EXHIBIT 4.4
Execution Copy
SPREAD ACCOUNT AGREEMENT
This Spread Account Agreement is dated as of September 29, 1998 (the
"Agreement") between First Union National Bank, a national banking association,
as Spread Account Depositor (the "Spread Account Depositor"), and The Bank of
New York, as indenture trustee (the "Indenture Trustee"), under the Indenture
referred to below. All capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Indenture and the Sale and Servicing
Agreement referred to below.
WHEREAS, certain subsidiaries of The Money Store Inc. (such subsidiaries,
the "Originators") have entered into a Trust Agreement dated as of August 31,
1998 (the "Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner
Trustee") pursuant to which The Money Store Trust 1998-C (the "Trust") was
established; and
WHEREAS, The Money Store Inc. ("TMS"), the Originators and the Trust have
entered into a Sale and Servicing Agreement dated as of August 31, 1998 (the
"Sale and Servicing Agreement") pursuant to which the Originators transferred to
the Trust a portfolio of mortgage loans (the "Loans"); and
WHEREAS, the Trust and the Indenture Trustee have entered into an Indenture
dated as of August 31, 1998 (the "Indenture") pursuant to which the Trust is
issuing certain classes of asset-backed notes (the "Notes"); and
WHEREAS, MBIA Insurance Corporation (the "Note Insurer") has issued its
note guaranty insurance policies with respect to the Notes, pursuant to which
the Note Insurer has agreed to make Insured Payments; and
WHEREAS, the Spread Account Depositor is the owner of all the Trust
Certificates issued by the Trust, which Trust Certificates entitle the holders
thereof to receive certain Excess Spread received on or with respect to the
Loans, which Excess Spread is required to be deposited into the Spread Account
pursuant to Section 7.14(b)(ii) of the Sale and Servicing Agreement and the
provisions of an Insurance Agreement dated as of September 1, 1998 (the
"Insurance Agreement") among the Note Insurer, TMS, the Originators, First Union
National Bank, as custodian, and the Indenture Trustee; and
WHEREAS, amounts in the Spread Account are available to fund Insured
Payments otherwise required to be paid by the Note Insurer; and
WHEREAS, the Spread Account Depositor desires to pledge to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, all of the
Spread Account Depositor's right, title and interest in the Spread Account to
serve as collateral for the Spread Account Depositor's obligation to apply
Excess Spread as set forth in the Sale and Servicing Agreement and the
Indenture;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
Section 1. DEFINITIONS. In addition to those terms defined in the Indenture
and the Sale and Servicing Agreement and otherwise herein, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
"Account Property" has the meaning set forth in Section 3 hereof.
"Certificated Securities" has the meaning set forth in Section
8-102(4) of the UCC.
"Clearing Corporation" has the meaning set forth in Section 8-102(5)
of the UCC.
"Delivery" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Indenture Trustee, endorsed
to, or registered in the name of, the Indenture Trustee or its nominee or
endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee; or
(ii) delivery thereof in registered form to the Indenture Trustee and
(A) the certificate is endorsed to the Indenture Trustee or in
blank by effective endorsement; or
(B) the certificate is registered in the name of the Indenture
Trustee, upon original issue or registration of transfer by the
issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Indenture
Trustee; or
(ii) the issuer has agreed that it will comply with instructions
originated by the Indenture Trustee without further consent by the
registered owner;
(d) with respect to any security issued by the U.S. Treasury that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the book-entry
security to the securities account (as defined in 31 CFR Part 357) of a
participant (as defined in 31 CFR Part 357) which is also a securities
intermediary; and
(ii) the participant indicates by book entry that the book-entry
security has been credited to the Indenture Trustee's securities account;
(e) with respect to a security entitlement:
(i) the Indenture Trustee becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it will comply with
entitlement orders originated by the Indenture Trustee without further
consent by the entitlement holder;
(f) for the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Trustee acquires possession thereof;
(B) another person (other than a securities intermediary) either
acquires possession thereof on behalf of the Indenture Trustee or,
having previously acquired possession thereof, acknowledges that it
holds for the Indenture Trustee; or
(C) a securities intermediary acting on behalf of the Indenture
Trustee acquires possession of thereof, only if the certificate is in
registered form and has been specially endorsed to the Indenture
Trustee by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee as the registered
owner, upon original issue or registration of transfer; or
(B) another person (other than a securities intermediary) either
becomes the registered owner thereof on behalf of the Indenture
Trustee or,
having previously become the registered owner, acknowledges that it
holds for the Indenture Trustee;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause same to be made
on the records of its nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
"Depositary" has the meaning set forth in 31 C.F.R. 306.118 or
similar federal regulations governing the transfer of securities
issued by the United States Treasury which are maintained in
book-entry form.
"FUNB" means First Union National Bank, a national banking
association headquartered in Charlotte, North Carolina, and its
successors and assigns.
"Instruments" has the meaning set forth in Section 9-105(l)(ii)
of the UCC but excludes any "instruments" that are "certificated
securities" as defined in Section 8-102(l) (a) of the UCC.
"Physical Property" has the meaning set forth in clause (i) of
the definition of "Delivery" in this Section 1.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"UCC" means the New York Uniform Commercial Code.
"Uncertificated Security" has the meaning set forth in Section
8-102(a)(18) of the UCC.
Section 2. APPOINTMENT OF INDENTURE TRUSTEE. The Spread Account Depositor
and the Note Insurer hereby appoint the Indenture Trustee as their agent under
this Agreement to act on their behalf in accordance with the terms of this
Agreement with respect to their interests in the Spread Account and all amounts
and investments deposited therein or credited thereto. The Indenture Trustee
hereby accepts and acknowledges its appointment as agent on behalf of the Spread
Account Depositor and the Note Insurer.
Section 3. PLEDGE OF SECURITY INTEREST. The Spread Account Depositor hereby
assigns, sells, conveys and transfers to the Indenture Trustee and its
successors and assigns, and grants thereto a security interest in, all of its
right, title and interest in and to all amounts payable to the Spread Account
pursuant to the Sale and Servicing Agreement, the Spread Account, all amounts
deposited therein or credited thereto, from time to time, and all proceeds of
the foregoing, including, without limitation, all other amounts and investments
held from time to time in the Spread Account to secure all its obligations
hereunder and all its obligations under the Basic Documents related to the
Spread Account in consideration of its right to receive Excess Spread in
accordance with Section 7.05(b) of the Sale and Servicing Agreement (all of the
foregoing, collectively, the "Account Property"), to have and to hold all the
aforesaid property, rights and privileges unto the Indenture Trustee, its
successors and assigns, in trust for the benefit of the Noteholders and the Note
Insurer, subject to the terms and provisions, set forth in this Agreement. The
Indenture Trustee hereby acknowledges such pledge and, upon receipt, shall hold
and distribute the Account Property in accordance with the terms and provisions
of this Agreement and the Sale and Servicing Agreement.
Section 4. ESTABLISHMENT OF THE ACCOUNT. In consideration of its right to
receive Excess Spread in accordance with Section 7.05(b) of the Sale and
Servicing Agreement, the Spread Account Depositor hereby establishes an account
titled "The Bank of New York--TMS Spread Account 1998-C" (the "Spread Account").
The Spread Account shall be the property of the Holder of the Trust Certificates
under the Trust Agreement, which is initially the Spread Account Depositor,
subject to the terms hereof and of the Sale and Servicing Agreement. The Spread
Account shall be a deposit account maintained with FUNB for so long as (i)(A)
the Servicer remains an affiliate of FUNB, (B) no Servicer Default shall have
occurred and be continuing, (C) FUNB maintains a short-term debt rating of at
least A-1 by S&P and P-1 by Moody's, and for five Business Days following any
reduction, suspension, termination or withdrawal in either such rating, (D) FUNB
maintains a long-term rating of at least "A" by S&P and "A2" by Moody's, and for
five Business Days following any reduction, suspension, termination or
withdrawal in either such rating, (E) there has been no (X) material adverse
change in the financial condition of FUNB or (Y) event which, in the reasonable
judgment of the Note Insurer, could result in a material adverse change in the
financial condition of FUNB and (F) no change in facts or circumstances exist
which, in the reasonable judgment of the Note Insurer, could result in the
Indenture Trustee not being entitled to the benefits of the Spread Account, or
(ii) following the occurrence and continuation of any event described in
subclause (i) of this paragraph, an arrangement is established that is
satisfactory to the Note Insurer which does not in itself result in (I) any
reduction of any rating issued in respect of the Notes or (II) any reduction
below investment grade of the Notes without the benefit of the Note Insurance
Policies. If the foregoing conditions are no longer satisfied, the Indenture
Trustee shall (and is hereby authorized to), upon obtaining actual knowledge
that the conditions are no longer satisfied, transfer the Spread Account to a
Designated Depository Institution as instructed in writing by the Note Insurer,
and obtain sole signatory authority thereto and invest amounts credited thereto
in Permitted Instruments in accordance with the provisions of Section 5 of this
Agreement which mature in the manner required by Section 7.07 of the Sale and
Servicing Agreement. Amounts on deposit on the Spread Account shall be invested
as set forth in Section 7.07(a) of the Sale and Servicing Agreement and, so long
as the Spread Account is maintained with FUNB, FUNB shall remit to the Spread
Account, from its own funds, the amount of any loss resulting from investments,
without reimbursement therefor, by the next Determination Date following such
loss. The Indenture Trustee shall not be liable for any loss resulting from the
investment of amounts on deposit in the Spread Account unless the Indenture
Trustee is the obligor under the investment.
The Spread Account Depositor hereby acknowledges and agrees that the Spread
Account is subject to the term of the Basic Documents, including, but not
limited to, Section 7.14(b)(ii) and Section 7.05(b) of the Sale and Servicing
Agreement. The Spread Account Depositor further acknowledges and agrees that
Indenture Trustee shall be entitled to withdraw amounts from the Spread Account
as provided in Section 7.05 of the Sale and Servicing Agreement. The Spread
Account Depositor covenants that amounts on deposit in the Spread Account shall
have an annual rate of return of at least 5.0%.
Section 5. DELIVERY OF ACCOUNT PROPERTY. With respect to the Account
Property that is not maintained with FUNB, the Spread Account Depositor and the
Indenture Trustee agree that:
(a) any Account Property that is held in deposit accounts shall
be held solely in an Eligible Deposit Account; and each such deposit
account shall be subject to the exclusive dominion and control of the
Indenture Trustee, and the Indenture Trustee shall have sole signature
authority with respect thereto;
(b) any Account Property that is Physical Property shall be
delivered to the Indenture Trustee in accordance with paragraph (a) of
the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC);
(c) any Account Property that is a "certificated security" under
Article 8 of the Relevant UCC shall be delivered to the Indenture
Trustee in accordance with paragraph (b) of the definition of
"Delivery" and shall be held, pending maturity or disposition, solely
by the Indenture Trustee or a securities intermediary (as such term is
defined in Section 8-102(a)(14) of the UCC);
(d) any Account Property that is an "uncertificated security"
under Article 8 of the Relevant UCC shall be delivered to the
Indenture Trustee in accordance with paragraph (c) of the definition
of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued registration on the
books and records of the issuer thereof of the ownership of such
security by the Indenture Trustee (or its nominee) or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC);
(e) any Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered to the Indenture Trustee in accordance
with paragraph (d) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or disposition,
through continued book-entry registration of such Account Property in
the name of the Indenture Trustee or a securities intermediary (as
such term is defined in Section 8-102(a)(14) of the UCC); and
(f) any Account Property held through a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the UCC) shall be
held in a securities account (as such term is defined in Section
8-501(a) of the UCC) that is established by such securities
intermediary in the name of the Indenture Trustee for which the
Indenture Trustee is the sole entitlement holder (as defined in
Section 8-102(a)(7) of the UCC).
Notwithstanding the foregoing, the parties hereto acknowledge that so long
as the Spread Account remains with FUNB, the provisions of this Section 5 shall
not apply.
Section 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPREAD ACCOUNT
DEPOSITOR AND THE INDENTURE TRUSTEE. (a) The Spread Account Depositor represents
and warrants that (i) the Spread Account Depositor is the sole owner of the
Spread Account, subject to no adverse claim (including any lien, encumbrance or
claim of legal or beneficial ownership), except the lien and security interest
in favor of the Indenture Trustee, (ii) the Spread Account Depositor has full
power, authority and legal right to pledge the Spread Account hereunder, and no
consent, approval or other authorization of any governmental authority shall be
required in connection therewith, (iii) the pledge of the Spread Account
pursuant to this Agreement will create a lien on and a security interest in the
Spread Account and the proceeds thereof, (iv) the performance by it of its
obligations hereunder will not result in the creation of any security interest,
lien or other incumbrance on the Spread Account other than the security interest
created under Section 3; provided, however, that no representation is made as to
the perfection or priority of the security interest in the Spread Account, (v)
the Spread Account Depositor's principal place of business is located at One
First Union Center, 000 X. Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx, 00000,
(vi) it is a national banking association duly organized and validly existing in
good standing under the laws of the United States, (vii) it has taken all
corporate action necessary to authorize the execution and delivery by it of this
Agreement, and (viii) neither the execution nor the delivery by it of this
Agreement, nor the performance by it of its obligations contemplated hereby nor
compliance by it with any of the terms or provisions hereof, will contravene any
federal law, governmental rule or regulation governing the banking powers of the
Spread Account Depositor or any judgment or order binding on it, or constitute
any default under its charter documents or by-laws or any material indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
(b) The Indenture Trustee hereby represents and warrants that: (i) it is a
banking corporation duly organized and validly existing in good standing under
the laws of the State of New York, (ii) it has taken all corporate action
necessary to authorize the execution and delivery by it of this Agreement, and
(iii) neither the execution nor the delivery by it of this Agreement, nor the
performance by it of its obligations contemplated hereby nor compliance by it
with any of the terms or provisions hereof will contravene any federal or New
York State law, governmental rule or regulation governing the banking or trust
powers of the Indenture Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
Section 7. STATEMENT OF ACCOUNT. On or before each Determination Date, the
Spread Account Depositor shall deliver to the Indenture Trustee, the Servicer
and the Note Insurer an Officer's Certificate of the Spread Account Depositor
setting forth, as of such date, (i) the amount on deposit in the Spread Account,
(ii) the activity in the Spread Account for the preceding month and (iii) the
amount of any income or gain (or loss) on amounts held in the Spread Account.
Section 8. FURTHER ASSURANCES. The Spread Account Depositor agrees that it
will execute and file Uniform Commercial Code financing statements, including
amendments thereto and continuation statements, with respect to that portion of
the Account Property in which perfection may be obtained by filing in such
jurisdictions as may be necessary to protect the security interest granted
hereby.
Section 9. NO DISPOSITION BY THE SPREAD ACCOUNT DEPOSITOR. The Spread
Account Depositor agrees that it will not, without the prior written consent of
the Note Insurer, sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Spread Account, nor will it create, incur
or permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge, option or any other encumbrance with respect to any of the Spread
Account, or any interest therein, or any proceeds thereof, except for the lien
and security interest provided for by this Agreement and the other Basic
Documents.
Section 10. TERMINATION. This Agreement shall terminate upon the
termination of the Trust in accordance with its terms. Upon termination of this
Agreement, any amounts on deposit in the Account shall be paid by the Indenture
to the Spread Account Depositor in accordance with the terms of the Sale and
Servicing Agreement.
Section 11. TERMINATION OF SECURITY INTEREST. Upon the payment in full of
the Notes pursuant to the Indenture and the payment in full of all amounts owed
to the Note Insurer with respect thereto, the lien and security interest
provided for herein as to the Spread Account shall immediately terminate and
cease to attach thereto (if such lien and security interest has not previously
terminated and ceased to attach) and the Indenture Trustee shall execute any and
all documents, including but not limited to UCC financing statements, necessary
to terminate any such lien and security interest upon receipt of such documents
from the Spread Account Depositor.
Section 12. THE NOTE INSURER. The parties hereto agree that the Note
Insurer shall be deemed a third party beneficiary of this Agreement entitled to
all rights and benefits set forth herein as fully as if it were a party hereto.
Notwithstanding the foregoing, any right conferred upon the Note Insurer
hereunder shall be suspended during any period in which an Insurer Default shall
be in effect.
Section 13. TRANSFER OF TRUST CERTIFICATES. First Union National Bank, as
holder of the Trust Certificates, shall not sell, transfer or otherwise dispose
of some or all of the Trust Certificates unless either (i) the Note Insurer
consents in writing to such sale, transfer or other disposition or (ii) First
Union National Bank contributes and transfers the Spread Account to the Trust
(or other entity acceptable to the Note Insurer) and provides the Note Insurer
with an opinion of counsel (and amendments to any Basic Documents, if necessary)
satisfactory to the Note Insurer to the effect that in the event of the
bankruptcy or insolvency of the proposed transferee of the Trust Certificates,
the Spread Account would not be deemed property of the estate of such transferee
and the Trust would not be consolidated with such transferee. Further, if while
First Union National Bank owns some or all of the Trust Certificates, an event
described in Section 4 hereof occurs that requires the Spread Account to be
transferred from First Union National Bank to another entity, First Union
National Bank shall, upon the written direction of the Note Insurer (i)
contribute and transfer the Trust Certificates to a "bankruptcy remote" special
purpose entity acceptable to the Note Insurer and (ii) provide the Note Insurer
with an opinion of counsel (and amendments to any Basic Documents, if necessary)
satisfactory to the Note Insurer to the effect that in the event of the
insolvency of First Union National Bank (or the parent of the special purpose
entity if not First Union National Bank) the assets and liabilities of such
special purpose entity would not be consolidated with the assets and liabilities
of First Union National Bank (or the parent of the special purpose entity if not
First Union National Bank).
Section 14. AMENDMENT. This Agreement may be amended by the Spread Account
Depositor and the Indenture Trustee with the consent of the Note Insurer.
Section 15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 17. NOTICES. All demands, notices and communications upon or to the
Spread Account Depositor, the Indenture Trustee or the Note Insurer under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt at the address set forth for the respective party in the Sale and
Servicing Agreement.
Section 18. SEVERABILITY OF PROVISIONS. If any one or more of the
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such agreements, provisions or terms shall be
deemed severable from the remaining agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 19. ASSIGNMENT; BENEFIT OF AGREEMENT. Notwithstanding anything to
the contrary contained herein, this Agreement may not be assigned by the Spread
Account Depositor or Indenture Trustee without the prior written consent of the
Note Insurer. Subject to the foregoing, this Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the Spread Account Depositor and the Indenture Trustee
have caused this Spread Account Agreement to be duly executed by their
respective officers as of the day and year first above written.
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Indenture Trustee
By
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Name:
Title:
FIRST UNION NATIONAL BANK,
as Spread Account Depositor
By:
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Name:
Title:
Acknowledged and Accepted
MBIA INSURANCE CORPORATION
By: ___________________________
Name:
Title:
