date, with the
same effect as if made on the Closing Date;
(ii) the Seller has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied in connection with the sale and delivery of the
Certificates;
(iii) all statements and information contained in the
Prospectus Supplement under the captions "The Seller," "The
Business Loan Pool" and "The SBA Loan Program," are true and
accurate in all material respects and nothing has come to such
officer's attention that would lead him to believe that any of
the specified sections contains any untrue statement of a
material fact or omits to state any material fact necessary in
order to make the statements and information therein, in the
light of the circumstances under which they were made, not
misleading;
(iv) the information set forth in the Business Loan
Schedule required to be furnished pursuant to the Pooling and
Servicing Agreement is true and correct in all material
respects;
(v) the copies of the Charter and By-laws of the
Seller attached to such certificate are true and correct and,
are in full force and effect on the date thereof;
(vi) except as may otherwise be disclosed in the
Prospectus, there are no actions, suits or proceedings pending
(nor, to the best knowledge of such officers, are any actions,
suits or proceedings threatened), against or affecting the
Seller which if adversely determined, individually or in the
aggregate, would adversely affect the Seller's obligations
under the Pooling and Servicing Agreement, the Pricing
Agreement or this Agreement;
(vii) each person who, as an officer or
representative of the Seller signed (a) this Agreement, (b)
the Pooling and Servicing Agreement, (c) the Certificates
issued thereunder, (d) the Pricing Agreement or (e) any other
document delivered prior hereto or on the date hereof in
connection with the purchase described in this Agreement and
the Pooling and Servicing Agreement, was, at the respective
times of such signing and delivery, and is now duly elected or
appointed, qualified and acting as such officer or
representative;
(viii) except as otherwise set forth in the Pooling
and Servicing Agreement, each of the Business Loans referred
to in the Pooling and Servicing Agreement was originated by
the Seller;
(ix) a certified true copy of the resolutions of the
board of directors of the Seller with respect to the sale of
the Certificates subject to this Agreement and the Pooling and
Servicing Agreement, which resolutions have not been amended
and remain in full force and effect;
(x) The Seller has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied in connection with the issuance, sale and
delivery of the Business Loans and the Certificates;
(xi) all statements contained in the Prospectus with
respect to the Company and the Seller are true and accurate in
all material respects and nothing has come to such officer's
attention that would lead such officer to believe that the
Prospectus contains any untrue statement of a material fact or
omits to state any material fact;
(h) At Closing Time, the Class A Certificates shall have been rated "AAA"
by Standard's & Poor's, Aaa by Moody's and "AAA" by Duff & Phelps, the Class M
Certificates shall have been rated "A" by Standard's & Poor's, A2 by Moody's and
"A" by Duff & Phelps and the Class B Certificates shall have been rated "BBB" by
Standard's and Poor's, "Baa2" by Moody's and "BBB" by Duff & Phelps.
(i) At Closing Time, counsel for the Underwriter shall have been furnished
with such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and delivery of the Certificates as
herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Certificates as herein contemplated
shall be satisfactory in form and substance to the Underwriter and counsel for
the Underwriter.
(j) On or before the Closing Time the Seller shall have delivered to the
Trustee, to hold in trust for the benefit of the holders of the Certificates,
Business Loans with aggregate outstanding balances as of the Cut-Off Date of
$87,808,810.42.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriter by notice to the Seller at any time at or prior to Closing time, and
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
Section 6. INDEMNIFICATION.
(a) The Company and the Seller jointly and severally agree to indemnify
and hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any untrue statement or omission described in
clause (i) above, or any such alleged untrue statement or
omission, if such settlement is effected with the written
consent of the Seller; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the
reasonable fees and disbursements of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing
or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any untrue
statement or omission described in clause (i) above, or any
such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with the information referred to in clauses (x),
(y) and (z) of the immediately following paragraph; provided, further, such
indemnity with respect to the Prospectus or any preliminary prospectus shall not
inure to the benefit of the Underwriter (or person controlling such Underwriter)
from whom the person suffering any such loss, claim, damage or liability
purchased the Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus at or prior to the confirmation of the sale of
such Certificates to such person in any case where such delivery is required by
the 1933 Act and the untrue statement or omission of a material fact contained
in the Prospectus or any preliminary prospectus was corrected in the Prospectus.
(b) The Underwriter agrees to indemnify and hold harmless the Company and
the Seller their directors, each of the Company's and Seller's officers who
signed the Registration Statement, and each person, if any, who controls the
Company or either Seller within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, contained in (x) the second sentence of the fifth paragraph on the
second page which is located on the inside cover (discussing the risk of a lack
of secondary trading) of the Prospectus (or any amendment or supplement
thereto), (y) the second sentence under "Investment Considerations-Limited
Liquidity" of the Prospectus Supplement and (z) any Computational Materials,
except to the extent of any errors in the Computational Materials that are
caused by errors in the pool information provided by the Company to the
Underwriter.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have otherwise than under this Section
6. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them and/or other indemnified parties that are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses other than the reasonable costs of investigation subsequently
incurred in connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Seller jointly and severally, on the one hand, and the Underwriter, on the other
hand, shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Seller jointly and severally, on the one hand, and the
Underwriter, on the other hand, as incurred, in such proportions that the
Underwriter is responsible for that portion represented by the underwriting
discount on the cover page of the Prospectus bears to the initial public
offering price of the Certificates appearing thereon, (or, with respect to
Computational Materials furnished by the Underwriter, the excess of the
principal amount of the Certificates over the underwriting discount allocated to
such principal amount of Certificates); and the Company and the Seller shall be
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 7, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by the Underwriter and distributed to the public exceeds the amount
of any damages which the Underwriter has otherwise been required to pay in
respect of such losses, liabilities, claims, damages and expenses. For purposes
of this Section 7, each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as the Underwriter and each respective director of the Seller, each officer of
the Seller who signed the Registration Statement, and each respective person, if
any, who controls the Seller within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the Seller.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Company
and the Seller submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriter or any controlling person thereof, or by or on behalf of the Seller,
and shall survive delivery of the Certificates to the Underwriter.
Section 9. TERMINATION OF AGREEMENT.
(a) The Underwriter may terminate this Agreement, by notice to the Company
and the Seller, at any time at or prior to Closing Time (i) if there has been,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the Registration Statement or Prospectus, any
change, or any development involving a prospective change, in or affecting
particularly the business or properties of the Company or the Seller considered
as one entity which, in the Underwriter's reasonable judgment, materially
impairs the investment quality of the Certificates; (ii) if there has occurred
any suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such exchange or
by any governmental authority; (iii) if any banking moratorium has been declared
by Federal or New York authorities; or (iv) if there has occurred any outbreak
or escalation of major hostilities in which the United States of America is
involved, any declaration of war by Congress, or any other substantial national
or international calamity or emergency if, in the Underwriter's judgment, the
effects of any such outbreak, escalation, declaration, calamity, or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Certificates.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 10. COMPUTATIONAL MATERIALS. (a) It is understood that the
Underwriter may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Certificates, subject to the following conditions:
(i) The Underwriter shall comply with all applicable
laws and regulations in connection with the use of
Computational Materials including the No-Action Letter of May
20, 1994 issued by the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated
and Kidder Structured Asset Corporation, as made applicable to
other issuers and underwriters by the Commission in response
to the request of the Public Securities Association dated May
24, 1994, and the No-Action Letter of February 17, 1995 issued
by the Commission to the Public Securities Association
(collectively, the "Kidder/PSA Letters").
(ii) As used herein, "Computational Materials" shall
have the meaning given such term and the term "ABS Term
Sheets" in the Kidder/PSA Letters, but shall include only
those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of
the Underwriter.
(iii) The Underwriter shall provide the Company with
representative forms of all Computational Materials prior to
their first use, to the extent such forms have not previously
been approved by the Company for use by the Underwriter. The
Underwriter shall provide to the Company, for filing on Form
8-K as provided in Section 10(b), copies of all Computational
Materials that are to be filed with the Commission pursuant to
the Kidder/PSA Letters. The Underwriter may provide copies of
the foregoing in a consolidated or aggregated form. All
Computational Materials described in this subsection (a)(iii)
must be provided to the Company not later than 10:00 a.m. New
York time one business day before filing thereof is required
pursuant to the terms of this Agreement.
(iv) If the Underwriter does not provide any
Computational Materials to the Company pursuant to subsection
(a)(iii) above, the Underwriter shall be deemed to have
represented, as of the Closing Date, that it did not provide
any prospective investors with any information in written or
electronic form in connection with the offering of the
Certificates that is required to be filed with the Commission
in accordance with the Kidder/PSA Letters.
(v) In the event of any delay in the delivery by the
Underwriter to the Company of all Computational Materials
required to be delivered in accordance with subsection
(a)(iii) above, the Company shall have the right to delay the
release of the Prospectus to investors or to the Underwriter,
to delay the Closing Date and to take other appropriate
actions in each case as necessary in order to allow the
Company to comply with is agreement set forth in Section 10(b)
to file the Computational Materials by the time specified
therein.
(b) The Company shall file the Computational Materials (if any) provided to
it by the Underwriter under Section 10(a)(iii) with the Commission pursuant to a
Current Report on Form 8- K no later than 10:00 a.m. on the date required
pursuant to the Kidder/PSA Letters.
Section 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292, Attention: Len Blum; and notices to the
Company or any Seller shall be directed to it at 2840 Morris Avenue, Union, New
Jersey 07083, Attention: Executive Vice President.
Section 12. PARTIES. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriter, the Company, the
Seller and their respective successors. Nothing expressed or mentioned in this
Agreement or the Pricing Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriter, the Company, the
Originators and their respective successors and the controlling persons and
officers and directors referred to in Section 6 and 7 hereof and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the Underwriter, the Company, the Seller and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Certificates from the Underwriter
shall be deemed to be a successor by reason merely of such purchase. The Company
and the Seller shall be jointly and severally liable for all obligations
incurred under this Agreement and the Pricing Agreement.
Section 13. GOVERNING LAW AND TIME. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Unless otherwise set forth herein, specified times of day refer to New
York time.
Section 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Seller a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriter, the Seller and the Company in accordance with
its terms.
Very truly yours,
THE MONEY STORE COMMERCIAL MORTGAGE INC.
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
THE MONEY STORE INC.
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Brendan Keane
Name: Brendan Keane
Title: Vice President
<PAGE>
EXECUTION COPY
$90,000,000
THE MONEY STORE INC.
The Money Store Business Loan Backed Certificates
Series 1997-1, Class A, Class M, Class B
PRICING AGREEMENT
March 21, 1997
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated March 21, 1997 (the
"Underwriting Agreement"), relating to $90,000,000, aggregate principal amount
of The Money Store Business Loan Backed Certificates, Series 1997-1, Class A,
Class M and Class B (collectively, the "Certificates"). The initial principal
amount of Class A, Class M and Class B Certificates shall be $75,600,000,
$7,200,000 and $7,200,000, respectively.
Pursuant to Section 2 of the Underwriting Agreement, The Money Store
Commercial Mortgage Inc. (the "Seller") agrees with Prudential Securities
Incorporated (the "Underwriter") as follows:
1. The Initial Remittance Rates on the Class A Certificates,
Class M Certificates and Class B Certificates shall be 6.40%, 6.85% and
7.10%, respectively, per annum.
2. The Underwriter's discount shall equal 0.375%, 0.50% and
0.50% of the initial principal amount of the Class A, Class M and Class
B Certificates, respectively.
3. Each Class of Certificates will be offered for sale to the
public in negotiated transactions at prices to be determined at the
time of sale.
[remainder of page intentionally blank]
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Seller a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter and the Seller in accordance with its terms.
Very truly yours,
THE MONEY STORE COMMERCIAL MORTGAGE INC.
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Brendan Keane
Name: Brendan Keane
Title: Vice President
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of February 28, 1997
Marine Midland Bank
(Trustee)
and
THE MONEY STORE COMMERCIAL MORTGAGE INC.
(Seller and Servicer)
and
THE MONEY STORE INC.
(Representative and Provider of the Limited Guaranty)
The Money Store Business Loan Backed
Certificates, Series 1997-1, Class A, Class M and Class B
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND.......................II-1
Section 2.02 POSSESSION OF BUSINESS FILES............................II-1
Section 2.03 BOOKS AND RECORDS.......................................II-1
Section 2.04 DELIVERY OF BUSINESS LOAN DOCUMENTS.....................II-2
Section 2.05 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND;
CERTAIN SUBSTITUTIONS; CERTIFICATION BY
TRUSTEE...................................II-4
Section 2.06 [Intentionally Omitted].................................II-6
Section 2.07 AUTHENTICATION OF CERTIFICATES..........................II-6
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE........................II-7
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT
BUSINESS LOANS............................II-7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF THE SELLER...........................III-1
Section 3.02 INDIVIDUAL BUSINESS LOANS...............................III-4
Section 3.03 PURCHASE AND SUBSTITUTION OF DEFECTIVE LOANS............III-9
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES........................................IV-1
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE...................IV-1
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.......IV-4
Section 4.04 PERSONS DEEMED OWNERS...................................IV-4
ARTICLE V
ADMINISTRATION AND SERVICING OF BUSINESS LOANS
Section 5.01 DUTIES OF THE SERVICER..................................V-1
Section 5.02 LIQUIDATION OF BUSINESS LOANS...........................V-4
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST
ACCOUNTS; DEPOSITS IN PRINCIPAL AND
INTEREST ACCOUNTS.........................V-5
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND
INTEREST ACCOUNTS.........................V-7
Section 5.05 [Intentionally Omitted].................................V-8
Section 5.06 TRANSFER OF ACCOUNTS....................................V-8
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.........................V-9
Section 5.08 [Intentionally Omitted].................................V-9
Section 5.09 FIDELITY BOND ..........................................V-9
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION.......................V-10
Section 5.11 [Omitted.] ..........................................V-11
Section 5.12 COLLECTION OF CERTAIN BUSINESS LOAN PAYMENTS............V-11
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING THE BUSINESS LOANS..V-12
Section 5.14 SUPERIOR LIENS..........................................V-12
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNT;
DEPOSITS IN CERTIFICATE ACCOUNT; PERMITTED
WITHDRAW FROM WITHDRAWAL ACCOUNT...........VI-1
Section 6.02 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN
SPREAD ACCOUNT; PERMITTED WITHDRAWALS FROM
SPREAD ACCOUNT..............................VI-2
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNT; DEPOSITS IN
EXPENSE ACCOUNT; PERMITTED WITHDRAWALS FROM
EXPENSE ACCOUNT............................VI-4
Section 6.04 PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT....................................VI-5
Section 6.05 [Intentionally Omitted]..................................VI-7
Section 6.06 INVESTMENT OF ACCOUNTS...................................VI-7
Section 6.07 DISTRIBUTIONS............................................VI-8
Section 6.08 ALLOCATION OF REALIZED LOSSES............................VI-10
Section 6.09 STATEMENTS ...........................................VI-11
Section 6.10 ADVANCES BY THE SERVICER.................................VI-14
Section 6.11 COMPENSATING INTEREST....................................VI-15
Section 6.12 REPORTS OF FORECLOSURE AND ABANDONMENT...................VI-15
Section 6.13 LIMITED GUARANTY.........................................VI-16
Section 6.14 ALTERNATE CREDIT ENHANCEMENT.............................VI-17
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Omitted] ...........................................VII-1
Section 7.02 SATISFACTION OF MORTGAGES AND COLLATERAL AND
RELEASE OF BUSINESS FILES..................VII-1
Section 7.03 SERVICING COMPENSATION...................................VII-2
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE........................VII-3
Section 7.05 ANNUAL INDEPENDENT PUBLIC................................VII-3
Section 7.06 TRUSTEE'S RIGHT TO EXAMINE SERVICER RECORDS
AND AUDIT OPERATIONS.......................VII-4
Section 7.07 REPORTS TO THE TRUSTEE; PRINCIPAL AND
INTEREST ACCOUNT STATEMENTS................VII-4
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.....................................VIII-1
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.......................IX-1
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER...................IX-2
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS........IX-2
Section 9.04 SERVICER NOT TO RESIGN....................................IX-2
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT........................................X-1
Section 10.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.................X-3
Section 10.03 WAIVER OF DEFAULTS.......................................X-5
Section 10.04 CONTROL BY MAJORITY CERTIFICATEHOLDERS...................X-5
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION ............................................XI-1
Section 11.02 ACCOUNTING UPON TERMINATION OF SERVICER..................XI-2
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE........................................XII-1
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE....................XII-2
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR BUSINESS LOANS....XII-4
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.............................XII-4
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES...........................XII-4
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.....................XII-5
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE...................XII-6
Section 12.08 SUCCESSOR TRUSTEE........................................XII-7
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.......................XII-7
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE....................XII-8
Section 12.11 AUTHENTICATING AGENT.....................................XII-9
Section 12.12 TAX RETURNS AND REPORTS..................................XII-10
Section 12.13 PROTECTION OF TRUST FUND.................................XII-11
Section 12.14 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TRUSTEE....XII-12
ARTICLE XIII 1
MISCELLANEOUS PROVISIONS.............................................XIII-1
Section 13.01 ACTS OF CERTIFICATEHOLDERS.............................XIII-1
Section 13.01 ACTS OF CERTIFICATEHOLDERS.............................XIII-1
Section 13.02 AMENDMENT. ..........................................XIII-1
Section 13.03 RECORDATION OF AGREEMENT...............................XIII-2
Section 13.04 DURATION OF AGREEMENT..................................XIII-2
Section 13.05 GOVERNING LAW..........................................XIII-2
Section 13.06 NOTICES. ..........................................XIII-2
Section 13.07 SEVERABILITY OF PROVISIONS.............................XIII-3
Section 13.08 NO PARTNERSHIP.........................................XIII-3
Section 13.09 COUNTERPARTS...........................................XIII-3
Section 13.10 SUCCESSORS AND ASSIGNS.................................XIII-4
Section 13.11 HEADINGS. ..........................................XIII-4
Section 13.12 PAYING AGENT...........................................XIII-4
Section 13.13 NOTIFICATION TO RATING AGENCIES........................XIII-5
<PAGE>
EXHIBIT INDEX
EXHIBIT A Contents of Business File
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class M Certificate
EXHIBIT B-3 Form of Class B Certificate
EXHIBIT C Principal and Interest Account Letter Agreement
EXHIBIT D [Omitted]
EXHIBIT E [Omitted]
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F Initial Certification
EXHIBIT F-1 Interim Certification
EXHIBIT F-2 Final Certification
EXHIBIT G [Omitted]
EXHIBIT H Business Loan Schedule
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Liquidation Report
EXHIBIT K Form of Delinquency Report
EXHIBIT L Servicer's Monthly Computer Tape Format
<PAGE>
Agreement dated as of February 28, 1997, among Marine Midland Bank, as
trustee (the "Trustee"), The Money Store Inc., as Representative and Provider of
the Limited Guaranty (the "Representative"), and The Money Store Commercial
Mortgage Inc., as Seller (the "Seller") and as Servicer (the "Servicer"):
PRELIMINARY STATEMENT
The Seller, in the ordinary course of its business, originates loans in
conjunction with the SBA 504 Loan Program (such loans, the "SBA 504 Loans") and
the SBA ss.7(a) Loan Program (such loans, the "Section 7(a) Companion Loans"
and, together with the SBA 504 Loans, the "Business Loans") to businesses which
Business Loans are evidenced by the Business Notes in favor of the Seller.
To facilitate the sale of the Business Loans and the servicing of the
Business Loans by the Servicer, the Seller, the Servicer and the Representative
are entering into this Agreement with the Trustee. The Seller is transferring
the Business Loans to the Trustee for the benefit of the Certificateholders
under this Agreement, pursuant to which Certificates are being issued,
denominated on the face thereof as The Money Store Business Loan Backed
Certificates, Series 1997-1, Class A, Class M and Class B, representing in the
aggregate a 100% undivided beneficial ownership interest in the right to receive
the principal portion of the Business Loans together with interest thereon at
the then applicable Class Remittance Rates. The Business Loans have an aggregate
outstanding principal balance of $87,808,810.42 as of February 28, 1997 (the
"Cut-Off Date"), after application of payments received by the Seller on or
before such date.
The offering of the Class A, Class M and Class B Certificates will be
registered under the Securities Act of 1933, as amended, pursuant to a
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission by the Representative, on behalf of itself, the Seller and certain of
their affiliates. The Representative will be responsible for determining that
the issuance and offering of the Certificates complies with the provisions
hereof and of such Registration Statement and for making Guaranty Payments
pursuant to the terms of the Limited Guaranty. Except for such responsibility,
the Representative shall have no obligations or duties hereunder.
The parties hereto agree as follows:
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 Business Loan Backed Certificates,
Series 1997-1, Class A, Class M and Class B. Unless otherwise provided, all
calculations of interest pursuant to this Agreement including, but not limited
to, the Interest Distribution Amounts, are based on a 360-day year and twelve
30-day months.
ACCOUNT: The Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account established by the Trustee for the benefit of the
Certificateholders and the Expense Account established by the Trustee for the
benefit of the Trustee; and the Spread Account held by the Spread Account
Custodian. The Trustee's obligation to establish and maintain the Certificate
Account is not delegable.
ACCOUNT NUMBER: The number assigned to each Business Loan by the Seller, as
set forth in Exhibit H hereto.
ACTUAL LOSS AMOUNT: With respect to any Remittance Date, the excess, if any
of (i) the Realized Loss Amount for such Remittance Date over (ii) the Extra
Interest for such Remittance Date actually received and on deposit in the
Certificate Account.
ADDITION NOTICE: With respect to the transfer of Subsequent Business Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than three Business Days prior to the related Subsequent Transfer
Date, of the Seller's designation of Subsequent Business Loans to be sold to the
Trust Fund and the aggregate Principal Balance of such Subsequent Business
Loans.
ADJUSTED INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance Date
and each Class of Certificates, the product of (A) the aggregate amount of
interest payable with respect to each Business Loan in accordance with its
terms, net of the Servicing Fee, the Extra Interest and the Annual Expense
Escrow Amount allocable to such interest (plus, for the Remittance Dates
occurring in April, May and June 1997, any amounts transferred from the
Pre-Funding Account and the Capitalized Interest Account for such Remittance
Date to be applied as a payment of interest on the Certificates) and (B) a
fraction, the numerator of which is the amounts set forth in clauses (i) and
(ii) of the definition of Interest Distribution Amount for the related Class of
Certificates with respect to such Remittance Date, and the denominator of which
is the sum of the aggregate amounts set forth in clauses (i) and (ii) of the
definition of Interest Distribution Amount for all Classes of Certificates with
respect to such Remittance Date.
ADJUSTED BUSINESS LOAN REMITTANCE RATE: With respect to any Business Loan,
a percentage per annum equal to the sum of (i) the then applicable weighted
average Class Remittance Rates for each Class of Certificates and (ii) 0.06% per
annum, relating to the Annual Expense Escrow Amount.
ADJUSTMENT DATE: The first Business Day of each January, April, July and
October, commencing July 1, 1997.
AGGREGATE CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class A Aggregate Certificate Principal Balance less
the sum of (i) all amounts previously distributed to the Class A
Certificateholders in respect of principal and (ii) all Actual Loss Amounts
allocated to such Class of Certificates.
AGGREGATE CLASS B CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Aggregate Class B Certificate Principal Balance less
the sum of (i) all amounts previously distributed to the Class B
Certificateholders in respect of principal and (ii) all Actual Loss Amounts
allocated to such Class of Certificates.
AGGREGATE CLASS M CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Aggregate Class M Certificate Principal Balance less
the sum of (i) all amounts previously distributed to the Class M
Certificateholders in respect of principal and (ii) all Actual Loss Amounts
allocated to such Class of Certificates.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ALTERNATE CREDIT ENHANCEMENT: Credit enhancement obtained by The Money
Store Inc. in lieu of the Limited Guaranty pursuant to Section 6.14.
ANNUAL EXPENSE ESCROW AMOUNT: The product of 0.06% per annum and the Pool
Principal Balance, which is computed and payable on a monthly basis and
represents the estimated annual Trustee's fees and Trust Fund expenses.
ASSIGNMENT OF MORTGAGE: With respect to those Business Loans secured by a
Mortgaged Property, an assignment of the Mortgage, notice of transfer or
equivalent instrument sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the transfer of the
related Business Loan to the Trustee.
AUTHENTICATING AGENT: Initially, Marine Midland Bank and thereafter, any
successor appointed pursuant to Section 12.11.
AVAILABLE FUNDS: With respect to each Remittance Date, the sum of (i) all
amounts (excluding Extra Interest exceeding the Realized Loss Amount for such
Remittance Date) received from any source by the Servicer or any Subservicer
during the preceding calendar month with respect to principal and interest on
the Business Loans (net of the Servicing Fee), (ii) advances by the Servicer,
(iii) amounts to be transferred from the Pre-Funding Account and the Capitalized
Interest Account with respect to the Remittance Dates during the Funding Period
and (iv) amounts in the Spread Account. Notwithstanding the foregoing, for each
Remittance Date occurring after the Spread Account Trigger Date, the Available
Funds also shall include all Extra Interest received from any source by the
Servicer during the preceding calendar month.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of California, New York or New Jersey
are authorized or obligated by law or executive order to be closed.
BUSINESS FILE: As described in Exhibit A.
BUSINESS LOAN: An individual SBA 504 Loan or Section 7 (a) Companion Loan
which is transferred to the Trustee pursuant to this Agreement, together with
the rights and obligations of a holder thereof and payments thereon and proceeds
therefrom, the Business Loans originally subject to this Agreement being
identified on the Business Loan Schedule. Any loan which, although intended by
the parties hereto to have been, and which purportedly was, transferred and
assigned to the Trust Fund by the Seller (as indicated by the Business Loan
Schedule), in fact was not transferred and assigned to the Trust Fund for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.02(h) hereof with respect to the loan, shall
nevertheless be considered a "Business Loan" for all purposes of this Agreement.
BUSINESS LOAN INTEREST RATE: With respect to any date of determination, the
then applicable annual rate of interest borne by a Business Loan, pursuant to
its terms, which, as of the Cut- Off Date, is shown on the Business Loan
Schedule.
BUSINESS LOAN SCHEDULE: The schedule of Initial Business Loans listed on
Exhibit H attached hereto and delivered to the Trustee on the Closing Date, such
schedule identifying each Initial Business Loan by address of the related
premises, and the name of the Obligor and setting forth as to each Initial
Business Loan the following information: (i) the Principal Balance as of the
close of business on the Cut-Off Date, (ii) the Account Number, (iii) the
original principal amount of the Business Loan, (iv) the Initial Business Loan
date and original number of months to maturity, in months, (v) the Business Loan
Interest Rate, (vi) when the first Monthly Payment was due, (vii) the Monthly
Payment as of the Cut-Off Date, (viii) the remaining number of months to
maturity as of the Cut-Off Date, (ix) the margin which is added to the Prime
Rate to determine the Business Loan Interest Rate, and (x) the lifetime minimum
and maximum Business Loan Interest Rates, if applicable.
BUSINESS NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under a Business Loan.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance Dates in
April, May and June 1997, the excess, if any, of (i) 30 days' interest (or, with
respect to the Remittance Date in April 1997, the actual number of days from the
Closing Date to but not including such Remittance Date) calculated at the
weighted average Class Remittance Rates on the excess of (a) the Aggregate Class
A, Class M and Class B Certificate Principal Balances for such Remittance Date
over (b) the aggregate Principal Balances of the Business Loans for such
Remittance Date over (ii) any Pre-Funding Earnings to be transferred to the
Certificate Account on such Remittance Date pursuant to Section 6.04(d). With
respect to the Special Remittance Date, 10 days' interest calculated at the
weighted average Class Remittance Rates on the amount to be transferred on the
Special Remittance Date from the Pre-Funding Account to the Certificate Account
pursuant to Section 6.04(c).
CERTIFICATE: Any Class A, Class M or Class B Certificate executed by the
Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the form annexed hereto as Exhibits B-1, B-2 and B-3.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Servicer, any Subservicer
or any affiliate of any of them, shall be deemed not to be outstanding and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Certificates necessary to
effect any such consent, waiver, request or demand has been obtained.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, Marine Midland Bank, and thereafter, any
successor appointed pursuant to Section 4.02.
CLASS: With respect to any Certificate, a Class A, Class M or Class B
Certificate, as the case may be.
CLASS A CARRY-FORWARD AMOUNT: The aggregate amount, if any, by which (i)
the Class A Principal Distribution Amount with respect to any preceding
Remittance Date exceeded (ii) the amount of the actual principal distribution to
the Class A Certificates on such Remittance Date.
CLASS A CERTIFICATE: A Certificate denominated as a Class A Certificate.
CLASS A CERTIFICATEHOLDER: A holder of a Class A Certificate.
CLASS A PERCENTAGE: With respect to each Remittance Date, 84%, representing
the beneficial ownership interest of the Class A Certificates in the Trust Fund.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT; CLASS M PRINCIPAL DISTRIBUTION
AMOUNT AND CLASS B PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the Class A, Class M or Class B Percentage, as the case may be,
multiplied by the sum of, without duplication, (i) all payments and other
recoveries of principal of a Business Loan (net of amounts reimbursable to the
Servicer pursuant to this Agreement) received by the Servicer or any Subservicer
in the related Due Period (ii) the principal portion of any Business Loan
actually purchased by the Seller for breach of a representation and warranty or
other defect and actually received by the Trustee as of the related
Determination Date; (iii) any Substitution Adjustments deposited in the
Principal and Interest Account and transferred to the Certificate Account as of
the related Determination Date; (iv) the then outstanding Principal Balance of
any Business Loan which, during the related Due Period, has become a Liquidated
Business Loan; and (v) the amount, if any, released from the Pre-Funding Account
on the April, May and June Remittance Dates.
CLASS A REMITTANCE RATE: During the first two Interest Accrual Periods
6.40% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date (or, until the first Adjustment Date,
the Prime Rate in effect on the Closing Date) minus 2.10% per annum.
CLASS B CERTIFICATE: A Certificate denominated as a Class B Certificate.
CLASS B CERTIFICATEHOLDER: A holder of a Class B Certificate.
CLASS B PERCENTAGE: With respect to each Remittance Date, 8%, representing
the beneficial ownership interest of the Class B Certificates in the Trust Fund.
CLASS B REMITTANCE RATE: During the first two Interest Accrual Periods
7.10% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date (or, until the first Adjustment Date,
the Prime Rate in effect on the Closing Date) minus 1.40% per annum.
CLASS B SHORTFALL AMOUNT: Shall have the meaning set forth in Section
6.07(b).
CLASS M CARRY-FORWARD AMOUNT: With respect to each Remittance Date
occurring prior to the Remittance Date on which the Aggregate Class B
Certificate Principal Balance is reduced to zero, the aggregate amount, if any,
by which (i) the Class M Principal Distribution Amount with respect to any
preceding Remittance Date exceeded (ii) the amount of the actual principal
distribution to the Class M Certificates on such Remittance Date. With respect
to each Remittance Date occurring on and after the Remittance Date on which the
Aggregate Class B Certificate Principal Balance is reduced to zero, the Class M
Carry-Forward Amount will equal zero. However, the Class M Certificates shall
still be entitled to receive, to the extent Available Funds are sufficient, the
Class M Carry-Forward Amount that existed prior to the Remittance Date on which
the Aggregate Class B Certificate Principal Balance was reduced to zero.
CLASS M CERTIFICATE: A Certificate denominated as a Class M Certificate.
CLASS M CERTIFICATEHOLDER: A holder of a Class M Certificate.
CLASS M PERCENTAGE: With respect to each Remittance Date, 8%, representing
the beneficial ownership interests of the Class M Certificate in the Trust Fund.
CLASS M REMITTANCE RATE: During the first two Interest Accrual Periods
6.85% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date (or, until the first Adjustment Date,
the Prime Rate in effect on the Closing Date) minus 1.65% per annum.
CLASS REMITTANCE RATE: The Class A Remittance Rate, the Class B Remittance
Rate or the Class M Remittance Rate, as the context requires.
CLOSING DATE: March 27, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COLLATERAL: All items of property (including a Mortgaged Property), whether
real or personal, tangible or intangible, or otherwise, pledged by an Obligor or
others to the Seller (including guarantees on behalf of the Obligor) to secure
payment under a Business Loan.
COMMERCIAL PROPERTY: Real property (other than agricultural property or
Residential Property) that is generally used by the Obligor in the conduct of
its business.
COMPENSATING INTEREST: As defined in Section 6.11.
CUMULATIVE ACTUAL LOSS AMOUNT: As of any date of determination, the
aggregate Actual Loss Amount since the Closing Date.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the aggregate
amount of Realized Losses since the Closing Date.
CURTAILMENT: With respect to a Business 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 Business Loan in full, nor is intended to cure a
delinquency.
CUT-OFF DATE: February 28, 1997; provided, however, that for purposes of
determining characteristics of the Initial Business Loans, the Cut-Off Date for
those Initial Business Loans originated after February 28, 1997 shall be deemed
to be the date of the applicable Business Note.
DELETED BUSINESS LOAN: A Business Loan replaced by a Qualified Substitute
Business Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to the Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated A2 or better
by Moody's, A or better by Standard & Poor's, and A or better by Duff & Phelps
or P-1 by Moody's, A-1 by Standard & Poor's, and A1 by Duff & Phelps, and which
is either (i) a federal savings association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, or (iv) a
principal subsidiary of a bank holding company, in each case acting or
designated by the Servicer as the depository institution for the Principal and
Interest Account.
DETERMINATION DATE: That day of each month which is the third Business Day
prior to the 15th day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial institution
for which the Depository holds Certificates from time to time as a securities
depository.
DUE DATE: The day of the month on which the Monthly Payment is due from the
Obligor on a Business Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
DUFF & PHELPS: Duff & Phelps Credit Rating Co. or any successor thereto.
EVENT OF DEFAULT: As described in Section 10.01.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on a
Business 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
Business Loan, the excess, if any, of (a) the total Net Liquidation Proceeds,
over (b) the Principal Balance of such Business Loan as of the date such
Business Loan became a Liquidated Business Loan plus 30 days interest thereon at
the then applicable Adjusted Business Loan Remittance Rate; provided, however,
that such excess shall be reduced by the amount by which interest accrued on the
advance, if any, made by the Servicer at the related Business Loan Interest
Rate(s) exceeds interest accrued on such advance at the then applicable weighted
average Class Remittance Rates.
EXPENSE ACCOUNT: The expense account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
EXTRA INTEREST: With respect to each Business Loan, for each Remittance
Date the product of (i) the Principal Balance of such Business Loan for such
Remittance Date and (ii) one-twelfth of the applicable Extra Interest
Percentage.
EXTRA INTEREST PERCENTAGE: With respect to each Business Loan, the excess
of (i) the Business Loan Interest Rate that would be in effect for such Business
Loan as of the Cut-Off Date without giving effect to any applicable lifetime
floors or caps over (ii) the sum of the rates used in determining the Servicing
Fee and the Annual Expense Escrow Amount and 6.492% per annum (I.E., the initial
weighted average Class A, Class M and Class B Remittance Rates without giving
effect to any applicable lifetime floors or caps on the Business Loans), less
(iii) with respect to each Remittance Date commencing in June 1997, 0.25%.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor thereto.
FORECLOSED PROPERTY: As described in Section 5.10.
FORECLOSED PROPERTY DISPOSITION: The final sale of a Foreclosed Property
acquired in foreclosure or by deed in lieu of foreclosure. The proceeds of any
Foreclosed Property Disposition constitute part of the definition of Liquidation
Proceeds.
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) at the close of business on June 24, 1997.
GUARANTY PAYMENT: For any Remittance Date until the Aggregate Class B
Certificate Principal Balance is reduced to zero, an amount equal to the sum of
(i) the difference if any, between (A) the Adjusted Interest Distribution Amount
of the Class B Certificates for such Remittance Date and (B) the portion of the
Available Funds to be distributed to the Class B Certificates on such Remittance
Date pursuant to Section 6.07 (b) (iii) and (ii) the Actual Loss Amount, if any,
for such Remittance Date that is allocated to the Class B Certificates pursuant
to Section 6.08.
GUARANTOR: The Money Store Inc., its successors and assigns or any other
party obligated to make Guaranty Payments under the Limited Guaranty or any
other payments due under any Alternate Credit Enhancement.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Certificate.
INITIAL BUSINESS LOANS: The Business Loans listed on Exhibit H hereto and
delivered to the Trustee on the Closing Date.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any insurance
policy covering a Business Loan, Collateral or Foreclosed Property, including
but not limited to title, hazard, life, health and/or accident insurance
policies.
INTEREST ACCRUAL PERIOD: With respect to each Remittance Date, the period
commencing on the 15th day of the month preceding such Remittance Date and
ending on the 14th day of the month of such Remittance Date, commencing March
15, 1997.
INTEREST DISTRIBUTION AMOUNT: With respect to each Class of Certificates on
each Remittance Date, the sum of (i) the interest accrued for the related
Interest Accrual Period at the then applicable Class Remittance Rate on the
Aggregate Class A, Aggregate Class M or Aggregate Class B Certificate Principal
Balance, as the case may be, outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of any interest that the
Certificates of the respective Class were entitled to receive on a preceding
Remittance Date but did not receive plus interest thereon at the then applicable
Class Remittance Rate for the respective Class of Certificates compounded
monthly; provided, however, that on each Remittance Date the Interest
Distribution Amount for each Class of Certificates will be increased or
decreased, as the case may be, to equal the Adjusted Interest Distribution
Amount for such Class of Certificates for such Remittance Date.
LIMITED GUARANTY: The obligation of The Money Store Inc. to make Guaranty
Payments as set forth in Section 6.13.
LIQUIDATED BUSINESS LOAN: Any defaulted Business Loan or Foreclosed
Property as to which the Servicer has determined that all amounts which it
reasonably and in good faith expects to recover have been recovered from or on
account of such Business Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of any
Foreclosed Property Disposition, revenues received with respect to the
conservation and disposition of a Foreclosed Property, and any other amounts
received in connection with the liquidation of defaulted Business Loans, whether
through trustee's sale, foreclosure sale or otherwise.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Business Loan, the gross
amount of the loan divided by the total net collateral value (as determined by
the Seller in accordance with its underwriting criteria) of the primary and
secondary Collateral securing such loan.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A, Class M and
Class B Certificates evidencing an Aggregate Class A Certificate Principal
Balance, Aggregate Class M Certificate Principal Balance and Aggregate Class B
Certificate Principal Balance in excess of 50% of the Aggregate Class A
Certificate Principal Balance, Aggregate Class M Certificate Principal Balance
and Aggregate Class B Certificate Principal Balance.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section 6.10
hereof.
MONTHLY PAYMENT: The monthly payment of principal and/or interest required
to be made by an Obligor on the related Business Loan, as adjusted pursuant to
the terms of the related Business Note.
MOODY'S: Moody's Investors Service, Inc. or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
on a Mortgaged Property.
MORTGAGED PROPERTY: The underlying real property, if any, securing a
Business Loan, consisting of a Commercial Property or Residential Property and
any improvements thereon.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Obligor pursuant to
applicable law.
1933 ACT: The Securities Act of 1933, as amended.
OBLIGOR: The obligor on a Business Note.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed by the
Chairman of the Board, the President, an Executive Vice President, a Vice
President, an Assistant Vice President, the Treasurer, the Secretary, or one of
the Assistant Secretaries of the Seller or the Servicer as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Seller or Servicer, reasonably acceptable to the
Trustee and experienced in matters relating thereto.
ORIGINAL CLASS A CERTIFICATE PRINCIPAL BALANCE: $75,600,000.
ORIGINAL CLASS B CERTIFICATE PRINCIPAL BALANCE: $7,200,000.
ORIGINAL CLASS M CERTIFICATE PRINCIPAL BALANCE: $7,200,000.
ORIGINAL POOL PRINCIPAL BALANCE: $87,808,810.42
ORIGINAL PRE-FUNDED AMOUNT: $2,191,189.58, representing the amount
deposited in the Pre-Funding Account on the Closing Date.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer Date
occurring in April 1997, the difference between (i) three-months' interest on
the aggregate Principal Balances of the Subsequent Business Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the weighted
average Class Remittance Rates, and (ii) three-months' interest on the aggregate
Principal Balances of the Subsequent Business Loans acquired by the Trust Fund
on such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account monies are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in May 1997, the
difference between (i) two-months' interest on the aggregate Principal Balances
of the Subsequent Business Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class Remittance Rates, and
(ii) two-months' interest on the aggregate Principal Balances of the Subsequent
Business Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre- Funding Account monies are invested as of
such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in June 1997, the
difference between (i) one-month's interest on the aggregate Principal Balances
of the Subsequent Business Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class Remittance Rates, and
(ii) one-month's interest on the aggregate Principal Balances of the Subsequent
Business Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre- Funding Account monies are invested as of
such Subsequent Transfer Date.
PAYING AGENT: Initially, Marine Midland Bank, and thereafter, any other
Person that meets the eligibility standards for the Paying Agent specified in
Section 13.12 hereof and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.
PERCENTAGE INTEREST: With respect to a Class A, Class M or Class B
Certificate, the portion of the Trust Fund evidenced by such Class A, Class M or
Class B Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Class A, Class M or Class B Certificate and the
denominator of which is the Original Class A Certificate Principal Balance, the
Original Class M Certificate Principal Balance or the Original Class B
Certificate Principal Balance, as the case may be. The Certificates are issuable
only in the minimum Percentage Interest corresponding to a minimum denomination
of $1,000 and integral multiples of $1,000 in excess thereof, except for one
Certificate of each Class which may be issued in a different denomination to
equal the remainder of the Original Class A Certificate Principal Balance, the
Original Class M Certificate Principal Balance or the Original Class B
Certificate Principal Balance, as the case may be.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall include
the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States, FHA debentures, Federal Home Loan Bank
consolidated senior debt obligations, and FNMA senior debt obligations,
but excluding any of such securities whose terms do not provide for
payment of a fixed dollar amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated Prime-1 or better by Moody's, A-1+ or better
by Standard & Poor's and Duff 1+ or better by Duff & Phelps;
(iii) deposits of any bank or savings and loan association
which has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by
the BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan
association have been rated A3 or better by Moody's, AA or better by
Standard & Poor's and A or better by Duff & Phelps;
(iv) commercial paper (having original maturities of
not more than 365 days) rated Prime-1 or better by Moody's,
A-1+ or better by Standard & Poor's and Duff 1+ or better
by Duff & Phelps;
(v) debt obligations rated Aaa by Moody's, AAA by Duff &
Phelps (other than any such obligations that do not have a fixed par
value and/or whose terms do not promise a fixed dollar amount at
maturity or call date);
(vi) investments in money market funds rated Aaa by Moody's,
AAA by Standard & Poor's and Duff 1+ or by Duff & Phelps the assets of
which are invested solely in instruments described in clauses (i)-(v)
above;
(vii) guaranteed investment contracts or surety bonds
providing for the investment of funds in an account or insuring a
minimum rate of return on investments of such funds, which contract or
surety bond shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial
strength or claims paying ability are rated "Aaa" by Moody's,
"AAA" by Standard & Poor's and "AAA"
by Duff & Phelps; and
(b) provide that the Trustee may exercise all of
the rights of the Representative under such contract
or surety bond without the necessity of the taking of
any action by the Representative;
(viii) A repurchase agreement that satisfies the
following criteria:
(a) Must be between the Trustee and a dealer
bank or securities firm described in a. or b. below:
1. Primary dealers on the Federal Reserve
reporting dealer list which are rated
"Aa" or better by Moody's, "AA" or
better by Standard & Poor's and "AA" or
better by Duff & Phelps, or
2. Banks rated "Aa" or better by Moody's,
"AA" or better by Standard & Poor's and
"AA" or better by Duff & Phelps.
(b) The written repurchase agreement must
include the following:
1. Securities which are acceptable for the
transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the
full faith and credit of the
U.S. government (and FNMA &
FHLMC)
2. the term of the repurchase agreement
may be up to 60 days
3. the collateral must be delivered to the
Trustee or third party custodian acting
as agent for the Trustee by appropriate
book entries and confirmation
statements must have been delivered
before or simultaneous with
payment (perfection by possession of
certificated securities)
4. Valuation of collateral
A. The securities must be valued
weekly, marked-to-market at
current market price plus accrued
interest
i. The value of the collateral
must be equal to at least
104% of the amount of
cash transferred
by the Trustee or
custodian for the
Trustee to the
dealer bank or
security firm under the
repurchase agreement plus
accrued interest.
If the value of
securities held as
collateral slips
below 104% of the
value of the cash
transferred by the Trustee plus
accrued interest, then
additional cash and/or
acceptable securities must be
transferred. If, however, the
securities used as collateral
are FNMA or FHLMC, then the
value of collateral must equal
at least 105%; and
(ix) any other investment acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the Trustee prior
to any such investment.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
POOL PRINCIPAL BALANCE: The aggregate Principal Balances as of any date of
determination.
PRE-FUNDED AMOUNT: With respect to any date of determination, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance with
Section 6.04 hereof and maintained by the Trustee.
PRE-FUNDING EARNINGS: With respect to the Remittance Date in April 1997,
the actual investment earnings earned during the period from the Closing Date
through the Business Day immediately preceding the Determination Date in April
1997 (inclusive) on the Pre-Funded Amount. With respect to the Remittance Dates
in May and June 1997, the actual investment earnings earned during the period
from the Determination Date in April and May 1997, respectively, through the
Business Day immediately preceding the Determination Date in May and June 1997,
respectively (inclusive), on the Pre-Funded Amount.
PRIME RATE: With respect to any date of determination, the lowest prime
lending rate published in the Money Rate Section of THE WALL STREET JOURNAL.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Business Loan or related Foreclosed
Property, at any date of determination, (i) the principal balance of the
Business Loan outstanding as of the Cut-Off Date, 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 6.07 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 a Foreclosed Property to
the extent applied by the Servicer as recoveries of principal in accordance with
the provisions hereof, which were distributed pursuant to Section 6.07 on any
previous Remittance Date. The Principal Balance of any Liquidated Business Loan
or any Business Loan that has been paid off will equal $0.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Business Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Business
Loan in full.
PRIOR LIEN: With respect to any Business Loan secured by a lien on a
Mortgaged Property which is not a first priority lien, each mortgage loan
relating to the corresponding Mortgaged Property having a prior priority lien.
QUALIFIED SUBSTITUTE BUSINESS LOAN: A Business Loan or Business Loans
substituted for a Deleted Business Loan pursuant to Section 2.05 or 3.03 hereof,
which (i) has or have an Business Loan interest rate or rates of not less than
(and not more than two percentage points more than) the Business Loan Interest
Rate for the Deleted Business Loan, (ii) relates or relate to the same type of
Collateral as the Deleted Business Loan, (iii) matures or mature no later than
(and not more than one year earlier than) the Deleted Business 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 Business 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 as of such date of the Deleted
Business Loan, (vi) was originated under the same program type as the Deleted
Business Loan; and (vii) complies or comply as the date of substitution with
each representation and warranty set forth in Section 3.02.
RATING AGENCIES: Moody's, Standard & Poor's and Duff & Phelps.
RATING AGENCY CONDITION: With respect to any specified action, that each of
the Rating Agencies shall have notified the Servicer and the Trustee, orally or
in writing, that such action will not result in a reduction or withdrawal of the
rating assigned by the respective Rating Agency to each Class of Certificates.
REALIZED LOSS: With respect to each Liquidated Business Loan, an amount
(not less than zero or greater than the related outstanding Principal Balance as
of the date of the final liquidation thereof) equal to the outstanding Principal
Balance of the Business Loan as of the date of such liquidation, after giving
effect to the application of the Net Liquidation Proceeds relating to such
Liquidated Business Loan (such Net Liquidation Proceeds to be applied first to
principal and then to interest thereon).
REALIZED LOSS AMOUNT: With respect to any Remittance Date, the aggregate
Realized Losses for such Remittance Date.
RECORD DATE: With respect to any Remittance Date, the close of business on
the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, May 31, 1997.
REGISTRATION STATEMENT: The registration statement (File No. 333-20817)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Certificates, including the
Prospectus dated March 7, 1997 and the Prospectus Supplement dated March 27,
1997.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable to
the Servicer and/or the Seller with respect to (i) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (ii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iii) any other amounts reimbursable to the Servicer or
the Seller pursuant to this Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Business Loan secured by a
Mortgaged Property, proceeds received by the Servicer in connection with (a) a
taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the lien of the related Mortgage, whether by partial condemnation, sale or
otherwise, which are not released to the Obligor in accordance with applicable
law, the Servicer's customary Business loan servicing procedures and this
Agreement.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing in April
1997.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Representative hereunder.
RESIDENTIAL PROPERTY: Any one or more of the following, (i) single family
dwelling unit not attached in any way to another unit, (ii) row house, (iii)
two-family house, (iv) low-rise condominium, (v) planned unit development, (vi)
three- or four- family house, (vii) high-rise condominium, (viii) mixed use
building or (ix) manufactured home (as defined in FNMA/FHLMC Seller-Servicers'
Guide) to the extent that it constitutes real property in the state in which it
is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division, including any Vice President,
Assistant Vice President, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject. When
used with respect to the Seller, the President, any Vice President, Assistant
Vice President, or any Secretary or Assistant Secretary.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SBA: The United States Small Business Administration, an agency of the
United States Government.
SBA RULES AND REGULATIONS: The Small Business Act, as amended, codified at
15 U.S.C. 631 ET. SEQ., all rules and regulations promulgated from time to time
thereunder and the Loan Guaranty Agreement.
SBA 504 LOAN: A Business Loan originated by the Seller in conjunction with
the SBA 504 Loan Program.
SBA 504 LOAN PROGRAM: The program established by the SBA pursuant to Rule
504 of the SBA Rules and Regulations.
SBA SS. 7(A) LOAN: A loan originated pursuant to Section 7(a) of the SBA
Rules and Regulations.
SBA SS. 7(A) LOAN PROGRAM: A general business loan program established
under Section 7(a) of the Small Business Act of 1953.
SECTION 7(A) COMPANION LOAN: A Business Loan originated by the Seller in
conjunction with an affiliate of the Seller originating an SBA ss.7 (a) Loan to
the same Obligor.
SELLER: The Money Store Commercial Mortgage Inc., a New Jersey corporation,
and its successors and assigns.
SERIES: 1997-1.
SERVICER: The Money Store Commercial Mortgage Inc., a New Jersey
corporation, and its successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.09.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property or other Collateral, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Foreclosed Property, (iv) compliance with the
obligations under clause (iv) of Section 5.01(a) and Sections 5.02 and 5.07,
which Servicing Advances are reimbursable to the Servicer to the extent provided
in Section 5.04(b) and (v) in connection with the liquidation of a Business
Loan, expenditures relating to the purchase or maintenance of any Prior Lien
pursuant to Section 5.14, for all of which costs and expenses the Servicer is
entitled to reimbursement thereon up to a maximum rate per annum equal to the
related Business Loan Interest Rate, except that any amount of such interest
accrued at a rate in excess of the weighted average Class A, Class B and Class M
Remittance Rates with respect to the Remittance Date on or prior to which the
Net Liquidation Proceeds will be distributed shall be reimbursable only from
Excess Proceeds.
SERVICING FEE: As to each Business Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly from the amounts
received in respect of interest on such Business Loan, shall accrue at the rate
of 0.40% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on an
Business Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Business Loans whose name appears
on a list of servicing officers furnished to the Trustee by the Servicer, as
such list may from time to time be amended.
SPECIAL REMITTANCE DATE: June 25, 1997.
SPECIFIED SPREAD ACCOUNT REQUIREMENT: The maximum amount of Spread Balance
required to be on deposit at any time in the Spread Account which, with respect
to any Remittance Date up to and including the Spread Account Trigger Date,
shall be $0, and, with respect to any Remittance Date after the Spread Account
Trigger Date, shall be equal to 1.0% of the sum of (i) the Original Pool
Principal Balance and (ii) the aggregate Principal Balances of the Subsequent
Business Loans as of the applicable Cut-Off Date; provided, however, that the
Specified Spread Account Requirement shall not exceed the then current Aggregate
Class A, Aggregate Class M and Aggregate Class B Certificate Principal Balances.
SPREAD ACCOUNT: The Spread Account established and maintained by the Spread
Account Custodian for distribution in ccordance with the provisions of Section
6.02 hereof.
SPREAD ACCOUNT CUSTODIAN: Marine Midland Bank, in its capacity as Spread
Account Custodian or any successor thereto.
SPREAD ACCOUNT DEPOSITOR: TMS SBA Holdings, Inc., a wholly- owned
subsidiary of The Money Store Investment Corporation.
SPREAD ACCOUNT EXCESS: As defined in Section 6.02(b)(iii).
SPREAD ACCOUNT TRIGGER DATE: The date on which the Pool Principal Balance
first equals or is less than 20% of the sum of (i) the Original Pool Principal
Balance and (ii) the aggregate Principal Balances of the Subsequent Business
Loans as of the applicable Cut-Off Date.
SPREAD BALANCE: As of any date of determination, the sum of the aggregate
amount then on deposit in the Spread Account.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Business
Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT BUSINESS LOANS: The Business Loans sold to the Trust Fund
pursuant to Section 2.09, which shall be listed on the Schedule of Business
Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated as
of a Subsequent Transfer Date executed by the Trustee and the Seller, by which
Subsequent Business Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
STANDARD & POOR'S: Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies Inc., or any successor thereto.
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 Business
Loans as provided in Section 5.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the amount (if any) by which the aggregate
unguaranteed portions of the principal balances (after application of principal
payments received on or before the date of substitution) of any Qualified
Substitute Business Loans as of the date of substitution are less than the
aggregate of the Principal Balance of the related Deleted Business Loans.
TAX RETURN: The federal income tax return to be filed on behalf of the
Trust Fund together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Business Loans as from time to time are subject to this Agreement, together with
the Business Files relating thereto and all proceeds thereof, (ii) such assets
(including any Permitted Instruments) as from time to time are identified as
Foreclosed Property or are deposited in or constitute the Certificate Account,
(iii) the Trustee's rights under all insurance policies with respect to the
Business Loans required to be maintained pursuant to this Agreement and any
Insurance Proceeds, (iv) any Liquidation Proceeds and (v) any Released Mortgaged
Property Proceeds, including all earnings thereon and proceeds thereof and (vi)
all Guaranty Payments and other amounts received under the Limited Guaranty and
any Alternate Credit Enhancement. Amounts deposited in the Principal and
Interest Account, Spread Account, Pre-Funding Account and Capitalized Interest
Account and the Limited Guaranty and any Alternate Credit Enhancement shall not
constitute part of the Trust Fund.
TRUSTEE: Marine Midland Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S DOCUMENT FILE: The documents delivered pursuant to Section 2.04.
<PAGE>
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND.
(a) The Seller hereby sells, transfers, assigns, sets over and conveys to
the Trustee without recourse and for the benefit of the Certificateholders,
subject to the terms of this Agreement, all of the right, title and interest of
the Seller in and to the Initial Business Loans and all other assets included or
to be included in the Trust Fund.
(b) The rights of the Certificateholders to receive payments with respect
to the Business Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement.
Section 2.02 POSSESSION OF BUSINESS FILES.
(a) Upon the issuance of the Certificates, the ownership of each Business
Note, the Mortgage and the contents of the related Business File relating to the
Initial Business Loans is, and upon each Subsequent Transfer Date the ownership
of each Business Note, the Mortgage and the contents of the related Business
File relating to the applicable Subsequent Business Loans will be, vested in the
Trustee for the benefit of the Certificateholders.
(b) Pursuant to Section 2.04, with respect to the Initial Business Loans
the Seller has delivered or caused to be delivered, and, on each Subsequent
Transfer Date, the Seller will deliver or cause to be delivered, each Business
Note to the Trustee.
Section 2.03 BOOKS AND RECORDS.
The sale of each Business Loan shall be reflected on the Seller's balance
sheet and other financial statements as a sale of assets by the Seller and the
Seller shall respond to any third-party inquiry that such transfer is so
reflected as a sale. The Seller shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Business Loan which shall
be clearly marked to reflect the ownership of each Business Loan by the Trustee
for the benefit of the Certificateholders.
Section 2.04 DELIVERY OF BUSINESS LOAN DOCUMENTS.
The Seller, (i) contemporaneously with the delivery of this Agreement, has
delivered or caused to be delivered to the Trustee and (ii) on each Subsequent
Transfer Date, will deliver or cause to be delivered to the Trustee, each of the
following documents for each Initial Business Loan:
(a) The original Business Note, endorsed by means of an allonge as follows:
"Pay to the order of Marine Midland Bank, and its successors and assigns, as
trustee under that certain Pooling and Servicing Agreement dated as of February
28, 1997, for the benefit of the holders of The Money Store Business Loan Backed
Certificates, Series 1997-1, Class A, Class M and Class B, without recourse" and
signed, by facsimile or manual signature, in the name of the Seller by a
Responsible Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to the Seller, if the Seller
was not the originator;
(b) With respect to those Business Loans secured by Mortgaged Properties,
either: (i) the original Mortgage, with evidence of recording thereon, (ii) a
copy of the Mortgage certified as a true copy by a Responsible Officer of the
Seller where the original has been transmitted for recording until such time as
the original is returned by the public recording office or duly licensed title
or escrow officer or (iii) a copy of the Mortgage certified by the public
recording office in those instances where the original recorded Mortgage has
been lost;
(c) With respect to those Business Loans secured by Mortgaged Properties,
either: (i) the original Assignment of Mortgage from the Seller endorsed as
follows: "Marine Midland Bank, ("Assignee") its successors and assigns, as
trustee under the Pooling and Servicing Agreement dated as of February 28, 1997"
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 Business Loans secured by Mortgaged Properties located in the same county),
or (ii) a copy of such Assignment of Mortgage certified as a true copy by a
Responsible Officer of the Seller where the original has been transmitted for
recording (provided, HOWEVER, that where the original Assignment of Mortgage is
not being delivered to the Trustee, the 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 Seller);
(d) With respect to those Business Loans secured by Mortgaged Properties,
either: (i) originals of all intervening assignments, if any, showing a complete
chain of title from the originator to the Seller, including warehousing
assignments, with evidence of recording thereon if such assignments were
recorded, (ii) copies of any assignments certified as true copies by a
Responsible Officer of the Seller where the originals have been submitted for
recording until such time as the originals are returned by the public recording
officer, or (iii) copies of any assignments certified by the public recording
office in any instances where the original recorded assignments have been lost;
(e) With respect to those Business Loans secured by Mortgaged Properties,
either: (i) originals of all title insurance policies relating to the Mortgaged
Properties to the extent the Seller obtained such policies or (ii) copies of any
title insurance policies or other evidence of lien position, including but not
limited to PIRT policies, limited liability reports and lot book reports, to the
extent the Seller obtain such policies or other evidence of lien position,
certified as true by the Seller;
(f) For all Business Loans, blanket assignment of all Collateral securing
the Business Loan, including without limitation, all rights under applicable
guarantees and insurance policies;
(g) For all Business Loans, irrevocable power of attorney of the Seller to
the Trustee to execute, deliver, file or record and otherwise deal with the
Collateral for the Business Loans in accordance with this Agreement. The power
of attorney will be delegable by the Trustee to the Servicer and any successor
servicer and will permit the Trustee or its delegate to prepare, execute and
file or record UCC financing statements and notices to insurers; and
(h) For all Business Loans, blanket UCC-1 financing statements identifying
by type all Collateral for the Business Loans and naming the Trustee as Secured
Party and the Seller as the Debtor. The UCC-1 financing statements will be filed
promptly following the Closing Date in New Jersey and California and will be in
the nature of protective notice filings rather than true financing statements.
The Seller shall, within ten Business Days after the receipt thereof, and
in any event, within one year of the Closing Date (or, with respect to the
Subsequent Business Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Trustee: (i) the original
recorded Mortgage in those instances where a copy thereof certified by the
Seller was delivered to the Trustee; (ii) the original recorded Assignment of
Mortgage from the Seller to the Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Trustee in those instances where copies thereof certified by the Seller
were delivered to the Trustee; and (iii) any intervening assignments of Mortgage
in those instances where copies thereof certified by the Seller were delivered
to the Trustee. Notwithstanding anything to the contrary contained in this
Section 2.04, in those instances where the public recording office retains the
original Mortgage, Assignment of Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied their obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, Assignment of Mortgage or assignments of Mortgage certified by
the public recording office to be a true copy of the recorded original thereof.
All Business Loan documents held by the Trustee as to each Business Loan are
referred to herein as the "Trustee's Document File."
Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Business
Loans and other assets in the Trust Fund pursuant to this Agreement shall
constitute a purchase and sale and not a loan, in the event that such conveyance
is deemed to be a loan, it is the intent of the parties to this Agreement that
the Seller shall be deemed to have granted, and hereby does grant, to the
Trustee a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under the Business Loans and other assets
in the Trust Fund, and that this Agreement shall constitute a security agreement
under applicable law.
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
(a) The Trustee shall execute and deliver on the Closing Date (or, with
respect to the Subsequent Business Loans, on the related Subsequent Closing
Date), an acknowledgment of receipt in the form attached as Exhibit F hereto,
stating that it has received, for each Business Loan, a Business Note, and a
file, and declares that the Trustee will hold such documents and any amendments,
replacements or supplements thereto, for the benefit of the Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to review each
Trustee's Document File within 90 days after the Closing Date or Subsequent
Closing Date, as the case may be, (or, with respect to any Qualified Substitute
Business Loan, within 45 days after the assignment thereof), and to deliver to
the Certificateholders, the Seller, and the Servicer a certification in the form
attached hereto as Exhibit F-1. Within 360 days after the Closing Date (or, with
respect to any Qualified Substitute Business Loan, within 360 days after the
assignment thereof), the Trustee shall deliver to the Servicer, the Seller, each
Rating Agency and any Certificateholder who requests a copy from the Trustee a
final certification in the form attached hereto as Exhibit F-2 evidencing the
completeness of the Trustee's Document Files.
(b) If the Trustee, during the process of reviewing the Trustee's Document
Files finds any document constituting a part of a Trustee's Document File which
is not properly executed, has not been received, is unrelated to a Business Loan
identified in the Business 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 Business Loan Schedule, the Trustee shall promptly so notify the
Servicer and the Seller. In performing any such review, the Trustee may
conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the Business Files is limited solely to confirming that the
documents listed in Section 2.04 have been executed and received and relate to
the Business Loans identified in the Business Loan Schedule. The Seller agrees
to use reasonable efforts to remedy a material defect in a document constituting
part of a Business File of which it is so notified by the Trustee. If, however,
within 60 days after the Trustee's notice to it respecting such material defect
the Seller has not remedied the defect and such defect materially and adversely
affects the value of the related Business Loan, the Seller will (i) substitute
in lieu of such Business Loan a Qualified Substitute Business Loan in the manner
and subject to the conditions set forth in Section 3.03 or (ii) purchase such
Business Loan at a purchase price equal to the Principal Balance of such
Business Loan as of the date of purchase, plus 30 days' interest on such
Principal Balance, computed at the Adjusted Business Loan Remittance Rate as of
the next succeeding Determination Date, plus any accrued unpaid Servicing Fees,
Monthly Advances and Servicing Advances reimbursable to the Servicer, which
purchase price shall be deposited in the Principal and Interest Account on the
next succeeding Determination Date.
(c) Upon receipt by the Trustee of a certification of a Servicing Officer
of the Servicer of such purchase and the deposit of the amounts described above
in the Principal and Interest Account (which certification shall be in the form
of Exhibit I hereto), the Trustee shall release to the Servicer for release to
the Seller the related Trustee's Document File and the Trustee shall execute,
without recourse, and deliver such instruments of transfer necessary to transfer
such Business Loan to the Seller. All costs of any such transfer shall be borne
by the Servicer.
(d) If in connection with taking any action the Servicer requires any item
constituting part of the Trustee's Document File, or the release from the lien
of the related Business Loan of all or part of any Mortgaged Property or other
Collateral, the Servicer shall deliver to the Trustee a certificate to such
effect in the form attached as Exhibit I hereto. Upon receipt of such
certification, the Trustee shall deliver to the Servicer the requested
documentation and the Trustee shall execute, without recourse, and deliver such
instruments of transfer necessary to release all or the requested part of the
Mortgaged Property or other Collateral from the lien of the related Business
Loan.
On the Remittance Date in March of each year, the Trustee shall deliver to
the Seller and the Servicer a certification detailing all transactions with
respect to the Business Loans for which the Trustee holds a Trustee's Document
File pursuant to this Agreement during the prior calendar year. Such
certification shall list all Trustee's Document Files which were released by or
returned to the Trustee during the prior calendar year, the date of such release
or return and the reason for such release or return.
Section 2.06 [Intentionally Omitted]
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Business Loans and the
delivery to the Trustee of the Trustee's Document Files and, concurrently with
such delivery, has authenticated or caused to be authenticated and delivered to
or upon the order of the Seller, in exchange for the Business Loans, the
Trustee's Document Files and the other assets included in the definition of
Trust Fund, Certificates duly authenticated by the Trustee in authorized
denominations.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE.
The fees and expenses of the Trustee including (i) the annual fees of the
Trustee, payable quarterly in advance, and subject to rebate to the Servicer as
additional servicing compensation hereunder for any fraction of a calendar
quarter in which this Agreement terminates, (ii) any other fees and expenses to
which the Trustee is entitled, and (iii) reimbursements to the Servicer for any
advances made by the Servicer to the Expense Account pursuant to Section 6.03
hereof, shall be paid from the Expense Account in the manner set forth in
Section 6.03 hereof; PROVIDED, HOWEVER, that the Seller shall be liable for any
expenses of the Trust Fund incurred prior to the Closing Date. The Servicer and
the Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee, or the
Servicer, acting as attorney-in-fact for the Trustee, on behalf of the Trust
Fund shall expressly state therein that no Certificateholder shall be personally
liable in connection with such contract or agreement.
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT BUSINESS 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 Seller shall on any Subsequent Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Trustee all right, title and interest of the Seller in and to each
Subsequent Business Loan listed on the Business Loan Schedule delivered by the
Seller on such Subsequent Transfer Date, all its right, title and interest in
and to principal collected and interest accruing on each such Subsequent
Business Loan on and after the related Subsequent Cut-Off Date and all its
right, title and interest in and to all insurance policies; PROVIDED, HOWEVER,
that the Seller reserves and retains all its right, title and interest in and to
principal (including Principal Prepayments) collected and interest accruing on
each such Subsequent Business Loan prior to the related Subsequent Cut-Off Date.
The transfer by the Seller of the Subsequent Business Loans set forth on the
Business Loan Schedule to the Trustee shall be absolute and shall be intended by
all parties hereto to be treated as a sale by the Seller.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate Principal Balances as of the related Subsequent
Transfer Date of the Subsequent Business Loans so transferred.
(b) The Seller shall transfer to the Trustee the Subsequent Business Loans
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee
with a timely Addition Notice and shall have provided
any information reasonably requested by it with
respect to the Subsequent Business Loans;
(ii) the Seller shall have delivered to the Trustee a
duly executed written assignment (including an acceptance by
the Trustee) that shall include Business Loan Schedules,
listing the Subsequent Business Loans and any other exhibits
listed thereon;
(iii) the Seller shall have deposited in the
Principal and Interest Account all collections in respect of
the Subsequent Business Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of
the Seller, the Servicer or the Representative was
insolvent nor will any of them have been made
insolvent by such transfer nor is any of them aware
of any pending insolvency;
(v) such addition will not result in a material
adverse tax consequence to the Trust Fund or the
Holders of the Certificates;
(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Representative shall have delivered to the
Trustee an Officer's Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b)
and in the related Subsequent Transfer Agreement; and
(viii) the Representative shall have delivered to
the Rating Agencies and the Trustee, Opinions of
Counsel with respect to the transfer of the Subsequent
Business Loans substantially in the form of the
Opinions of Counsel delivered to the Trustee on the Closing
Date (bankruptcy, corporate and tax opinions).
(c) The obligation of the Trust Fund to purchase a Subsequent Business Loan
on any Subsequent Transfer Date is subject to the requirement, as evidenced by a
certificate from a Responsible Officer of the Representative, that such
Subsequent Business Loan conforms in all material respects to the
representations and warranties concerning the individual Initial Business 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 Business Loans being transferred
to the Trust Fund on such Subsequent Transfer Date will not change, in any
material respect, the characteristics of the Initial Business Loans, in the
aggregate, set forth in Sections 3.01 and 3.02 or in the Prospectus Supplement
dated March 25, 1997 forming a part of the Registration Statement under the
headings "Summary of Terms -- The Business Loan Pool" and "The Business Loan
Pool."
(d) In connection with the transfer and assignment of the Subsequent
Business Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the Remittance
Dates in April, May and June 1997 and the Special Remittance Date, the
Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirements, Overfunded Interest Amounts, and Pre-Funding
Earnings and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account. If any amounts are incorrectly released to the Representative from the
Capitalized Interest Account, the Representative shall immediately repay such
amounts to the Trustee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF THE SELLER.
The Seller hereby represents and warrants to the Trustee and the
Certificateholders as of the Closing Date:
(a) Such Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation and has
all licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by such Seller and perform its obligations hereunder; such Seller
has corporate power and authority to execute and deliver this Agreement and each
Subservicing Agreement and to perform in accordance herewith and therewith; the
execution, delivery and performance of this Agreement and each Subservicing
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement and each Subservicing Agreement) by such Seller and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action; this Agreement and
each Subservicing Agreement evidences the valid, binding and enforceable
obligation of such Seller; and all requisite corporate action has been taken by
such Seller to make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon such Seller in accordance with the respective terms
of each, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any proceeding, whether
at law or in equity, none of which will affect the ownership of the Business
Loans by the Trustee, as trustee.
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc., under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which such Seller makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by such Seller of the documents to
which it is a party, have been duly taken, given or obtained, as the case may
be, are in full force and effect on the date hereof, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and each Subservicing Agreement and
the other documents on the part of such Seller and the performance by such
Seller of its obligations under this Agreement and each Subservicing Agreement
and such of the other documents to which it is a party;
(c) The consummation of the transactions contemplated by this Agreement and
each Subservicing Agreement will not result in the breach of any terms or
provisions of the certificate of incorporation or by-laws of such Seller or
result in the breach of any term or provision of, or conflict with or constitute
a default under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other material
instrument to which such Seller or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to which such
Seller or its property is subject.
(d) Neither this Agreement or any Subservicing Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
and each Subservicing Agreement or in connection with the transactions
contemplated hereby and thereby contains any untrue statement of material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading;
(e) Such Seller does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement or any Subservicing Agreement;
(f) There is no action, suit, proceeding or investigation pending or, to
the best of such Seller's knowledge, threatened against such Seller which,
either in any one instance or in the aggregate, may (i) except as described in
the Registration Statement, result in any material adverse change in the
business, operations, financial condition, properties or assets of such Seller
or in any material impairment of the right or ability of such Seller to carry on
its business substantially as now conducted, or in any material liability on the
part of such Seller or of any action taken or to be taken in connection with the
obligations of such Seller contemplated herein, or which would be likely to
impair materially the ability of such Seller to perform under the terms of this
Agreement and each Subservicing Agreement or (ii) which would draw into question
the validity of this Agreement and each Subservicing Agreement or the Business
Loans;
(g) The Trust Fund will not constitute an "investment company" within the
meaning of such Act;
(h) Such Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of such
Seller or its properties or might have consequences that would materially and
adversely affect its performance hereunder;
(i) The statements contained in the Registration Statement which describe
such Seller or the Business Loans or matters or activities for which such Seller
is responsible in accordance with the Registration Statement, this Agreement and
all documents referred to therein or herein or delivered in connection therewith
or herewith, or which are attributable to such Seller therein or herein are true
and correct in all material respects, and the Registration Statement does not
contain any untrue statement of a material fact with respect to such Seller or
the Business Loans and does not omit to state a material fact necessary to make
the statements contained therein with respect to such Seller or the Business
Loans not misleading. Such Seller is not aware that the Registration Statement
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not misleading. There is
no fact peculiar to such Seller or the Business Loans and known to such Seller
that materially adversely affects or in the future may (so far as such Seller
can now reasonably foresee) materially adversely affect such Seller or the
Business Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement;
(j) No Certificateholder is subject to state licensing requirements solely
by virtue of holding the Certificates;
(k) The transfer, assignment and conveyance of the Business Notes and the
Mortgages by such Seller pursuant to this Agreement are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction and do not violate the SBA Rules and Regulations;
(l) The origination and collection practices used by such Seller with
respect to each Business Note and Mortgage relating to the Initial Business
Loans have been, and the origination and collection practices to be used by such
Seller with respect to each Business Note and Mortgage relating to the
Subsequent Business Loans will have been, in all material respects legal,
proper, prudent and customary in the business loan origination and servicing
business;
(m) Each Initial Business Loan was, and each Subsequent Business Loan will
be, selected from among the existing SBA 504 Loans and Section 7(a) Companion
Loans in such Seller's portfolio at the date hereof or, in the case of the
Subsequent Business Loans at the related Subsequent Cut-Off Date in a manner not
designed to adversely affect the Certificateholders;
(n) Such Seller received fair consideration and reasonably equivalent value
in exchange for the sale of the Business Loans evidenced by the Certificates;
(o) Neither such Seller nor any of its affiliates sold any interest in any
Business Loan evidenced by the Certificates with any intent to hinder, delay or
defraud any of their respective creditors;
(p) Such Seller is solvent, and such Seller will not be rendered insolvent
as a result of the transfer of the Business Loans to the Trust Fund or the sale
of the Certificates; and
(q) The chief executive office and legal name of the Seller is as set forth
on the respective UCC-1 financing statement filed on behalf of such Seller
pursuant to Section 2.04(h), such office is the place where such Seller is
"located" for the purposes of Section 9-103(3)(d) of the Uniform Commercial Code
as in effect in the State of New York, and neither the location of such office
nor the legal name of the Seller has changed in the past four months.
Section 3.02 INDIVIDUAL BUSINESS LOANS.
The Seller hereby represents and warrants to the Trustee, and the
Certificateholders, with respect to each Initial Business Loan as of the Closing
Date, and with respect to each Subsequent Business Loan, as of the related
Subsequent Transfer Date:
(a) The information with respect to each Business Loan set forth in the
Business Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee on the Closing Date or as otherwise provided in Section
2.04;
(c) Each Mortgaged Property is improved by a Commercial Property or a
Residential Property and does not constitute other than real property under
state law;
(d) Each Business Loan has been originated by the Seller and each Business
Loan is being serviced by the Servicer;
(e) Each Business Loan is an SBA 504 Loan or a Section 7(a) Companion Loan
and is secured by one or more items of Collateral;
(f) Each Business Note will, with respect to principal payments, adjust
quarterly and provide for a schedule of Monthly Payments which are, if timely
paid, sufficient to fully amortize the principal balance of such Business Note
on its maturity date;
(g) With respect to those Business Loans secured by a Mortgaged Property,
each Mortgage is a valid and subsisting lien of record on the Mortgaged Property
subject only to any applicable Prior Liens on such Mortgaged Property and
subject in all cases to such exceptions that are generally acceptable to banking
institutions in connection with their regular commercial lending activities, and
such other exceptions to which similar properties are commonly subject and which
do not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(h) Immediately prior to the transfer and assignment herein contemplated,
the Seller held good and indefeasible title to, and was the sole owner of, each
Business Loan conveyed by the Seller subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in Section 3.02(g) or other
liens which will be released simultaneously with such transfer and assignment;
and immediately upon the transfer and assignment herein contemplated, the
Trustee will hold good and indefeasible title, to, and be the sole owner of,
each Business Loan subject to no liens, charges, mortgages, encumbrances or
rights of others except as set forth in Section 3.02(g), or other liens which
will be released simultaneously with such transfer and assignment;
(i) As of the Cut-Off Date (or, with respect to any Subsequent Business
Loan, as of the related Subsequent Cut-Off Date) no Business Loan is 59 or more
days delinquent in payment;
(j) To the best of the Seller's knowledge, there is no delinquent tax or
assessment lien on any Mortgaged Property, and each Mortgaged Property is free
of material damage and is in good repair;
(k) The Business 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 Business Note or any related Mortgage, or the
exercise of any right thereunder, render either the Business Note or any related
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(l) Each Business Loan at the time it was made complied and, as of the
Closing Date, complies in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and, if applicable, the SBA Rules and
Regulations;
(m) The Business Loans were originated by the Seller in accordance with the
underwriting criteria set forth in the Registration Statement;
(n) The Seller requires that the improvements upon each Mortgaged Property
are covered by a valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage described in Section 5.07;
(o) The Seller requires that if a Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy is in effect with respect
to such Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in Section 5.07;
(p) Each Business Note, any related Mortgage and any other agreement
pursuant to which Collateral is pledged to a Seller is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), none of
which will prevent the ultimate realization of the security provided by the
Collateral or other agreement, and all parties to each Business Loan had full
legal capacity to execute all Business Loan documents and convey the estate
therein purported to be conveyed;
(q) The Servicer has caused and will cause to be performed any and all acts
reasonably required to be performed to preserve the rights and remedies of the
Trustee in any insurance policies applicable to the Business Loans including,
without limitation, in each case, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee or the Seller,
respectively;
(r) Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Seller (or, subject to Section 2.04 hereof, are in the process
of being recorded);
(s) Each Business Loan conforms, and all such Business Loans in the
aggregate conform, to the description thereof set forth in the Registration
Statement;
(t) The terms of the Business Note and the related Mortgage or other
security agreement pursuant to which Collateral was pledged have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Certificateholders and which has been delivered to the Trustee;
(u) There are no material defaults in complying with the terms of any
applicable Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable;
(v) There is no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Business Loan or the use
for which the premises were intended;
(w) Each Mortgaged Property which is the primary collateral for the related
Business Loan was, at the time of origination of such Business Loan, and to the
best of the Seller's knowledge, is, as of the Cut-off Date, free of
contamination from toxic substances or hazardous wastes or is subject to ongoing
environmental rehabilitation;
(x) The proceeds of the Business Loan have been fully disbursed, and there
is no obligation on the part of the Seller to make future advances thereunder.
Any and all requirements as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or closing
or recording the Business Loans were paid;
(y) There is no obligation on the part of the Seller or any other party
(except for any guarantor of a Business Loan) to make Monthly Payments in
addition to those made by the Obligor;
(z) No statement, report or other document signed by the Seller
constituting a part of the Business File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(aa) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Obligor;
(bb) No Business Loan has a shared appreciation feature, or other
contingent interest feature;
(cc) With respect to each Business Loan secured by a Mortgaged Property and
that is not a first mortgage loan, either (i) no consent for the Business Loan
is required by the holder of any related Prior Lien or (ii) such consent has
been obtained;
(dd) Each Business Loan was originated to a business located in the State
identified in the Business Loan Schedule;
(ee) All parties which have had any interest in the Business Loan, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein any
Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(ff) Any related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would materially
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(gg) There is no default, breach, violation or event of acceleration
existing under the Business 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 Seller have waived any default, breach, violation or event of
acceleration;
(hh) All parties to the Business Note and any related Mortgage or other
document pursuant to which Collateral was pledged had legal capacity to execute
the Business Note and any such Mortgage or other document and each Business Note
and Mortgage or other document have been duly and properly executed by such
parties;
(ii) The Business Loan was not selected for inclusion under this Agreement
from the Seller's portfolio of comparable loans on any basis which would have a
material adverse affect on a Certificateholder; and
(jj) All amounts received after the Cut-Off Date (or, with respect to the
Subsequent Business Loans, after the related Subsequent Cut-Off Date) with
respect to the Business Loans have been, to the extent required by this
Agreement, deposited into the Principal and Interest Account and are, as of the
Closing Date (or, with respect to the Subsequent Business Loans, as of the
related Subsequent Closing Date) in the Principal and Interest Account.
Section 3.03 PURCHASE AND SUBSTITUTION OF DEFECTIVE LOANS.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates to
the Certificateholders. Upon discovery by the Servicer, any Subservicer or the
Trustee of a breach of any of such representations and warranties which
materially and adversely affects the value of the Business Loans or the interest
of the Certificateholders therein or which materially and adversely affects the
interests of the Certificateholders in the related Business Loan in the case of
a representation and warranty relating to a particular Business Loan
(notwithstanding that such representation and warranty was made to the Seller's
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 Seller
shall (a) promptly cure such breach in all material respects, (b) purchase such
Business Loan by depositing in the Principal and Interest Account, on the next
succeeding Determination Date, an amount and in the manner specified in Section
2.05(b), or (c) if within two years of the Closing Date, remove such Business
Loan from the Trust Fund (in which case it shall become a Deleted Business Loan)
and substitute one or more Qualified Substitute Business Loans. Any such
substitution shall be accompanied by payment by the Seller of the Substitution
Adjustment, if any.
As to any Deleted Business Loan for which the Seller substitutes a
Qualified Substitute Business Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit I, executed by a Servicing Officer, and shall also deliver to
the Trustee, the documents constituting the Trustee's Document File for such
Qualified Substitute Business Loan or Loans.
The Servicer shall deposit in the Principal and Interest Account all
payments of principal received in connection with such Qualified Substitute
Business Loan or Loans after the date of such substitution together with all
interest (net of the Servicing Fee). Monthly Payments received with respect to
Qualified Substitute Business Loans on or before the date of substitution will
be retained by the Seller. The Trust Fund will own all payments received with
respect to the Deleted Business Loan on or before the date of substitution, and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Business Loan. The Servicer shall give
written notice to the Trustee that such substitution has taken place and shall
amend the Business Loan Schedule to reflect the removal of such Deleted Business
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Business Loan or Loans. Upon such substitution, such Qualified
Substitute Business Loan or Loans shall be subject to the terms of this
Agreement in all respects, including Sections 2.04 and 2.05, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Business
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 Seller will remit to the Servicer, and the Servicer will
deposit into the Principal and Interest Account an amount equal to the
Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in Section
2.05 and this Section 3.03, the Seller shall indemnify and hold harmless the
Trust Fund, the Trustee and the Certificateholders against any loss, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand, defense
or assertion based on or grounded upon, or resulting from, a breach of the
Seller's representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Seller set forth in Sections
2.05 and 3.03 to cure, purchase or substitute for a defective Business Loan and
to indemnify the Certificateholders and the Trustee as provided in Sections 2.05
and 3.03 constitute the sole remedies of the Trustee and the Certificateholders
respecting a breach of the foregoing representations and warranties.
Any cause of action against the Servicer or the Seller relating to or
arising out of the breach of any representations and warranties made in Sections
2.05, 3.01 or 3.02 shall accrue as to any Business Loan upon (i) discovery of
such breach by any party and notice thereof to the Seller and or notice thereof
by the Seller to the Trustee, (ii) failure by the Seller to cure such breach or
purchase or substitute such Business Loan as specified above, and (iii) demand
upon the Seller by the Trustee for all amounts payable hereunder in respect of
such Business Loan.
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
The Class A, Class M and Class B Certificates shall be substantially in the
forms annexed hereto as Exhibits B-1, B-2 and B-3, respectively, and shall, upon
original issue, be executed and delivered by the Servicer to the Trustee for
authentication and redelivery to or upon the order of the Seller, upon receipt
by the Trustee of the documents specified in Section 2.04. All Certificates
shall be executed on behalf of the Servicer by its President, one of its
Executive Vice Presidents, one of its Vice Presidents or one of its Assistant
Vice Presidents, in the denominations specified in the definition of Percentage
Interest, and shall be authenticated on behalf of the Trustee by one of its
Responsible Officers. Certificates bearing the signatures of individuals who
were at the time of the execution or authentication of the Certificates the
proper officers of the Servicer or a Responsible Officer of the Trustee, as the
case may be, shall bind the Servicer or the Trustee, as the case may be,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES
(a) The Trustee shall cause to be kept at the office of the Certificate
Registrar, in New York, New York, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series. Marine Midland Bank is initially
appointed Certificate Registrar for the purpose of registering Certificates and
transfer and exchanges of Certificates as herein provided.
(b) It is intended that the Certificates be registered so as to participate
in a global book-entry system with the Depository, as set forth herein. The
Class A Certificates shall initially be issued in the form of a single fully
registered Class A Certificate with an aggregate denomination equal to
$75,600,000. The Class M Certificate shall initially be issued in the form of a
single fully registered Class M Certificate with an aggregate denomination equal
to $7,200,000. The Class B Certificates shall initially be issued in the form of
a single fully registered Class B Certificate with an aggregate denomination
equal to $7,200,000. Upon initial issuance, the ownership of such Certificates
shall be registered in the Register in the name of Cede & Co., or any successor
thereto, as nominee for the Depository.
The Seller and the Trustee are hereby authorized to execute and deliver a
Letter of Representations with the Depository relating to the Certificates.
(c) With respect to Certificates registered in the Register in the name of
Cede & Co., as nominee of the Depository, the Seller, Servicer and the Trustee
shall have no responsibility or obligation to Direct or Indirect Participants or
beneficial owners for which the Depository holds Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Seller, Servicer and the Trustee shall have no responsibility or obligation with
respect to (a) the accuracy of the records of the Depository, Cede & Co., or any
Direct or Indirect Participant with respect to the ownership interest in the
Certificates, (b) the delivery to any Direct or Indirect Participant or any
other Person, other than a registered Holder of a Certificate, (c) the payment
to any Direct or Indirect Participant or any other Person, other than a
registered Holder of a Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Certificates or (d)
the making of book-entry transfers among Participants of the Depository with
respect to Certificates registered in the Register in the name of the nominee of
the Depository. No Person other than a registered Holder of a Certificate as
shown in the Register shall receive a certificate evidencing such Certificate.
(d) Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of distributions by the mailing of checks or drafts to the registered Holders of
Certificates appearing as registered Owners in the Certificate Register on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(e) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Certificates and the Servicer is unable to locate a qualified successor or (ii)
the Servicer at its sole option elects to terminate the book-entry system
through the Depository, the Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Servicer may determine that the
Certificates shall be registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be acceptable to the
Servicer, or such depository's agent or designee but, if the Servicer does not
select such alternative global book-entry system, then the Certificates may be
registered in whatever name or names registered Holders of Certificates
transferring Certificates shall designate, in accordance with the provisions
hereof.
(f) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Certificates are registered in the name of Cede & Co., as nominee
of the Depository, all distributions of principal and interest on such
Certificates and all notices with respect to such Certificates shall be made and
given, respectively, in the manner provided in the Letter of Representations.
(g) No transfer of a Class A, Class M or Class B Certificate or
Certificates or any interest therein shall be made to any Employee Benefit Plan
or other retirement plan or arrangement which is subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended, and/or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code"), or any entity
whose underlying assets include plan assets by reason of such plan or account
investing in such entity (including insurance company separate or general
accounts and collective investment funds).
(h) Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at the office of the Certificate Registrar, the
Servicer shall execute in the name of the designated transferee or transferees,
a new Certificate of the same Percentage Interest and dated the date of
authentication by the Trustee. The Certificate Registrar shall notify the
Servicer and the Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations of a like Class and aggregate
Percentage Interest, upon surrender of the Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Servicer
shall execute the Certificates which the Certificateholder making the exchange
is entitled to receive. Every Certificate presented or surrendered for transfer
or exchange shall be accompanied by wiring instructions, if applicable, in the
form of Exhibit E(1).
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment by the
transferor of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be marked
canceled by the Authenticating Agent and retained for one year and destroyed
thereafter.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which, in the case of an insurance company, shall be
limited to a letter of indemnity) as may be required by each of them to save
each of them harmless, then, in the absence of notice to the Servicer, the
Trustee and the Certificate Registrar that such Certificate has been acquired by
a bona fide purchaser, the Servicer shall execute and deliver, and the Trustee
shall authenticate, in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like Class, tenor and
Percentage Interest, but bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section 4.03, the Servicer
and the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Seller, the Trustee, the Paying Agent and the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 6.07 and for all other purposes whatsoever, and the Seller, the
Servicer, the Trustee and the Certificate Registrar shall not be affected by
notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF BUSINESS LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) The Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of the Trust Fund and
that, in such capacity, it shall: (i) prepare and file, or cause to be prepared
and filed, in a timely manner, any Tax Return required to be filed by the Trust
Fund; (ii) prepare and forward, or cause to be prepared and forwarded, to the
Trustee, the Certificateholders and to the Internal Revenue Service and any
other relevant governmental taxing authority all information returns or reports
as and when required to be provided to them in accordance with any provision of
federal, state or local income tax laws; (iii) to the extent that the affairs of
the Trust Fund are within its control, conduct such affairs at all times that
any Certificates are outstanding so as to maintain the status of the Trust Fund
as a grantor trust under any applicable federal, state and local laws; (iv) pay
the amount of any and all federal, state, and local taxes, imposed on the Trust
Fund when and as the same shall be due and payable (but such obligation shall
not prevent the Servicer or any other appropriate Person from contesting any
such tax in appropriate proceedings and shall not prevent the Servicer from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (v) ensure that any such returns or reports filed on behalf
of the Trust Fund are properly executed by the appropriate person; and (vi)
represent the Trust Fund in any administrative or judicial proceedings relating
to an examination or audit by any governmental taxing authority, request an
administrative adjustment as to any taxable year of the Trust Fund, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any item of the Trust Fund and otherwise act on behalf
of the Trust Fund in relation to any tax matter involving the Trust Fund. The
Servicer shall indemnify the Trustee and the Trust Fund for any liability it may
incur in connection with this Section 5.01(a), which indemnification shall
survive the termination of the Trust Fund; PROVIDED, HOWEVER, that the Servicer
shall not indemnify the Trustee for the Trustee's negligence or willful
misconduct.
(b) The Servicer, as independent contract servicer, shall service and
administer the Business 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 Business 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 a net worth of at least $5,000,000 or (y) is an affiliate of the Servicer.
Any such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Business Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee and the
Certificateholders for the servicing and administering of the Business 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 Business Loans. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Business
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 Business 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 Business 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 Business Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Obligor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Certificateholders, PROVIDED, HOWEVER, that (unless (x) the Obligor is in
default with respect to the Business Loan, or such default is, in the judgment
of the Servicer, imminent and (y) the Servicer determines that any modification
would not be considered a new loan for federal income tax purposes) the Servicer
may not permit any modification with respect to any Business Loan that would
change the Business Loan Interest Rate, defer (subject to Section 5.12), or
forgive the payment of any principal or interest (unless in connection with the
liquidation of the related Business Loan), or extend the final maturity date on
such Business 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 Business Loan.
Without limiting the generality of the foregoing, the Servicer shall continue,
and is hereby authorized and empowered to execute and deliver on behalf of the
Trustee and each Certificateholder, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Business Loans and with respect to any
Mortgaged Properties or other Collateral. If reasonably required by the
Servicer, each Certificateholder and/or the Trustee shall furnish the Servicer,
within 5 Business Days of receipt of the Servicer's request, with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement. Any such
request to the Trustee shall be accompanied by a certification in the form of
Exhibit I attached hereto signed by a Servicing Officer.
The Servicer, in servicing and administering the Business Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
Foreclosed Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering business loans
for its own account, giving due consideration to the Certificateholders'
reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of, or
notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 9.04, after
receipt of the Opinion of Counsel required pursuant to Section 9.04 addressed to
the Trustee, the Trustee or its designee shall assume all of the rights and
obligations of the Servicer, subject to Section 10.02 hereof. The Servicer
shall, upon request of the Trustee but at the expense of the Servicer, deliver
to the Trustee all documents and records (including computer tapes and
diskettes) relating to the Business Loans and an accounting of amounts collected
and held by the Servicer and otherwise use its best efforts to effect the
orderly and efficient transfer of servicing rights and obligations to the
assuming party.
Section 5.02 LIQUIDATION OF BUSINESS LOANS.
In the event that any payment due under any Business Loan and not postponed
pursuant to Section 5.01 is not paid when the same becomes due and payable, or
in the event the Obligor fails to perform any other covenant or obligation under
the Business Loan, the Servicer shall take such action as it shall deem to be in
the best interests of the Certificateholders. The Servicer shall foreclose upon
or otherwise comparably effect the ownership in the name of the Trustee of
Mortgaged Properties or other Collateral relating to defaulted Business Loans
for which the related Business Loan is still outstanding, as to which no
satisfactory arrangements can be made for collection of delinquent payments in
accordance with the provisions of Section 5.10. In connection with such
foreclosure or other conversion, the Servicer shall exercise collection and
foreclosure procedures with the same degree of care and skill in its exercise or
use as it would exercise or use under the circumstances in the conduct of its
own affairs. Any amounts advanced in connection with such foreclosure or other
action shall constitute "Servicing Advances." The Servicer shall take into
account the existence of any hazardous substances, hazardous wastes or solid
wastes on Mortgaged Properties in determining whether to foreclose upon or
otherwise comparably convert the ownership of such Mortgaged Property, and will
not foreclose on a Mortgaged Property where it has cause to believe such
substances exist unless it has received a Phase I environmental report and such
report reveals no environmental problems, or such Mortgaged Property is subject
to an environmental rehabilitation for which the Seller is not responsible.
After a Business Loan has become a Liquidated Business Loan, the Servicer
shall promptly prepare and forward to the Trustee and upon request, any
Certificateholder, a Liquidation Report, in the form attached hereto as Exhibit
J, detailing the Liquidation Proceeds received from the Liquidated Business
Loan, expenses incurred with respect thereto, and any loss incurred in
connection therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS; DEPOSITS IN
PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts, in one or more Designated Depository
Institutions, 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
Commercial Mortgage Inc., in trust for the registered holders of The Money Store
Business Loan Backed Certificates, Series 1997-1, Class A, Class M and Class B."
Such Principal and Interest Accounts shall be insured by the BIF or SAIF
administered by the FDIC to the maximum extent provided by law. The creation of
any Principal and Interest Account shall be evidenced by a letter agreement in
the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee and, upon
request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without duplication
(within two Business Days of receipt thereof) in the Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date
on account of principal on the Business Loans,
including all Excess Payments, Principal Prepayments
and Curtailments collected after the Cut-Off Date;
(ii) all payments received after the Cut-Off Date
on account of interest on the Business Loans (net of
the Servicing Fee with respect to each Business Loan and other
servicing compensation payable to the Servicer as permitted
herein);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds (other than amounts
to be applied to restoration or repair of any related
Mortgaged Property, or to be released to the Obligor
in accordance with customary servicing procedures);
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts paid in connection with the
repurchase of any Business Loan and the amount of any
Substitution Adjustment received pursuant to
Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section
5.04 or 5.10; and
(viii) the amount of any losses incurred in
connection with investments in Permitted Instruments.
(c) The foregoing requirements for deposit in the Principal and Interest
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments with respect to the Servicing
Fee (to the extent received and permitted by Section 7.03), with respect to each
Business Loan, together with the difference between any Liquidation Proceeds and
the related Net Liquidation Proceeds, need not be deposited by the Servicer in
the Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the Principal and Interest Account
by the Servicer immediately following its monthly remittance to the Trustee
pursuant to Section 5.04(a). Any reference herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST ACCOUNT
The Servicer shall withdraw funds from the Principal and Interest Account
for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date for
deposit in the Certificate Account, the portion of the Available Funds and the
Extra Interest for the related Remittance Date that is net of Compensating
Interest and the Monthly Advances (and, with respect to the Determination Dates
occurring during the Funding Period, net of amounts then on deposit in the
Pre-Funding Account and the Capitalized Interest Account);
(b) to reimburse itself for any accrued unpaid Servicing Fees, unreimbursed
Monthly Advances and for unreimbursed Servicing Advances to the extent deposited
in the Principal and Interest Account (and not netted from Monthly Payments
received). The Servicer's right to reimbursement for unpaid Servicing Fees and,
except as provided in the following sentence, Servicing Advances and Monthly
Advances shall be limited to Liquidation Proceeds, Released Mortgaged Property
Proceeds, Insurance Proceeds and such other amounts as may be collected by the
Servicer from the Obligor or otherwise relating to the Business 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
Business Loans generally, including Liquidation Proceeds, Released Mortgaged
Property Proceeds, Insurance Proceeds and any other amounts; PROVIDED, HOWEVER,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the Certificateholders and may be exercised only if
the Spread Balance equals the then applicable Specified Spread Account
Requirements;
(c) to withdraw any amount received from an Obligor that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay to
itself, as permitted by Section 5.03(d), interest paid in respect of Permitted
Instruments or by a Designated Depository Institution on funds deposited in the
Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and Interest Account
that were not required to be deposited therein or were deposited therein in
error;
(f) to pay itself servicing compensation pursuant to Section 7.03 hereof or
interest as permitted under the definition of Excess Proceeds; and
(g) to clear and terminate the Principal and Interest Account upon the
termination of this Agreement.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained with a Designated Depository
Institution as an interest-bearing account meeting the requirements set forth in
Section 5.03(a), or the funds held therein may be invested by the Servicer (to
the extent practicable) in Permitted Instruments, as directed in writing by the
Servicer. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store
Commercial Mortgage Inc., in trust for the registered holders of The Money Store
Business Loan Backed Certificates, Series 1997-1." All interest or other
earnings from funds on deposit in the Principal and Interest Account (or any
Permitted Instruments thereof) shall be the exclusive property of the Servicer,
and may be withdrawn from the Principal and Interest Account pursuant to clause
(d) above. The amount of any losses incurred in connection with the investment
of funds in the Principal and Interest Account in Permitted Instruments shall be
deposited in the Principal and Interest Account by the Servicer from its own
funds immediately as realized without reimbursement therefor.
Section 5.05 [Intentionally Omitted]
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written notice to the Trustee, transfer any
Principal and Interest Account to a different Designated Depository Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall comply with the customary servicing procedures
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of a Business Loan, to the best of the Servicer's knowledge
after reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
if it maintains flood insurance, the Servicer will require the related Obligor
to purchase a flood insurance policy with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of (i) the
full insurable value of the Mortgaged Property, or (ii) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended.
The Servicer shall also maintain, to the extent such insurance is available, and
in accordance with the Servicer's policies, on Foreclosed Property constituting
real property, fire and hazard insurance in the amounts described above and
liability insurance. Any amounts collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
Mortgaged Property, or to be released to the Obligor in accordance with
applicable law) shall be deposited in the Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Obligor or maintained on Foreclosed Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer or
its affiliates.
Section 5.08 [Intentionally Omitted]
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000,and a maximum deductible of $100,000, if
commercially available, with coverage on all employees acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Business Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, its officers and employees against losses resulting from forgery,
theft, embezzlement or fraud by such Servicer Employees. The errors and
omissions policy shall insure against losses resulting from the errors,
omissions and negligent acts of such Servicer employees. No provision of this
Section 5.09 requiring such fidelity bond and errors and omissions insurance
shall relieve the Servicer from its duties as set forth in this Agreement. Upon
the request of the Trustee or any Certificateholder, the Servicer shall cause to
be delivered to the Trustee or such Certificateholder a certified true copy of
such fidelity bond and insurance policy. The current issuer of such fidelity
bond and insurance policy is National Union Fire Insurance Company of
Pittsburgh, Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSED PROPERTY
In the event that title to a Mortgaged Property is acquired in foreclosure
or by deed in lieu of foreclosure (a "Foreclosed Property"), the deed or
certificate of sale may be taken in the name of the Trustee for the benefit of
the Certificateholders.
The Servicer, subject to Sections 5.01 and 5.02 hereof, shall manage,
conserve, protect and operate each Foreclosed Property for the
Certificateholders solely for the purpose of its prudent and prompt disposition
and sale. The Servicer shall, either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the Foreclosed Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the Foreclosed Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the
Certificateholders.
The Servicer shall cause to be deposited in the Principal and Interest
Account, no later than five Business Days after the receipt thereof, all
revenues received with respect to the conservation and disposition of the
related Foreclosed Property net of Servicing Advances.
The disposition of Foreclosed Property shall be carried out by the Servicer
at such price, and upon such terms and conditions, as the Servicer, deems to be
in the best interest of the Certificateholders. The proceeds of sale of the
Foreclosed Property shall promptly, but in no event later than two Business Days
after receipt, be deposited in the Principal and Interest Account as received
from time to time and, as soon as practicable thereafter, the expenses of such
sale shall be paid, the Servicer shall, subject to Section 5.04, reimburse
itself for any related unreimbursed Servicing Advances, unpaid Servicing Fees
and unreimbursed Monthly Advances, and the Servicer shall deposit in the
Principal and Interest Account the net cash proceeds of such sale to be
distributed to the Certificateholders in accordance with Section 6.07 hereof.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Business Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer and the Trustee shall have received an Opinion
of Counsel with respect to such longer retention.
Section 5.11 [Intentionally Omitted.]
Section 5.12 COLLECTION OF CERTAIN BUSINESS LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Business 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 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 Business
Note for a period (with respect to each payment as to which the due date is
extended) not greater than 180 days after the initially scheduled due date for
such payment provided that the Servicer determines such extension would not be
considered a new mortgage loan for federal income tax purposes. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Business 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
BUSINESS LOANS.
The Servicer shall provide to the Trustee, access to the documentation
regarding the Business Loans required by applicable local, state and federal
regulations, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Servicer
designated by it.
Section 5.14 SUPERIOR LIENS.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by a Prior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust Fund, whatever actions are necessary to protect the interests of the
Certificateholders, and/or to preserve the security of the related Business
Loan. The Servicer shall immediately notify the Trustee and each of the Rating
Agencies of any such action or circumstances. The Servicer will advance the
necessary funds to cure the default or reinstate the superior lien, if such
advance is in the best interests Certificateholders. The Servicer shall
thereafter take such action as is necessary to recover the amount so advanced.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNT; DEPOSITS IN CERTIFICATE
ACCOUNT; PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself in its trust department a trust account, which shall not be
interest-bearing, titled "Certificate Account, Marine Midland Bank, as trustee
for the registered holders of The Money Store Business Loan Backed Certificates,
Series 1997-1, Class A, Class M and Class B" (the "Certificate Account"). The
Trustee shall, promptly upon receipt, deposit in the Certificate Account and
retain therein:
(i) the Available Funds (net of the amount of
Monthly Advances and Compensating Interest deposited
pursuant to subclause (ii) below) and the Extra
Interest remitted by the Servicer;
(ii) the Compensating Interest and the portion of
the Monthly Advance remitted to the Trustee by the
Servicer;
(iii) Guaranty Payments or any amounts received
from any Alternate Credit Enhancement pursuant to
Sections 6.13 and 6.14;
(iv) amounts transferred from the Spread Account
pursuant to Section 6.02(b)(i);
(v) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses
on investments of amounts in the Certificate Account;
and
(vi) amounts transferred from the Pre-Funding Account
and the Capitalized Interest Account on the Special Remittance
Date pursuant to Sections 6.04(c) and (h), respectively.
(b) Amounts on deposit in the Certificate Account shall be withdrawn on
each Remittance Date by the Trustee, or the Paying Agent, on its behalf, to
effect the distribution described in Section 6.07(b) and thereafter by the
following parties in no particular order of priority:
(i) by the Trustee, to invest amounts on deposit
in the Certificate Account in Permitted Instruments
pursuant to Section 6.06;
(ii) the Trustee, to pay on a monthly basis to
the Servicer as additional servicing compensation
interest paid and earnings realized on Permitted
Instruments;
(iii) by the Trustee, to withdraw any amount not
required to be deposited in the Certificate Account
or deposited therein in error; and
(iv) by the Trustee, to clear and terminate the
Certificate Account upon the termination of this
Agreement in accordance with the terms of Section 11.01
hereof.
Section 6.02 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD ACCOUNT;
PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish with the
Spread Account Custodian an Account for the benefit of the
Certificateholders (the "Spread Account"). The Spread Account shall be the
property of the Spread Account Depositor, subject to the terms hereof, and the
funds held therein may be invested in Permitted Instruments. The Spread Account
shall not constitute part of the Trust Fund. No amounts shall be required to be
deposited into the Spread Account until the first Remittance Date following the
Spread Account Trigger Date. The Trustee or the Spread Account Custodian, as the
case may be, shall, promptly upon receipt, deposit into the Spread Account or,
in the case of the Trustee, transfer to the Spread Account Custodian for deposit
in the Spread Account:
(i) on each Remittance Date after the Spread Account
Trigger Date, that portion of the Available Funds, if any,
required to be deposited into the Spread Account pursuant to
Section 6.07(b)(ix) until the Spread Balance equals the then
applicable Specified Spread Account Requirement; and
(ii) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on
investments of amounts in the Spread Account.
(b) Amounts on deposit in the Spread Account shall be withdrawn by the
Spread Account Custodian and transferred to the Trustee for distribution in the
manner set forth in subclause (c) below on each Remittance Date in the following
order of priority:
(i) to deposit in the Certificate Account an amount
by which (a) the sum of the Class A, Class M and Class B
Interest Distribution Amounts, the Class A, Class M and Class
B Principal Distribution Amounts and the Class A and Class M
Carry Forward Amounts exceeds (b) the Available Funds for such
Remittance Date, less the amount of any Guaranty Payments or
Payments under any Alternate Credit Enhancement received for
such Remittance Date.
(ii) to deposit in the Certificate Account the
amount, if any, required to make the full distribution
to the Expense Account pursuant to Section
6.07(b)(vii); and
(iii) to the extent that the amount then on deposit
in the Spread Account after giving effect to all required
transfers from the Spread Account to the Certificate Account
on such Remittance Date then exceeds the Specified Spread
Account Requirement as of such Remittance Date (such excess,
a "Spread Account Excess"), an amount equal to such Spread
Account Excess shall be distributed by the Spread Account
Custodian to the Spread Account Depositor;
and also, in no particular order of priority:
(iv) to invest amounts on deposit in the Spread
Account in Permitted Instruments pursuant to Section
6.06;
(v) to withdraw any amount not required to be
deposited in the Spread Account or deposited therein
in error; and
(vi) to clear and terminate the Spread Account
upon the termination of this Agreement in accordance
with the terms of Section 11.01.
(c) Any amounts which are required to be withdrawn from the Spread Account
pursuant to paragraph (b) above shall be withdrawn from the Spread Account in
the following order of priority: (i) FIRST, from any uninvested funds therein,
and (ii) SECOND, from the proceeds of the liquidation of any investments therein
pursuant to Section 6.06(b).
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNT; DEPOSITS IN EXPENSE ACCOUNT;
PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNT
(a) No later than the Closing Date, the Trustee will establish with itself
an account for the benefit of the Trustee to pay its fees and expenses related
to the Trust Fund (the "Expense Account"). The Expense Account shall not
constitute part of the Trust Fund and is for the benefit of the Trustee and, on
a subordinate basis, for the benefit of the Servicer as described in (b)(ii) and
(c) below. The Trustee shall deposit into the Expense Account:
(i) on each Remittance Date from the amounts on
deposit in the Certificate Account an amount equal to
one-twelfth of the Annual Expense Escrow Amount; and
(ii) upon receipt, amounts required to be paid by
the Servicer pursuant to Section 6.06(e) in
connection with losses on investments of amounts in
the Expense Account.
If, at any time the amount then on deposit in the Expense Account shall be
insufficient to pay in full the fees and expenses of the Trustee then due, the
Trustee shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount. Thereafter,
the Servicer shall be entitled to reimbursement from the Expense Account for the
amount of any such advance from any excess funds available pursuant to subclause
(c)(ii) below. Without limiting the obligation of the Servicer to advance such
insufficiency, in the event the Servicer does not advance the full amount of
such insufficiency by the Business Day immediately preceding the Determination
Date, the amount of such insufficiency shall be deposited into the Expense
Account for payment to the Trustee pursuant to Section 6.07(b)(v), to the extent
of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account in
Permitted Instruments pursuant to Section 6.06 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee's fees and expenses as
described in Section 2.08 hereof;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and
earnings realized on Permitted Instruments;
(iii) withdraw any amounts not required to be
deposited in the Expense Account or deposited therein
in error; and
(iv) clear and terminate the Expense Account upon
the termination of this Agreement in accordance with
the terms of Section 11.01.
(c) On the twelfth Remittance Date following the Closing Date, and on each
twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Seller,
for reimbursable advances made pursuant to Section
9.01;
(ii) reimburse the Servicer for advances made by
it pursuant to the last paragraph of subclause (a)
above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in the Expense Account
after payments made pursuant to subclauses (b)(i), (b)(ii),
(b)(iii), (c)(i) and (c)(ii), above.
Section 6.04 PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT
(a) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "The Money Store Business Loan Pre-Funding
Account 1997-1" (the "Pre-Funding Account"). The Pre-Funding Account shall not
constitute part of the Trust Fund. The Representative shall be deemed the owner
of the Pre-Funding Account for Federal income tax purposes. The Trustee shall,
promptly upon receipt, deposit into the Pre-Funding Account and retain therein
the Original Pre- Funded Amount from the proceeds of the sale of the
Certificates.
(b) On each Subsequent Transfer Date, the Representative shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Business 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.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
such amounts in the Certificate Account. However, if at the close of business on
June 24, 1997, amounts still remain in the Pre-Funding Account, the Servicer
shall instruct the Trustee to withdraw from the Pre- Funding Account on the
Special Remittance Date and deposit in the Certificate Account any Pre-Funded
Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in April, May and June 1997, the
Trustee shall transfer from the Pre-Funding Account to the Certificate Account,
the Pre-Funding Earnings, if any, applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "The Money Store Business Loan Capitalized
Interest Account 1997-1" (the "Capitalized Interest Account"). The Capitalized
Interest Account shall not constitute part of the Trust Fund. The Representative
shall be deemed the owner of the Capitalized Interest Account for Federal income
tax purposes. The Trustee shall, promptly upon receipt, deposit into the
Capitalized Interest Account $21,868.07. If prior to the end of the Funding
Period the funds on deposit in the Pre-Funding Account are invested in a
guaranteed investment contract, repurchase agreement or other arrangement
acceptable to the Rating Agencies, that constitutes a Permitted Instrument, the
Trustee shall, within one Business Day of its receipt of notification of
satisfaction of the Rating Agency Condition, withdraw from the Capitalized
Interest Account and pay to the Representative the amount set forth in such
notification.
(f) On each Subsequent Transfer Date the Representative may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Representative the Overfunded Interest Amount
for such Subsequent Transfer Date, as calculated by the Representative pursuant
to Section 2.09(e) hereof.
(g) On the Remittance Dates occurring in April, May and June 1997, the
Trustee shall transfer from the Capitalized Interest Account to the Certificate
Account, the Capitalized Interest Requirement, if any, for such Remittance
Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Special Remittance Date. Any amounts remaining in
the Capitalized Interest Account after taking into account such transfer shall
be paid on such Special Remittance Date to the Representative, and the
Capitalized Interest Account shall be closed.
Section 6.05 [Intentionally Omitted]
Section 6.06 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account which is not by the terms of this Agreement to be held uninvested
shall be invested and reinvested by the Trustee or the Spread Account Custodian,
as directed in writing by the Servicer, in one or more Permitted Instruments in
the name of the Trustee, bearing interest or sold at a discount. No such
investment in the Certificate Account, the Pre-Funding Account, the Capitalized
Interest Account and the Spread Account shall mature later than the Business Day
immediately preceding the next Remittance Date and no such investment in the
Expense Account shall mature later than the Business Day immediately preceding
the date such funds will be needed to pay fees or premiums; PROVIDED, HOWEVER,
the Trustee or any affiliate thereof, may be the obligor on any investment which
otherwise qualifies as a Permitted Instrument and any investment on which the
Trustee is the obligor may mature on such Remittance Date or date when needed,
as the case may be.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee or the Spread Account Custodian and sufficient uninvested funds are not
available to make such disbursement, the Trustee or the Spread Account Custodian
shall cause to be sold or otherwise converted to cash a sufficient amount of the
investments in such Account. Neither the Trustee nor the Spread Account
Custodian shall be liable for any investment loss or other charge resulting
therefrom.
(c) Subject to Section 12.01 hereof, neither the Trustee nor the Spread
Account Custodian shall in any way be held liable by reason of any insufficiency
in any Account held by the Trustee or the Spread Account Custodian resulting
from any investment loss on any Permitted Instrument included therein (except to
the extent that the Trustee is the obligor thereon).
(d) The Trustee and the Spread Account Custodian shall invest and reinvest
funds in the Accounts held by the Trustee or the Spread Account Custodian to the
fullest extent practicable, in such manner as the Servicer shall from time to
time direct in writing, but only in one or more Permitted Instruments.
(e) All income or other gain from investments in any Account held by the
Trustee or the Spread Account Custodian shall be deposited in such Account,
immediately on receipt, and the Trustee or the Spread Account Custodian shall
notify the Servicer of any loss resulting from such investments. The Servicer
shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee or the Spread Account Custodian for
deposit in the Account from which the related funds were withdrawn for
investment by the next Determination Date following receipt by the Servicer of
such notice.
Section 6.07 DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement.
(b) On each Remittance Date the Trustee shall withdraw from the Certificate
Account the sum of (A) that portion of the Available Funds and the Extra
Interest received from the Servicer pursuant to Section 6.01(a)(i), (ii) and
(iv), and (B) the amounts, if any, of Guaranty Payments or payments relating to
Alternate Credit Enhancement received pursuant to Section 6.01(a) (iii), and (C)
the amounts, if any, received from the Spread Account pursuant to Section
6.02(b)(i) and make distributions thereof in the following order of priority
(provided, however, that Guaranty Payments may be distributed only pursuant to
clauses (iii) and (vi) below and any Extra Interest exceeding the Realized Loss
Amount may be distributed only pursuant to clauses (ix), (x) and (xi) below):
(i) First, to the Class A Certificates in an
amount up to the Interest Distribution Amount for such
Class of Certificates;
(ii) Second, to the Class M Certificates in an
amount up to the Interest Distribution Amount for such
Class of Certificates;
(iii) Third, to the Class B Certificates in an
amount up to the Interest Distribution Amount for such
Class of Certificates:
(iv) Fourth, to the Class A Certificates in an amount
up to the sum of (a) the Class A Principal Distribution Amount
and (b) the Class A Carry Forward Amount;
(v) Fifth, to the Class M Certificates, in an amount
up to the sum of (a) the Class M Principal Distribution Amount
and (b) the Class M Carry Forward Amount;
(vi) Sixth, to the Class B Certificates, in an
amount up to the Class B Principal Distribution Amount;
(vii) Seventh, to the Expense Account in an amount up
to one-twelfth of the Annual Expense Escrow Amount plus any
amount required to be paid to the Trustee pursuant to Section
6.03(a) resulting from insufficiencies in the Expense Account;
(viii) Eighth, to the Servicer in an amount up
to the Reimbursable Amounts;
(ix) Ninth, on each Remittance Date after the
Spread Account Trigger Date, to the Spread Account any
remainder unless and until the amount herein equals
the Specified Spread Account Requirement;
(x) Tenth, to The Money Store Inc. or any
provider of Alternate Credit Enhancement, in an amount
equal to any unreimbursed Guaranty Payments or
payments under the Alternate Credit Enhancement, as
the case may be; and
(xi) Eleventh, to the Spread Account Depositor,
any remainder.
Notwithstanding the foregoing, if on any Remittance Date a Guaranty Payment
required to have been made was not made, in whole or in part, the Class B
Certificates shall be entitled to receive on future Remittance Dates (even after
the Aggregate Class B Certificate Principal Balance is reduced to zero) from the
portion of the Extra Interest that otherwise would be distributed pursuant to
clauses (ix), (x) and (xi) above, an amount equal to the aggregate amount of
such missed Guaranty Payments, together with interest thereon at the then
applicable Class B Remittance Date (such amount, the "Class B Shortfall
Amount").
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)(vi) and make distributions thereof as follows: (i) from amounts
transferred from the Pre-Funding Account, distributions of principal to the
Class A, Class M and Class B Certificates pro rata based upon the Class A, Class
M and Class B Percentages and (ii) from amounts transferred from the Capitalized
Interest Account, distributions of interest to such Class A, Class M and Class B
Certificates equal to the applicable Capitalized Interest Requirement.
(c) All distributions made to the Certificateholders of a particular Class
will be made on a pro rata basis among the Certificateholders of record of the
applicable Class on the next preceding Record Date based on the Percentage
Interest represented by their respective Certificates, and shall be made by
check or, upon request by a Certificateholder, by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, and, in the case of wire
transfers, at the expense of such Certificateholder unless such
Certificateholder shall own of record Certificates which have initial principal
balances aggregating at least $5,000,000.
Section 6.08 ALLOCATION OF REALIZED LOSSES.
Prior to each Determination Date, the Servicer shall determine the total
amount of Realized Losses, if any, that occurred in the related Due Period and
the Extra Interest received during such Due Period. Based upon such
determination, the Servicer also shall determine the Actual Loss Amount for such
Due Period. The Actual Loss Amount shall be allocated to the Class B
Certificates until the Aggregate Class B Certificate Principal Balance has been
reduced to zero. Thereafter, any Actual Loss Amount shall be allocated to the
Class M Certificates until the Aggregate Class M Certificate Principal Balance
has been reduced to zero. Any future Actual Loss Amount shall be allocated to
the Class A Certificates until the Aggregate Class A certificate Principal
Balance has been reduced to zero. Any allocation of an Actual Loss Amount among
a Class of Certificates shall be made on a pro rata basis among all
Certificateholders of record of such Class on the next preceding Record Date
based on the Percentage Interest represented by their respective Certificates,
by reducing the portion of the Aggregate Certificate Principal Balance of the
respective Class by the amount so allocated, which allocation shall be deemed to
have occurred on the related Remittance Date.
Section 6.09 STATEMENTS.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Servicer shall deliver to the Trustee, by telecopy, for distribution
to the Certificateholders, the receipt and legibility of which shall be
confirmed telephonically, with hard copy thereof and the Servicer's Monthly
Computer Tape in the form attached hereto as Exhibit L (both in hard copy and in
computer tape form) to be delivered on the Business Day following the
Determination Date, a certificate signed by a Servicing Officer (a "Servicer's
Certificate") stating the date (day, month and year), the Series number of the
Certificates, the date of this Agreement, and, as of the close of business on
the Record Date for such month:
(i) Available Funds for the related Remittance
Date;
(ii) The Aggregate Class A Certificate Principal
Balance, the Aggregate Class M Certificate Principal Balance,
the Aggregate Class B Certificate Principal Balance and the
Pool Principal Balance as reported in the prior Servicer's
Certificate pursuant to subclause
(xii) below, or, in the case of the first Determination Date,
the Original Class A, Class M and Class B Certificate
Principal Balance and the Original Pool Principal Balance;
(iii) The number and Principal Balances of all
Business Loans which were the subject of Principal Prepayments
during the Due Period;
(iv) The amount of by all Curtailments which were
received during the Due Period;
(v) The amount of all Excess Payments and the
amount of all Monthly Payments in respect of principal
received during the Due Period;
(vi) The aggregate amount of interest received on
each Business Loan;
(vii) The amount of the Monthly Advances to be made
on the Determination Date and the Compensating Interest
payment to be made on the Determination Date;
(viii) The delinquency and foreclosure
information set forth in the form attached hereto as
Exhibit K;
(ix) The amount of any Realized Losses incurred
during the related Due Period and the Actual Loss
Amount for such Remittance Date;
(x) The Class A, Class M and Class B Interest
Distribution Amounts and Principal Distribution Amounts for
the Remittance Date with the components thereof stated
separately;
(xi) The amount available in the Spread Account as of
the related Record Date in cash and from liquidation of
Permitted Instruments and the amount, if any, to be
transferred from the Spread Account to the Certificate Account
pursuant to Section 6.02(b)(i) and the total amount of
Guaranty Payments and payments with respect to Alternate
Credit Enhancement for such Remittance Date;
(xii) The Aggregate Class A Certificate Principal
Balance, Aggregate Class M Certificate Principal
Balance, Aggregate Class B Certificate Principal Balance and
the Pool Principal Balance after giving effect to the
distribution to be made on the Remittance Date;
(xiii) The Extra Interest received with respect to
such Remittance Date and, for each Remittance Date
after the Spread Account Trigger Date, the Spread
Balance and the Specified Spread Account Requirement
with respect to such Remittance Date;
(xiv) The weighted average maturity and weighted
average Business Loan Interest Rate;
(xv) The Servicing Fees and amounts to be
deposited to the Expense Account;
(xvi) The amount of all payments and
reimbursements to the Servicer pursuant to
Section 5.04 (b), (c), (d)(ii), (e) and (f);
(xvii) The Class A, Class M and Class B Remittance
Rates with respect to such Remittance Date;
(xviii) the Cumulative Actual Loss Amount and
Cumulative Realized Losses for such Remittance Date;
(xix) the Class B Shortfall Amount, if any, for
such Remittance Date;
(xx) During the Funding Period, the aggregate
Principal Balance of the Subsequent Mortgage Loans purchased
during the prior Due Period and the amount on deposit in the
Pre-Funding Account as of the end of such Due Period; and
(xxi) Such other information as the
Certificateholders or the Rating Agencies may reasonably
require.
The Trustee shall forward such report to the Certificateholders and the
Rating Agencies on the Remittance Date, together with a separate report
indicating the amount of funds deposited in the Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Seller pursuant to Sections 6.03(c)(i), 6.03(c)(ii) and 6.07(b)(vi) (all
reports prepared by the Trustee of such withdrawals and deposits will be based
in whole or in part upon the information provided to the Trustee by the
Servicer).
To the extent that there are inconsistencies between the telecopy of the
Servicer's Certificate and the hard copy thereof, the Trustee shall be entitled
to rely upon the telecopy. In the case of information furnished pursuant to
subclauses (ii), (iii), (iv), (v), (x) and (xii), above, the amounts shall be
expressed in a separate section of the report as a dollar amount for each Class
per $1,000 original dollar amount as of the Cut- Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based upon
information received from the Servicer, forward to the Certificateholders and
the Rating Agencies a report setting forth the amount of principal and interest,
if any, being paid to each Class of Certificates on the Special Remittance Date.
(a) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Certificateholder such information as is
reasonably necessary to provide to such Person a statement containing the
information set forth in subclauses (vi), (x), and (xv), above, aggregated for
such calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer pursuant to any requirements of the Code as from time
to time are in force.
(b) Upon reasonable advance notice in writing, the Servicer will provide to
each Certificateholder which is a savings and loan association, bank or
insurance company certain reports and access to information and documentation
regarding the Business Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Certificates.
(c) The Servicer shall furnish to each Certificateholder, during the term
of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Certificateholder or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
by and in accordance with such applicable instructions and directions as the
Certificateholder may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producible
in the ordinary course of the Servicer's business. The Rating Agencies shall
receive copies of any such reports or information furnished to the
Certificateholders.
Section 6.10 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the Certificate Account an
amount (as indicated in the Servicer's Certificate prepared pursuant to Section
6.09), to be distributed on the related Remittance Date pursuant to Section
6.07, equal to the amount by which (i) 30 days' interest at a rate equal to the
then applicable Adjusted Business Loan Remittance Rate on the Aggregate Class A,
Class M and Class B Certificate Principal Balances immediately prior to the
related Remittance Date (plus or minus the difference, if any, between (A) the
sum of the Class A, Class M and Class B Interest Distribution Amounts and (B)
the sum of the Adjusted Class A, Adjusted Class M and Adjusted Class B Interest
Distribution Amounts for the related Remittance Date) exceeds (ii) the amount
received by the Servicer as of the related Record Date in respect of interest on
the Business Loans (plus, for the Remittance Dates in April, May and June 1997,
the sum of (i) all funds to be transferred to the Certificate Account from the
Capitalized Interest Account for such Remittance Date pursuant to Section
6.04(g) and (ii) the Pre-Funding Earnings for the applicable Remittance Date),
such excess being defined herein as the "Monthly Advance." The Servicer may
reimburse itself for Monthly Advances made pursuant to Section 5.04.
Section 6.11 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest on the
principal portion of each Business Loan at the then applicable Class A, Class M
or Class B Remittance Rate, as the case may be. Not later than the close of
business on each Determination Date, with respect to each Business Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the Certificate
Account from amounts otherwise payable to it as servicing compensation, an
amount (such amount required to be delivered to the Trustee is referred to
herein as "Compensating Interest") (as indicated in the Servicer's Certificate
prepared pursuant to Section 6.09) equal to the difference between (a) 30 days'
interest at the Adjusted Business Loan Remittance Rate on the Principal Balance
of each such Business Loan as of the beginning of the Due Period applicable to
the Remittance Date on which such amount will be distributed, and (b) the amount
of interest actually received on each such Business Loan for such Due Period net
of the Servicing Fee, and the fees and expenses of the Trustee allocable to such
interest.
Section 6.12 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED PROPERTY
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before February
15th of each year, shall provide to the Trustee, reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust Fund acquires an interest in a Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of
the Business Loan, or (ii) knows or has reason to know that a Mortgaged Property
has been abandoned.
Section 6.13 LIMITED GUARANTY.
(a) No later than the third Business Day prior to each Remittance Date, the
Servicer shall notify the Guarantor of the amount of any Guaranty Payment for
such Remittance Date. Not later than the Business Day preceding each Remittance
Date, the Guarantor shall deposit any such Guaranty Payment for such Remittance
Date into the Certificate Account.
(b) The obligations of the Guarantor under this Agreement shall not
terminate upon or otherwise be affected by an Event of Default pursuant to
Article X of this Agreement.
(c) The obligation of the Guarantor to provide the Limited Guaranty under
this Agreement shall terminate on the date that both the Aggregate Class B
Certificate Principal Balance and the Class B Shortfall Amount equal zero.
(d) The obligation of the Guarantor to make the Guaranty Payments described
in subsection (a) above shall be unconditional and irrevocable and shall
constitute an unsecured obligation of the Guarantor and will rank on a parity
with all other unsecured and unsubordinated indebtedness of the Guarantor. The
Guarantor acknowledges that its obligation to make the Guaranty Payments
described in subsection (a) above shall be deemed a guaranty by the Guarantor of
indebtedness of the Trust Fund for funds borrowed from the Class B
Certificateholders, and the Guarantor acknowledges and agrees that it has no
right of reimbursement, indemnity, exoneration, contribution or other similar
right of recovery arising from amounts expended pursuant to its obligations
under this Agreement, other than the right to receive distributions, to the
extent available, from the Trust Fund as provided in this Agreement. In no event
shall the amount paid on the Class B Certificates in respect of principal
pursuant to the Limited Guaranty exceed the Original Class B Certificate
Principal Balance.
(e) If the Guarantor fails to make a Guarantor Payment in whole or in part,
the Guarantor shall promptly notify the Trustee, and the Trustee shall promptly
notify each Rating Agency. The Guarantor shall promptly notify each Rating
Agency in the event of any termination of the Limited Guaranty or any change of
the Person providing the Limited Guaranty, including but not limited to a change
by merger.
Section 6.14 ALTERNATE CREDIT ENHANCEMENT.
The Guarantor, at its option and upon prior written notice to each Rating
Agency, may substitute an alternate form of credit enhancement in place of the
Limited Guaranty, provided that (i) the Rating Agency Condition shall have been
satisfied and (ii) the Guarantor shall cause to be delivered to the Trustee an
Opinion of Counsel to the effect that such substitution of credit enhancement
shall not adversely affect the status of the Trust Fund as a "grantor trust".
Such alternate form of credit enhancement can be in the form of cash or
securities deposited by the Guarantor or any other Person in a segregated
escrow, trust or collateral account or a letter of credit, certificate insurance
policy or surety bond provided by a third party and delivered to or held by the
Trustee.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Intentionally Omitted]
Section 7.02 SATISFACTION OF MORTGAGES AND COLLATERAL AND RELEASE OF
BUSINESS FILES
The Servicer shall maintain the Fidelity Bond as provided for in Section
5.09 insuring the Servicer against any loss it may sustain with respect to any
Business Loan not satisfied in accordance with the procedures set forth herein.
Upon the payment in full of any Business 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 by
a certification in the form of Exhibit I attached hereto (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Principal and Interest Account pursuant to Section 5.03 have been or will be
so deposited) of a Servicing Officer and shall request delivery to it of the
Trustee's Document File. Upon receipt of such certification and request, the
Trustee shall release, within 3 Business Days, the related Trustee's Document
File to the Servicer. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be payable only from and to the
extent of servicing compensation and shall not be chargeable to the Principal
and Interest Account or the Certificate Account.
From time to time and as appropriate for the servicing or foreclosure of
any Business Loan, the Trustee shall, upon request of the Servicer and delivery
to the Trustee of a certification in the form of Exhibit I attached hereto
signed by a Servicing Officer, release the related Trustee's Document File to
the Servicer within 3 Business Days, and the Trustee shall execute such
documents as shall be necessary to the prosecution of any such proceedings. Such
servicing receipt shall obligate the Servicer to return the Trustee's Document
File to the Trustee when the need therefor by the Servicer no longer exists,
unless the Business Loan has been liquidated and the Liquidation Proceeds
relating to the Business Loan have been deposited in the Principal and Interest
Account and remitted to the Trustee for deposit in the Certificate Account or
the Business File or such document has been delivered to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property or other Collateral either judicially or non-judicially,
and the Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Business 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
Business Loan was liquidated, the servicing receipt shall be released by the
Trustee to the Servicer.
The Trustee shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or other Collateral or to any
legal action brought to obtain judgment against any Obligor on the Business Note
or Mortgage or other agreement securing Collateral or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Business
Note or Mortgage or other agreement securing Collateral or otherwise available
at law or in equity. Together with such documents or pleadings, the Servicer
shall deliver to the Trustee a certificate of a Servicing Officer requesting
that such pleadings or documents be executed by the Trustee and certifying as to
the reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage or other agreement securing Collateral, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
The Trustee shall, upon receipt of a written request from a Servicing Officer,
execute any document provided to the Trustee by the Servicer or take any other
action requested in such request, that is, in the opinion of the Servicer as
evidenced by such request, required by any state or other jurisdiction to
discharge the lien of a Mortgage or other agreement securing Collateral upon the
satisfaction thereof and the Trustee will sign and post, but will not guarantee
receipt of, any such documents to the Servicer, or such other party as the
Servicer may direct, within five Business Days of the Trustee's receipt of such
certificate or documents. Such certificate or documents shall establish to the
Trustee's satisfaction that the related Business Loan has been paid in full by
or on behalf of the Obligor and that such payment has been deposited in the
Principal and Interest Account.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall be entitled
to withdraw from the Principal and Interest Account or to retain from interest
payments on the Business Loans the Servicer's Servicing Fee; provided, however,
that the Servicer only may withdraw from the Principal and Interest Account the
Servicer's Servicing Fee related to the Business Loan. Additional servicing
compensation in the form of assumption and other administrative fees, interest
paid on funds on deposit in the Principal and Interest Account, interest paid
and earnings realized on Permitted Instruments and amounts remitted pursuant to
Section 6.03(c)(iii) shall be retained by or remitted to the Servicer to the
extent not required to be remitted to the Trustee for deposit in the Certificate
Account. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Trustee, and the Rating Agencies on or
before March 31 of each year beginning March 31, 1998, an Officer's Certificate
stating that (i) the Servicer has fully complied with the provisions of Articles
V and VII, (ii) a review of the activities of the Servicer during the preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (iii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof and the action being taken by the
Servicer to cure such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT
On or before March 31 of each year beginning March 31, 1998, the Servicer,
at its expense, shall cause one of the "big six" accounting firms to furnish a
letter or letters to the Trustee and the Rating Agencies to the effect that such
firm has with respect to the Servicer's overall servicing operations examined
such operations in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
Section 7.06 TRUSTEE'S RIGHT TO EXAMINE SERVICER RECORDS AND AUDIT
OPERATIONS
The Trustee shall have the right upon reasonable prior notice, during
normal business hours and as often as reasonably required, to examine and audit
any and all of the books, records or other information of the Servicer, whether
held by the Servicer or by another on behalf of the Servicer, which may be
relevant to the performance or observance by the Servicer of the terms,
covenants or conditions of this Agreement. No amounts payable in respect of the
foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE; PRINCIPAL AND INTEREST ACCOUNT
STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Trustee a statement, certified by a Servicing Officer, setting forth the
status of the Principal and Interest Account as of the close of business on the
preceding Record Date and showing, for the period covered by such statement, the
aggregate of deposits into the Principal and Interest Account for each category
of deposit specified in Section 5.03, the aggregate of withdrawals from the
Principal and Interest Account for each category of withdrawal specified in
Section 5.04, the aggregate amount of permitted withdrawals not made in the
related Due Period, and the amount of any Monthly Advances or payments of
Compensating Interest, in each case, for the related Due Period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders the annual audited financial statements of the
Servicer's parent for one or more of the most recently completed five fiscal
years for which such statements are available, which request shall not be
unreasonably denied.
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, and any Certificateholder may sustain in any way
related to the failure of the Servicer to perform its duties and service the
Business Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Trustee if a claim is made by any party with
respect to this Agreement, and the Servicer shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Trustee, and/or Certificateholder in respect of such claim. The Trustee may
reimburse the Servicer from the Expense Account pursuant to Section 6.03(c)(i)
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the failure of the Servicer to service and
administer the Business Loans in compliance with the terms of this Agreement.
(b) The Seller agrees to indemnify and hold the Trustee and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, and any Certificateholder may sustain in any way
related to the failure of the Servicer, if it is an affiliate thereof, or the
failure of the Sellers to perform their respective duties in compliance with the
terms of this Agreement and in the best interests of the Certificateholders. The
Seller shall immediately notify the Trustee, if a claim is made by a third party
with respect to this Agreement, and the Seller 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
Seller, the Trustee and/or Certificateholder in respect of such claim. The
Trustee may reimburse the Seller from the Expense Account pursuant to Section
6.03(c)(i) for all amounts advanced by it pursuant to the preceding sentence
except when the claim relates directly to the Seller indemnification pursuant to
Section 2.05 and Section 3.03 or to the failure of the Servicer, if it is an
affiliate of the Seller, to perform its obligations to service and administer
the Business Loans in compliance with the terms of this Agreement, or the
failure of the Seller to perform its duties in compliance with the terms of this
Agreement and in the best interests of the Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer will keep in full effect its existence, rights and franchises
as a corporation, and will obtain and preserve its qualification to do business
as a foreign corporation, in each jurisdiction necessary to protect the validity
and enforceability of this Agreement or any of the Business Loans and to perform
its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution that has a
net worth of at least $15,000,000, and shall be the successor of the Servicer,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Servicer shall send notice of any such merger or
consolidation to the Trustee and the Rating Agencies.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the Servicer
may rely on any document of any kind which it in good faith reasonably believes
to be genuine and to have been adopted or signed by the proper authorities
respecting any matters arising hereunder. Subject to the terms of Section 9.01
herein, the Servicer shall have no obligation to appear with respect to,
prosecute or defend any legal action which is not incidental to the Servicer's
duty to service the Business Loans in accordance with this Agreement.
Section 9.04 SERVICER NOT TO RESIGN.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Trustee and the Majority Certificateholders, or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law or administrative determination and such incapacity cannot
be cured by the Servicer. Any such determination permitting the resignation of
the Servicer shall be evidenced by a written Opinion of Counsel (who may be
counsel for the Servicer) to such effect delivered to the Trustee, which Opinion
of Counsel shall be in form and substance acceptable to the Trustee. No such
resignation shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 10.02.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default by the Servicer
shall occur and be continuing, that is to say:
(i) (A) the failure by the Servicer to make any
required Servicing Advance, to the extent such failure
materially and adversely affects the interests of the
Certificateholders; (B) the failure by the Servicer to make
any required Monthly Advance; (C) the failure by the Servicer
to remit any Compensating Interest; or (D) any failure by the
Servicer to remit to Certificateholders, or to the Trustee for
the benefit of the Certificateholders, any payment required to
be made under the terms of this Agreement which continues
unremedied after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee or to the Servicer and
the Trustee by any Certificateholder; or
(ii) failure by the Servicer or the Seller duly to
observe or perform, in any material respect, any other
covenants, obligations or agreements of the Servicer or the
Seller as set forth in this Agreement, which failure continues
unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer or the Seller,
as the case may be, by the Trustee or to the Servicer, or the
Seller, as the case may be, and the Trustee by any
Certificateholder; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up
or liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of the Servicer's
property; or
(v) the Servicer shall admit in writing its inability
to pay its debts as they become due, file a petition to take
advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(B)), if such Event of Default shall not have been remedied within 30
days after the Servicer has received notice of such Event of Default, (x) with
respect solely to clause (i)(B) above, if such Monthly Advance is not made
earlier than 4:00 p.m. New York time on the Determination Date, the Trustee
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and, unless such failure is cured, either by receipt of payment or
receipt of evidence (E.G., a wire reference number communicated by the sending
bank) that such funds have been sent, by 12:00 Noon New York time on the
following Business Day, the Trustee shall immediately assume, pursuant to
Section 10.02 hereof, the duties of a successor Servicer; and (y) in the case of
clauses (i)(A), (i)(C), (i)(D), (iii), (iv) and (v), the Majority
Certificateholders, by notice in writing to the Servicer (except with respect to
(iii), (iv) and (v) for which no notice is required) may, in addition to
whatever rights such Certificateholders may have at law or equity including
damages, injunctive relief and specific performance, in each case immediately
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Business Loans and the proceeds thereof, as Servicer. Upon
such receipt by the Servicer of a second written notice from the Majority
Certificateholders stating that they or it intend to terminate the Servicer as a
result of such Event of Default, all authority and power of the Servicer under
this Agreement, whether with respect to the Business Loans or otherwise, shall,
subject to Section 10.02, pass to and be vested in the Trustee and the Trustee
is hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Business Loans
and related documents. The Servicer agrees to cooperate with the Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee for
administration by it of all amounts which shall at the time be credited by the
Servicer to each Principal and Interest Account or thereafter received with
respect to the Business Loans.
Section 10.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR
On and after the time of the Servicer's immediate termination, or the
Servicer's receipt of notice if required by Section 10.01, or at any time if the
Trustee receives the resignation of the Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.04 or the Servicer is removed as Servicer pursuant
to this Article X, the Trustee shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that the Trustee shall
not be liable for any actions of any Servicer prior to it, and that the Trustee
shall not be obligated to make advances or payments pursuant to Sections 6.03,
6.10, 6.11, 5.10 or 5.14 but only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee. As compensation therefor,
the Trustee shall be entitled to all funds relating to the Business Loans which
the Servicer would have been entitled to receive from the Principal and Interest
Account pursuant to Section 5.04 if the Servicer had continued to act as
Servicer hereunder, together with other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 7.01
and 7.03.
Notwithstanding the above, the Trustee shall, if it is unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any
established servicing institution satisfying the Rating Agency Condition that
has a net worth of not less than $15,000,000, as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Any collections received by the
Servicer after removal or resignation shall be endorsed by it to the Trustee and
remitted directly to the Trustee or, at the direction of the Trustee, to the
successor servicer. The compensation of any successor servicer (including,
without limitation, the Trustee) so appointed shall be the aggregate Servicing
Fees and other servicing compensation in the form of assumption fees, late
payment charges or otherwise. In the event the Trustee is required to solicit
bids as provided herein, the Trustee shall solicit, by public announcement, bids
from banks and mortgage servicing institutions meeting the qualifications set
forth above. Such public announcement shall specify that the successor servicer
shall be entitled to the full amount of the aggregate Servicing Fees as
servicing compensation, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise. Within thirty days
after any such public announcement, the Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee shall deduct from any sum received by the Trustee from the successor to
the Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of
the servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the Servicer's successor. The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. The Servicer agrees to
cooperate with the Trustee and any successor servicer in effecting the
termination of the Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the Trustee or such successor servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Trustee or such successor servicer, as applicable, all amounts which then
have been or should have been deposited in the Principal and Interest Account or
Spread Account by the Servicer or which are thereafter received with respect to
the Business Loans. Neither the Trustee nor any other successor servicer shall
be held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until written notice of such proposed appointment
shall have been provided by the Trustee to each Certificateholder and the
Trustee shall have consented thereto. The Trustee shall not resign as servicer
until a successor servicer has been appointed.
Pending appointment of a successor to the Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Business Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 7.03 or otherwise as
provided in this Agreement. The Servicer, the Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 10.03 WAIVER OF DEFAULTS.
The Majority Certificateholders may, on behalf of all Certificateholders,
and subject to satisfaction of the Rating Agency Condition, waive any events
permitting removal of the Servicer pursuant to this Article X; provided,
however, that the Majority Certificateholders may not waive a default in making
a required distribution on a Certificate without the consent of the holder of
such Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived.
Section 10.04. CONTROL BY MAJORITY CERTIFICATEHOLDERS.
The Majority Certificateholders may direct the time, method and place of
conducting any proceeding relating to the Trust Fund or the Certificates or for
any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates or the Trust Fund PROVIDED THAT:
(i) such direction shall not be in conflict with
any rule of law or with this Agreement;
(ii) the Trustee shall have been provided with
indemnity satisfactory to it; and
(iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction; PROVIDED, HOWEVER, that the Trustee, as the case
may be, need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the
Holders not so directing.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon notice to the Trustee of the earlier of
the following events: (a) the final payment or other liquidation of the last
Business Loan or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Business Loan and the remittance of all funds
due thereunder, or (b) mutual consent of the Servicer and all Certificateholders
in writing; provided, however, that in no event shall the Trust established by
this Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the United
States to the Court of St. James, alive as of the date hereof.
The Servicer or the Representative may, at its option, terminate this
Agreement on any date on which the Pool Principal Balance is less than 10% of
the sum of (i) the Original Pool Principal Balance and (ii) the aggregate
Principal Balances of the Subsequent Business Loans as of the applicable Cut-Off
Date by purchasing, on the next succeeding Remittance Date, all of the Business
Loans and Foreclosed Properties at a price equal to the sum of (i) 100% of the
then outstanding Aggregate Class A, Aggregate Class M and Aggregate Class B
Certificate Principal Balances, and (ii) 30 days' interest thereon at the then
applicable Class A, Class M and Class B Remittance Rates, as the case may be
(the "Termination Price"). Notwithstanding the prior sentence, if at the time
the Servicer or the Representative, as the case may be, determines to exercise
such option the unsecured long-term debt obligations of the Servicer or the
Representative, as the case may be, are not rated at least Baa3 by Moody's, BBB-
by Standard & Poor's and BBB- by Duff & Phelps, if such Rating Agencies are
still rating the Certificates, the Servicer or the Representative, as the case
may be, shall give such Rating Agencies prior written notice of the Servicer's
or the Representative's, as the case may be, determination to exercise such
option and shall not exercise such option, without the consent of each such
Rating Agency, prior to furnishing each such Rating Agency with an Opinion of
Counsel, in form and substance reasonably satisfactory to each such Rating
Agency, that the exercise of such option would not be deemed a fraudulent
conveyance by the Servicer or the Representative, as the case may be.
Notice of any termination, specifying the Remittance Date upon which the
Trust Fund will terminate and that the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. Any obligation of the Servicer to pay
amounts due to the Trustee shall survive the termination of this Agreement.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the national
edition of THE WALL STREET JOURNAL notice that such money remains unclaimed. If
within six months after the second notice all of the Certificates shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Seller shall be entitled to all unclaimed
funds and other assets which remain subject hereto and the Trustee upon transfer
of such funds subject hereto and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds and the Certificateholders
shall look to the Seller for payment.
Section 11.02 ACCOUNTING UPON TERMINATION OF SERVICER
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
(a) deliver to their successor or, if none shall yet have been appointed,
to the Trustee the funds in any Principal and Interest Account;
(b) deliver to their successor or, if none shall yet have been appointed,
to the Trustee all Business Files and related documents and statements held by
it hereunder and a Business Loan portfolio computer tape;
(c) deliver to their successor or, if none shall yet have been appointed,
to the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Business 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 Business Loans to their successor and to more fully and definitively vest in
such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or the Sellers hereunder. If any such instrument is
found not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Default, and after the curing of
all such Events of Default which may have occurred, the duties and obligations
of the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders, relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
(d) In the absence of actual knowledge of an Event of Default, the Trustee
shall not be required to take notice or be deemed to have notice or knowledge of
any default or Event of Default unless the Trustee shall be specifically
notified in writing by the Servicer or any of the Certificateholders. In the
absence of actual knowledge or receipt of such notice, the Trustee may
conclusively assume that there is no default or Event of Default; and
(e) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may request and rely and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate, certificate of
auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) The Trustee may consult with counsel and any
opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend by litigation hereunder or in
relation hereto at the request, order or direction of the
Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same
degree of care and skill in its exercise as a prudent person
would exercise or use under the circumstances in the conduct
of such person's own affairs;
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% provided, however, that if the
payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense
or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by
the Servicer or, if paid by the Trustee, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(vi) The right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a
duty, and the Trustee shall not be answerable for other than
its negligence or willful misconduct in the performance of
such act;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby
or the powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR BUSINESS 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 Business 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 Business Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith, provided that the Trustee shall have no lien on the
Trust Fund for the payment of its fees and expenses. To the extent that actual
fees and expenses of the Trustee exceed the amount available for payment thereof
on deposit in the Expense Account as of the date such fees and expenses are due
and payable, the Servicer shall reimburse the Trustee for such shortfall out of
its own funds without reimbursement therefor, except as provided in Section
6.03. The Trustee and any director, officer, employee or agent of the Trustee
shall be indemnified by the Servicer and held harmless against any loss,
liability or expense (i) incurred in connection with any legal action relating
to this Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, and (ii) resulting from any error in any tax
or information return prepared by the Servicer. The obligations of the Servicer
under this Section 12.05 shall survive payment of the Certificates, and shall
extend to any co-trustee appointed pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be (i) a national banking
association or banking corporation or trust company organized and doing business
under the laws of any state or the United States of America, (ii) authorized
under such laws to exercise corporate trust powers, (iii) having a combined
capital and surplus of at least $30,000,000, (iv) having unsecured and
unguaranteed long-term debt obligations rated at least Baa3 by Moody's, BBB- by
Standard & Poor's and BBB- by Duff & Phelps (provided Duff & Phelps is rating
the unsecured and unguaranteed long-term debt obligations of the Trustee) and
(v) is subject to supervision or examination by federal or state authority. If
such banking association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section its combined capital and
surplus shall be deemed to be as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
(a) give prompt notice that it has so ceased to be eligible to be the Trustee
(which shall give prompt notice to each Certificateholder) and (b) resign, upon
the request of the Majority Certificateholders, in the manner and with the
effect specified in Section 12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, and to all
Certificateholders. Upon receiving such notice of resignation, the Servicer
shall promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer. Unless a successor trustee shall have been
so appointed and have accepted appointment within 60 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 12.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer.
The Majority Certificateholders, upon satisfaction of the Rating Agency
Condition, 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 Business Files
and related documents and statements held by it hereunder, and the Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall send notice of any
such merger or consolidation to the Rating Agencies.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
12.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 12.06 hereunder. No notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, all rights, powers, duties and obligations conferred or
imposed upon the trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co- trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, initially, Marine Midland Bank, with power to act on the
Trustee's behalf and subject to its direction in the authentication and delivery
of the Certificates in connection with transfers and exchanges under Section
4.02, as fully to all intents and purposes as though the Authenticating Agent
had been expressly authorized by that Section to authenticate and deliver
Certificates. For all purposes of this Agreement, the authentication and
delivery of Certificates by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of Certificates by the
Trustee. Such Authenticating Agent shall at all times be a Person meeting the
requirements for the Trustee set forth in Section 12.06.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of the Trust Fund and, upon request within five
(5) Business Days after its receipt thereof, shall (i) sign on behalf of the
Trust Fund any Tax Return that the Trustee is required to sign pursuant to
applicable federal, state or local tax laws, and (ii) cause such Tax Return to
have been returned to the Servicer for filing.
The Servicer shall prepare and file or cause to be filed with the Internal
Revenue Service Federal tax information returns with respect to the Trust Fund
and the Certificates containing such information and at the times and in the
manner as may be required by the Code or applicable Treasury regulations, and
shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Trustee shall
sign all tax information returns filed pursuant to this Section and any other
returns as may be required by the Code, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Servicer.
Section 12.13 PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund and such other assets as may from
time to time be deposited with it hereunder in trust for the benefit of the
Holders and at the request of the Seller will from time to time execute and
deliver all such supplements and amendments hereto pursuant to Section 13.02
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request as it deems reasonably necessary or
advisable, to:
(i) more effectively hold in trust all or any
portion of the Trust Fund or such other assets;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this
Agreement;
(iii) enforce any of the Business Loans; or
(iv) preserve and defend title to the Trust Fund and the
rights of the Trustee, and the ownership interests of the
Certificateholders represented thereby, in such Trust Fund
against the claims of all Persons and parties.
The Trustee shall send copies of any request received from the Seller to
take any action pursuant to this Section 12.13 to the Holders.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.13 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders or the Seller in accordance with the
terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.14 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TRUSTEE.
The Trustee hereby makes the following representations, warranties and
covenants on which the Seller, the Servicer, and the Certificateholders shall
rely:
(a) The Trustee is a banking corporation and trust company duly organized,
validly existing and in good standing under the laws of the State of New York.
(b) The Trustee has full power, authority and legal right to execute,
deliver and perform this Agreement, and shall have taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement.
(c) The execution, delivery and performance by the Trustee of this
Agreement shall not (i) violate any provision of any law or any order, writ,
judgment or decree of any court, arbitrator or governmental authority applicable
to the Trustee or any of its assets, (ii) violate any provision of the corporate
charter or By-laws of the Trustee or (iii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any lien on any properties included in the
Trust Fund pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to materially and adversely affect the
Trustee's performance or ability to perform its duties under this Agreement or
the transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with or the taking of any other
action in respect of any governmental authority or agency regulating the banking
and corporate trust activities of the Trustee.
(e) This Agreement has been duly executed and delivered by the Trustee and
constitutes the legal, valid and binding agreement of the Trustee, enforceable
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity. The Trustee hereby agrees and covenants
that it will not at any time in the future, deny that this Agreement constitutes
the legal, valid and binding agreement of the Trustee.
(f) The Trustee shall not take any action, or fail to take any action, if
such action or failure to take action will materially interfere with the
enforcement of any rights of the Certificateholders under this Agreement or the
Certificates.
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 Seller, the
Servicer and the Trustee by written agreement, without the notice to or consent
of the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, to add any Alternate
Credit Enhancement in compliance with the provisions of Section 6.14, or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect the interests of any
Certificateholder or any other party and further provided that no such amendment
shall reduce in any manner the amount of, or delay the timing of, any amounts
received on Business Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other party hereto without the consent of such
party.
(b) This Agreement may be amended from time to time by the Sellers, the
Servicer, the Trustee and the Majority Certificateholders for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders; provided, however, that no such amendment shall reduce in any manner
the amount of, or delay the timing of, any amounts which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate or reduce the percentage of Holders which are required to consent to
any such amendment without the consent of the Holders of 100% of the
Certificates affected thereby and, provided further, that no amendment affecting
only one Class of Certificates shall require the approval of holders of
Certificates of the other Class.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Business Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided.
SECTION 13.05 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Servicer and the Seller, The Money Store Commercial Mortgage
Inc., 3301 C Street, Suite 100-M, Sacramento, California 95816, Attention:
President, or such other addresses as may hereafter be furnished to the
Certificateholders in writing by the Seller and the Servicer, (ii) in the case
of the Trustee, Marine Midland Bank, 140 Broadway, New York, New York 10005,
12th Floor, Attention: Corporate Trust Department, (iii) in the case of the
Certificateholders, as set forth in the Certificate Register, (iv) in the case
of Moody's, to Moody's Investors Service, ABS Monitoring Department, 99 Church
Street, 4th Floor, New York, New York 10007, (v) in the case of Standard &
Poor's, 26 Broadway, 15th Floor New York, New York 10004, (vi) in the case of
Duff & Phelps, to Duff & Phelps Credit Rating Co., 55 East Monroe Street,
Chicago, Illinois 60603, Attention: Asset Backed Monitoring Group, and (vii) in
the case of the Representative and the Guarantor, to The Money Store Inc., 2840
Morris Avenue, Union, New Jersey 07083 Attention: Corporate Counsel. Any such
notices shall be deemed to be effective with respect to any party hereto upon
the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificate- holders.
Section 13.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the Seller
and the Servicer, the Trustee, the Representative and the Certificateholders and
their respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 PAYING AGENT.
The Trustee hereby appoints Marine Midland Bank as Paying Agent. The
Trustee may appoint one or more other Paying Agents or successor Paying Agents
meeting the eligibility requirements of a Trustee set forth in Section 12.06
(i), (ii), (iii), (iv), (v) and (vii) hereof.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.06, that such Paying Agent will:
(a) allocate all sums received for distribution to the Holders of
Certificates for which it is acting as Paying Agent on each Remittance Date
among such Holders in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Holders entitled
thereto until such sums shall be paid to such Holders or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificateholders by mailing notice thereof to
their addresses appearing on the Certificate Register.
Section 13.13 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any change of the Trustee,
the Servicer or Paying Agent, (3) any Event of Default or waiver of an Event of
Default, (4) that any superior lienholder has accelerated or intends to
accelerate the obligations secured by a Prior Lien, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Servicer shall give
prompt notice to the Rating Agencies if the Servicer or any of its affiliates
acquire any Certificates.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the Seller, the Representative, the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
THE MONEY STORE COMMERCIAL
MORTGAGE INC., as
Seller and Servicer
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
THE MONEY STORE INC.,
as Representative, and Provider
of the Limited Guaranty
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
MARINE MIDLAND BANK,
as Trustee
By: /s/ Barbara Jean McCauley
Name: Barbara Jean McCauley
Title: Assistant Vice President
<PAGE>
ACCEPTANCE OF MARINE MIDLAND BANK
Marine Midland Bank hereby accepts its appointment under the within
instrument to serve as initial Authenticating Agent, Certificate Registrar,
Paying Agent and Spread Account Custodian. In connection therewith, Marine
Midland Bank agrees to be bound by all applicable provisions of such instrument.
MARINE MIDLAND BANK, as initial
Authenticating Agent, Certificate
Registrar, Paying Agent and Spread
Account Custodian
By: /s/ Barbara Jean McCauley
Name: Barbara Jean McCauley
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 27th day of March, 1997 before me, a Notary Public in and for said
State, personally appeared Barbara Jean McCauley known to me to be an officer of
the Trustee, the trust company that executed the within instrument, and also
known to me to be the person who executed it on behalf of said banking
corporation, and acknowledged to me that such banking corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Christine Mariano
Notary Public
My Commission expires 1/25/98
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF UNION )
On the 27th day of March, 1997 before me, a Notary Public in and for the
State of New Jersey, personally appeared MORTON DEAR known to me to be the
EXECUTIVE VICE PRESIDENT of The Money Store Commercial Mortgage Inc., one of the
corporations that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF UNION )
On the 27th day of March, 1997 before me, a Notary Public in and for the
State of New Jersey, personally appeared MORTON DEAR known to me to be the
EXECUTIVE VICE PRESIDENT of The Money Store Inc., one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Eleonore Ferro
Notary Public
My Commission expires 12/8/98
<PAGE>
EXHIBIT A
CONTENTS OF BUSINESS FILE
With respect to each Business Loan, the Business File shall include a copy
of any of the following items delivered to the Trustee:
1. The original Business Note, endorsed by means of
an allonge as follows: "Pay to the order of
Marine Midland Bank, and its successors and
assigns, as trustee under that certain Pooling
and Servicing Agreement dated as of February 28,
1997, for the benefit of the holders of The
Money Store Business Loan Backed Certificates,
Series 1997-1, Class A, Class M and Class B, as
their respective interests may appear, without
recourse" and signed, by facsimile or manual
signature, in the name of the applicable Seller
by a Responsible Officer, with all prior and
intervening endorsements showing a complete
chain of endorsement from the originator to the
Seller, if such Seller was not the originator;
2. With respect to those Business Loans secured by
Mortgaged Properties, either: (i) the original
Mortgage, with evidence of recording thereon,
(ii) a copy of the Mortgage certified as a true
copy by a Responsible Officer of the Seller where
the original has been transmitted for recording
until such time as the original is returned by the
public recording office or duly licensed title or
escrow officer or (iii) a copy of the Mortgage
certified by the public recording office in those
instances where the original recorded Mortgage has
been lost;
3. With respect to those Business Loans secured by
Mortgaged Properties, either: (i) the original
Assignment of Mortgage from the Seller endorsed
as follows: "Marine Midland Bank, ("Assignee")
its successors and assigns, as trustee under the
Pooling and Servicing Agreement dated as of February
28, 1997" 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
Business Loans secured by Mortgaged Properties
located in the same county),
or (ii) a copy of such Assignment of Mortgage
certified as a true copy by a Responsible Officer
of the Seller where the original has been
transmitted for recording (PROVIDED, HOWEVER, that
where the original Assignment of Mortgage is not
being delivered to the Trustee, a 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
Seller);
4. With respect to those Business Loans secured by
Mortgaged Properties, either: (i) originals of
all intervening assignments, if any, showing a
complete chain of title from the originator to
the Seller, including warehousing assignments,
with evidence of recording thereon if such
assignments were recorded, (ii) copies of any
assignments certified as true copies by a
Responsible Officer of the Seller where the
originals have been submitted for recording
until such time as the originals are returned by
the public recording officer, or (iii) copies of
any assignments certified by the public
recording office in any instances where the
original recorded assignments have been lost;
5. With respect to those Business Loans secured by
Mortgaged Properties, either: (i) originals of all
title insurance policies relating to the Mortgaged
Properties to the extent the Seller obtained such
policies or (ii) copies of any title insurance
policies or other evidence of lien position,
including but not limited to PIRT
policies, limited liability reports and lot book
reports, to the extent the Seller obtain such
policies or other evidence of lien position,
certified as true by the Seller;
6. For all Business Loans, blanket assignment of all
Collateral securing the Business Loan, including
without limitation, all rights under applicable
guarantees and insurance policies;
7. For all Business Loans, irrevocable power of
attorney of the Seller to the Trustee to execute,
deliver, file or record and otherwise deal with the
Collateral for the Business Loans in accordance with
the Agreement. The power of attorney will be
delegable by the Trustee to the Servicer and any
successor servicer and will permit the Trustee or its
delegate to prepare, execute and file or record UCC
financing statements and notices to insurers; and
8. For all Business Loans, blanket UCC-1 financing
statements identifying by type all Collateral for
the Business Loans and naming the Trustee as
Secured Party and the Seller as the Debtor. The
UCC-1 financing statements will be filed promptly
following the Closing Date in New Jersey and
California and will be in the nature of protective
notice filings rather than a true financing
statement.
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A CERTIFICATE]
NO TRANSFER OF A CLASS A CERTIFICATE OR CERTIFICATES OR ANY INTEREST
THEREIN SHALL BE MADE TO ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND/OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH PLAN OR ACCOUNT INVESTING IN SUCH
ENTITY (INCLUDING INSURANCE COMPANY SEPARATE OR GENERAL ACCOUNTS AND COLLECTIVE
INVESTMENT FUNDS).
THE RIGHTS OF THE HOLDERS OF THE CLASS M AND CLASS B CERTIFICATES TO RECEIVE
DISTRIBUTIONS WITH RESPECT TO INTEREST AND PRINCIPAL WILL BE SUBORDINATED TO
SUCH RIGHTS OF THE HOLDERS OF THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
<PAGE>
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed under its official seal.
THE MONEY STORE COMMERCIAL
MORTGAGE INC., Servicer
By: ___________________________
Name: Morton Dear
Title: Executive Vice President
Dated:_________________
Attest:
- -------------------------
Assistant Secretary
This is one of the Certificates referred to in the within-mentioned Agreement.
MARINE MIDLAND BANK,
as Trustee
By:_____________________
Authorized Signatory
or
MARINE MIDLAND BANK,
as Authenticating Agent
By:_____________________
Authorized Signatory
<PAGE>
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: _______________________________
-------------------------------
_______________________________ (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
February 28, 1997, The Money Store Business Loan Backed Certificates, Series
1997-1 Class A, Class M and Class B (the "Agreement"), we hereby authorize and
request you to establish an account, as a Principal and Interest Account
pursuant to Section 5.03 of the Agreement, to be designated as "The Money Store
Commercial Mortgage Inc., in trust for the registered holders of The Money Store
Business Loan Backed Certificates, Series 1997-1." All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Servicer. You
may refuse any deposit which would result in violation of the requirement that
the account be fully insured as described below. This letter is submitted to you
in duplicate. Please execute and return one original to us.
THE MONEY STORE COMMERCIAL
MORTGAGE INC.
By:
Name: Morton Dear
Title: Executive Vice President
<PAGE>
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number __________, at the office of
the depository indicated above, and agrees to honor withdrawals on such account
as provided above. The amounts deposited at any time in the account will be
insured to the maximum amount provided by applicable law by the Federal Deposit
Insurance Corporation.
(Name of Depository)
By:
Name:
Title:
<PAGE>
EXHIBIT D
[OMITTED]
<PAGE>
EXHIBIT E
[OMITTED]
<PAGE>
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
========================
- ------------------------
Re: The Money Store Business Loan Backed
Certificates, Series 1997-1, [CLASS A] [CLASS M]
[CLASS B] NUMBER ____
Dear Sir:
In connection with the sale of the above-captioned Certificate by
___________________________________ to ___________________________________,
("Transferee") you, as Paying Agent, are instructed to make all remittances to
Transferee as Certificateholder as of ____________, 19__ by wire transfer. For
such wire transfer, the wiring instructions are as follows:
===========================
---------------------------
--------------------------------
Transferee
Certificateholder's mailing address:
Name:
Address:
<PAGE>
EXHIBIT F
FORM OF INITIAL CERTIFICATION
, 1997
[Seller]
[Servicer]
Re: Pooling and Servicing Agreement
The Money Store Business Loan Backed
Certificates, Series 1997-1, dated
as of February 28, 1997 among The Money
Store Commercial Mortgage Inc., The Money Store
INC. AND MARINE MIDLAND BANK, AS TRUSTEE
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement (the "Agreement"), the undersigned, as Trustee, hereby
certifies that, except as noted on the attachment hereto, if any (the "Loan
Exception Report"), it has received a Business Note and a file with respect to
each [Initial] [Subsequent] Business Loan listed in the Business Loan Schedule
and the documents contained therein appear to bear original signatures.
The Trustee has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any such documents or any of the
Business Loans identified on the Business Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Business
Loan.
MARINE MIDLAND BANK,
as Trustee
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT F-1
FORM OF INTERIM CERTIFICATION
, 1997
[Seller]
[Servicer]
Re: Pooling and Servicing Agreement
The Money Store Business Loan Backed
Certificates, Series 1997-1, dated
as of February 28, 1997 among The Money
Store Commercial Mortgage Inc., The Money Store
INC. AND MARINE MIDLAND BANK, AS TRUSTEE
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement (the "Agreement"), the undersigned, as Trustee, hereby
certifies that, except as noted on the attachment hereto, if any (the "Loan
Exception Report"), it has received each of the documents required to be
delivered to it pursuant to Section 2.04 of the Agreement with respect to each
[Initial] [Subsequent] Business Loan listed in the Business Schedule and the
documents contained therein appear to bear original signatures.
The Trustee has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any such documents or any of the
Business Loans identified on the Business Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Business
Loan.
MARINE MIDLAND BANK,
as Trustee
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT F-2
FORM OF FINAL CERTIFICATION
[date]
[Servicer]
[Seller]
Re: Pooling and Servicing Agreement, The Money Store
Business Loan Backed Adjustable Rate
Certificates, Series 1997-1, dated as of
February 28, 1997 among The Money Store Commercial
Mortgage Inc., The Money Store Inc. and Marine
Midland Bank, AS TRUSTEE
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Business Loan listed in the
Business Loan Schedule (other than any Business Loan paid in full or listed on
the attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.04 of the Pooling and Servicing Agreement and has determined that (i)
all such documents are in its possession, (ii) such documents have been reviewed
by it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Business Loan and (iii) based on its examination, and only as
to the foregoing documents, the information set forth in the Business Loan
Schedule respecting such Business Loan is correct. The Trustee has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Business Loan Schedule, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Business Loan.
MARINE MIDLAND BANK,
as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT G
[OMITTED]
<PAGE>
EXHIBIT H
Business LOAN SCHEDULE
[NOT ATTACHED]
<PAGE>
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: [Trustee]
Re: Pooling and Servicing Agreement,
The Money Store Business Loan Backed
Certificates, Series 1997-1, dated
AS OF FEBRUARY 28, 1997
In connection with the administration of the pool of Business Loans held by
you, we request the release, and acknowledge receipt, of the (Trustee's Business
File/[specify document]) for the Business Loan described below, for the reason
indicated.
OBLIGOR'S NAME, ADDRESS & ZIP CODE:
BUSINESS LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
____ 1. Business 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. Business 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. Business Loan in Foreclosure
_____4. Business Loan Repurchased Pursuant to Section 11.01
of the Pooling and Servicing Agreement.
_____5. Business Loan Repurchased or Substituted Pursuant
to Article II or III of the Pooling and
Servicing Agreement (Servicer hereby
certifies that the repurchase price or
Substitution Adjustment has been credited to
the Principal and Interest Account and/or
remitted to the Trustee for deposit into the
Certificate Account pursuant to the Pooling
and Servicing Agreement.)
____ 6. Collateral Being Released Pursuant to Section
5.01(f) of the Pooling and Servicing Agreement.
____ 7. Other (explain) ____________________________
---------------------------------
If box 1 or 2 above is checked, and if all or part of the Trustee's
Business 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 Business Loan.
If box 3, 4, 5, 6 or 7 above is checked, upon our return of all of the
above documents to you, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
THE MONEY STORE COMMERCIAL
MORTGAGE INC., as Servicer
BY:
NAME:
DATE:
Documents returned to Trustee:
- -------------------------------
Trustee
By:____________________________
Date:__________________________
<PAGE>
EXHIBIT J
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. 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 Business
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
<PAGE>
EXHIBIT K
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
RANGES # GROSS GROSS CERT. UNGTD
SERIES (IN DAYS) ACCT AMOUNT PCT AMOUNT PCT
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 TO 179 Days
180 to 719 Days
720 AND OVER
FORECLOSURE REO
PROPERTY
DELINQUENCY
OUTSTANDING
<PAGE>
EXHIBIT L
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section 6.09
shall contain the following information for each Business Loan as of the related
Record Date:
1. Name of the Obligor, address of the Mortgaged
Property, if applicable, and Account Number.
2. The Business Loan Interest Rate.
3. The Monthly Payment.
4. The dates on which the payments were received for the
applicable Due Period and the amount of such payments
segregated into the following categories; (a) total
interest received (including Servicing Fee and Extra
interest), (b) principal and Excess Payments received;
(c) Curtailments received; and (d) Principal Prepayments
received.
5. The Business Loan Principal Balance.
6. The Business Loan date and original term to
maturity.
7. A "Delinquency Flag" noting that the Business Loan
is current or delinquent. If delinquent, state the
date on which the last payment was received.
8. A "Foreclosure Flag" noting that the Business Loan
is the subject of foreclosure proceedings.
9. An "REO Flag" noting that the Mortgaged Property is
an REO Property.
10. A "Liquidated Business Loan Flag" noting that the
Business Loan is a Liquidated Business Loan and the
Net Liquidation Proceeds received in connection
therewith.
11. Any additional information reasonably requested by
the Trustee.
