EXHIBIT 99.1
================================================================================
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
dated as of April 15, 2003
among
GSS HOMEPRIDE CORP.,
as Seller,
HOMEPRIDE FINANCE CORP.,
as Servicer,
THE CIT GROUP/SALES FINANCING, INC.,
as Sub-Servicer,
GREENWICH FUNDING CORP,
as an Investor,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Banks,
and
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH,
as Agent
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS......................................................................... 1
SECTION 1.01. Certain Defined Terms............................................ 1
SECTION 1.02. Other Terms...................................................... 45
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES.................................................. 45
SECTION 2.01. Purchase Facility................................................ 45
SECTION 2.02. Making Purchases................................................. 45
SECTION 2.03. Receivable Interest Calculation.................................. 46
SECTION 2.04. Take-Outs........................................................ 47
SECTION 2.05. Servicer Take-Outs............................................... 47
SECTION 2.06 Optional Reductions........................................... 48
ARTICLE III YIELD, FEES, ETC.................................................................... 48
SECTION 3.01. Yield Payment Dates.............................................. 48
SECTION 3.02. Fees............................................................. 48
SECTION 3.03. Computation of Yield and Fees.................................... 48
ARTICLE IV CAPITAL INVESTMENT REPAYMENTS....................................................... 48
SECTION 4.01. Repayments of Capital Investment................................. 48
ARTICLE V PAYMENTS............................................................................ 49
SECTION 5.01. Making of Payments............................................... 49
SECTION 5.02. Distributions.................................................... 49
ARTICLE VI INCREASED COSTS; TAXES.............................................................. 53
SECTION 6.01. Increased Costs.................................................. 53
SECTION 6.02. Additional Yield on Receivable Interests Bearing a Eurodollar
Rate............................................................. 54
SECTION 6.03. Taxes............................................................ 54
ARTICLE VII CONDITIONS OF PURCHASES............................................................. 55
SECTION 7.01. Conditions Precedent to Initial Purchase......................... 55
SECTION 7.02. Conditions Precedent to All Purchases............................ 59
ARTICLE VIII REPRESENTATIONS AND WARRANTIES...................................................... 61
SECTION 8.01. Representations and Warranties of the Seller..................... 61
i
Page
ARTICLE IX COVENANTS........................................................................... 65
SECTION 9.01. Records.......................................................... 65
SECTION 9.02. Other Liens or Interests......................................... 65
SECTION 9.03. Costs and Expenses............................................... 66
SECTION 9.04. Compliance with Laws, Etc........................................ 66
SECTION 9.05. Offices, Records, Name and Organization.......................... 66
SECTION 9.06. Performance and Compliance with Contracts and Credit and
Collection Policy................................................ 66
SECTION 9.07. Change in Business or Credit and Collection Policy............... 66
SECTION 9.08. Extension or Amendment of Receivables............................ 66
SECTION 9.09. Marking of Records............................................... 67
SECTION 9.10. Further Assurances............................................... 67
SECTION 9.11. Reporting Requirements........................................... 67
SECTION 9.12. Corporate Separateness........................................... 70
SECTION 9.13. Purchase and Contribution Agreement; Purchase and Sale
Agreement; Custodial Agreement; Global Servicing
Agreement........................................................ 73
SECTION 9.14. Nature of Business............................................... 73
SECTION 9.15. Mergers, Etc..................................................... 73
SECTION 9.16. Distributions, Etc............................................... 73
SECTION 9.17. Debt............................................................. 73
SECTION 9.18. Certificate of Incorporation and By-Laws......................... 73
SECTION 9.19. Inspections...................................................... 74
SECTION 9.20. Take-Out Securitization.......................................... 74
SECTION 9.21. Rating........................................................... 75
SECTION 9.22. Intentionally Omitted............................................ 75
SECTION 9.23. Changes in Payment Instructions to Obligors...................... 75
SECTION 9.24. Deposits to Specified Accounts................................... 75
SECTION 9.25. Lock-Box Accounts; Lock-Box Banks................................ 75
ARTICLE X GRANT OF SECURITY INTEREST.......................................................... 76
SECTION 10.01. Seller's Grant of Security Interest; Assignment of Purchase
and Sale Agreement............................................... 76
SECTION 10.02. Characterization of Transaction. ............................... 77
SECTION 10.03. Seller Remains Liable............................................ 77
ARTICLE XI ADMINISTRATION AND SERVICING OF RECEIVABLES......................................... 78
SECTION 11.01. Designation of Servicer Parties.................................. 78
SECTION 11.02. Duties of the Servicer Parties................................... 79
SECTION 11.03. Collection of Receivable Payments; Modification and
Amendment of Receivables......................................... 81
SECTION 11.04. Realization Upon Receivables..................................... 83
ii
Page
SECTION 11.05. Insurance and Dealer Recourse............................. 84
SECTION 11.06. Covenants, Representations and Warranties of Servicer
Parties................................................... 86
SECTION 11.07. Servicing and Sub-Servicing Fee; Payment of Certain
Expenses by Servicer and Sub-Servicer..................... 91
SECTION 11.08. Servicer's Certificate.................................... 92
SECTION 11.09. Annual Statement as to Compliance; Notice of Servicer
Termination Event......................................... 92
SECTION 11.10. Annual Independent Accountant's Report.................... 92
SECTION 11.11. Access to Certain Documentation and Information Regarding
Receivables............................................... 93
SECTION 11.12. Fidelity Bond............................................. 93
SECTION 11.13. Insurance................................................. 93
SECTION 11.14. Accounts.................................................. 93
ARTICLE XII THE SERVICER................................................................. 95
SECTION 12.01. Liability of Servicer Parties; Indemnities................ 95
SECTION 12.02. Consolidations, Mergers and Sales of Assets............... 96
SECTION 12.03. Limitation on Liability of Servicer Parties and Others.... 97
SECTION 12.04. Delegation of Duties...................................... 97
SECTION 12.05. Servicer Parties Not to Resign............................ 97
ARTICLE XIII SERVICER TERMINATION EVENTS.................................................. 98
SECTION 13.01. Servicer Termination Event................................ 98
SECTION 13.02. Consequences of a Servicer Termination Event.............. 99
SECTION 13.03. Appointment of Successor Servicer......................... 102
SECTION 13.04. Certain Rights of the Agent............................... 103
ARTICLE XIV TERMINATION EVENTS........................................................... 104
SECTION 14.01. Termination Events........................................ 104
SECTION 14.02. Effect of Termination Event............................... 105
SECTION 14.03. Events of Default......................................... 106
ARTICLE XV THE AGENT.................................................................... 109
SECTION 15.01. Authorization and Action.................................. 109
SECTION 15.02. Exculpation............................................... 109
SECTION 15.03. CSFB and Affiliates....................................... 110
SECTION 15.04. Bank's Purchase Decision.................................. 110
SECTION 15.05. Notice by Agent........................................... 110
ARTICLE XVI INDEMNIFICATION.............................................................. 110
SECTION 16.01. Indemnities by the Seller................................. 110
iii
Page
ARTICLE XVII MISCELLANEOUS................................................................ 113
SECTION 17.01. No Waiver; Remedies....................................... 113
SECTION 17.02. Amendments................................................ 113
SECTION 17.03. Notices, Etc.............................................. 113
SECTION 17.04. Assignability............................................. 113
SECTION 17.05. Costs, Expenses and Taxes................................. 114
SECTION 17.06. No Proceedings............................................ 115
SECTION 17.07. Confidentiality........................................... 115
SECTION 17.08. Captions and Cross References............................. 115
SECTION 17.09. Severability.............................................. 116
SECTION 17.10. GOVERNING LAW............................................. 116
SECTION 17.11. Execution in Counterparts................................. 116
SECTION 17.12. WAIVER OF JURY TRIAL...................................... 116
SECTION 17.13. Survival of Termination................................... 116
SECTION 17.14. ENTIRE AGREEMENT.......................................... 117
SECTION 17.15. Consent to Jurisdiction................................... 117
SECTION 17.16. Lienholder Nominee........................................ 117
SCHEDULE I - Agent's Account
SCHEDULE II - Credit and Collection Policy
SCHEDULE III - Non-Permitted Assignees
ANNEXES
ANNEX A - Form of Assignment and Acceptance Agreement
ANNEX B - Form of Control Agreement
ANNEX C - Form of Purchase Request
ANNEX D - Form of Transfer Certificate
ANNEX E - Intentionally Omitted
ANNEX F - Intentionally Omitted
ANNEX G - Intentionally Omitted
ANNEX H - Form of Funds Transfer Letter
iv
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this
"Agreement") is made and entered into as of April 15, 2003, among GSS HOMEPRIDE
CORP., a Delaware corporation (the "Seller"), HOMEPRIDE FINANCE CORP., a
Michigan corporation ("HomePride"), as servicer (the "Servicer"), THE CIT
GROUP/SALES FINANCING, INC., a Delaware corporation (the "Sub-Servicer"),
GREENWICH FUNDING CORP, a Delaware corporation ("Conduit"), THE FINANCIAL
INSTITUTIONS SET FORTH ON THE SIGNATURE PAGES HERETO and their permitted
assigns, as banks (the "Banks") and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH
("CSFB"), as agent (in such capacity the "Agent") for the Investors (as
hereinafter defined) and the Banks.
WHEREAS, the parties hereto have previously entered into that certain
Receivables Purchase Agreement, dated April 18, 2002 (the "Original Agreement");
WHEREAS, the parties hereto have agreed to amend and restate the Original
Agreement on the terms and conditions set forth herein;
WHEREAS, the Seller may acquire, from time to time, Receivables from
HomePride Funding Corp., a Delaware corporation ("HomePride SPV");
WHEREAS, the Seller is prepared to sell undivided fractional ownership
interests (referred to herein as "Receivable Interests") in the Receivables;
WHEREAS, Conduit may, in its sole discretion, purchase such Receivable
Interests, and the Banks are prepared to purchase such Receivable Interests, in
each case on the terms set forth herein.
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accountant's Report" has the meaning set forth in Section 11.10(a).
"Acquired Property" means property acquired by either Servicer Party or
Seller by foreclosure, repossession, replevin, deed in lieu of foreclosure, or
otherwise in respect of a Receivable.
"Acquired Property Mortgage" means, with respect to any Acquired Property,
any mortgage, deed of trust or similar security instrument from the Servicer (or
any other holder of title of such Acquired Property as may be permitted under
Section 11.04(b)) to the Agent which (i) encumbers such Acquired Property and
(ii) secures all amounts which were due on the related Contract up to the date
of acquisition of such Acquired Property.
"Additional Commitment Trigger" means that at any time on or after August
2, 2003, there shall not be in full force and effect Additional Committed Bank
Facilities with an aggregate amount of commitments at least equal to
$75,000,000.
"Additional Committed Bank Facilities" means committed finance facilities
under which banks and other financial institutions are committed to, on a
revolving basis, lend to, or purchase receivables or interests in receivables
from, the Seller, the Parent or any consolidated Subsidiary of the Parent, which
committed finance facilities shall (i) be on terms and conditions satisfactory
to the Agent in its reasonable discretion and (ii) exclude the finance facility
provided under this Agreement.
"Advance Rate"means as of any date of determination (a) 78% if the
following conditions shall be satisfied as of such date of determination: (i)
the Aggregate Outstanding Balance of all Eligible Receivables in the Receivables
Pool that are secured by New Homes shall be greater than or equal to 80% of the
Aggregate Outstanding Balance of all Eligible Receivables in the Receivables
Pool, (ii) the Aggregate Outstanding Balance of all Eligible Receivables in the
Receivables Pool secured by multi-wide Manufactured Homes shall be greater than
or equal to 70% of the Aggregate Outstanding balance of all Eligible Receivables
in the Receivables Pool and (iii) the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool with respect to which the related
Manufactured Home is located in a manufactured housing park shall be less than
or equal to 40% of the Aggregate Outstanding Balance of all Eligible Receivables
in the Receivables Pool and (b) 76.75% if the following conditions shall be
satisfied as of such date of determination: (i) the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool that are secured by
New Homes shall be greater than or equal to 75% of the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool, (ii) the Aggregate
Outstanding Balance of all Eligible Receivables in the Receivables Pool secured
by multi-wide Manufactured Homes shall be greater than or equal to 65% of the
Aggregate Outstanding balance of all Eligible Receivables in the Receivables
Pool and (iii) the Aggregate Outstanding Balance of all Eligible Receivables in
the Receivables Pool with respect to which the related Manufactured Home is
located in a manufactured housing park shall be less than or equal to 50% of the
Aggregate Outstanding Balance of all Eligible Receivables in the Receivables
Pool; provided, however if all of the conditions set forth in the immediately
preceding clauses (a) and (b) shall be satisfied as of such date of
determination, then
2
the Advance Rate shall be 78% ; provided, further, however, if Advance Rate
shall not be 78% or 76.75% pursuant to the foregoing on such date of
determination, then the Advance Rate shall be 76% on such date of determination;
provided, further, however, that, at all times after the Ratings have been
obtained from the Rating Agencies, the Advance Rate shall, form time to time, be
adjusted as necessary to maintain the Ratings so obtained form the Rating
Agencies.
"Affected Person" has the meaning set forth in Section 6.01(a).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Affiliated Dealer" means any Dealer that (i) is a direct or indirect
Subsidiary of the Parent and (ii) has originated Receivables that are included
in the Receivables Pool.
"Agent" has the meaning set forth in the Preamble.
"Agent's Account" means the account of the Agent set forth on Schedule I
hereto or such other account as the Agent shall designate in writing to the
Seller, the Servicer and the Custodian.
"Aggregate Outstanding Balance" means, with respect to any group of
Receivables as of any date, the sum of the Outstanding Balances of all such
Receivables as of the opening of business on such date.
"Aggregate Required Reserve Account Amount" means, with respect to any
date of determination, (a) the sum of the Required Reserve Account Amounts for
all Purchases made on or prior to such date minus (b) the sum of the Required
Reserve Account Amounts for all Receivables which are or have been the subject
of a Take-Out on or prior to such date.
"Allowed Land Value" means, with respect to any Receivable that arises in
connection with a Land and Home Contract or a Mortgage Loan, an amount equal to
(a) 95% multiplied by (b) the Appraised Value of the land on which the related
Manufactured Home is situated (or, if the land on which the related Manufactured
Home is situated consists of more than five acres, an amount equal to (x) the
Appraised Value of the entire tract of land on which the related Manufactured
Home is situated multiplied by (y) a fraction, the numerator of which is five,
and the denominator of which is the total amount of acres of such entire tract
of land); provided, that, in any case, all such land must be owned by the
related Obligor free and clear of any liens other than those arising under the
Mortgage securing the related Land and Home Contract or Mortgage Loan or any
other adverse claims.
"Alternate Base Rate" means a fluctuating rate per annum as shall be in
effect from time to time, which rate shall be at all times equal to the highest
of:
3
(a) the rate of interest announced publicly by CSFB in New York, New
York, from time to time as CSFB's base commercial lending rate;
(b) 1/2 of one percent above the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three- week moving average being determined weekly on each
Monday (or, if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous Friday by
CSFB on the basis of such rates reported by certificate of deposit dealers
to and published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of quotations
for such rates received by CSFB from three New York, New York certificate
of deposit dealers of recognized standing selected by CSFB, in either case
adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4
of one percent, to the next higher 1/4 of one percent; and
(c) the Federal Funds Rate.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount initially extended under the related Contract toward the purchase price
of the related Manufactured Home and/or Mortgaged Property and related costs.
"Applicable Spread" shall have the meaning ascribed thereto in the Fee
Letter.
"Appraised Value" means the market value of any Manufactured Home and/or
Mortgaged Property as set forth in the appraisal made for the originator of the
related Contract by a licensed independent professional appraiser at the time of
the origination of the related Contract.
"Approved Short-Term Investments" means any one or more of the following:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof (in each case, having original maturities of not
more than 360 days), provided such obligations are backed by the full
faith and credit of the United States;
(ii) certificates of deposit, eurodollar or other time deposits,
demand deposits, bankers acceptances and overnight bank deposits (in each
case, having original maturities of not more than 360 days) of any bank or
trust company incorporated under the laws of the United States or any
State thereof or the District of Columbia, having capital and surplus in
excess of $500 million and a short-term debt rating of no less than P-1 by
▇▇▇▇▇'▇ and A-1 by S&P and, if rated by Fitch, F-1 by Fitch;
4
(iii) repurchase obligations with a term of not more than seven days
for underlying obligations of the types described in clauses (i) and (ii)
above entered into with any financial institution meeting the
qualifications specified in clause (ii) above;
(iv) commercial paper having the highest short-term rating
obtainable from ▇▇▇▇▇'▇ and one of the two highest ratings from S&P (and,
if rated by Fitch, one of the two highest ratings from Fitch) with
maturities of not more than 6 months; and
(v) obligations issued by any fund rated at least AAAm by S&P or the
equivalent by ▇▇▇▇▇'▇ that has total assets in excess of $500,000,000 and
that invests at least 85% of its assets in investments of the types
described in clauses (i) through (iv) above.
"Asset Purchase Agreement" means (a) in the case of any Bank other than
CSFB, the asset purchase agreement entered into by such Bank concurrently with
the Assignment and Acceptance pursuant to which it became party to this
Agreement and (b) in the case of CSFB, the secondary market agreement, asset
purchase agreement or other similar liquidity agreement entered into by CSFB for
the benefit of Conduit, to the extent relating to the sale or transfer of
interests in Receivable Interests.
"Assignee Rate" for any Fixed Period for any Receivable Interest funded by
a Bank or an Investor that is not funding such Receivable Interest through the
issuance of commercial paper or other promissory notes, means an interest rate
per annum equal to the Eurodollar Rate for such Fixed Period plus the Applicable
Spread; provided, however, that in case of:
(i) any Fixed Period on or prior to the first day of which a Bank or
Investor shall have notified the Agent that (A) the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for such Bank or Investor to fund such Receivable Interest at the Assignee Rate
set forth above or (B) it is unable to obtain U.S. Dollars in the London
interbank market to fund or maintain any Receivable Interest (and such Bank or
Investor shall not have subsequently notified the Agent that such circumstances
no longer exist), or
(ii) any Fixed Period for a Receivable Interest, the Capital Investment of
which allocated to such Investor or Bank is less than $500,000,
the "Assignee Rate" for such Fixed Period shall be an interest rate per annum
equal to the Alternate Base Rate in effect from time to time during such Fixed
Period; provided further that the Agent and the Seller may agree in writing from
time to time upon a different "Assignee Rate."
5
"Assignment and Acceptance" means an assignment and acceptance agreement
entered into by a Bank, an assignee of such Bank and the Agent, pursuant to
which such assignee may become a party to this Agreement, in substantially the
form of Annex A hereto.
"Available Funds Cap" means, with respect to any Distribution Date, an
amount equal to:
AFCR x CI x ED
360
where:
AFCR = the Available Funds Cap Rate with respect to such
Distribution Date
CI = the average daily balance of the Capital Investment
during the Fixed Period ending on such Distribution
Date
ED = the actual number of days
elapsed during the Fixed
Period ending on such
Distribution Date.
"Available Funds Cap Carryforward Amount" has the meaning set forth in
Section 5.02 hereof.
"Available Funds Cap Rate" means, with respect to any Distribution Date, a
rate equal to the greater of (X) zero and (Y)(i) the Weighted Average Coupon
Rate of all Eligible Receivables in the Receivables Pool as of such Distribution
Date minus (ii) the sum of (a) the Servicing Fee Rate, (b) the Sub-Servicing Fee
Rate, (c) the Custodial Fee Rate with respect to such Distribution Date and (d)
2.50%.
"Bank Account" means any of the Collection Account, the Excess Collections
Account or the Reserve Account.
"Bank Commitment" of any Bank means, (a) with respect to CSFB,
$75,000,000; or (b) with respect to a Bank that has entered into an Assignment
and Acceptance, the amount set forth therein as such Bank's Bank Commitment, in
each case as such amount may be reduced by an Assignment and Acceptance entered
into between such Bank and its assignee, and as may be further reduced (or
terminated) pursuant to the next sentence. Any termination of the Purchase Limit
pursuant to the terms of this Agreement shall terminate the Bank Commitment of
each Bank.
6
"Banks" has the meaning set forth in the Preamble.
"Bi-Weekly Contract" means any Contract pursuant to which the scheduled
level payment of interest and principal is due every 14 days.
"Business Day" shall mean any day on which (a) commercial banks in New
York City are not authorized or required to be closed, and (b) in the case of a
Business Day which relates to calculation of a Eurodollar Rate, dealings are
carried on in the London interbank Eurodollar market.
"Buy-For Contract" means a Contract under which the related Obligor is not
a resident of the related Manufactured Home and such Manufactured Home was
purchased primarily for use by some party other than the Obligor.
"California Park Receivable" means a Receivable (i) which is related to
Manufactured Home located in a manufactured housing park in California, (ii)
which is secured by the related Manufactured Home but not the land on which it
is situated and (iii) with respect to which, the Servicer has received an
appraisal of the value of the related Manufactured Home from a licensed
independent professional appraiser.
"California Weighted Average FICO Score" means, as of any date of
determination, the weighted average (weighted solely based upon the Outstanding
Balances of the Eligible Receivables owed by the applicable Obligors as of such
date of determination) of the FICO Scores of the Obligors related to all
Eligible Receivables originated in California as of such date of determination.
"Capital Deficiency" means, with respect to any time of determination, the
amount, if any, by which aggregate Capital Investment at such time plus all
accrued and unpaid Yield and Fees at such time shall exceed the product of (x)
the then Advance Rate and (y) the Net Receivables Pool Balance at such time.
"Capital Investment" of any Receivable Interest means the original amount
paid to the Seller for such Receivable Interest at the time of its purchase by
an Investor or a Bank pursuant to this Agreement or such amount divided or
combined in accordance with Section 2.03, in each case reduced from time to time
by Collections distributed on account of such Capital Investment pursuant to
Section 5.02 ; provided that if such Capital Investment shall have been reduced
by any payment and thereafter all or a portion of such distribution is rescinded
or must otherwise be returned for any reason, such Capital Investment shall be
increased by the amount of such rescinded or returned payment, as though it had
not been made.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent
7
ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
"Change of Control" means (i) (a) the Parent shall cease to own, directly
or indirectly, 100% of the outstanding Capital Stock of HomePride; (b) HomePride
shall cease to own 100% of the Capital Stock of HomePride SPV; or (c) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), shall become, or obtain rights
(whether by means of warrants, options or otherwise, to become, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the outstanding Capital Stock of the Parent,
(ii) a "Change of Control" as defined in the 1999 Indenture shall have occurred
or (iii) a "Change of Control"as defined in the 2002 Indenture shall have
occurred.
"CHBC" means Champion Home Builders Co.
"CIT" means CIT Group Inc., a Delaware corporation, or any successor
thereto.
"CIT Group/Sales" means The CIT Group/Sales Financing, Inc., a Delaware
corporation, or any successor thereto.
"CIT Group/Sales Termination Date" has the meaning set forth in Section
11.01(c).
"CIT Guaranty" means the Guaranty, dated as of the Original Closing Date,
executed by CIT in favor of the Agent in respect of the obligations of CIT
Group/Sales, in its capacity as Sub-Servicer under this Agreement, as such
Guaranty may be amended, supplemented or otherwise modified from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" has the meaning set forth in Section 11.03.
"Collection Account Bank"has the meaning set forth in Section 11.03.
"Collection Period" means, with respect to a Distribution Date, the
calendar month immediately preceding such Distribution Date (or portion thereof
following the Original Closing Date or the most recent Take-Out Date).
"Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds of such Receivable, including, without limitation, all
cash proceeds of Related Security with respect to such Receivable received in
respect of such Receivable after the related Cut-Off Date (but excluding any
fees occasioned by the making of expedited payments by the related Obligor by
means of telephonic communication) and all amounts paid under or in
8
connection with any Interest Rate Hedge purchased in accordance with the
provisions of this Agreement.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with the Parent within the meaning of Section 4001
of ERISA or is part of a group which includes the Parent and which is treated as
a single employer under Section 414 of the Code.
"Computer Tape" means, with respect to Pool Receivables, a computer tape
or other electronic medium in a format reasonably acceptable to the Agent
containing data specifications approved by the Agent on or prior to the date of
the initial Purchase hereunder.
"Conduit" has the meaning set forth in the Preamble.
"Consolidated EBIT" shall mean for any date of determination hereunder, an
amount equal to (A) the sum of Consolidated Net Income (Loss) as calculated for
the most recently concluded fiscal quarter plus, (B) to the extent deducted in
determining Consolidated Net Income (Loss) for such period, (i) provisions for
taxes based on income and state single business taxes and (ii) Consolidated
Interest Expense.
"Consolidated Interest Expense" means, for any date of determination
hereunder, total interest expense (including without limitation, interest
expense attributable to capital leases in accordance with GAAP) of the Parent
and its Subsidiaries on a consolidated basis as calculated for the most recently
concluded fiscal quarter.
"Consolidated Net Income (Loss)" means, for any fiscal period of the
Parent and its consolidated Subsidiaries, the net income (or loss) of the Parent
and such Subsidiaries on a consolidated basis for such period (taken as a single
accounting period) determined in conformity with GAAP; provided, however, that
there shall be excluded therefrom the income (or loss) of any Person accrued
prior to the date such Person becomes such a consolidated Subsidiary of the
Parent or is merged into or consolidated with the Parent or such a consolidated
Subsidiary of the Parent, or such Person's assets are acquired by the Parent or
one of such consolidated Subsidiaries.
"Contract" means a Manufactured Housing Contract, a Land and Home Contract
or a Mortgage Loan.
"Control Agreement" means a control agreement, in the form of Annex B
hereto, among the Collection Account Bank, the Agent, the Servicer and the
Seller, dated as of the Original Closing Date, with respect to each of the Bank
Accounts, as the same may be amended, modified, restated or supplemented from
time to time in accordance with its terms.
9
"Coupon Rate" means, with respect to any Receivable, the per annum rate of
interest for such Receivable set forth in the related Contract.
"Credit and Collection Policy" means (i) those manufactured housing loan
credit policies and practices of the Servicer and (ii) those manufactured
housing loan servicing policies and practices of the Sub-Servicer, as such
manufactured loan servicing policies and practices shall have been adopted by
the Servicer, all as in effect on the date of this Agreement as set forth in
Schedule II attached hereto, as modified from time to time in compliance with
this Agreement.
"CSFB" has the meaning set forth in the Preamble.
"Custodial Agreement" means the Custodial Agreement, dated as of the
Original Closing Date, among the Custodian, the Agent, the Seller, the Servicer
and the Sub-Servicer, including all amendments, modifications and supplements
thereto.
"Custodial Fee Rate" means, with respect to any Distribution Date, a rate
equal to the Custodial Fees payable with respect to the immediately preceding
Collection Period expressed as a percentage of the aggregate Receivables in the
Receivables Pool as of such Distribution Date.
"Custodial Fees" means the fees and expenses owed to the Custodian under
the Custodial Agreement.
"Custodian" means JPMorgan Chase Bank, as custodian under the Custodial
Agreement and any successor appointed pursuant to the terms thereof.
"Cut-Off Date" means, with respect to any Pool Receivable, the date
specified as such in the Purchase Request for such Receivables and as approved
by the Agent.
"Dealer" means a dealer who sold a Manufactured Home to an Obligor and who
originated and assigned the Contract relating to such Manufactured Home to
HomePride under a Dealer Agreement, and any successor to such Dealer.
"Dealer Agreement" means any agreement between HomePride and a Dealer with
respect to the origination and assignment of Contracts, substantially in the
form previously delivered to and approved by the Agent, and as such may be
amended, modified and supplemented from time to time with the consent of the
Agent (in the case of amendments, modifications and supplements other than those
of an inconsequential nature), such consent not to be unreasonably withheld.
"Dealer Recourse" means, with respect to a Contract, all of HomePride's
rights arising under the related Dealer Agreement or otherwise against the
Dealer which originated such Contract.
10
"Debt" means, without duplication, (a) indebtedness for borrowed money,
whether evidenced by bonds, debentures, notes or other similar instruments, (b)
obligations to pay the deferred purchase price of property or services, (c)
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, (d) obligations under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (c) above and (e) Restricted Contingent Liabilities.
"Deemed Advance Percentage" means as of any date of determination, an
advance percentage determined by the Agent to be consistent with the criteria
necessary for the facility contemplated by this Agreement to receive a rating of
the highest category from one or more nationally recognized statistical rating
agencies; it being understood that such determination shall be made by the Agent
without actually obtaining such a rating from any such statistical rating
agencies.
"Deemed Capital Investment Amount" means as of any date of determination,
the product of (i) the Net Receivables Pool Balance and (ii) the Deemed Advance
Percentage as of such date.
"Deemed Credit Enhancement Amount" means as of any date of determination,
an amount equal to the excess, if any, of (i) the Capital Investment as of such
date of determination over (ii) the Deemed Capital Investment Amount as of such
date of determination.
"Defaulted Receivable" means a Receivable with respect to which:
(a) the related Manufactured Home or Mortgaged Property has been
repossessed or foreclosed upon;
(b) all or any portion greater than $65 of any Scheduled Payment is
90 days or more past due;
(c) such Receivable has been partially or wholly charged-off for any
reason because the Servicer or Sub-Servicer has made a good faith
determination that payments under the related Contract are not likely to
be resumed;
(d) the related Obligor is involved in an Event of Bankruptcy; or
(e) consistent with the Credit and Collection Policy, such
Receivable has been or should be written off as uncollectible.
11
"Deferred Payment Receivable" means a Receivable with respect to which the
related Contract provides that the first Scheduled Payment thereon is due on a
date later than 60 days from the date of the origination of such Contract.
"Delinquency/Repossession Ratio" means, as of any date of determination,
with respect to any group of Receivables, the ratio (expressed as a percentage)
computed by dividing:
(a) the sum, without duplication, of (i) the Aggregate Outstanding
Balance of such Receivables which were Tier 2 Delinquent Receivables as of
the last day of the immediately preceding Collection Period and (ii) the
Aggregate Outstanding Balance of such Receivables which became Repossessed
Receivables during the immediately preceding Collection Period;
by
(b) the Aggregate Outstanding Balance of all such Receivables as of
the last day of the immediately preceding Collection Period.
"Delinquent Receivable" means a Receivable as to which any Scheduled
Payment, or part thereof greater than $65.00, remains unpaid for 30 days or more
from the original due date for such Scheduled Payment.
"Determination Date" means, with respect to each Distribution Date, that
day which shall be two (2) Business Days prior to such Distribution Date.
"Distribution Date" means, the 13th day of each calendar month, or if such
day is not a Business Day, the next succeeding Business Day.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Eligible Account" means (a) a segregated, non-interest bearing trust or
custodial account or (b) a segregated direct deposit account, in each case,
maintained with a depository institution or trust company organized under the
laws of the United States of America, or any of the States thereof, or the
District of Columbia, having a certificate of deposit, short term deposit or
commercial paper rating of at least A-1+ by Standard & Poor's and P-1 by
Moody's.
"Eligible Assignee" means CSFB, any of its Affiliates, any Person managed
by CSFB or any of its Affiliates or any other financial or other institution
acceptable to the Agent other than the financial or other institutions set forth
on Schedule III hereto as amended from time to time with the written consent of
the Agent.
"Eligible Counterparty" means (A) CSFB or any of its Affiliates, (B) any
other nationally recognized financial institution that is in the business of
entering into interest rate
12
hedging arrangements (i) the long-term senior unsecured debt obligations of
which are rated "AA" or better by Standard & Poor's and "Aa2" or better by
Moody's and (ii) which is otherwise acceptable to the Agent or (C) any other
financial institution that has been approved in writing by the Agent.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or a
governmental subdivision or agency;
(b) is not a Defaulted Receivable or Delinquent Receivable;
(c) which, according to the Contract related thereto, is required to
be paid in full within 360 months of the original billing date therefor;
(d) which is an "eligible asset" as defined in Rule 3a-7 under the
Investment Company Act of 1940, as amended;
(e) which is, and for which the related Contract and Mortgage Note,
if any, is, an "account," "instrument," "chattel paper," "general
intangible" or "payment intangible" within the meaning of Article 9 of the
UCC of all applicable jurisdictions;
(f) which is denominated and payable only in Dollars in the United
States;
(g) which arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the Obligor of such Receivable and is not
subject to any litigation or any right of rescission, dispute, offset,
counterclaim or other defense of such Obligor;
(h) (i) which, together with the related Contract, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, lender
licensing, fair debt collection practices and privacy) and with respect to
which no part of such Contract and none of the Seller, HomePride,
Servicer, Sub-Servicer or the related Obligor or Dealer is in violation of
any such law, rule or regulation in any material respect and (ii) which,
together with the related Contract, does not contravene in any respect the
Georgia Fair Lending Act, as in effect from time to time, and with respect
to which no part of
13
such Contract and none of the Seller, HomePride, Servicer, Sub-Servicer or
the related Obligor or Dealer is in violation of such law in any respect;
(i) which arises under a Contract which (i) does not require the
Obligor thereunder to consent to the transfer, sale or assignment of the
rights and duties of the Seller, HomePride, HomePride SPV or the Dealer
thereunder, (ii) does not contain a confidentiality provision that
purports to restrict the ability of the Investors, Banks or the Agent to
exercise their rights under this Agreement, including, without limitation,
their right to review the related Contract, and (iii) does not require
notice to the Obligor thereunder of any transfer, sale or assignment of
the rights and duties of the Seller, HomePride, HomePride SPV or the
Dealer thereunder;
(j) which (i) satisfies in all respects, other than in an
inconsequential respect, all applicable requirements of the Credit and
Collection Policy and (ii) was originated or acquired by HomePride in the
ordinary course of its business and in accordance with HomePride's
customary acquisition or underwriting and originating policies and
procedures;
(k) for which the related Manufactured Home is a "single family
residence" within the meaning of Section 25(e)(10) of the Code;
(l) which provides for level monthly, semi-monthly or bi-weekly
payments to the stated maturity thereof, and permits either partial or
full prepayment without penalty; and with respect to which the interest
thereon is calculated in accordance with one of the methods commonly
referred to as the "Simple Interest Method", "Actuarial Method" or the
"Rule of 78's Method" (with payments received applied first to interest
accrued);
(m) which, if the related Contract was not originated by HomePride,
was originated by a Dealer and such Dealer is subject to a Dealer
Agreement which is in full force and effect;
(n) which arises under a Contract which shall represent a first
priority perfected security interest in the related Manufactured Home
and/or Mortgaged Property;
(o) which is serviced by the Servicer or the Sub-Servicer, and with
respect to which the related Contract has not been compromised, adjusted
or modified (including by the extension of time for payment or the
granting of any discounts, allowances or credits) other than in a manner
that was, in the reasonable judgment of the Servicer, Sub-Servicer or any
prior servicer or holder
14
of the related Contract, necessary to maximize the amount to be received
thereunder;
(p) with respect to which at all times since the origination of the
related Contract the related Manufactured Home and Mortgaged Property, if
any, is covered by appropriate physical damage insurance or property
insurance (including for each Manufactured Home located in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy meeting
the requirements of the guidelines of the Flood Insurance Administration
as of the date of origination), in each case in an amount at least equal
to the lesser of the maximum insurable value of the Manufactured Home and
the Amount Financed and otherwise satisfying the provisions of Section
11.05;
(q) which the Seller acquired in good faith, for value and without
notice of any Lien and with respect to which the Seller has good and
marketable title, free and clear of all Liens;
(r) which shall not have been originated in a jurisdiction under
which the assignment or sale of such Receivable would be invalid or
unlawful;
(s) with respect to which all information in the Computer Tape and
otherwise provided by HomePride, either Servicer Party or the Seller to
the Agent hereunder shall be true and correct as of the date of the
Purchase of a Receivable Interest therein;
(t) with respect to which no adverse selection process was used for
selecting such Receivable for sale by HomePride to HomePride SPV or by
HomePride SPV to the Seller and which has not been selected for inclusion
in Receivables Pool under this Agreement in a manner that is adverse to
the interests of the Investors or the Banks;
(u) with respect to which the Servicer or Sub-Servicer has performed
all acts required to preserve the rights of the Agent, the Investors and
the Banks in any Insurance Policies in respect of such Receivable;
(v) with respect to which no error, omission, misrepresentation,
negligence or fraud in any respect, other than in an inconsequential
respect, occurred in connection with the origination of such Receivable
and the related Contract;
(w) with respect to which the related Manufactured Home and
Mortgaged Property is free of damage and in good repair;
15
(x) with respect to which there has been no fraud, dishonesty,
material misrepresentation or negligence on the part of HomePride in
connection with the origination or acquisition of such Receivable;
(y) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, with respect to which the related Mortgage constitutes a
valid first priority lien upon and security title to the related Mortgaged
Property described therein;
(z) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, with respect to which no part of the Mortgaged Property
purporting to secure the related Contract has been, or shall have been,
released from the lien or security title of the Mortgage securing the
related Contract;
(aa) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, if the related Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to act as such, is properly
designated, serving and named in such Mortgage;
(bb) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, with respect to which the related Mortgaged Property is
located in the United States;
(cc) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, with respect to which there is no delinquent tax or
assessment lien on the related Mortgaged Property;
(dd) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, with respect to which no improvement located on or being
part of the related Mortgaged Property is in violation of any applicable
zoning law or regulation in any material respect; and all material
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of such Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities, and such Mortgaged
Property is lawfully occupied under the applicable law;
(ee) if such Receivable arises under a Land and Home Contract or a
Mortgage Loan, no hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act
of
16
1976, or other federal, state or local environmental legislation exist on,
or affect, the related Mortgaged Property;
(ff) if such Receivable arises under a Mortgage Loan secured by real
estate, such Mortgage Loan is evidenced by one original promissory note
which is secured by a valid and perfected first lien on the related
Mortgaged Property;
(gg) which arises under a Contract which contains customary and
enforceable provisions adequate for realization of the benefits of the
Related Security for such Contract;
(hh) which arises under a Contract which (together with the
Collections and Related Security related thereto) has been the subject of
either a valid transfer and assignment from HomePride to HomePride SPV,
and from HomePride SPV to the Seller, of all of HomePride's and HomePride
SPV's, respectively, right, title and interest therein or the grant of a
first priority perfected security interest therein (and in the Collections
and Related Security related thereto);
(ii) which arises under a Contract with respect to which each of
HomePride, HomePride SPV and Seller has performed all obligations required
to be performed by it thereunder;
(jj) which, together with the related Contract and all agreements
with respect thereto, was (i) prior to the sale thereof to HomePride SPV
pursuant to the Purchase and Contribution Agreement, owned by HomePride
free and clear of any lien or other right that may impair the interest of
the Investors or the Banks or the Servicer's rights under this Agreement
and (ii) prior to the sale thereof to the Seller pursuant to the Purchase
and Sale Agreement, owned by HomePride SPV free and clear of any lien or
other right that may impair the interest of the Investors or the Banks or
the Servicer's rights under this Agreement;
(kk) in which HomePride SPV, after the transfer from HomePride
pursuant to the Purchase and Contribution Agreement (in the event the
intent of the parties thereto that such transfer constitutes a true sale
is disregarded), shall have acquired a valid and perfected first priority
security interest, along with the related Collections, following the
respective purchase date with respect thereto, free and clear of any lien
or other right that may impair the interest of the Seller, the Investors,
the Banks or the Servicer under this Agreement;
(ll) in which the Seller, after transfer from HomePride SPV pursuant
to the Purchase and Sale Agreement (in the event the intent of the parties
thereto that such transfer constitutes a true sale is disregarded), shall
have acquired a valid and perfected first priority security interest,
along with the related Collections,
17
following the respective purchase date with respect thereto, free and
clear of any lien or any other right that may impair the interest of the
Seller, Investors, Banks or Servicer under this Agreement;
(mm) as to which no effective financing statement or other
instrument similar in effect covering such Receivable, the related
Contract, any interest therein, or Collections with respect thereto is on
file in any recording office except such as may be filed in favor of
HomePride under any Dealer Agreement, HomePride SPV under the Purchase and
Contribution Agreement, the Seller under the Purchase and Sale Agreement
or the Agent under this Agreement;
(nn) which arises under a Contract with respect to which all costs,
fees, intangible, documentary and recording taxes and expenses incurred in
making, closing and recording such Contract have been paid;
(oo) if such Receivable arises under a Manufactured Housing
Contract, the related Manufactured Home is personal property, was personal
property at the time of the execution and delivery of such Contract by the
parties thereto, and is not and was not, at such time, considered or
classified as part of the real estate on which it is located under the
laws of the jurisdiction in which it is located;
(pp) the Obligor of which, if a natural person, is living, is not a
minor under the laws of his/her state of residence, is competent to enter
into a contract and incur debt;
(qq) with respect to which all material consents, licenses or
authorizations of, or registrations with, any governmental authority
required to be obtained or given in connection with the origination of
such Receivable, the execution and delivery of the related Contract, and
the sale, assignment and transfer of the related Contract to HomePride SPV
and the Seller, and the servicing of the related Contract by the Servicer
and Sub-Servicer have been duly obtained or given and are in full force
and effect;
(rr) which arises under a Contract which has a fixed annual
percentage rate and provides for level monthly, bi-weekly or semi-monthly
payments of principal and interest and which fully amortize such Contract
over its term;
(ss) which has a Loan-to-Value Ratio not exceeding 100%;
(tt) with respect to which, (i) if the related Manufactured Home is
located in a state in which notation of a security interest on the Title
related to such Manufactured Home is required or permitted to perfect (a)
security interest in such Manufactured Home, such Title shows HomePride,
or if a new or
18
replacement Title with respect to such Manufactured Home is being applied
for, such Title will be issued within 180 days and will show, HomePride,
as the holder of a first priority security interest in such Manufactured
Home; (ii) if the related Manufactured Home is located in a state in which
the filing of a financing statement or the making of a fixture filing
under the UCC is required to perfect a security interest in manufactured
housing, such filings or recordings have been duly made and show HomePride
as secured party; (iii) if the related Manufactured Home secures a Land
and Home Contract, the related land securing such Land and Home Contract
is subject to a Mortgage properly filed in the appropriate public
recording office which itself, or with an assignment of mortgage properly
filed in such office, names HomePride as mortgagee; provided, further that
in each such case, the Seller has the same rights as the secured party of
record would have (if such secured party were still the owner of the
Contract) against all Persons claiming an interest in such Manufactured
Home;
(uu) such Receivable is not a Deferred Payment Receivable;
(vv) which is of a type which the Agent has not provided notice to
the Seller that such type of Receivable is not permitted to be included in
a pool of manufactured housing loans which secures or is represented by
interests in rated securities by any of the Rating Agencies;
(ww) the Obligor of which has been directed to make payments to the
Specified Account (or to a Lock-Box Account as and when required under
this Agreement);
(xx) the Outstanding Balance of such Receivable at the time of
Purchase of a Receivable Interest therein does not exceed $200,000;
(yy) such Receivable was originated by HomePride or a Person
(including, without limitation, an Affiliate of HomePride, but excluding
the Parent) which sold such Receivable to HomePride and said Receivable
which was purchased by HomePride was, prior to the time of its purchase,
re-underwritten in accordance with the standards and criteria set forth in
the Credit and Collection Policy;
(zz) which is evidenced by one original executed Contract;
(aaa) the originally executed Contract related to such Receivable
and related Receivable File is in the possession of the Custodian;
(bbb) with respect to which the documents contained in the related
Receivable File are not defective in any material respect;
19
(ccc) if such Receivable arises under a Land and Home Contract or is
a Mortgage Loan, such Land and Home Contract or the related Mortgage Note,
as applicable, is endorsed to HomePride in blank;
(ddd) if such Receivable arises under a Land and Home Contract or is
a Mortgage Loan, the original related Land and Home Contract or Mortgage
Note, as applicable, is in the possession of the Custodian;
(eee) if such Receivable arises under a Land and Home Contract or is
a Mortgage Loan, with respect to which the related Mortgage has been
properly recorded as required by law;
(fff) with respect to which, if such Receivable arises under a
Manufactured Housing Contract, the related original Title is in the
possession of the Custodian; provided, that, if the related Manufactured
Home is located in a jurisdiction the laws of which require that the
related original Title must be delivered to the related Obligor, then the
appropriate document issued by the titling authority in such jurisdiction
evidencing the notation of HomePride's perfected, first priority security
interest in such Manufactured Home is in the possession of the Custodian;
(ggg) the related Contract, and the loan created thereunder, does
not constitute a Section 32 Loan;
(hhh) with respect to which, the representations and warranties of
the Dealer involved in the origination of such Receivable were true and
correct as of the date that the Receivable was acquired from such Dealer;
(iii) which, if originated by a Dealer, was originated by such
Dealer in the regular course of its business;
(jjj) the inclusion at any time (whether on the date a Receivable
Interest in such Receivable is first Purchased or at any time thereafter)
of such Receivable in the Receivables Pool as an Eligible Receivable shall
not cause the Weighted Average Loan-to-Value to be greater than 90%;
(kkk) the inclusion at any time (whether on the date a Receivable
Interest in such Receivable is first Purchased or at any time thereafter)
of such Receivable in the Receivables Pool as an Eligible Receivable shall
not cause the Weighted Average FICO Score to be less than 670;
20
(lll) the inclusion at any time (whether on the date a
Receivable Interest in such Receivable is first Purchased or
at any time thereafter) of such Receivable in the Receivables
Pool as an Eligible Receivable shall not cause the Weighted
Average Manufactured Housing Contract Remaining Term to be
greater than 300 months;
(mmm) the inclusion (whether on the date a Receivable
Interest in such Receivable is first Purchased or at any time
thereafter) of such Receivable in the Receivables Pool as an
Eligible Receivable shall not cause the California Weighted
Average FICO Score to be less than 700 at any time that the
amount by which the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool originated in the
State of California exceeds 20% of the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool;
(nnn) until such time as HomePride, HomePride SPV and
the Seller shall have obtained duly issued licenses, permits
and/or approvals which authorize them to originate and hold
Contracts under the applicable statutes, rules, regulations,
case law and administrative decisions of the State of Maryland
and its courts and administrative bodies, (i) the Obligor
under the Contract related to such Receivable shall not be a
resident of the State of Maryland, (ii) the related
Manufactured Home shall not be located in the State of
Maryland and (iii) the Title for such Manufactured Home shall
not be, and shall not be required to be, issued by the State
of Maryland or any subdivision, agency, bureau or court
thereof;
(ooo) until such time as HomePride, HomePride SPV and
the Seller shall have obtained duly issued licenses, permits
and/or approvals which authorize them to originate and hold
Contracts under the applicable statutes, rules, regulations,
case law and administrative decisions of the State of
Louisiana and its courts and administrative bodies, (i) the
Obligor under the Contract related to such Receivable shall
not be a resident of the State of Louisiana, (ii) the related
Manufactured Home shall not be located in the State of
Louisiana and (iii) the Title for such Manufactured Home shall
not be, and shall not be required to be, issued by the State
of Louisiana or any subdivision, agency, bureau or court
thereof; and
(ppp) until such time as HomePride, HomePride SPV and
the Seller shall have obtained duly issued licenses, permits
and/or approvals which authorize them to originate and hold
Contracts under the applicable statutes, rules, regulations,
case law and administrative decisions of the Commonwealth of
Pennsylvania and its courts and administrative bodies, (i) the
Obligor under the Contract related to such Receivable shall
not be a resident of the Commonwealth
21
of Pennsylvania, (ii) the related Manufactured Home shall not
be located in the Commonwealth of Pennsylvania and (iii) the
Title for such Manufactured Home shall not be, and shall not
be required to be, issued by the Commonwealth of Pennsylvania
or any subdivision, agency, bureau or court thereof;
(qqq) , other than a California Park Receivable, with
respect to which (a) the related Amount Financed (excluding
any set up expenses, fees, taxes, insurance, closing costs,
discount points, warranty coverage, retailer installed
options, park amenities, cost to the related Obligor to
acquire or refinance the land on which the related
Manufactured Home is or will be located, and site preparation
costs otherwise includable in such Amount Financed), when
added to the aggregate Amount Financed for all other Eligible
Receivables (excluding any set up expenses, fees, taxes,
insurance, closing costs, discount points, warranty coverage,
retailer installed options, park amenities, cost to the
related Obligor to acquire or refinance the land on which the
related Manufactured Home is or will be located, and site
preparation costs otherwise includable in any such Amount
Financed), does not exceed 130% of (b) the sum of (x) the
dealer invoice price for the Manufactured Home related to such
Receivable plus (y) the aggregate dealer invoice price for the
Manufactured Homes related to all other Eligible Receivables;
(rrr) which arises under a Contract which is not a
Buy-For Contract, other than a Parent/Child Buy-For Contract;
(sss) with respect to which the set up fees related to
the applicable Manufactured Home and included in the related
Amount Financed did not exceed $2,500 per section of such
Manufactured Home or $7,500 in the aggregate;
(ttt) with respect to which the retailer installed
options related to the applicable Manufactured Home and
included in the related Amount Financed did not exceed 30% of
the dealer invoice for such Manufactured Home;
(uuu) with respect to which the insurance premiums
related to the applicable Manufactured Home and included in
the related Amount Financed did not exceed 20% of such Amount
Financed;
(vvv) with respect to which the warranty coverage cost
related to the applicable Manufactured Home and included in
the related Amount Financed did not exceed $1,500; and
(www) with respect to which any funds to be disbursed
to the related Obligor pursuant to the related Contract have
been fully disbursed; and
22
(xxx) until such time as the Agent has received a "no
objection" letter, in form and substance satisfactory to the
Agent, from the appropriate regulatory body in the State of
Louisiana which explicitly states that both the Conduit and
CSFB are exempt from any requirement in such State to obtain
any licenses, permits and/or approvals or to submit any
notifications or registrations in connection with the
transactions contemplated by the Transaction Documents, (i)
the Obligor under the Contract related to such Receivable
shall not be a resident of such State, (ii) the related
Manufactured Home shall not be located in such State and (iii)
the Title for such Manufactured Home shall not be, and shall
not be required to be, issued by such State or any
subdivision, agency, bureau or court thereof; and
(yyy) until such time as the Agent has received a "no
objection" letter, in form and substance satisfactory to the
Agent, from the appropriate regulatory body in the State of
Maryland which explicitly states that both the Conduit and
CSFB are exempt from any requirement in such State to obtain
any licenses, permits and/or approvals or to submit any
notifications or registrations in connection with the
transactions contemplated by the Transaction Documents, (i)
the Obligor under the Contract related to such Receivable
shall not be a resident of such State, (ii) the related
Manufactured Home shall not be located in such State and (iii)
the Title for such Manufactured Home shall not be, and shall
not be required to be, issued by such State or any
subdivision, agency, bureau or court thereof; and
(zzz) until such time as the Agent has received a "no
objection" letter, in form and substance satisfactory to the
Agent, from the appropriate regulatory body in the State of
New York which explicitly states that each of the Seller, the
Conduit and CSFB are exempt from any requirement in such State
to obtain any licenses, permits and/or approvals or to submit
any notifications or registrations in connection with the
transactions contemplated by the Transaction Documents, (i)
the Obligor under the Contract related to such Receivable
shall not be a resident of such State, (ii) the related
Manufactured Home shall not be located in such State and (iii)
the Title for such Manufactured Home shall not be, and shall
not be required to be, issued by such State or any
subdivision, agency, bureau or court thereof;
(aaaa) until such time as the Agent has received a "no
objection" letter, in form and substance satisfactory to the
Agent, from the appropriate regulatory body in the
Commonwealth of Pennsylvania which explicitly states that both
the Conduit and CSFB are exempt from any requirement in such
Commonwealth to obtain any licenses, permits and/or approvals
or to submit any notifications or registrations in connection
with the transactions contemplated by the Transaction
Documents, (i) the Obligor under the Contract related to such
Receivable shall not
23
be a resident of such Commonwealth, (ii) the related
Manufactured Home shall not be located in such Commonwealth
and (iii) the Title for such Manufactured Home shall not be,
and shall not be required to be, issued by such Commonwealth
or any subdivision, agency, bureau or court thereof;
(bbbb) which relates to a Contract of a type, and was
originated by a Dealer or HomePride in a State, that, in each
case, was addressed in an Opinion of Counsel delivered in
accordance with Section 7.01(l) or Section 7.02(j) hereof and
such Opinion of Counsel did not disclose any federal, state or
local licensing, registration, notification or similar
requirements with respect to such Receivable which are
applicable to (i) HomePride, HomePride SPV or the Seller,
other than that those that have been satisfied by HomePride,
HomePride SPV or the Seller, as applicable, or (ii) the Agent,
the Investor or any Bank;
(cccc) ,other than a California Park Receivable, with
respect to which (a) the related Amount Financed (excluding
any cost to the related Obligor to acquire or refinance the
land on which the related Manufactured Home is or will be
located which would otherwise be includable in such Amount
Financed) does not exceed 210% of (b) the dealer invoice price
for the Manufactured Home related to such Receivable;
(dddd) , if such Receivable is a California Park
Receivable, with respect to which (a) the related Amount
Financed does not exceed 130% of the Appraised Value of the
related Manufactured Home and (b) the related manufactured
housing park has been approved by the Servicer in accordance
with its Credit and Collection Policy;
(eeee) arising in connection with a Land and Home
Contract or a Mortgage Loan only if the related Amount
Financed attributable to the land on which the related
Manufactured Home is situated does not exceed the related
Allowed Land Value;
(ffff) with respect to which, the related promissory
note or other instrument, if any, has no marks or notations
indicating that such note or other instrument is currently
pledged or assigned to any Person other than the Agent, the
Conduit or the Banks;
(gggg) which is not subject to the Georgia Fair Lending
Act, as in effect from time to time, or was originated prior
to October 1, 2002 or after March 7, 2003, if the Manufactured
Home or Mortgaged Property related to such Receivable is
located in the State of Georgia; and
24
(hhhh) which is not related to a Contract which is a
Land and Home Contract or a Mortgage Loan if the Manufactured
Home or Mortgaged Property related to such Receivable is
located in the State of New York.
"Eligible Servicer" means HomePride or a Person, acceptable to
the Agent, which at the time it succeeds the then existing Servicer as Servicer,
(a) is servicing a portfolio of manufactured housing loans, (b) is legally
qualified and has the capacity to service the Receivables in the Receivables
Pool, (c) has demonstrated the ability, professionally and competently, to
service a portfolio of manufactured housing loans similar to the Receivables in
the Receivables Pool with reasonable skill and care, and (d) is qualified and
entitled to use, pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer and
Sub-Servicer use in connection with performing its duties and responsibilities
under this Agreement or otherwise has available software which is adequate to
perform its duties and responsibilities under this Agreement.
"Eligible Sub-Servicer" means CIT Group Sales or a Person,
acceptable to the Agent, which at the time it succeeds the then existing
Sub-Servicer as Sub-Servicer, (a) is servicing a portfolio of manufactured
housing loans, (b) is legally qualified and has the capacity to service the
Receivables in the Receivables Pool, (c) has demonstrated the ability,
professionally and competently, to service a portfolio of manufactured housing
loans similar to the Receivables in the Receivables Pool with reasonable skill
and care, and (d) is qualified and entitled to use, pursuant to a license or
other written agreement, and agrees to maintain the confidentiality of, the
software which the Sub-Servicer uses in connection with performing its duties
and responsibilities under this Agreement or otherwise has available software
which is adequate to perform its duties and responsibilities under this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means, with respect to the Parent or any of
its Subsidiaries, any trade or business (whether or not incorporated) that is a
member of a group of which the Parent or any of its Subsidiaries is a member and
which is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.
"ERISA Event" means for any Person, (a) any "reportable
event," as defined in Section 4043 of ERISA or the regulations issued thereunder
with respect to a Plan (other than an event for which the 30 day notice period
is waived); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by such Person or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by
25
such Person or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by such Person or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by such
Person or any ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from such Person or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to such
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Rate" means, for any Fixed Period, an interest
rate per annum equal to the rate per annum (rounded upward, if necessary, to the
nearest 1/16 of 1%) as determined on the basis of the offered rates for deposits
in U.S. Dollars, for a period of 30 days which appears at Telerate Page 3750 as
of 11:00 A.M. (London time) (i) in the case of any Fixed Period in respect of
which Yield is computed by reference to the Assignee Rate, two (2) Business Days
before the first day of such Fixed Period or (ii) in the case of any Fixed
Period in respect of which Yield is computed by reference to the Investor Rate,
on the first day of such Fixed Period; provided that if the rate described above
does not appear on Telerate Page 3750 on any applicable interest determination
date, the Eurodollar Rate shall be the rate (rounded upward as described above,
if necessary) for deposits in Dollars for a period of 30 days on the Reuters
Screen LIBO Page, as of 11:00 A.M. (London time) (i) in the case of any Fixed
Period in respect of which Yield is computed by reference to the Assignee Rate,
two (2) Business Days before the first day of such Fixed Period or (ii) in the
case of any Fixed Period in respect of which Yield is computed by reference to
the Investor Rate, on the first day of such Fixed Period. If the Agent is unable
to determine the Eurodollar Rate for any Fixed Period by reference to either the
Telerate Page 3750 or the Reuters Screen LIBO Page, then the Eurodollar Rate for
that Fixed Period will be the rate per annum of the offered rate for deposits in
U.S. Dollars for a period of 30 days which is offered by CSFB in the London
interbank market at approximately 11:00 A.M. (London time) two (2) Business Days
before the first day of such Fixed Period. Each determination by the Agent
pursuant to this definition shall be conclusive absent manifest error.
"Eurodollar Rate Reserve Percentage" of any Investor or Bank
for any Fixed Period in respect of which Yield is computed by reference to the
Eurodollar Rate means the reserve percentage applicable two Business Days before
the first day of such Fixed Period under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) (or if
more than one such percentage shall be applicable, the daily average of such
percentages for those days in such Fixed Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Investor or Bank with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with
26
respect to any other category of liabilities that includes deposits by reference
to which the interest rate on Eurocurrency Liabilities is determined) having a
term equal to such Fixed Period.
"Event of Bankruptcy" shall be deemed to have occurred with
respect to a Person if either:
(a) a case or other proceeding shall be commenced,
without the application or consent of such Person, in any
court, seeking the liquidation, reorganization, debt
arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or
substantially all of its assets, or any similar action with
respect to such Person under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or
adjustment of debts, and, with respect to any such case or
proceeding brought against, or in respect of, any Person other
than Seller or HomePride SPV, such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period
of 60 consecutive days; or an order for relief in respect of
such Person shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws now or hereafter
in effect; or
(b) such Person shall commence a voluntary case or
other proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar
law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its
property, or shall make any general assignment for the benefit
of creditors, or shall fail to, or admit in writing its
inability to, pay its debts generally as they become due, or,
if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
"Excess Collections" means, with respect to any Collection
Period, the amount equal to (A) the Interest Collections, with respect to such
Collection Period minus (B) the sum of (i) an amount equal to, without
duplication, all Available Funds Cap Carryforward Amounts and all accrued Yield,
Fees and Other Amounts to be paid on the Distribution Date immediately following
such Collection Period, (ii) an amount equal to the accrued fees and expenses to
be paid to the Custodian on such Distribution Date, (iii) the amount to be
deposited in the Reserve Account on such Distribution Date and (iv) an amount
equal to the accrued Servicing Fees and Sub-Servicing Fees to be paid on such
Distribution Date.
"Excess Collections Account" means the account designated as
the Excess Collections Account in, and which is established and maintained with
the Collection Account Bank pursuant to Section 11.14(d).
27
"Excess Collections Percentage" means, with respect to any
Collection Period, the Spread Percentage with respect to such Collection Period.
"Excess Concentration Amount" means, at any time, an amount
equal to the sum, without duplication, of the following:
(a) the amount by which the Aggregate Outstanding
Balance of Eligible Receivables in the Receivables Pool for
which the number of Scheduled Payments has been increased
subsequent to the origination thereof exceeds 2% of the
Aggregate Outstanding Balance of all Eligible Receivables in
the Receivables Pool;
(b) the amount by which the Aggregate Outstanding
Balance of Eligible Receivables in the Receivables Pool which
were not originated by HomePride or an Affiliate of HomePride
and were acquired by HomePride as part of an acquisition of a
portfolio of Contracts, exceeds 5% of the Aggregate
Outstanding Balance of all Eligible Receivables in the
Receivables Pool;
(c) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
that are secured by Manufactured Homes that are not New Homes
exceeds 25% of the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool;
(d) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
originated in the State of California exceeds 30% of the
Aggregate Outstanding Balance of all Eligible Receivables;
(e) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
originated in any one State, other than the State of
California, exceeds 20% of the Aggregate Outstanding Balance
of all Eligible Receivables in the Receivables Pool;
(f) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
originated in the Three Highest States exceeds 60% of the
Aggregate Outstanding Balance of all Eligible Receivables in
the Receivables Pool;
(g) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
for which the related land was pledged in lieu of a down
payment at the time of purchase by the Obligor exceeds 3% of
the Aggregate Outstanding Balance of all Eligible Receivables
in the Receivables Pool;
28
(h) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
secured by single-wide Manufactured Homes exceeds 40% of the
Aggregate Outstanding Balance of all Eligible Receivables in
the Receivables Pool;
(i) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
attributable to loans for the purchase of Manufactured Homes
which were previously repossessed exceeds 5% of the Aggregate
Outstanding Balance of all Eligible Receivables in the
Receivables Pool;
(j) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
with respect to which the related Manufactured Home is located
in a mobile home park exceeds 60% of the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool;
(k) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
secured by Manufactured Homes that are not multi-wide
Manufactured Homes exceeds 40% of the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool;
(l) the amount by which the aggregate Financed Points
related to all Eligible Receivables in the Receivables Pool
exceeds 4% of the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool;
(m) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
with respect to which the related Obligor has a FICO Score of
600 or less or as to which a FICO Score is not available
exceeds 5% of the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool;
(n) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
with respect to which the Outstanding Balance thereof is
greater than $150,000 but less than or equal to $200,000
exceeds 10% of the Aggregate Outstanding Balance of all
Eligible Receivables in the Receivables Pool;
(o) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
for which the down payment at the time of purchase by the
related Obligor was less than 8% of the Amount Financed in
respect of the related Manufactured Home and/or Mortgaged
Property exceeds
29
35% of the Aggregate Outstanding Balance of all Eligible
Receivables in the Receivables Pool;
(p) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool as
to which the related Manufactured Homes and/or Mortgaged
Properties securing the related Contracts did not constitute
the primary residence of the related Obligors at the time of
origination of such Contracts exceeds 5% of the Aggregate
Outstanding Balance of all Eligible Receivables in the
Receivables Pool;
(q) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
with respect to which the related Contract is a Parent/Child
Buy-For Contract exceeds 5% of the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool;
and
(r) the amount by which the Aggregate Outstanding
Balance of all Eligible Receivables in the Receivables Pool
which were originated by any one Independent Dealer exceeds
the greater of (i) $1,000,000 and (ii) 2% of the Aggregate
Outstanding Balance of all Eligible Receivables in the
Receivables Pool.
"Exit Fee Rate" shall have the meaning ascribed thereto in the
Fee Letter.
"Facility Termination Date" means the earliest of (a) April
14, 2004, unless, prior to such date (or the date so extended pursuant to this
clause), upon the Seller's request, made not more than 90 nor less than 45 days
prior to the then Facility Termination Date, the Conduit and one or more Banks
having commitments equal to 100% of the Purchase Limit shall in their sole
discretion consent, which consent shall be given not more than 30 days prior to
the then Facility Termination Date, to the extension of the Facility Termination
Date to the date occurring 364 days after the then Facility Termination Date;
provided, however, that any failure of the Conduit or any Bank to respond to the
Seller's request for such extension shall be deemed a denial of such request by
the Conduit or such Bank, (b) the date determined pursuant to Section 14.01, and
(c) the date on which the Purchase Limit has been reduced to zero.
"Fair Market Value" means, with respect to any Contract or any
group of Contracts as of any date of determination, the market value of such
Contract or group of Contracts as determined by the Agent and the Servicer.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for
30
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" means the amended and restated letter agreement,
dated as of the date hereof, among the Agent, HomePride and the Seller, as such
letter agreement may be amended, supplemented or otherwise modified from time to
time.
"Fees" means all fees and other amounts payable by HomePride
or the Seller to the Agent, the Investors or the Banks pursuant to the Fee
Letter or Section 2.05 or Section 2.06 hereof.
"FICO Score" means the statistical credit bureau scores
obtained by lenders in connection with the loan application to help assess a
borrower's credit worthiness.
"Financed Points" means, with respect to any Receivable, the
aggregate Dollar amount of any related points due at the time of origination of
the related Contract which were financed by the loan made to the Obligor under
the related Contract.
"Fixed Period" means, with respect to any Receivable Interest,
the period commencing on the date such Receivable Interest is purchased
hereunder and ending on the next Distribution Date and each successive period
commencing on the first day after the previous Distribution Date and ending on
the immediately subsequent Distribution Date.
"Funds Transfer Letter" means a letter in substantially the
form of Annex H hereto executed and delivered by Seller to the Agent.
"GAAP" means generally accepted United States accounting
principles.
"Global Servicing Agreement" means that Servicing Agreement
entered into as of April 18, 2002 between HomePride and CIT Group/Sales, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"GSS" means Global Securitization Services, Inc., a Delaware
corporation.
"HomePride" has the meaning set forth in the Preamble.
"HomePride SPV" means HomePride Funding Corp., a Delaware
corporation, and any successor thereto or assign thereof acceptable to the
Agent.
"HomePride Account" means account number 1851358596 maintained
by HomePride at Comerica Bank of Detroit.
31
"Incipient Termination Event" means an event that but for
notice or lapse of time or both would constitute a Termination Event.
"Indemnified Amounts" has the meaning set forth in Section
16.01.
"Indemnified Party" has the meaning set forth in Section
16.01.
"1999 Indenture" means the Indenture, dated as May 3, 1999
among the Parent, as the issuer, the Subsidiary Guarantors named therein and The
First National Bank of Chicago, as trustee, as amended, supplemented or
otherwise modified from time to time.
"2002 Indenture" means the Indenture, dated as of April 22,
2002, among Champion Home Builders, Co., as the issuer, the Parent, as parent
guarantor, the Subsidiary Guarantors named therein and Bank One Trust Company,
N.A., as trustee, as amended, supplemented or otherwise modified from time to
time.
"Independent Accountants" has the meaning set forth in Section
11.10(a).
"Independent Dealer" means any Dealer that is not a direct or
indirect Subsidiary of the Parent.
"Independent Director" has the meaning set forth in Section
9.12(a).
"Insurance Policies" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in clause (p) of
the definition of "Eligible Receivable") required in accordance with the Credit
and Collection Policy benefitting the holder of the Receivable providing loss or
physical damage, extended warranty, credit life, credit disability, or similar
coverage with respect to the related Manufactured Home, Mortgaged Property or
Obligor.
"Insurance Proceeds" means proceeds of any Insurance Policies
to the extent not expended by the Servicer for the restoration or repair of any
Manufactured Home or Mortgaged Property.
"Interest Collections" means, with respect to a Distribution
Date, the sum of (a) the amount deposited in the Collection Account during the
preceding Collection Period attributable to interest payments on the Receivables
in the Receivables Pool pursuant to the related Contracts (including Paid Ahead
Interest Payments); (b) the portion of any Liquidation Proceeds, Other Proceeds
or Take-Out Proceeds received during such Collection Period allocable to
interest due on such Receivables; and (c) the amount of any investment income
earned on amounts on deposit in the Bank Accounts since the preceding
Distribution Date (or the Original Closing Date in the case of the first
Distribution Date) and deposited in the Collection Account pursuant to Section
5.02.
32
"Interest Rate Hedge" means, with respect to all or any
Receivables in the Receivables Pool, an interest rate cap agreement which:
(a) is entered into by the Seller or the Agent, on
behalf of the Seller, with an Eligible Counterparty;
(b) is evidenced by a standard ISDA Agreement and
confirmation thereto;
(c) has been assigned to the Agent, for the benefit of
the Investors and the Banks, and provides for all payments
thereunder to be deposited directly into the Collection
Account;
(d) provides for the Eligible Counterparty thereunder
to make monthly payments thereunder to the Seller in an amount
equal to (I) the notional amount thereof times (II) the excess
of (x) Eurodollar Rate, determined monthly during the term
thereof, over (y) an amount equal to (A) the Weighted Average
Coupon Rate of the Receivables in respect of which such
Interest Rate Hedge is being purchased minus (B) the sum of
(i) all Yield (without giving effect to the Eurodollar Rate)
and Fees payable hereunder in respect of the Receivable Pool
during the applicable monthly period (such Yield and Fees to
be expressed as an annual percentage rate), (ii) the Servicing
Fee payable in respect of the Receivable Pool for such monthly
period (to be expressed as an annual percentage rate), (iii)
all fees and expenses payable to the Custodian in respect of
the Receivable Pool for such monthly period (to be expressed
as an annual percentage rate), (iv) all Other Amounts payable
in respect of the Receivable Pool for such monthly period (to
be expressed as an annual percentage rate) and (v) 4.00%;
(e) shall have a notional balance which shall be
acceptable to the Agent, but in no event greater than the
Aggregate Outstanding Balance of all Receivables which shall
then be in the Receivables Pool;
(f) provides for payments thereunder to be calculated
on an actual/360 basis;
(g) includes provisions requiring the Eligible
Counterparty thereunder to post short-term marketable
collateral in an amount acceptable to the Agent within 30 days
of the rating of the long-term unsecured senior indebtedness
of the Eligible Counterparty being downgraded to or below (i)
"A2" by Moody's (or such rating having been withdrawn or
canceled) or (ii) "A" by S&P (or such rating having been
withdrawn or canceled) (and such provisions have been complied
with in full);
33
(h) includes provisions requiring the Eligible
Counterparty to be replaced within 30 days of (a) the rating
of its long-term unsecured senior indebtedness being
downgraded to or below (i) "A2" by Moody's or (ii) "A" by S&P,
or (b) the Eligible Counterparty's failure to perform in any
material respect any of its obligations under such interest
rate cap agreement (and such provisions have been complied
with in full); and
(i) shall otherwise be on such terms and conditions and
pursuant to such documentation as shall be acceptable to the
Agent.
"Investor" means Conduit and all other owners by assignment or
otherwise of a Receivable Interest originally purchased by Conduit and, to the
extent of the undivided interests so purchased, shall include any participants.
"Investor Rate" for any Fixed Period for any Receivable
Interest means, to the extent that the Investor funds such Receivable Interest
by issuing commercial paper or other promissory notes, an interest rate per
annum equal to the Eurodollar Rate; for such Fixed Period plus the Applicable
Spread; provided, however, that in case of:
(i) any Fixed Period on or prior to the first day of which an
Investor shall have notified the Agent that (A) the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for such Investor to fund such Receivable Interest at the Investor Rate set
forth above or (B) it is unable to obtain U.S. Dollars in the London interbank
market to fund or maintain any Receivable Interest (and such Investor shall not
have subsequently notified the Agent that such circumstances no longer exist),
or
(ii) any Fixed Period for a Receivable Interest the Capital
Investment of which allocated to the Investors is less than $500,000, the
"Investor Rate" for such Fixed Period shall be an interest rate per annum equal
to the Alternate Base Rate in effect from time to time during such Fixed Period;
provided further that the Agent and the Seller may agree in writing from time to
time upon a different "Investor Rate."
"Land and Home Contract" means a manufactured housing fixed
rate retail installment sale contract, installment loan agreement or promissory
note that is secured in part, or intended to be secured in part, by the lien of
a Mortgage on real estate on which the related Manufactured Home is situated,
and which Manufactured Home is considered or classified as part of the real
estate under the laws of the jurisdiction in which it is located.
"Land and Home Contract File" means with respect to each
Receivable arising under a Land and Home Contract, (a) the original of such Land
and Home Contract and the
34
original related Mortgage Note, if any; (b) the original related Mortgage with
evidence of recording thereon and any Title for the related Manufactured Home;
(c) the duly executed original assignment of the Land and Home Contract from the
originator thereof to HomePride; (d) all original extension, modification or
waiver agreement(s) relating to such Contract; (e) the duly executed original
Mortgage Note, endorsed by HomePride in blank, without recourse and in a form
satisfactory to the Agent, showing a complete chain of endorsement from the
originator thereof to HomePride; (f) all original interim recorded assignments
of such Mortgage, if any, showing a complete chain of title from the originator
thereof to HomePride in recordable form and sufficient to effect the assignment
of and transfer to the assignee thereof under the Mortgage to which the
assignment relates; provided that, if the related Mortgage has not been returned
from the applicable public recording office, such assignment of the Mortgage may
exclude the recording information; (g) an assignment of such Mortgage by
HomePride in blank and in recordable form; (h) the original of each assumption,
written assurance or substitution agreement, if any; and (i) the original or
duplicate original lender's title policy with respect to such Land and Home
Contract.
"Lien" means any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind, including tax liens, mechanics'
liens and any liens that attach by operation of law.
"Limited Recourse Guaranty" means the Limited Recourse
Guaranty, dated as of the Original Closing Date, executed by the Parent in favor
of the Agent in respect of certain payment obligations of the Seller under this
Agreement, as amended, supplemented or otherwise modified from time to time.
"Limited Servicer Termination Event" has the meaning set forth
in Section 13.02(a).
"Liquidated Receivable" means, with respect to any Collection
Period, a Receivable as to which the applicable servicer has determined in good
faith that all amounts it expects to recover with respect to such Receivable
have been received.
"Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Liquidated Receivable
(including insurance proceeds) net of (a) expenses of the Servicer incurred in
connection with the collection, repossession, repair and disposition of the
related Manufactured Home (and Mortgaged Property, if any), (b) any expenses
incurred by the Sub- Servicer in foreclosing upon a Pool Receivable which shall
have been reimbursed to the Sub-Servicer by Servicer pursuant to Section
11.04(a), and (c) amounts that are required to be refunded to the related
Obligor; provided, however, that the Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero.
"Loan-to-Value Ratio" means, with respect to a Receivable, the
ratio of the Amount Financed with respect to such Receivable, including prepaid
finance charges, to (i) with
35
respect to any Receivable that is related to a Manufactured Home that is not
located in California (or that is related to a Manufactured Home that is located
in California if the Servicer has not received an appraisal of the value of such
Manufactured Home from a licensed independent professional appraiser) and does
not arise in connection with a Land and Home Contract, the cash selling price
paid by the related Obligor for the purchase of the related Manufactured Home
plus the sum of the related (a) sales tax, (b) freight, (c) prepaid finance
charges, (d) closing fees to third parties and (e) insurance or (ii) with
respect to any Receivable related to a Manufactured Home located in California
(if the Servicer has received an appraisal of the value of such Manufactured
Home from a licensed independent professional appraiser) or that arises in
connection with a Land and Home Contract, the sum of the Appraised Value of the
related Manufactured Home and, if applicable, the land on which the related
Manufactured Home is situated, plus the sum of the related (a) sales tax, (b)
freight, (c) prepaid finance charges, (d) closing fees to third parties and (e)
insurance.
"Lock-Box Account" means a post office box administered by a
Lock-Box Bank or an account maintained at a Lock-Box Bank, in each case for the
purpose of receiving Collections.
"Lock-Box Agreement" means an agreement providing for the
establishment and maintenance of a Lock-Box Account, which agreement shall be in
form and substance satisfactory to the Agent.
"Lock-Box Bank" means any of the banks holding one or more
Lock-Box Accounts which is subject to a Lock-Box Agreement.
"Management Agreement" means the Management Agreement, dated
as of the Original Closing Date, between the Seller and GSS as amended,
supplemented or otherwise modified from time to time with the prior written
consent of the Agent.
"Management Fees" means the fees and expenses owed to GSS
under the Management Agreement.
"Manufactured Home" means (i) a structure, transportable in
one or more sections, built to National Manufactured Home Construction and
Safety Standards, on a permanent chassis and designed to be used as a single
family dwelling with or without a permanent foundation when connected to the
required utilities including any plumbing, heating, air conditioning and
electrical systems present and installed in the Manufactured Home, securing the
indebtedness of the Obligor under the related Contract, (ii) modular housing
complying with all applicable state and local building codes or (iii) a
manufactured home, including all accessions thereto, that is legally classified
as real property under applicable state law, securing the indebtedness of the
Obligor under the related Contract.
36
"Manufactured Housing Contract" means an agreement which
evidences both (i) the obligation of the related Obligor to repay the related
Contract evidenced thereby and (ii) the grant of a first priority security
interest in the related Manufactured Home.
"Manufactured Housing Contract File" means, with respect to a
Receivable, other than a Receivable arising under a Land and Home Contract or a
Mortgage Loan, (a) the original of the Contract and endorsements or assignments
(which may be blanket assignments) from Dealers or other sellers showing a
complete chain of title to HomePride; (b) the original Title for the related
Manufactured Home of the type issued in the name of HomePride unless the laws of
the jurisdiction in which the related Manufactured Home is located do not
provide for the issuance of a Title for such Manufactured Home; provided,
however, that at any time following the occurrence of a Termination Event (to
the extent there is any Capital Investment which remains outstanding) the Agent
may request and require that the Seller cause the party in whose name the lien
is noted to transfer such lien to the Seller; (c) evidence of one or more of the
following types of perfection of the security interest in the related
Manufactured Home granted by such Contract, as required under applicable law:
(1) notation of such security interest on the related Title, (2) a financing
statement meeting the requirements of the UCC, with evidence of recording in the
appropriate offices indicated thereon, or (3) such other evidence of perfection
of a security interest in a manufactured housing unit as is customary in such
jurisdiction; (d) any extension, modification or waiver agreement(s) relating to
such Contract; and (e) an original or copy of the credit application of the
Obligor.
"Material Adverse Effect" means, with respect to each Servicer
Party, a material adverse effect on (i) its financial condition or operations or
those of any of its Subsidiaries or (ii) its ability to perform its obligations
under this Agreement or the legality, validity or enforceability of this
Agreement or (iii) the collectibility of, or its ability to collect, any Pool
Receivable.
"Material Amendment" means, with respect to any Transaction
Document, an amendment thereto which would have a material adverse effect upon
the interests of the Investor, the Banks or the Agent.
"Minimum Purchase Price" means, with respect to a Take-Out,
the sum of (a) all outstanding Capital Investment in respect of the Receivable
Interests whose related Contracts are subject of such Take-Out together with all
unpaid Yield on such Capital Investment which has accrued or will accrue through
the related Take-Out Date; (b) all accrued and unpaid Fees through such Take-
Out Date; (c) all accrued and unpaid fees and expenses of the Custodian through
such Take-Out Date; and (d) any Other Amounts owed to the Agent, the Investors
or the Banks hereunder.
"Minimum Rating" has the meaning set forth in Section 9.21.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any
successor thereto.
37
"Mortgage" means, with respect to a Land and Home Contract or
Mortgage Loan, the original mortgage, deed of trust or other security
instrument, if any, executed by an Obligor which creates a first lien on an
estate in fee simple interest in the real property securing such Contract.
"Mortgage Loan File" means with respect to each Mortgage Loan,
(a) the original related Mortgage, with evidence of recording indicated thereon,
(b) the duly executed assignments of the Mortgage from the originator hereof to
HomePride with evidence of recording thereon, (c) the duly executed original
Mortgage Note, if any, endorsed by HomePride in blank, without recourse and in a
form satisfactory to the Agent, showing a complete chain of endorsement from the
originator thereof to HomePride; (d) the original assignment and any intervening
assignments of the related Mortgage, with evidence of recording thereon, showing
a complete chain of assignments of such Mortgage Loan from origination of such
Mortgage Loan to HomePride; (e) all original extension, modification or waiver
agreement(s), if any, for such Mortgage Loan; (f) the originals of each
assumption, written assurance or substitution agreement, if any; (g) an
assignment of such Mortgage by HomePride in blank and in recordable form; and
(h) the original or duplicate original lender's title policy with respect to
such Mortgage Loan.
"Mortgage Loans" means the mortgage loans or deeds of trust
loans secured by a Mortgage on single-family residential properties, described
in the related Purchase Request, and which include, without limitation, all
related security interest and any and all rights to receive payments which are
due pursuant thereto from and after the date, but shall exclude rights to
receive payments which are due pursuant thereto prior to the applicable Purchase
Date or after the completion of any Take-Out for such Mortgage Loan.
"Mortgage Note" means the note or other evidence of
indebtedness secured by a Mortgage purporting to create a first lien or similar
interest in real estate or improvements thereon.
"Mortgaged Property" means as to any Land and Home Contract or
Mortgage Loan, the underlying property, including real property and improvements
thereon securing the related Contract.
"Multiemployer Plan" means, with respect to any Person, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Receivables Pool Balance" means, at any time, the
Outstanding Balance of Eligible Receivables then in the Receivables Pool minus
the Excess Concentration Amount, reduced by the sum of the aggregate amount of
Collections on hand at such time for payment on account of any Eligible
Receivables, the Obligor of which has not been identified.
"New Home" means a Manufactured Home that was not owned or
occupied by any individual or individuals prior to being purchased by the
related Obligor.
38
"Obligor" means a Person obligated to make payments pursuant
to a Contract or who has acquired a Manufactured Home subject to a Contract.
"Officer's Certificate" means, with respect to any Person, a
certificate from a Responsible Officer of such Person with respect to the
representations, warranties and notices required to be submitted on behalf of
such Person pursuant to Section 11.09.
"Opinion of Counsel" means a written opinion of counsel
reasonably acceptable to the Agent.
"Original Agreement" has the meaning set forth in the preamble
hereto.
"Original Closing Date" means April 18, 2002.
"Original Value" means, (a) with respect to any Manufactured
Home that was new at the time the related Contract was originated, the sum of
the down payment (including the value allocated to any trade-in unit or land
pledged as additional security or in lieu of the down payment), the Amount
Financed on the related Contract, which may include sales and other taxes and
premiums for related insurance, and in the case of a Land and Home Contract, the
value of the land securing such Contracts as determined by an independent
appraiser, and (b) with respect to any Manufactured Home that was used at the
time the related Contract was originated, the total delivered sales price of
such Manufactured Home (including for this purpose, any Mortgaged Property not
constituting a part of the Manufactured Home), plus sales and other taxes and,
to the extent financed under such Contract, premiums for related insurance;
provided, however, that in the case of a refinanced Contract, the Original Value
shall equal the appraised value of the Manufactured Home (including for this
purpose, any Mortgaged Property not constituting a part of the Manufactured
Home) at the time such Contract was refinanced as determined by an independent
appraiser.
"Other Amounts" means collectively, all amounts (not
constituting repayment of Capital Investment or Yield) owed by the Seller to the
Investors, the Banks and the Agent, including, without limitation, amounts
arising under Article VI.
"Other Costs" has the meaning set forth in Section 17.05(b).
"Other Proceeds" means all proceeds deposited in the
Collection Account which were realized in connection with, or arose from, the
occurrence of any of the events, circumstances or results, or the exercise or
performance of any rights or obligations, described or set forth in Section 2.05
hereof, Section 2.04 or Section 8.01 of the Purchase and Contribution Agreement
or Section 2.04 or 8.01 of the Purchase and Sale Agreement.
"Other Sellers" has the meaning set forth in Section 17.05(b).
39
"Other Taxes" has the meaning set forth in Section 6.03(b).
"Outstanding Balance" means, with respect to any Receivable,
as of any date, the Amount Financed minus that portion of all amounts received
with respect to such Receivable on or prior to such date and allocable to
principal in accordance with the related Contract (including any Paid Ahead
Principal Payments and principal prepayments).
"Paid Ahead Interest Payments" means the portion of any
Scheduled Payments made by an Obligor prior to the related due date therefor and
allocable to interest payments on the related Receivable in accordance with the
related Contract (but excluding any such payments applied as prepayments).
"Paid Ahead Principal Payments" means the portion of any
Scheduled Payments made by an Obligor prior to the related due date therefor and
allocable to principal payments on the related Receivable in accordance with the
related Contract (but excluding any such payments applied as prepayments).
"Parent" means Champion Enterprises, Inc., a Michigan
corporation, and its permitted successors and assigns.
"Parent/Child Buy-For Contract" means a Contract under which
(i) at least one parent of one or more children of such parent is the Obligor
under such Contract and the related Manufactured Home was purchased primarily
for use by such child(ren) or (ii) at least one child of one or both parents of
such child is the Obligor under such Contract and the related Manufactured Home
was purchased primarily for use by such parent(s).
"Parent Guaranty" means the Guaranty, dated as of the Original
Closing Date, executed by the Parent in favor of the Seller in respect of the
obligations of HomePride under the Purchase and Contribution Agreement, as
amended, supplemented or otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation,
referred to and defined in ERISA, and any successor entity performing similar
functions.
"Percentage" of any Bank means, (a) with respect to CSFB, the
percentage set forth on the signature page to this Agreement, or such amount as
reduced by any Assignment and Acceptance entered into with an Eligible Assignee,
or (b) with respect to a Bank that has entered into an Assignment and
Acceptance, the amount set forth therein as such Bank's Percentage, or such
amount as reduced by an Assignment and Acceptance entered into between such Bank
and an Eligible Assignee.
40
"Permitted Investment" means, at any time:
(i) any evidence of indebtedness issued or guaranteed by the United
States government or any agency thereof;
(ii) commercial paper, in each case issued by a corporation (other than
the Seller or any Affiliate of the Seller) organized under the laws of any state
of the United States or of the District of Columbia and rated at least A-1 by
Standard & Poor's or P-1 by Moody's;
(iii) any certificate of deposit (or time deposits represented by such
certificates of deposit) or bankers acceptance or overnight federal funds
transactions that are issued or sold by a commercial banking institution that is
a member of the Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $500,000,000; and/or
(iv) money market mutual funds registered under the Investment Company
Act of 1940, as amended, having a rating, at the time of such investment, from
each of Standard & Poor's and Moody's in the highest investment category granted
thereby.
Any Permitted Investments may be purchased by or through the Agent or any of its
Affiliates and may include investments for which the Collection Account Bank or
any of its affiliates is an investment manager or adviser.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Plan" means, at any particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Parent or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Preferred Stock" means, as of any date, any capital stock of
the Parent or any consolidated Subsidiary of the Parent (which shall not include
the Seller) which (i) has priority, both with respect to the payment of
dividends and distributions upon liquidation, over the common stock of the
Parent, or, as the case may be, such consolidated Subsidiary of the Parent, (ii)
has been issued in a specific Dollar amount, (iii) has a specific maturity date
which is no earlier than (I) the second anniversary date of the Original Closing
Date or (II) if the facility provided hereunder shall have been extended one or
more times, the second anniversary date of the effective date of the most recent
extension of the facility provided hereunder, (iv) entitles the holder thereof
to receive a fixed rate of return from the date of issuance thereof to the date
of
41
maturity thereof and (v) has not been held, since its date of issuance, by a
Person which is the Parent, any Subsidiary of the Parent, or any Affiliate of
the Parent or any such Subsidiary.
"Purchase" has the meaning set forth in Section 2.01; the term
"Purchased" shall have a correlative meaning.
"Purchase and Contribution Agreement" means the Purchase and
Contribution Agreement, dated as of the Original Closing Date, by and between
HomePride, as seller, and HomePride SPV, as buyer, as amended, restated or
otherwise modified from time to time with the prior written consent of the
Agent.
"Purchase and Sale Agreement" means the Purchase and Sale
Agreement, dated as of the Original Closing Date, by and between HomePride SPV,
as seller, and Seller, as buyer, as amended, restated or otherwise modified from
time to time with the prior written consent of the Agent.
"Purchase Date" has the meaning set forth in Section 2.02(b).
"Purchase Limit" means $75,000,000, or such other amount as
the Seller and the Agent shall agree from time to time with the consent of all
Investors and all Banks. References to the unused portion of the Purchase Limit
shall mean, at any time, the Purchase Limit minus the then outstanding Capital
Investment.
"Purchase Price" means, with respect to each Purchase, an
amount equal to the product of the then Advance Rate multiplied by, with respect
to the Eligible Receivable related to the Receivables Interests purchased in
connection with such Purchase, the Net Receivables Pool Balance with respect to
such Eligible Receivable as of the date of such purchase.
"Purchase Request" means a request for the purchase of
Receivables in the form of Annex C.
"Rated Final Maturity Date" means the maturity date of the
Contract related to Pool Receivable that has the latest occurring maturity date
of all of the Contracts related to Pool Receivables on the Facility Termination
Date.
"Rating" means collectively, (i) with respect to Moody's, a
rating indication consistent with a certain rating for the financing facility
provided under this Agreement and (ii) with respect to S&P, a rating of the
timely payment of Yield, subject to the Available Funds Cap, and the ultimate
repayment of the aggregate Capital Investment on or prior to the Rated Final
Maturity Date.
"Rating Agencies" means Standard & Poor's and Moody's if and
so long as they have rated and are continuing to rate commercial paper notes of
the Conduit, or such other
42
nationally recognized statistical rating organizations as may be designated by
the Agent, together with their permitted successors and assigns.
"Rating Agency Submission" means, at any time, the submission
to one or more of the Rating Agencies of the facility hereunder.
"Receivable" means all rights to payment from an Obligor under
a Contract including the right to payment of any finance charges, interest or
fees with respect thereto.
"Receivable File" means a Manufactured Housing Contract File,
a Land and Home Contract File and/or a Mortgage Loan File.
"Receivable Interest" means, at any time, an undivided
percentage ownership interest in (i) all then outstanding Pool Receivables
arising prior to the time of the most recent computation or recomputation of
such undivided percentage interest pursuant to Section 2.03, (ii) all Related
Security with respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables. Such undivided
percentage interest shall be computed as:
CI + AU
--------
NRPB
where:
CI = the Capital Investment of
such Receivable Interest at
the time of computation.
AU = the aggregate accrued and
unpaid Yield, Fees and
Other Amounts related to
such Receivable Interest at
the time of computation.
NRPB = the Net Receivables Pool
Balance at the time of
computation.
Each Receivable Interest shall be determined from time to time pursuant to the
provisions of Section 2.03.
"Receivables Pool" means, at any time, the aggregation of each
then outstanding Receivable sold to the Seller pursuant to the Purchase and Sale
Agreement and which comprise and underlie the Receivable Interest (as recomputed
in accordance with Section 2.03) then outstanding.
43
"Records" means, with respect to any Contract, all documents,
books, records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) relating to such Contract.
"Related Security" means with respect to any Senior Beneficial
Interest, (a) the Seller's security interest in the related Manufactured Homes
and Mortgaged Property, (b) the Seller's rights, remedies, powers and privileges
under the related Contracts, including any personal guaranty thereof, (c) the
Seller's rights, remedies, powers and privileges under the Transaction
Documents, (d) the Receivables Files for such Receivables, (e) the Seller's
rights, remedies, powers and privileges under the Dealer Agreements, including
but not limited to Dealer Recourse and any holdback amounts, (f) with respect to
any related Land and Home Contracts, the Seller's rights, remedies, powers and
privileges under the related Mortgage, (g) the Seller's rights, remedies, powers
and privileges under the related Insurance Policies, (h) all security
agreements, mortgages, deeds of trust or other agreements that relate to such
Receivable, (i) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by the related Obligor
(or otherwise filed against the related Obligor) describing any collateral
securing such Receivable, (j) the assignment to the Seller of all financing
statements concerning any collateral securing payment of such Receivable, (k)
all guaranties, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Receivable or otherwise, (l)
the Contract, all Records with respect thereto and all other books, records and
other information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
relating to such Receivable and the related Obligor, (m) any certificate of
title related to such Receivable, (n) each Interest Rate Hedge purchased in
accordance with the provisions of this Agreement and all transactions
consummated thereunder, (o) the Bank Accounts and all cash proceeds and
investments therein, and (p) all proceeds of the foregoing.
"Repossessed Receivable" means a Receivable (other than a
Liquidated Receivable) as to which the Servicer or Sub-Servicer has repossessed
the related Manufactured Home.
"Repurchase Price" has the meaning specified in Section 2.05.
"Required Monthly Consolidated Net Income (Loss)" means, with
respect to each fiscal month of the Parent listed below, the Consolidated Net
Income (Loss) listed below beside such calendar month:
Fiscal Month Consolidated Net Income (Loss)
------------ ------------------------------
April 2003 ($ 1,700,000)
May 2003 ($ 1,900,000)
44
June 2003 ($15,000,000)
July 2003 ($ 72,000)
August 2003 $ 447,000
September 2003 $ 21,000
October 2003 $ 2,600,000
November 2003 ($ 2,200,000)
December 2003 ($ 4,100,000)
January 2004 ($ 5,100,000)
February 2004 ($ 3,700,000)
March 2004 ($ 2,400,000)
"Required Monthly Consolidated Net Income (Loss) Trigger"
means (i) Consolidated Net Income (Loss), to the extent that it is a loss, shall
be a larger loss during any fiscal month of the Parent than the Required Monthly
Consolidated Net Income (Loss), to the extent that it is a loss, with respect to
such fiscal month, (ii) Consolidated Net Income (Loss) is a loss during any
fiscal month of the Parent with respect to which the related Required Monthly
Consolidated Net Income (Loss) is a gain and (iii) Consolidated Net Income
(Loss), to the extent that it is a gain, shall be a smaller gain during any
fiscal month of the Parent than the Required Monthly Consolidated Net Income
(Loss), to the extent that it is a gain, with respect to such fiscal month;
"Required Quarterly Consolidated Net Income (Loss)" means, as
of the end of any fiscal quarter of the Parent listed below, the Consolidated
Net Income (Loss) listed below beside such fiscal quarter.
Fiscal Quarter Consolidated Net Income (Loss)
-------------- ------------------------------
March 30, 2003 - June 28, 2003 ($25,000,000)
June 29, 2003 - September 27, 2003 $ 500,000
September 28, 2003 - January 3, 2003 ($ 5,000,000)
January 4, 2004 - April 3, 2004 ($15,900,000)
"Required Reserve Account Amount" means, with respect to any
Purchase, the product of (a) the Required Reserve Account Percentage for such
Purchase and (b) the Aggregate Outstanding Balance of the Receivables which are
related to such Purchase.
"Required Reserve Account Percentage" means, initially, 3.00%,
as such percentage may be (a) decreased by Agent, in it sole discretion, to take
into account Interest Rate ▇▇▇▇▇▇ purchased pursuant to the terms hereof or (b)
increased by the Agent, in it sole discretion, (i) to permit the facility
hereunder to receive a rating of "A" from Standard & Poor's or "A2" by Moody's
in connection with any Rating Agency Submission or (ii) to reflect a level of
reserves for the facility hereunder which is consistent with the level of
reserves which was
45
required for a rating of "A" from Standard & Poor's or "A2" by Moody's in
connection with the most recent Term Securitization for which the Servicer was
the sponsor.
"Reserve Account" means the account designated as such in, and
which is established and maintained with the Collection Bank pursuant to Section
11.14(c).
"Responsible Officer" means, with respect to any Person that
is not an individual, the President, any Vice-President, Corporate Trust Officer
or the Controller of such Person, or any other officer or employee having
similar functions to whom a matter arising under this Agreement may be referred.
"Restricted Contingent Liabilities" means, with respect to any
Person, all Debt (without duplication) for (i) the undrawn amount of letters of
credit for which such Person or any of its consolidated Subsidiaries, has a
reimbursement or other guaranty obligation and (ii) guaranties of such Person or
any of its consolidated Subsidiaries relating to subordinate tranches or classes
of securities or certificates issued in connection with, or other obligations
arising under, any Term Securitization program of such Person or any of its
consolidated Subsidiaries.
"Scheduled Payment" means, with respect to any Receivable, the
periodic payment set forth in the related Contract (excluding, however, any
portion of such payment that represents late payment charges and payments in
respect of taxes, licenses or similar items).
"Section 32 Loan" means a Contract classified as (a) a "high
cost" loan under the Home Ownership and Equity Protection Act of 1994 or (b) a
"high cost," "threshold," or "predatory" loan under any other applicable state,
federal or local law.
"Seller" has the meaning set forth in the Preamble.
"Seller's Parent" means GSS Holdings, Inc., a Delaware
corporation, and any successor thereto, or assign thereof, reasonably
satisfactory to the Agent.
"Semi-Monthly Contract" means a Contract pursuant to which the
scheduled level of payment of interest and principal is due twice each month.
"Servicer" means HomePride Finance Corp., in its capacity as
such under this Agreement, or, as applicable, any successor servicer appointed
pursuant to this Agreement.
"Servicer Parties" means, collectively, the Servicer and
Sub-Servicer and, individually, the Servicer or Sub-Servicer.
"Servicer Take-Out" has the meaning set forth in Section
2.05(a).
"Servicer Termination Event" has the meaning set forth in
Section 13.01.
46
"Servicer's Certificate" means, with respect to each
Determination Date, a certificate, completed by and executed on behalf of the
Servicer by a Responsible Officer, in accordance with Section 11.08, in a form
reasonably acceptable to the Agent.
"Servicing Fee" has the meaning set forth in Section 11.07(a).
"Servicing Fee Rate" means 0.10%.
"Short-Term Asset Amount" means, for any date of determination
hereunder, the amount of non-restricted cash and the aggregate face amount of
Approved Short Term Investments (net of the amount of interest scheduled to
accrue, but not yet accrued, thereon if such Approved Short Term Investments
were issued on a discount basis) of the Parent and its consolidated
Subsidiaries.
"Short-Term Assets Trigger" means, that the Short-Term Asset
Amount as of the last day of any fiscal month is less than the amount to the
right of such fiscal month below:
Fiscal Months Required Short-Term Asset Amount
------------- --------------------------------
Fiscal months ending May 31, 2003
through September 27, 2003 The lesser of (i) $65,000,000 plus the
Tax Refund at the time of determination
and (ii) $125,000,000
Fiscal months ending November 1, 2003
through January 3, 2003 $100,000,000
Fiscal months ending February 7, 2004
through April 3, 2004 $80,000,000
"Significant Subsidiary"means any Subsidiary of a Person which
fits the definition of Significant Subsidiary contained in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission, other than
a Subsidiary that is a special purpose entity formed for the purpose of
securitizing, selling for securitization or otherwise facilitating the
securitization of assets of such Person or any other Subsidiary; provided, that,
each Affiliated Dealer shall be deemed to be a Significant Subsidiary of the
Parent.
"Special Indemnified Amounts" has the meaning specified in
Section 12.01.
"Special Indemnified Party" has the meaning specified in
Section 12.01.
"Specified Account" means the account numbered 010212725
maintained at Bank One, Oklahoma, N.A. in Oklahoma City, Oklahoma in the name of
The CIT Group/Sales
47
Financing, Inc., and any replacements therefor or additions thereto which are
acceptable to the Agent.
"Specified Account Bank" means Bank One, Oklahoma, N.A., and
any replacements therefor or additions thereto agreed to in writing by the
Agent.
"Spread Percentage" means, with respect to any Collection
Period, the percentage equivalent of a fraction (a) the numerator of which shall
be the product of (x) Excess Collections for such Collection Period and (y) a
fraction, the numerator of which shall be the number of days in the year in
which such Collection Period shall occur and the denominator of which shall be
the number of days in such Collection Period, and (b) the denominator of which
shall be the average Aggregate Outstanding Balance of the Pool Receivables
during such Collection Period.
"Standard & Poor's" means Standard & Poor's Ratings Service,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subject Manufactured Home" has the meaning set forth in
Section 17.16.
"Sub-Servicer" means CIT Group/Sales, in its capacity as such
under this Agreement, or any successor sub-servicer appointed pursuant to this
Agreement.
"Sub-Servicer Replacement Event" has the meaning set forth in
Section 13.02(a).
"Sub-Servicing Fee" has the meaning set forth in Section
11.07(b).
"Sub-Servicing Fee Rate" means 1.00%.
"Subsidiary" means any corporation or other entity of which
securities having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Seller or the Parent, as the case may be, or one or
more Subsidiaries, or by the Seller or the Parent, as the case may be, and one
or more Subsidiaries.
"Successor Servicer" has the meaning set forth in Section
13.03(a).
"Successor Sub-Servicer" has the meaning set forth in Section
13.02(a).
"Take-Out" means a Take-Out Securitization or Servicer
Take-Out.
"Take-Out Date" means the date on which a Take-Out
Securitization occurs.
"Take-Out Proceeds" means all proceeds deposited in the
Collection Account as a result of any of the actions taken pursuant to Section
2.04.
48
"Take-Out Securitization" means (i) a financing transaction of
any sort undertaken by the Seller or any Affiliate of the Seller secured,
directly or indirectly, by any Contracts subject hereto or (ii) any other asset
securitization, secured loans or similar transactions involving any Contracts
subject hereto or any beneficial interest therein, including any Term
Securitization.
"Tangible Net Worth" means with respect to the Seller, the net
worth of the Seller calculated in accordance with GAAP after subtracting
therefrom the aggregate amount of the Seller's intangible assets, including,
without limitation, goodwill, franchises, licenses, patents, trademarks,
tradenames, copyrights and service marks.
"Taxes" has the meaning set forth in Section 6.03(a).
"Tax Refund" means, as of any date of determination, the
amount of the federal tax refunds received by the Parent as of such date of
determination with respect to the Parent's fiscal year ending December 28, 2002.
"Term Securitization" means an asset securitization or a
financing undertaken by the Servicer, or any Affiliate thereof, in each case
involving the direct or indirect sale or other conveyance of Contracts to a
Person that shall privately or publicly sell securities, notes or certificates
backed by such Contracts.
"Termination Event" has the meaning set forth in Section
14.01.
"Three Highest States" means, on any date of determination,
those three States or Commonwealths in the United States of America in which
Eligible Receivables with the three largest (determined on a per
State/Commonwealth basis) Aggregate Outstanding Balances (determined on such
date of determination) were originated.
"Tier 1 Delinquency Ratio" means, as of any date of
determination, with respect to any group of Receivables, the ratio (expressed as
a percentage) computed by dividing:
(i) the Aggregate Outstanding Balance of such Receivables
which were Tier 1 Delinquent Receivables as of the last
day of the immediately preceding Collection Period;
by
(ii) the Aggregate Outstanding Balance of all such
Receivables as of the last day of the immediately
preceding Collection Period.
"Tier 2 Delinquency Ratio" means, as of any date of
determination, with respect to any group of Receivables, the ratio (expressed as
a percentage) computed by dividing:
49
(i) the Aggregate Outstanding Balance of such Receivables
which were Tier 2 Delinquent Receivables as of the last
day of the immediately preceding Collection Period;
by
(ii) the Aggregate Outstanding Balance of all such
Receivables as of the last day of the immediately
preceding Collection Period.
"Tier 1 Delinquent Receivable" means a Receivable as to which
any Scheduled Payment, or part thereof, remains unpaid for 30 or more days but
less than 60 days from the original due date for such Scheduled Payment.
"Tier 2 Delinquent Receivable" means a Receivable as to which
any Scheduled Payment, or part thereof, remains unpaid for 60 days or more from
the original due date for such Scheduled Payment.
"Title" means any certificate of title or other similar form
of title issued with respect to a Manufactured Home by any governmental agency
or body responsible for the registration of, and the issuance of certificates of
title relating to, Manufactured Homes and liens thereon.
"Total Liabilities" means, as of any date of determination,
all Debt of the Parent and its Subsidiaries on a consolidated basis outstanding
at such time which matures more than one year after the date of calculation, and
any such Debt maturing within one year from such date of calculation which is
renewable or extendable at the option of the obligor to a date more than one
year from such date.
"Transaction Documents" means this Agreement, the Fee Letter,
the Custodial Agreement, the Purchase and Sale Agreement, the Purchase and
Contribution Agreement, the Funds Transfer Letter, the Lock-Box Agreements, the
Parent Guaranty, the Control Agreement, the Limited Recourse Guaranty, the
Global Servicing Agreement, the CIT Guaranty and the Interest Rate ▇▇▇▇▇▇, the
confirmations related thereto and the other documents to be executed and
delivered in connection with this Agreement.
"Transfer Certificate" means a transfer certificate evidencing
the sale of a Receivable Interest hereunder in the form of Annex D hereto.
"Trust Receipt" shall mean the confirmation statement issued
by the Custodian that evidences receipt and confirms ownership of Contracts and
other documents indicated thereon, as provided for in Section 6 of the Custodial
Agreement with respect to the Custodian.
50
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"USAP" has the meaning set forth in Section 11.10(a).
"Weighted Average Coupon Rate" means, as of any date of
determination and with respect to any group of Receivables, the weighted average
(based upon the Outstanding Balances of such Receivables) of the Coupon Rates of
such Receivables.
"Weighted Average FICO Score" means, as of any date of
determination, the weighted average (weighted solely based upon the Outstanding
Balances of the Eligible Receivables owed by the applicable Obligors as of such
date of determination) of the FICO Scores of the Obligors related to all
Eligible Receivables as of such date of determination.
"Weighted Average Loan-to-Value Ratio" means, as of any date
of determination, the weighted average (weighted solely based upon the
Outstanding Balances of the Eligible Receivables as of such date of
determination) of the Loan-to-Value Ratios of the Eligible Receivables as of
such date of determination.
"Weighted Average Manufactured Housing Contract Remaining
Term" means, as of any date of determination, the weighted average (weighted
solely based upon the Outstanding Balances, as of such date of determination, of
the Eligible Receivables originated under Manufactured Housing Contracts) of the
then unexpired terms to stated maturity under the Manufactured Housing Contracts
related to the Eligible Receivables.
"Weighted Average Remaining Term" means, as of any date of
determination, the weighted average (weighted solely based upon the Outstanding
Balances of the Eligible Receivables as of such date of determination) of the
then unexpired terms to stated maturity under the Contracts related to the
Eligible Receivables.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Yield" means:
(i) for each Receivable Interest for any Fixed Period to the
extent the Conduit will be funding such Receivable Interest through the issuance
of commercial paper or other promissory notes,
IR x CI x ED
----
360
51
(ii) for each Receivable Interest for any Fixed Period to the
extent (x) the Investors will not be funding such Receivable Interest through
the issuance of commercial paper or other promissory notes, or (y) the Banks
will be funding such Receivable Interest,
AR x CI x ED
----
360
where:
AR = the Assignee Rate for such Fixed Period
CI = the average daily balance of the Capital Investment during such
Fixed Period
IR = the Investor Rate for such Fixed Period
ED = the actual number of days elapsed during such Fixed Period
provided that no provision of this Agreement shall require the payment or permit
the collection of Yield in excess of the maximum permitted by applicable law;
provided further, that to the extent that any Receivable Interest remains
outstanding on or after the Facility Termination Date, Yield for such Receivable
Interest shall be equal to Alternative Base Rate from time to time in effect
plus 2.00% per annum; and provided even further that Yield for any Receivable
Interest shall not be considered paid by any distribution to the extent that at
any time all or a portion of such distribution is rescinded or must otherwise be
returned for any reason. The payment of Yield on any Distribution Date, but not
the amount of Yield ultimately required to be paid hereunder, may be limited
pursuant to the provisions of Section 5.02 hereof related to the Available Funds
Cap.
SECTION 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Purchase Facility. On the terms and conditions
hereinafter set forth, Conduit may, in its sole discretion, and the Banks shall,
ratably in accordance with their respective Bank Commitments, purchase
Receivable Interests ("Purchase") from the Seller from time to time during the
period from the Original Closing Date to the Facility Termination Date. Under no
circumstances shall Conduit make any such purchase, or the Banks be obligated to
make any such purchase, if after giving effect to such purchase (i) the
aggregate outstanding
52
Capital Investment of Receivable Interests would exceed the Purchase Limit or
(ii) a Capital Deficiency shall exist. Any Purchase under, and as defined in,
the Original Agreement shall be deemed to have been a Purchase under this
Agreement.
SECTION 2.02. Making Purchases. (a) Each Purchase by Conduit
or the Banks shall be made following delivery by the Servicer, on behalf of the
Seller, to the Agent of a Purchase Request by no later than Noon (New York City
time) at least two Business Days prior to the proposed date of Purchase (or by
no later than Noon (New York City time) one Business Day in the case of the
initial Purchase hereunder). Each such Purchase Request shall specify (i) the
Purchase Price requested to be paid to the Seller (such amount, which shall not
be less than $1,000,000, being referred to herein as the "Capital Investment" of
the Receivable Interests then being Purchased), (ii) the date of such Purchase
(which shall be a Business Day) and (iii) be accompanied by Computer Tape
describing the Receivables that are the subject of the requested Purchase. The
Servicer, on behalf of the Seller, shall submit no more than one (1) Purchase
Request per calendar week and no more than four (4) Purchase Requests in any
calendar month. The Agent shall promptly thereafter notify the Seller whether
Conduit has determined to make a Purchase and, if so, whether all of the terms
specified by the Seller are acceptable to Conduit.
If Conduit has determined not to make a proposed purchase, the
Agent shall promptly send notice of the proposed purchase to all of the Banks
concurrently by telecopier, telex or cable specifying the date of such purchase.
Such notice shall also set forth (i) the Purchase Price to be paid by each such
Bank, which shall be equal to each Bank's Percentage multiplied by the aggregate
amount of Capital Investment of the Receivable Interest being purchased and (ii)
whether the Yield for such Receivable Interest is to be computed based on the
Eurodollar Rate or on the Alternate Base Rate; provided, however, that the
Eurodollar Rate may be used only if the related Purchase Notice is given at
least two Business Days prior to the proposed Purchase Date.
(b) On the date of each such Purchase (a "Purchase Date"),
Conduit or the Banks, as the case may be, shall, upon satisfaction of the
applicable conditions set forth in Article VII, in payment of the Purchase Price
in respect of such Purchase, (i) deposit a portion of the Purchase Price for
such Purchase equal to the Required Reserve Account Amount for such Purchase
into the Reserve Account and (ii) make available to the Seller by deposit into
an account specified by the Seller in same day funds of an amount equal to the
remaining amount of the Purchase Price.
(c) Effective on the date of each Purchase pursuant to this
Section 2.02, the Seller hereby sells and assigns to the Agent, for the benefit
of the parties making such Purchase, an undivided percentage ownership interest,
to the extent of the Receivable Interest then being Purchased, in each Pool
Receivable then existing and in the Related Security and Collections with
respect thereto.
53
(d) Notwithstanding the foregoing, a Bank shall not be
obligated to make purchases under this Section 2.02 at any time in an amount
which would exceed the Bank Commitment of such Bank less the sum of (i) the
aggregate outstanding and unpaid amount of any purchases made by such Bank under
the Asset Purchase Agreement plus (ii) such Bank's ratable share of the
aggregate outstanding Capital Investment held by Conduit. Each Bank's obligation
shall be several, such that the failure of any Bank to make available to the
Seller any funds in connection with any Purchase shall not relieve any other
Bank of its obligation, if any, hereunder to make funds available on the date of
such Purchase, but no Bank shall be responsible for the failure of any other
Bank to make funds available in connection with any Purchase.
SECTION 2.03. Receivable Interest Calculation. Each Receivable
Interest shall be initially computed on its date of Purchase. Thereafter until
the Facility Termination Date, such Receivable Interest shall be automatically
recomputed (or deemed to be recomputed) on each day. Any Receivable Interest, as
computed (or deemed recomputed) as of the day immediately preceding the Facility
Termination Date for such Receivable Interest, shall thereafter remain constant;
provided, however, that from and after the date on which the Facility
Termination Date shall have occurred for all Receivable Interests and until each
Receivable Interest becomes zero in accordance with the next sentence, each
Receivable Interest shall be calculated as the percentage equivalent of a
fraction the numerator of which is the percentage representing such Receivable
Interest immediately prior to such date and the denominator of which is the sum
of the percentages representing all Receivable Interests which were outstanding
immediately prior to such date. Each Receivable Interest shall become zero when
Capital Investment thereof and Yield thereon shall have been paid in full, and
all Fees and other amounts owed by the Seller hereunder to the Investors, the
Banks or the Agent are paid and the Servicer shall have received the accrued
Servicing Fee thereon.
SECTION 2.04. Take-Outs. (a) On any Take-Out Date, the Agent,
with the consent of the Servicer, may direct the Servicer (on behalf of the
Seller and the Agent) to sell the Contracts (or a portion thereof equal to at
least the amount necessary to permit the Servicer to exercise its purchase
rights pursuant to Section 2.05) to the Person designated by the Agent, with the
consent of the Servicer, for the Fair Market Value thereof in connection with a
Take-Out Securitization. All Take-Out Proceeds received from such a Take-Out
Securitization shall be immediately deposited in the Collection Account for
distribution pursuant to Section 5.02(d). In the event that the Fair Market
Value of the Contracts subject to any such Take-Out Securitization would be less
than the Minimum Purchase Price on the proposed Take-Out Date, the Agent shall
have the right to (i) with the consent of the Investor and the Banks, purchase
the Contracts subject to the Take-Out Securitization for the Fair Market Value
thereof or (ii) notify the Seller that the Investors and the Banks will not
purchase any additional Receivable Interests hereunder. In the event that (A)
the Agent exercises its option pursuant to clause (i) of the immediately
preceding sentence, (x) the Agent shall deposit into the Collection Account an
amount equal to the Fair Market Value of the Contracts (for distribution in
accordance with the provisions of Section 5.02(d)) and (y) the Seller's interest
in such Contracts and in the related Receivables shall be deemed canceled
without requirement for any future actions or (B) the Agent exercises
54
its option pursuant to clause (ii) of the immediately preceding sentence, the
Seller shall retain title to the Contracts subject to the Take-Out
Securitization (subject to the Banks and the Investors Receivable Interests in
the related Receivables), and all amounts in the Collection Account to be
distributed on succeeding Distribution Dates shall be distributed in accordance
with Section 5.02(c).
(b) The Seller and each Servicer Party agree to take any and
all actions reasonably required by the Agent to effectuate any sale of Contracts
described in this Section 2.04. Any Contracts subject to a Take-Out shall be
released by the Agent (on behalf of the Investors and Banks) from the
Receivables Interests of the Banks and Investors therein upon completion of such
Take-Out and the deposit of the applicable proceeds in the Collection Account.
SECTION 2.05. Servicer Take-Outs. (a) On any Business Day on
which the Outstanding Balance of the Pool Receivables is less than or equal to
10% of the greatest Outstanding Balance of the Pool Receivables at any time
during the term of this Agreement or upon five Business Day's notice to the
Agent and so long as no event has occurred and is continuing which constitutes a
Termination Event or an Incipient Termination Event, the Servicer may direct the
Seller to sell Contracts to the Person designated by the Servicer for the Fair
Market Value thereof (a "Servicer Take-Out"); provided, that (i) all proceeds
received from such a sale shall be immediately deposited in the Collection
Account for distribution pursuant to Section 5.02, (ii) the Seller shall have
paid to the Agent a fee (the amount of which shall be paid from funds on account
in the Collection Account) with respect to the Receivables related to such
Contracts equal to the Aggregate Outstanding Balance of such Receivables
multiplied by the Exit Fee Rate and (iii) after giving effect to any such sale,
the deposit of the proceeds thereof in the Collection Account and the payment of
the fee referred to in the immediately preceding clause (ii), no Termination
Event or Incipient Termination Event shall occur.
(b) Any Contracts subject to a sale referred to in Section 2.05(a)
shall be released by the Agent (on behalf of the Investors and Banks) from the
Receivables Interests of the Banks and Investors therein upon completion of such
sale in full compliance with Section 2.05(a).
SECTION 2.06. Optional Reductions. (a) The Seller may, at any
time and from time to time with the consent or at the direction of the Servicer,
repay all or a portion of the Capital Investment by written notice delivered to
the Agent no later than the fifth (5th) Business Day prior to the Business Day
of the desired reduction; provided that (i) each such repayment of the Capital
Investment shall be in an amount that is an integral multiple of $5,000,000 and
not less than $10,000,000 in the aggregate (unless the amount of the Capital
Investment is less than $10,000,000 at such time, in which case such repayment
shall be in an amount equal to the total amount of the Capital Investment such
time), (ii) all accrued Yield with respect to the Capital Investment being
repaid shall be paid concurrently with the repayment of such Capital Investment
and (iii) after giving effect to any such repayment, no Termination Event or
Incipient
55
Termination Event shall occur. Such reductions shall occur no more frequently
than once per calendar month.
(b) The Seller may, at any time and from time to time with the
consent or at the direction of the Servicer, upon at least three (3) Business
Days' written notice to the Agent, terminate in whole or reduce in part the
unused portion of the Purchase Limit; provided that (i) each such reduction of
the Purchase Limit shall be in an amount that is an integral multiple of
$5,000,000 and (ii) after giving effect to such reduction, no Termination Event
or Incipient Termination Event shall occur. Upon any such permanent reduction of
the Purchase Limit, each Bank Commitment shall be reduced ratably in accordance
with the amount of such reduction. Such reductions shall occur not more
frequently than once per calendar month.
(c) Upon the request of the Seller, with the consent or at the
direction of the Servicer, the Agent (on behalf of itself, the Investor and the
Banks), agrees to take any and all actions reasonably requested by the Seller to
release any Lien in favor of the Agent, the Investor and the Banks on any
Receivables subject to a reduction described in Sections 2.06(a) and (b) above;
provided, that, the Seller shall have paid to the Agent a fee (the amount of
which shall be paid from funds on account in the Collection Account) with
respect to such Receivables equal to the Aggregate Outstanding Balance of such
Receivables on the date of such release multiplied by the Exit Fee Rate.
ARTICLE III
YIELD, FEES, ETC.
SECTION 3.01. Yield Payment Dates. Yield accrued on each
Purchase shall be payable, without duplication: (a) on the date of any payment
or prepayment, in whole or in part, of Capital Investment and (b) on each
Distribution Date.
SECTION 3.02. Fees. The Seller agrees that CSFB, as agent for
the Banks, shall be entitled to receive on each Distribution Date the Fees in
the amounts set forth in the Fee Letter.
SECTION 3.03. Computation of Yield and Fees. All Yield and
Fees shall be computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for which such
Yield or Fee is payable over a year comprised of 360 days.
56
ARTICLE IV
CAPITAL INVESTMENT REPAYMENTS
SECTION 4.01. Repayments of Capital Investment. Capital
Investment shall be due and payable in accordance with the provisions of Article
V.
ARTICLE V
PAYMENTS
SECTION 5.01. Making of Payments. (a) All amounts to be paid
or deposited by the Seller or either Servicer Party hereunder shall be paid or
deposited no later than 12:00 P.M. (New York City time) on the day when due in
same day funds to the Agent, at the Agent's Account.
(b) The Seller and each Servicer Party shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by it when
due hereunder, at an interest rate per annum equal to Alternate Base Rate then
in effect plus 2% per annum, payable on demand.
(c) All computations of interest under subsection (b) above
and all computations of Yield, Fees, and other amounts hereunder shall be made
on the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed. Whenever any payment or deposit to be
made hereunder shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment or deposit.
SECTION 5.02. Distributions. (a) Collection of the Pool
Receivables shall be administered by the Servicer Parties in accordance with the
terms of Article XI of this Agreement. All Collections received by the
Sub-Servicer shall be deposited in the Collection Account by 4:00 p.m. (New York
time) on the second Business Day following the receipt thereof in the Specified
Account. All Collections received by the Servicer shall be deposited in the
Collection Account by 11:00 a.m. (New York time) on the Business Day following
the receipt thereof in the Lock-Box Account.
(b) On each Distribution Date prior to the Facility
Termination Date (other than on a Distribution Date next following the
occurrence of a Take-Out), the Agent shall distribute amounts on deposit in the
Collection Account as follows:
FIRST, to the Servicer and Sub-Servicer in respect of
Servicing Fees and Sub-Servicing Fees due for the immediately-preceding
Collection Period, to be paid, pro rata, based upon the respective amounts of
such Servicing Fees and Sub-Servicing Fees due to the Servicer and Sub-Servicer,
respectively;
57
SECOND, pro rata, to (i) the Custodian, in payment of any
Custodial Fees due for the immediately-preceding Collection Period and (ii) the
Collection Account Bank in payment of any fees or expenses due under the Control
Agreement for the immediately-preceding Collection Period;
THIRD, to the Agent's Account, an amount equal to the lesser
of (x) without duplication, any Available Funds Cap Carryforward Amount with
respect to any previous Distribution Date not previously paid to the Agent's
Account (plus interest thereon at a rate equal to the rate of interest used to
determine the Yield payable on such Distribution Date) and any accrued and
unpaid Yield and Fees in respect of all preceding Fixed Periods (including any
Fixed Period ending on such Distribution Date) owing to the Agent, the Banks and
the Investors and (y) the Available Funds Cap with respect to such Distribution
Date;
FOURTH, to the Agent's Account, an amount equal to any accrued
and unpaid Other Amounts, owing to the Agent, the Banks and the Investors;
FIFTH, to GSS, in respect of any Management Fees due for the
immediately-preceding Collection Period;
SIXTH, to the Agent's Account, in an amount equal to any
Capital Deficiency;
SEVENTH, to the Reserve Account, until the amount on deposit
therein is equal to the Aggregate Required Reserve Account Amount at such time;
EIGHTH, to the Agent's Account, an amount (for purposes of
this Section 5.02(b), the "Available Funds Cap Carryforward Amount") equal to
the excess, if any, of the aggregate amounts described in clause (x) of item
THIRD above over the amount described in clause (y) of item THIRD above;
NINTH, if (i) the senior unsecured long-term debt rating of
the Parent or CHBC is downgraded below B- by S&P (or if the Parent or CHBC is
put on negative credit watch by S&P at any time that such rating is at B-) or
below B3 by ▇▇▇▇▇'▇ (or if the Parent or CHBC is put on negative credit watch by
▇▇▇▇▇'▇ at any time that such rating is at B3)(or if such rating is withdrawn or
cancelled by S&P or ▇▇▇▇▇'▇), (ii) a Short-Term Assets Trigger shall have
occurred, (iii) a Required Monthly Consolidated Net Income (Loss) Trigger shall
have occurred or (iv) an Additional Commitment Trigger shall have occurred, to
the Agent's Account in payment of the Capital Investment until such time as the
Deemed Credit Enhancement Amount shall have been paid in full;
TENTH, to any Successor Servicer, in payment of any unpaid
transition costs approved by the Agent pursuant to Section 13.03; and
ELEVENTH, any remaining amounts, to the Excess Collections
Account; provided, however, that, prior to the Facility Termination Date, if
HomePride has repurchased, on or before
58
the immediately-preceding Determination Date, all Delinquent Receivables as of
the end of the immediately- preceding Collection Period in accordance with
Section 2.04(c) of the Purchase and Contribution Agreement, then if no
Termination Event or Incipient Termination Event shall have occurred, all such
remaining amounts, plus all other amounts on deposit in the Excess Collections
Account, shall be remitted to the Seller for its own account.
(c) On each Distribution Date following the occurrence of the
Facility Termination Date, the Agent shall distribute amounts on deposit in the
Collection Account as follows:
FIRST, to the Servicer and Sub-Servicer in respect of
Servicing Fees and Sub-Servicing Fees due for the immediately-preceding
Collection Period, to be paid, pro rata, based upon the respective amounts of
such Servicing Fees and Sub-Servicing Fees due to the Servicer and Sub-Servicer,
respectively;
SECOND, pro rata, to (i) the Custodian, in payment of any
Custodial Fees due for the immediately-preceding Collection Period and (ii) the
Collection Account Bank in payment of any fees or expenses due under the Control
Agreement for the immediately-preceding Collection Period;
THIRD, to the Agent's Account, an amount equal to, without
duplication, any Available Funds Cap Carryforward Amount with respect to any
previous Distribution Date not previously paid to the Agent's Account (plus
interest thereon at a rate equal to the rate of interest used to determine the
Yield payable on such Distribution Date) and any accrued and unpaid Yield and
Fees in respect of all preceding Fixed Periods (including any Fixed Period
ending on such Distribution Date) and all Other Amounts owing to the Agent, the
Banks and the Investors
FOURTH, to GSS, in respect of any Management Fees due for the
immediately-preceding Collection Period;
FIFTH, to any Successor Servicer, in payment of any unpaid
transition costs approved by the Agent pursuant to Section 13.03; and
SIXTH, to the Investors and/or Banks in reduction to zero of
all Capital Investment.
After all Capital Investment, Yield, Fees, Servicing Fees,
fees owed to the Custodian, and Other Amounts have been paid in full, all
additional amounts on deposit in the Collection Account, the Reserve Account and
the Excess Collections Account shall be released and remitted to the Seller for
its own account.
(d) On each Distribution Date which immediately follows the
occurrence of a Take-Out and is prior to the Facility Termination Date, the
Agent shall distribute all amounts on deposit in the Collection Account,
including, without limitation, Take-Out Proceeds, whether such amounts are paid
by the Seller, either Servicer Party, the Agent or a third-party purchaser, as
follows:
59
FIRST, to the Servicer and Sub-Servicer in respect of
Servicing Fees and Sub-Servicing Fees due for the immediately-preceding
Collection Period, to be paid, pro rata, based upon the respective amounts of
such Servicing Fees and Sub-Servicing Fees due to the Servicer and Sub-Servicer,
respectively;
SECOND, pro rata, to (i) the Custodian, in payment of any
Custodial Fees due for the immediately-preceding Collection Period and (ii) the
Collection Account Bank in payment of any fees or expenses due under the Control
Agreement for the immediately-preceding Collection Period;
THIRD, to the Agent's Account, an amount equal to the lesser
of (x) without duplication, any Available Funds Cap Carryforward Amount with
respect to any previous Distribution Date not previously paid to the Agent's
Account (plus interest thereon at a rate equal to the rate of interest used to
determine the Yield payable on such Distribution Date) and any accrued and
unpaid Yield and Fees in respect of all preceding Fixed Periods (including any
Fixed Period ending on such Distribution Date) owing to the Agent, the Banks and
the Investors and (y) the Available Funds Cap with respect to such Distribution
Date;
FOURTH, to the Agent's Account, an amount equal to any accrued
and unpaid Other Amounts, owing to the Agent, the Banks and the Investors;
FIFTH, to GSS, in respect of any Management Fees due for the
immediately-preceding Collection Period;
SIXTH, to the Agent's Account, in an amount equal to any
Capital Deficiency;
SEVENTH, to the Reserve Account, until the amount on deposit
therein is equal to the Aggregate Required Reserve Account Amount at such time;
EIGHTH, to the Agent's Account, an amount (for purposes of
this Section 5.02(d), the "Available Funds Cap Carryforward Amount") equal to
the excess, if any, of the aggregate amounts described in clause (x) of item
THIRD above over the amount described in clause (y) of item THIRD above;
NINTH, if (i) the senior unsecured long-term debt rating of
the Parent or CHBC is downgraded below B- by S&P (or if the Parent or CHBC is
put on negative credit watch by S&P at any time that such rating is at B-) or
below B3 by ▇▇▇▇▇'▇ (or if the Parent or CHBC is put on negative credit watch by
▇▇▇▇▇'▇ at any time that such rating is at B3)(or if such rating is withdrawn or
cancelled by S&P or ▇▇▇▇▇'▇), (ii) a Short-Term Assets Trigger shall have
occurred, (iii) a Required Monthly Consolidated Net Income (Loss) Trigger shall
have occurred or (iv) an Additional Commitment Trigger shall have occurred, to
the Agent's Account in payment of the Capital Investment until such time as the
Deemed Credit Enhancement Amount shall have been paid in full;
60
TENTH, to any Successor Servicer, in payment of any unpaid
transition costs approved by the Agent pursuant to Section 13.03; and
ELEVENTH, any remaining amounts, to the Excess Collections
Account; provided, however, that, prior to the Facility Termination Date, if
HomePride has repurchased, on or before the immediately-preceding Determination
Date, all Delinquent Receivables as of the end of the immediately- preceding
Collection Period in accordance with Section 2.04(c) of the Purchase and
Contribution Agreement, then if no Termination Event or Incipient Termination
Event shall have occurred, all such remaining amounts, plus all other amounts on
deposit in the Excess Collections Account, shall be remitted to the Seller for
its own account.
(e) The Agent shall have the right to purchase Interest Rate
▇▇▇▇▇▇ with respect to all or any portion of the Receivables Pool for the
benefit of the Seller at such times as the Agent may elect. Any Interest Rate
Hedge purchased pursuant to the previous sentence shall be purchased only after
the Agent shall have requested and received price quotes for such an Interest
Rate Hedge from three Eligible Counterparties and such Interest Rate Hedge shall
be purchased only from the Eligible Counterparty that provided the lowest such
price quote, unless the Agent shall have determined in its reasonable discretion
that purchasing such Interest Rate Hedge from one of the remaining two such
Eligible Counterparties would better serve the interests of the Investors (in
which case such Interest Rate Hedge shall be purchased from one of such
remaining Eligible Counterparties). In connection with any such purchase of an
Interest Rate Hedge, the Agent may, in its sole discretion, direct the
Collection Account Bank in writing, and the Collection Account Bank shall, upon
such direction, withdraw such amounts on deposit in the Reserve Account (and if
the Reserve Account is depleted, then the Excess Collections Account) as the
Agent shall designate (in its sole discretion) for payment of any fees and/or
costs which may be owed to the Eligible Counterparty providing such Interest
Rate Hedge. On each Distribution Date prior to the Facility Termination Date and
on the Termination Date or any date subsequent thereto, the Agent may, in its
sole discretion, direct the Collection Account Bank in writing, and the
Collection Account Bank shall, upon such direction, withdraw such amounts on
deposit in the Reserve Account and/or Excess Collections Account as the Agent
shall designate (in its sole discretion) for payment of any and all amounts set
forth in Subsections (a), (c) or (d) of this Section 5.02 as the Agent shall
designate (in its sole discretion) which shall remain unpaid after the
application of Collections required to be made on such date. If the purchase
price of any Interest Rate Hedge purchased by the Agent shall exceed the amounts
in the Reserve Account and the Excess Collections Account which are available to
be applied to such purchase price, such excess shall be treated as an Other
Amount and be repaid to the Agent in accordance with the provisions of Section
5.02.
Without limiting any other provision hereof, the Seller shall
purchase an Interest Rate Hedge immediately upon the Agent's request that such
Interest Rate Hedge be purchased (whether or not there exists sufficient funds
in the Reserve Account to purchase such Interest Rate Hedge). In connection with
any such purchase of an Interest Rate Hedge, the Agent may, in its sole
discretion, direct the Collection Account Bank in writing, and the Collection
Account Bank shall, upon such direction, withdraw such amounts on deposit in the
Reserve Account (and if the Reserve
61
Account is depleted, then the Excess Collections Account) as the Agent shall
designate (in its sole discretion) for payment, in whole or in part, of (or to
reimburse the Seller for) the purchase price of such Interest Rate Hedge.
(f) For purposes of this Section 5.02:
(i) if on any day any of the representations or warranties
contained in Section 8.01(g) is no longer true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a Collection
of such Pool Receivable in full; and
(ii) if and to the extent the Agent, the Investors or the
Banks shall be required for any reason to pay over to an Obligor any amount
received on its behalf hereunder, such amount shall be deemed not to have been
so received but rather to have been retained by the Seller and, accordingly, the
Agent, the Investors or the Banks, as the case may be, shall have a claim
against the Seller for such amount, payable when and to the extent that any
distribution from or on behalf of such Obligor is made in respect thereof;
provided, however, that it is expressly agreed and understood by the parties
hereto (i) that the foregoing is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Pool Receivables and (ii) that
nothing in this Section 5.02(f) shall require the Seller to indemnify any Person
for Receivables which are not collected, not paid or uncollectible on account of
the insolvency, bankruptcy, or financial inability to pay of the applicable
Obligor.
ARTICLE VI
INCREASED COSTS; TAXES
SECTION 6.01. Increased Costs. (a) If, due to either (i) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation,
administration or application of any law or regulation (including, without
limitation, any law or regulation resulting in any interest payments paid to
CSFB, any Investor, any Bank or other entity under this Agreement being subject
to United States withholding tax) or any guideline of any accounting board or
authority (whether or not a part of government) which is responsible for the
establishment or interpretation of national or international accounting
principles, in each case whether foreign or domestic or (ii) the compliance with
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to CSFB, any Investor, any Bank, or any Affiliate thereof, successor or
assign thereof (each of which shall be an "Affected Person") of agreeing to
commit to make purchases or maintain the investment in the Pool Receivables or
interest therein related to this Agreement or to the funding thereof or
commitments of the same type (or any reduction of the amount of any payment
(whether of principal, interest, fees, compensation or otherwise) to any
Affected Person hereunder), as the case may be, the Seller shall, from time to
time, within ten (10) days after written demand by the Agent, on behalf of such
Affected Person, pay to the Agent, on behalf of such Affected Person, additional
amounts sufficient to compensate such
62
Affected Person for such increased costs or reduced payments. For the avoidance
of doubt, Financial Accounting Standards Board Interpretation No. 46 or any
other interpretation of Accounting Research Bulletin No. 51 by the Financial
Accounting Standards Board shall constitute a change in the interpretation,
administration or application of a guideline subject to this Section 6.01(a).
(b) If either (i) the introduction of or any change in or in
the interpretation, administration or application of any law, guideline, rule or
regulation, directive or request or (ii) the compliance by any Affected Person
with any law, guideline, rule, regulation, directive or request, from any
central bank, any governmental authority or agency or any accounting board or
authority (whether or not a part of government) which is responsible for the
establishment or interpretation of national or international accounting
principles, in each case whether foreign or domestic (whether or not having the
force of law), including, without limitation, compliance by an Affected Person
with any request or directive regarding capital adequacy, has or would have the
effect of reducing the rate of return on the capital of any Affected Person, as
a consequence of its obligations hereunder or any related document or arising in
connection herewith or therewith to a level below that which any such Affected
Person could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Person with respect to
capital adequacy), by an amount deemed by such Affected Person to be material,
then, from time to time, after demand by such Affected Person (which demand
shall be accompanied by a statement setting forth the basis of such demand), the
Agent shall be paid, on behalf of such Affected Person (from Collections
pursuant to, and subject to the priority of payment set forth in, Section 5.02),
such additional amounts as will compensate such Affected Person for such
reduction. For the avoidance of doubt, Financial Accounting Standards Board
Interpretation No. 46 or any other interpretation of Accounting Research
Bulletin No. 51 by the Financial Accounting Standards Board shall constitute a
change in the interpretation, administration or application of a guideline
subject to this Section 6.01(b).
(c) In determining any amount provided for in this Section
6.01, the Affected Person may use any reasonable averaging and attribution
methods. The Agent, on behalf of any Affected Person making a claim under this
Section 6.01, shall submit to the Borrower a certificate setting forth in
reasonable detail the basis for and the computations of such additional or
increased costs, which certificate shall be conclusive absent demonstrable
error.
(d) If, as a result of any event or circumstance similar to
those described in Section 6.01(a) or 6.01(b), any Affected Person is required
to compensate a bank or other financial institution (including, without
limitation, CSFB) providing liquidity support, credit enhancement or other
similar support to such Affected Person in connection with this Agreement, then,
upon demand by the Agent, on behalf of such Affected Person, the Seller shall
pay to the Agent, on behalf of such Affected Person such additional amount or
amounts as may be necessary to reimburse such Affected Person for any amounts
paid by it.
SECTION 6.02. Additional Yield on Receivable Interests Bearing
a Eurodollar Rate. Each Investor and Bank shall be entitled to receive, from
Collections in accordance with Section 5.02 and amounts on deposit in the Excess
Collections Account and the Reserve Account,
63
so long as such Investor or Bank shall be required under regulations of the
Board of Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional Yield on the unpaid Capital Investment of each
Receivable Interest of such Investor or Bank during each Fixed Period in respect
of which Yield is computed by reference to the Eurodollar Rate, for such Fixed
Period, at a rate per annum equal at all times during such Fixed Period to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Fixed Period
from (ii) the rate obtained by dividing such Eurodollar Rate referred to in
clause (i) above by that percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Investor or Bank for such Fixed Period, payable on
each date on which Yield is payable on such Receivable Interest. Such additional
Yield shall be determined by such Investor or Bank and notice thereof given to
the Seller through the Agent within 30 days after any Yield payment is made with
respect to which such additional Yield is requested. A certificate as to such
additional Yield submitted to the Seller and the Agent by such Investor or Bank
shall set forth such amounts in reasonable detail and shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 6.03. Taxes. (a) Any and all payments and deposits
required to be made hereunder or under any other Transaction Document by the
Servicer, HomePride or the Seller shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding net
income taxes or taxes of a similar nature (however characterized by the
applicable jurisdiction) that are imposed by the United States and franchise
taxes and net income taxes that are imposed on an Affected Person by any state
or foreign jurisdiction or other locality (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Seller or the Servicer shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to any
Affected Person, (i) the Seller shall make an additional payment to such
Affected Person, in an amount sufficient so that, after making all required
deductions (including deductions applicable to additional sums payable under
this Section 6.03), such Affected Person receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Seller, HomePride
or the Servicer, as the case may be, shall make such deductions and (iii) the
Seller, HomePride or the Servicer, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Seller agrees to pay, in accordance with
the terms and order of priority set forth in Section 5.02 hereof, any present or
future stamp or other documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or under
any other Transaction Document or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Transaction
Document (hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Affected Person for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
6.03) paid by such Affected Person and any liability
64
(including penalties, interest and expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made, in accordance with the terms and
order of priority set forth in Section 5.02 hereof, on the Distribution Date
immediately following the date on which the Affected Person makes written demand
therefor (and a copy of such demand shall be delivered to the Agent). A
certificate as to the amount of such indemnification submitted to the Seller and
the Agent by such Affected Person, setting forth, in reasonable detail, the
basis for and the calculation thereof, shall be conclusive and binding for all
purposes absent manifest error.
ARTICLE VII
CONDITIONS OF PURCHASES
SECTION 7.01. Conditions Precedent to Initial Purchase under
the Original Agreement. The initial Purchase of a Receivable Interest under the
Original Agreement was subject to the conditions precedent that the Agent shall
have received on or before the date of such purchase the following, each (unless
otherwise indicated) dated such date and in form and substance satisfactory to
the Agent:
(a) Certified copies of the resolutions of the Board of
Directors of each of the Seller, the Servicer and the Sub-Servicer approving
this Agreement, the Purchase and Sale Agreement, if applicable, the other
Transaction Documents to which each of them is a party and any other documents
contemplated thereby and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, the Purchase and Sale Agreement, the other Transaction Documents
and any other documents contemplated thereby;
(b) A certificate of the Secretary or Assistant Secretary of
each of the Seller, the Servicer and the Sub-Servicer certifying the names and
true signatures of the officers of the Seller and the Servicer authorized to
sign the Purchase and Sale Agreement, if applicable, this Agreement and the
other Transaction Documents to be delivered by it in connection herewith and
therewith;
(c) Proper financing statements under the UCC of all
jurisdictions that the Agent may deem necessary or desirable in order to perfect
the ownership and security interests contemplated by this Agreement, the
Purchase and Sale Agreement and the Purchase and Contribution Agreement;
(d) Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Pool Receivables, any Contracts related thereto or any Related Security
related thereto previously granted by the Seller, HomePride SPV or HomePride;
(e) Completed requests for information, dated on or before the
date of such initial
65
Purchase, with respect to each jurisdiction referred to in subsection (c) above
that name the Seller, HomePride SPV or HomePride as debtor, together with copies
of such other financing statements (none of which shall cover any Pool
Receivables, any Contracts related thereto or any Related Security related
thereto or any collateral referred to in Section 10.01);
(f) Favorable Opinions of Counsel in form and substance
satisfactory to the Agent, with respect to, among other things, the due
authorization, execution and delivery of, and enforceability of this Agreement
and the other Transaction Documents;
(g) A favorable Opinion of Counsel, in form and substance
satisfactory to the Agent, to the effect that (i) the Receivables to be conveyed
to HomePride SPV under the Purchase and Contribution Agreement will be conveyed
to HomePride SPV in a "true sale" and would not be considered part of
HomePride's bankruptcy estate in the event of its insolvency and (ii) HomePride
SPV would not be substantially consolidated with HomePride for purposes of the
Federal Bankruptcy Code in such event;
(h) A favorable Opinion of Counsel, in form and substance
satisfactory to the Agent, to the effect that the Seller would not be
substantially consolidated with Seller's Parent for purposes of the Federal
Bankruptcy Code in such event;
(i) A favorable Opinion of Counsel, in form and substance
satisfactory to the Agent with respect to, among other things, there being no
material conflicts between the Transaction Documents and the 1999 Indenture or
the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(j) Favorable Opinions of Counsel, in form and substance
satisfactory to the Agent, with respect to the creation, perfection and priority
of ownership interests and, in the alternative, security interests in the
Transferred Receivables, Related Security and Collections under the Purchase and
Sale Agreement (as such terms are defined in the Purchase and Sale Agreement),
the Transferred Receivables, Related Security and Collections under the Purchase
and Contribution Agreement (as such terms are defined in the Purchase and Sale
Agreement) and the Pool Receivables, Related Security and Collections under this
Agreement;
(k) A favorable Opinion of Counsel from special counsel for
the Seller, with respect to the first priority perfected security interest of
the Agent in the Collection Account, the Excess Collections Account and the
Reserve Account;
(l) A favorable Opinion of Counsel, in form and substance
satisfactory to the Agent, which shall address (i) certain regulatory and
licensing issues related to the (a) ownership of the Receivables and Related
Security by HomePride, HomePride SPV and the Seller and (b) the servicing of the
Receivables by the Servicer and (ii) the exemption of the Agent, Investors and
Banks from federal, state and local licensing requirements with respect to the
transactions contemplated by the Transaction Documents;
66
(m) A favorable Opinion of Counsel from special Texas counsel
for the Seller satisfactory to the Agent, in form and substance satisfactory to
the Agent, with respect to the first priority, perfected, possessory security
interest in the Contracts;
(n) A copy of the by-laws of the Seller, the Servicer and the
Sub-Servicer certified by the Secretary or Assistant Secretary of the Seller,
the Servicer or the Sub-Servicer, as applicable;
(o) A copy of the certificate or articles of incorporation of
the Seller, the Servicer and the Sub-Servicer, certified as of a recent date by
the Secretary of State or other appropriate official of the state of its
organization, and a certificate as to the good standing of the Seller, the
Servicer and the Sub- Servicer from such Secretary of State or other official,
dated as of a recent date;
(p) The Agent (or its counsel) shall have received from each
party to the Fee Letter either (i) an original counterpart of the Fee Letter
signed on behalf of such party or (ii) written evidence satisfactory to the
Agent (which may include telecopy transmission of a signed signature page of the
Fee Letter) that such party has signed a counterpart of the Fee Letter;
(q) The Agent (or its counsel) shall have received from each
party to the Purchase and Sale Agreement either (i) an original counterpart of
the Purchase and Sale Agreement signed on behalf of such party or (ii) written
evidence satisfactory to the Agent (which may include telecopy transmission of a
signed signature page of the Purchase and Sale Agreement) that such party has
signed a counterpart of the Purchase and Sale Agreement;
(r) The Agent (or its counsel) shall have received from each
party to the Purchase and Contribution Agreement either (i) an original
counterpart of the Purchase and Contribution Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Agent (which may include
telecopy transmission of a signed signature page of the Purchase and
Contribution Agreement) that such party has signed a counterpart of the Purchase
and Contribution Agreement;
(s) The Agent (or its counsel) shall have received from each
party to the Custodial Agreement either (i) an original counterpart of the
Custodial Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Agent (which may include telecopy transmission of a signed
signature page of the Custodial Agreement) that such party has signed a
counterpart of the Custodial Agreement;
(t) The Agent (or its counsel) shall have received from the
Parent (i) an original counterpart of the Parent Guaranty signed on behalf of
the Parent or (ii) written evidence satisfactory to the Agent (which may include
telecopy transmission of a signed signature page of the Parent Guaranty) that
the Parent has signed a counterpart of the Parent Guaranty;
(u) The Agent (or its counsel) shall have received from the
Parent (i) an original counterpart of the Limited Recourse Guaranty signed on
behalf of the Parent or (ii) written evidence satisfactory to the Agent (which
may include telecopy transmission of a signed signature page of the
67
Limited Recourse Guaranty) that the Parent has signed a counterpart of the
Limited Recourse Guaranty;
(v) The Agent (or its counsel) shall have received from CIT
(i) an original counterpart of the CIT Guaranty signed on behalf of CIT or (ii)
written evidence satisfactory to the Agent (which may include telecopy
transmission of a signed signature page of the CIT Guaranty) that CIT has signed
a counterpart of the CIT Guaranty;
(w) The Agent (or its counsel) shall have received the Global
Servicing Agreement in form and substance satisfactory to the Agent and from
each party thereto either (i) an original counterpart of the Global Servicing
Agreement signed on behalf of such party or (ii) written evidence satisfactory
to the Agent (which may include telecopy transmission of a signed signature page
of the Global Servicing Agreement) that such party has signed a counterpart of
the Global Servicing Agreement;
(x) The Agent (or its counsel) shall have received the Control
Agreement in form and substance satisfactory to the Agent and from each party
thereto either (i) an original counterpart of the Control Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Agent (which
may include telecopy transmission of a signed signature page of the Control
Agreement) that such party has signed a counterpart of the Control Agreement;
(y) The Agent (or its counsel) shall have received from the
Seller (i) an original counterpart of the Funds Transfer Letter signed on behalf
of the Seller or (ii) written evidence satisfactory to the Agent (which may
include telecopy transmission of a signed signature page of the Funds Transfer
Letter) that the Seller has signed a counterpart of the Funds Transfer Letter;
(z) The Agent (or its counsel) shall have received this
Agreement and all other Transaction Documents required to be delivered on the
Original Closing Date, in each case, in form and substance satisfactory to the
Agent and from each party thereto either (i) an original counterpart thereof
signed on behalf of such party or (ii) written evidence satisfactory to the
Agent (which may include telecopy transmission of a signed signature page
thereof that such party has signed a counterpart thereof.
(aa) A Responsible Officer of the Seller shall have certified
that all conditions to the obligations of HomePride and the Seller under the
Purchase and Sale Agreement shall have been satisfied in all respects and a copy
of all documents delivered thereunder shall be delivered to the Agent and shall
be reasonably satisfactory to the Agent;
(bb) A Responsible Officer of HomePride shall have certified
that all conditions to the obligations of HomePride and HomePride SPV under the
Purchase and Contribution Agreement shall have been satisfied in all respects
and a copy of all documents delivered thereunder shall be delivered to the Agent
and shall be reasonably satisfactory to the Agent;
68
(cc) A Responsible Officer of HomePride shall have certified
that all conditions to the obligations of HomePride and CIT Group/Sales under
the Global Servicing Agreement shall have been satisfied in all respects and a
copy of all documents delivered thereunder shall be delivered to the Agent and
shall be reasonably satisfactory to the Agent;
(dd) A copy of the Credit and Collection Policy, certified by
a Responsible Officer of the Seller;
(ee) A review of the computer programs, material tapes, data
and back-up plans of Sub-Servicer, HomePride, HomePride SPV and the Seller
required for the collection of Receivables and the Agent shall be satisfied that
the foregoing, including the procedures of Sub-Servicer, HomePride, HomePride
SPV and the Seller for the preparation, storage and retrieval thereof, are
sufficient upon the termination of the Servicer or the Sub-Servicer to permit
(i) the Seller or the Agent to collect the Receivables with or without the
participation of HomePride, HomePride SPV or the Sub-Servicer and the Seller or
the Servicer and (ii) a third-party servicer to collect the Receivables with or
without the participation of HomePride, HomePride SPV, the Servicer, the
Sub-Servicer or the Seller; and
(ff) Such other documents, instruments, certificates and
opinions as the Agent may reasonably request.
SECTION 7.02. Conditions Precedent to All Purchases. Each
Purchase (including the initial Purchase) shall be subject to the further
conditions precedent that:
(a) If requested by the Agent in connection with such
Purchase, the Seller shall have entered into an Interest Rate Hedge with respect
to the Receivables which are the subject of such Purchase;
(b) The representations and warranties contained in Section
8.01 shall be correct on and as of the date of such Purchase as though made on
and as of such date (other than the representations and warranties stated to be
correct on or as of a date certain, which shall have been correct on such date
certain);
(c) No event has occurred and is continuing, or would result
from such purchase, that constitutes a Termination Event or an Incipient
Termination Event;
(d) The Agent shall have received the Purchase Request for
such Purchase in accordance with Section 2.02, together with all items required
to be delivered in connection therewith;
(e) The Facility Termination Date shall not have occurred;
(f) The Agent shall have received a Trust Receipt, in form and
substance
69
satisfactory to the Agent, in respect of each Receivable File related to such
Purchase;
(g) The amount on deposit in the Reserve Account shall be
equal to the Aggregate Required Reserve Amount (after giving effect to such
Purchase);
(h) The Seller's Tangible Net Worth shall not be less than
$50,000;
(i) The Agent shall have received a duly executed Transfer
Certificate, in form and substance satisfactory to the Agent, with respect to
the Receivable Interests to be Purchased on the requested Purchase Date;
(j) HomePride shall have provided Agent an Opinion of Counsel
in a form consistent with the form contemplated by Section 7.01(l) that (i)
updates all prior Opinions of Counsel delivered in accordance with Section
7.01(l) and this Section 7.02(j) (each, a "Prior Opinion") and (ii) identifies
each State of the United States in which HomePride, HomePride SPV or the Seller
has satisfied the state and local licensing, registration, notification and
similar requirements (each, a "License") with respect to the transactions
contemplated by the Transaction Documents (each, a "Consumer Transaction") and
states that no other state, local or federal Licenses are required for the
Consumer Transactions consummated to date. The Opinion of Counsel referenced in
the previous sentence shall be required if, and only if, HomePride shall have
consummated any Consumer Transactions not addressed by any Prior Opinion; and
(k) The Agent shall have received such other approvals,
opinions or documents as it may request.
Acceptance of the proceeds of each Purchase shall be deemed a representation and
warranty that the conditions set forth in this Section 7.02 have been fulfilled.
SECTION 7.03. Conditions Precedent to Initial Purchase under
this Agreement. The initial Purchase of a Receivable Interest under this
Agreement is subject to the conditions precedent that the Agent shall have
received on or before the date of this Agreement the following, each (unless
otherwise indicated) dated the date of this Agreement and in form and substance
satisfactory to the Agent:
(a) The Agent (or its counsel) shall have received from each
party to the Fee Letter either (i) an original counterpart of the Fee Letter, in
form and substance satisfactory to the Agent, signed on behalf of such party or
(ii) written evidence satisfactory to the Agent (which may include telecopy
transmission of a signed signature page of the Fee Letter) that such party has
signed a counterpart of the Fee Letter;
(b) The Agent (or its counsel) shall have received from each
party to this Agreement either (i) an original counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Agent (which may include telecopy transmission of a signed
70
signature page of this Agreement) that such party has signed a counterpart of
this Agreement;
(c) A favorable Opinion of Counsel, with respect to, among other things,
the due authorization, execution, delivery and enforceability of this Agreement
and the Fee Letter;
(d) The Agent (or its counsel) shall have received a fully executed
amendment to the Purchase and Sale Agreement;
(e) The Agent (or its counsel) shall have received a fully executed
amendment to the Purchase and Contribution Agreement;
(f) A written reaffirmation from the Parent of its obligations under the
Parent Guaranty;
(g) A written reaffirmation from the Parent of its obligations under the
Limited Recourse Guaranty;
(h) A written reaffirmation from CIT of its obligations under the CIT
Guaranty; and
(i) Such other documents, instruments, certificates and opinions as the
Agent may reasonably request.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of the Seller. The Seller
hereby represents and warrants as of the date hereof and as of the date of each
Purchase as follows; provided, however, that each representation and warranty of
the Seller with respect to the Lock-Box Accounts or Lock-Box Banks shall not be
deemed to be made by the Seller until the date when one or more Lock-Box
Accounts are required to be established pursuant to the terms of this Agreement:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, and is duly qualified to do business,
and is in good standing, in every jurisdiction where the nature of its business
requires it to be so qualified. The Seller has full corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and to carry out its terms and their terms,
respectively.
(b) The execution, delivery and performance by the Seller of this
Agreement and the Transaction Documents to which it is a party and the other
documents to be delivered by it hereunder, including the Seller's use of the
proceeds of Purchases, (i) have been duly authorized by all necessary corporate
action, (ii) do not contravene (1) the Seller's certificate of incorporation or
by-laws, (2) any law, rule or regulation applicable to the Seller, (3) any
contractual restriction
71
binding on or affecting the Seller or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the Seller or its
property, and (iii) do not result in or require the creation of any Lien upon or
with respect to any of its properties (except for the interests created pursuant
to the Transaction Documents). Each of the Transaction Documents to which it is
a party has been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (which has not been
obtained) is required for the due execution, delivery and performance by the
Seller of the Transaction Documents to which it is a party or any other document
to be delivered thereunder, except for the filing of UCC financing statements
which are referred to herein and therein.
(d) Each of the Transaction Documents to which it is a party constitutes
the legal, valid and binding obligation of the Seller enforceable against the
Seller 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 generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The balance sheets of the Parent and its Subsidiaries as at December
29, 2001, and the related statements of operations of the Parent and its
Subsidiaries for the fiscal year ended December 29, 2001, copies of which have
been furnished to the Agent, fairly present the financial condition of the
Parent and its Subsidiaries as at such date and the results of the operations of
the Parent and its Subsidiaries for the period ended on such date, all in
accordance with GAAP consistently applied, and since December 29, 2001 there has
been no material adverse change in the business, operations, property or
financial or other condition of the Parent.
(f) There is no pending or, to the Seller's knowledge, threatened action
or proceeding affecting the Seller or the Parent or any of its Subsidiaries
before any court, governmental agency or arbitrator which, if adversely
determined, would materially adversely affect the financial condition or
operations of the Seller or of the Parent and Subsidiaries taken as a whole or
the ability of the Seller or the Servicer to perform their respective
obligations under the Transaction Documents, or which purports to affect the
legality, validity or enforceability of the Transaction Documents; none of the
Seller, the Parent or any Subsidiary of the Parent is in default with respect to
any order of any court, arbitration or governmental body except for defaults
with respect to orders of governmental agencies which defaults are not material
to the business or operations of the Seller, the Parent or the Parent's
Subsidiaries.
(g) Immediately prior to the Purchase by the Investors or the Banks, as
the case may be, the Seller is the legal and beneficial owner of the Pool
Receivables and Related Security free and clear of any Lien; upon each Purchase,
the Investors or the Banks, as the case may be, shall acquire a valid and
perfected first priority undivided percentage ownership interest to the extent
of the pertinent Receivable Interest in each Pool Receivable then existing or
thereafter arising and in the
72
Related Security and Collections with respect thereto. No effective financing
statement or other instrument similar in effect covering any Contract or Pool
Receivable or the Related Security or Collections with respect thereto is on
file in any recording office, except those filed in favor of the Agent relating
to this Agreement, those filed by the Seller pursuant to the Purchase and Sale
Agreement, those filed by HomePride SPV pursuant to the Purchase and
Contribution Agreement and those filed by HomePride pursuant to any Dealer
Agreements.
(h) Each Servicer Certificate (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent or the Investors in connection with this
Agreement is or will be accurate in all material respects as of its date or
(except as otherwise disclosed to the Agent or the Investors, as the case may
be, at such time) as of the date so furnished, and no such document (in each
case as of such date) (x) contains or will contain any untrue statement of a
material fact or (y) omits or will omit to state a material fact necessary in
order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(i) The principal place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the Pool
Receivables are located at the address or addresses referred to in Section 17.03
(other than records held by a Custodian).
(j) The Seller is not known by and does not use any tradename or
doing-business-as name.
(k) The Seller was organized on April 17, 2002, and the Seller did not
engage in any business activities prior to the date of this Agreement. The
Seller has no Subsidiaries.
(l) With respect to each Pool Receivable, the Seller shall have purchased
such Pool Receivable from HomePride SPV in exchange for payment (made by the
Seller to HomePride SPV in accordance with the provisions of the Purchase and
Sale Agreement) of cash and/or subordinated debt in an amount which constitutes
fair consideration and reasonably equivalent value. Each such sale referred to
in the preceding sentence shall not have been made for or on account of an
antecedent debt owed by HomePride SPV to the Seller and no such sale is intended
to be voidable or subject to avoidance under any section of the Bankruptcy Code.
(m) The Seller will treat the purchase of each Receivable and Related
Security pursuant to the Purchase and Sale Agreement as a purchase of HomePride
SPV's full right, title and ownership interest in such Receivable and Related
Security.
(n) The Seller has complied with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties and all Pool Receivables and Related Security.
73
(o) The Seller has filed on a timely basis all material tax returns
(including, without limitation, foreign, federal, state, local and otherwise)
required to be filed, is not liable for taxes payable by any other Person and
has paid or made adequate provisions for the payment of all material taxes,
assessments and other governmental charges due from the Seller. No tax lien or
similar adverse claim has been filed, and no claim is being asserted, with
respect to any such tax, assessment or other governmental charge. Any taxes,
fees and other governmental charges payable by the Seller in connection with the
execution and delivery of this Agreement and the other Transaction Documents to
which it is a party and the transactions contemplated hereby or thereby
including the transfer of each Pool Receivable and Related Security to the
Seller have been paid or shall have been paid if and when due at or prior to the
Original Closing Date and the relevant Purchase Date, as the case may be.
(p) The Seller is in compliance with ERISA and has not incurred and does
not expect to incur any liabilities (except for premium payments arising in the
ordinary course of business) to the PBGC under ERISA.
(q) (i) The Seller is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
restriction that could have, and no provision of applicable law or governmental
regulation is reasonably likely to have, a material adverse effect on the
condition (financial or otherwise), business, operations, results of operations
or properties of the Seller, or could have such a material adverse effect on the
ability of the Seller to carry out its obligations under this Agreement and the
other Transaction Documents to which it is a party and (ii) the Seller is not in
default under or with respect to any contract, agreement, lease or other
instrument to which the Seller is a party and which would have a material
adverse effect on the Seller's condition (financial or otherwise), business,
operations or properties, and the Seller has not delivered or received any
notice of default thereunder.
(r) The Seller is not an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended. The making of the Purchases by
the Investors, the application of the proceeds and repayment thereof by the
Seller and the consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which the Seller is a party will not
cause the Seller to violate any provision of such Act or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
(s) No proceeds of any Purchase will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
(t) No transaction contemplated hereby or by the Purchase and Sale
Agreement requires compliance with any bulk sales act or similar law.
(u) (i) The fair value of the property of the Seller is greater than the
total amount of liabilities, including contingent liabilities, of the Seller,
(ii) the present fair salable value of the
74
assets of the Seller is not less than the amount that will be required to pay
all probable liabilities of the Seller on its debts as they become absolute and
matured, (iii) the Seller does not intend to, and does not believe that it will,
incur debts or liabilities beyond the Seller's abilities to pay such debts and
liabilities as they mature and (iv) the Seller is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which the Seller's property would constitute unreasonably small capital.
(v) Each Contract has been originated or re-underwritten by HomePride
consistent with the eligibility criteria required for a public securitization of
manufactured housing contracts, land-and-home contracts and mortgage loans
similar to the Contracts, and, as of the related Purchase Date, there are no
additional criteria which would exclude such Contracts from future
securitizations at such Purchase Date.
(w) Intentionally Omitted.
(x) Each of the Lock-Box Accounts, the Collection Account, the Reserve
Account and the Excess Collections Account is free and clear of any Lien and not
subject to any right of set- off other than any banker's lien or right of
set-off in favor of the banks holding such accounts that are obtained by
operation of law or contract, to the extent such liens or rights of set-off were
granted solely with respect to customary fees and expenses for the routine
maintenance of such accounts or the amounts of any checks which have been
credited to such accounts but are subsequently returned unpaid because of
uncollected or insufficient funds.
ARTICLE IX
COVENANTS
Until the later of (x) the Facility Termination Date and (y) the date on
which no Capital Investment of or Yield on any Receivable Interest shall be
outstanding or the date all Other Amounts owed hereunder to the Investors, the
Banks or the Agent are paid in full:
SECTION 9.01. Records. The Seller and each Servicer Party shall, at their
own cost and expense, maintain satisfactory and complete records of the Pool
Receivables, including a record of all payments received and all credits granted
with respect to the Pool Receivables and all other dealings with the Pool
Receivables. Upon 72 hours notice at any time after the occurrence and during
the continuation of a Termination Event, the Seller and each Servicer Party
shall deliver and turn over to the Agent or to its representatives, or at the
option of the Agent, shall provide the Agent or its representatives with access
to, during ordinary business hours, on demand of the Agent, all of the Seller's
and such Servicer Party's facilities, personnel, books and records pertaining to
the Pool Receivables, including all Records. If a Termination Event shall have
occurred and be continuing, promptly upon request therefor, the Seller or such
Servicer Party shall deliver to the Agent records reflecting payment activity
relating to the Pool Receivables through the close of business on the
immediately preceding Business Day.
75
SECTION 9.02. Other Liens or Interests. The Seller will not sell, pledge,
assign (by operation of law or otherwise), transfer to any other Person,
otherwise dispose of, or grant, create, incur, assume or suffer to exist any
Lien upon or with respect to, the Seller's undivided interest in any Pool
Receivable, Related Security, related Contract or Collections, or upon or with
respect to any account to which any Collections of any Pool Receivable are sent,
or assign any right to receive income in respect thereof, and the Seller and
Servicer shall defend the right, title, and interest of the Investors, the Banks
and the Agent in and to the Pool Receivables, related Contracts and Related
Security against all claims of third parties claiming through or under the
Seller other than (i) for the ownership and security interests created by this
Agreement in favor of the Agent or (ii) in connection with any Take-Out, but
only to the extent that the Minimum Purchase Price for all related Receivable
Interests shall have been paid in full in connection therewith. The Seller and
each Servicer Party shall advise the Agent promptly, in reasonable detail of the
occurrence of any event which would have a material adverse effect on the
aggregate value of the Pool Receivables, related Contracts and Related Security
or on the assignments and security interests granted by the Seller in this
Agreement.
SECTION 9.03. Costs and Expenses. The Seller shall pay all of its
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under the Transaction Documents.
SECTION 9.04. Compliance with Laws, Etc. The Seller will comply with all
applicable laws, rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications, and privileges.
SECTION 9.05. Offices, Records, Name and Organization. The Seller will
keep its principal place of business and chief executive office and the office
where it keeps its records concerning the Pool Receivables at the address of the
Seller set forth under its name on the signature pages to this Agreement or,
upon 30 days' prior written notice to the Agent, at any other locations within
the United States. The Seller will not change its name or its state of
organization, unless (i) the Seller shall have provided the Agent with at least
30 days' prior written notice thereof and (ii) no later than the effective date
of such change, all actions requested by the Agent to protect and perfect the
interest in the Pool Receivables have been taken and completed. The Seller also
will maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Pool Receivables
and related Contracts in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Pool Receivables
(including, without limitation, records adequate to permit the daily
identification of each Pool Receivable and all Collections of and adjustments to
each existing Pool Receivable). The Seller will give the Agent notice of any
material change in the administrative and operating procedures of the Seller
referred to in the previous sentence.
SECTION 9.06. Performance and Compliance with Contracts and Credit and
76
Collection Policy. The Seller will, at its expense, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed
by it under the Contracts related to the Pool Receivables, and timely and fully
comply in all respects (other than an in inconsequential respect) with the
Credit and Collection Policy in regard to each Pool Receivable and the related
Contract.
SECTION 9.07. Change in Business or Credit and Collection Policy. The
Seller will not make any change in its business or in the Credit and Collection
Policy (other than, with respect to the Credit and Collection Policy, an
inconsequential change thereto) that would adversely affect the collectibility
of the Pool Receivables or the ability of the Seller or either Servicer Party to
perform its obligations under this Agreement.
SECTION 9.08. Extension or Amendment of Receivables. Except as provided in
Section 11.03, the Seller will not extend, amend or otherwise modify the terms
of any Pool Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
SECTION 9.09. Marking of Records. At its expense, the Seller will ▇▇▇▇ its
master data processing records evidencing Pool Receivables with a legend
evidencing that Receivable Interests related to such Pool Receivables have been
sold in accordance with this Agreement.
SECTION 9.10. Further Assurances. (a) The Seller and Servicer agree from
time to time, at its own expense, promptly to execute and deliver all further
instruments and documents, and to take all further actions, that may be
necessary or desirable, or that the Agent may reasonably request, to perfect,
protect or more fully evidence the Purchases, to perfect the security interests
granted under this Agreement or to enable the Investors, the Banks or the Agent
to exercise and enforce their respective rights and remedies under this
Agreement. Without limiting the foregoing, the Seller and Servicer will, upon
the request of the Agent, execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and documents,
that may be necessary or desirable, or that the Agent may request, to perfect,
protect or evidence such Purchases.
(b) The Seller authorizes the Agent to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to the Pool
Receivables and the Related Security and the Collections with respect thereto
without the signature of the Seller where permitted by law in order to enable
the Investors, the Banks or the Agent to exercise their respective rights and
remedies under this Agreement. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.
(c) The Seller and Servicer shall furnish to the Agent from time to time
such statements and schedules further identifying and describing the Pool
Receivables and Related Security and such other reports in connection with the
Pool Receivables and Related Security as the Agent may request, all in
reasonable detail.
77
SECTION 9.11. Reporting Requirements. The Seller and Servicer will
maintain a system of accounting established and administered in accordance with
GAAP and will provide to the Agent (in multiple copies, if requested by the
Agent) and each Rating Agency the following:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Parent, a copy of the audited consolidated financial
statements for such year of the Parent and its consolidated Subsidiaries,
certified by independent accountants of nationally recognized standing, together
with calculations, certified by the chief financial officer or chief accounting
officer of the Parent, of the Consolidated Net Income (Loss) as of the end of
the fiscal quarter ending on the last day of such fiscal year;
(b) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Parent, a
consolidated balance sheet of the Parent and its consolidated Subsidiaries as of
the end of such quarter and including the prior comparable period, and
consolidated statements of operations of the Parent and its consolidated
Subsidiaries for such quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter prepared in
accordance with GAAP, together with calculations of the Consolidated Net Income
(Loss) as of the end of such fiscal quarter, such balance sheet, statements of
operations, and calculations to be certified by the chief financial officer or
chief accounting officer of the Parent identifying such balance sheets or
statements as being the balance sheets or statements described in this paragraph
(b) and stating that the information set forth therein fairly presents the
financial condition of the Parent and its consolidated Subsidiaries as of and
for the periods then ended, subject to year-end adjustments consisting only of
normal, recurring accruals and subject to the auditors' year end report and
confirming that the Parent is in compliance with all financial conditions in
this Agreement;
(c) as soon as available and in any event within ten (10) Business Days
after the end of each fiscal month of the Parent, calculations of the average
Short-Term Assets Amount and Consolidated Net Income (Loss) of the Parent during
such month, in a form satisfactory to the Agent, certified by the chief
financial officer of the Parent;
(d) as soon as available and in any event within 90 days after the end of
each fiscal year of the Seller, a copy of the audited financial statements for
such year of the Seller, certified by independent accountants of nationally
recognized standing; and
(e) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Seller, a balance
sheet of the Seller as of the end of such quarter and including the prior
comparable period, and consolidated statements of income of the Seller for such
quarter and for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter prepared in accordance with GAAP, certified
by the officer of the Seller responsible for its financial affairs identifying
such balance sheets or statements as being the balance sheets or statements
described in this paragraph (d) and stating that the information set
78
forth therein fairly presents the financial condition of the Seller as of and
for the periods then ended, subject to year-end adjustments consisting only of
normal, recurring accruals and subject to the auditors' year end report and
confirming that the Seller is in compliance with all financial covenants in this
Agreement.
(f) as soon as available and in any event within 90 days after the end of
each fiscal year of the Servicer, a balance sheet of the Servicer as of the end
of such fiscal year, and a statement of operations of the Servicer for such
fiscal year prepared in accordance with GAAP, such balance sheet and statements
of operations to be certified by the chief financial officer or chief accounting
officer of the Servicer identifying such balance sheets or statements as being
the balance sheets or statements described in this paragraph and stating that
the information set forth therein fairly presents the financial condition of the
Servicer as of and for the fiscal year then ended;
(g) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Servicer, a balance
sheet of the Servicer as of the end of such quarter and including the prior
comparable period, and a statement of operations of the Servicer for such
quarter and for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter prepared in accordance with GAAP, such
balance sheet and statement of operations to be certified by the chief financial
officer or chief accounting officer of the Servicer identifying such balance
sheets or statements as being the balance sheets or statements described in this
paragraph and stating that the information set forth therein fairly presents the
financial condition of the Servicer as of and for the periods then ended,
subject to year-end adjustments consisting only of normal, recurring accruals;
(h) as soon as available and in any event within 90 days after the end of
each fiscal year of the HomePride SPV, a balance sheet of HomePride SPV as of
the end of such fiscal year, and a statement of operations of HomePride SPV for
such fiscal year prepared in accordance with GAAP, such balance sheet and
statements of operations to be certified by the chief financial officer or chief
accounting officer of HomePride SPV identifying such balance sheets or
statements as being the balance sheets or statements described in this paragraph
and stating that the information set forth therein fairly presents the financial
condition of HomePride SPV as of and for the fiscal year then ended;
(i) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of HomePride SPV, a balance
sheet of HomePride SPV as of the end of such quarter and including the prior
comparable period, and a statement of operations of HomePride SPV for such
quarter and for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter prepared in accordance with GAAP, such
balance sheet and statement of operations to be certified by the chief financial
officer or chief accounting officer of HomePride SPV identifying such balance
sheets or statements as being the balance sheets or statements described in this
paragraph and stating that the information set forth therein fairly presents the
financial condition of HomePride SPV as of and for the periods then ended,
subject to year-end adjustments consisting only of normal, recurring accruals;
79
(j) concurrently with the delivery of the financial statements referred to
in Section 9.11, a certificate of a Responsible Officer of the Seller stating
that, to the best of such Responsible Officer's knowledge, the Seller during
such period has observed or performed all of its covenants and other agreements,
and satisfied every condition, contained in the Transaction Documents to which
it is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Termination Event or
Incipient Termination Event, except as specified in such certificate;
(k) as soon as possible and in any event within one day after the
occurrence of each Termination Event or Incipient Termination Event, a statement
of the principal financial officer of the Seller setting forth details of such
Termination Event or Incipient Termination Event and the action that the Seller
has taken and proposes to take with respect thereto;
(l) promptly upon the furnishing thereof to the shareholders of the Parent
or the Servicer, copies of all financial statements, reports and proxy
statements so furnished;
(m) promptly after sending or filing thereof and upon request by the Agent
therefor, copies of all registration statements and annual, quarterly, monthly
or other regular reports which the Parent or any of its Subsidiaries files with
the Securities and Exchange Commission;
(n) promptly after the filing or receiving thereof, copies of all reports
and notices that the Parent or any Affiliate thereof files under ERISA with the
Internal Revenue Service or the PBGC or the U.S. Department of Labor or that the
Parent or any Affiliate thereof receives from any of the foregoing or from any
multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which
the Parent or any Affiliate thereof is or was, within the preceding five years,
a contributing employer;
(o) at least 30 days prior to any change in the name of either Servicer
Party or the Seller, a notice setting forth the new name and the effective date
thereof;
(p) promptly after the Seller or Servicer obtains knowledge thereof,
notice of any "Event of Termination" or "Facility Termination Date" under the
Purchase and Sale Agreement;
(q) so long as any Capital Investment shall be outstanding, as soon as
possible and in any event no later than the day of occurrence thereof, notice
that HomePride SPV has stopped selling Receivables to the Seller pursuant to the
Purchase and Sale Agreement;
(r) promptly after receipt thereof, copies of all notices received by the
Seller from HomePride SPV under the Purchase and Sale Agreement; and
(s) promptly, such additional financial and other information with respect
to the Parent, HomePride, HomePride SPV, either Servicer Party and the Seller
and their business and
80
properties (including, without limitation, the Pool Receivables and the Related
Security) as any Agent may from time to time reasonably request by written
notice to the Seller or the Servicer.
SECTION 9.12. Corporate Separateness. (a) The Seller shall at all times
maintain at least two independent directors (each, an "Independent Director")
each of whom (i) is in fact independent, (ii) does not have any direct financial
interest or any material indirect financial interest in the Seller or HomePride,
or in any Affiliate of the Seller or HomePride, (iii) is not, and has not been,
connected with the Seller or HomePride or any Affiliate of the Seller or
HomePride as an officer, employee, promoter, underwriter, trustee, partner or
person performing similar functions and is not a member of the immediate family
of any such officer or employee and (iv) is not, and has not been, a director
(other than as an independent director for an Affiliate which is a limited
special purpose corporation) or stockholder of any Affiliate of the Seller or
HomePride and is not a member of the immediate family of any such director or
stockholder.
(b) The Seller shall not direct or participate in the management of any
other Person's operations, and no other Person shall be permitted to direct or
participate in the management of the Seller.
(c) The Seller shall maintain a principal executive and administrative
office through which its business in conducted separate from those of any other
Person, and, to the extent that the Seller and any other Persons have offices in
contiguous space, there shall be fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair share of such
expenses.
(d) The Seller shall engage only in those transactions described in
Section 3 of its certificate of incorporation and matters necessarily incident
thereto.
(e) The Seller shall have stationery and other business forms separate
from that of any other Person.
(f) The Seller shall ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities and that each such entity shall
bear its fair share of such costs and shall ensure that, to the extent that the
Seller contracts or does business with vendors or service providers where the
goods and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such
entities for whose benefit the goods and services are provided and that each
such entity shall bear its fair share of such costs.
(g) The Seller shall at all times be adequately capitalized in light of
its contemplated business.
(h) The Seller shall at all times provide for its own operating expenses
and
81
liabilities from its own funds, shall not allow its funds to be diverted to any
other Person or for other than the corporate use of the Seller, and shall not,
except as may be expressly permitted by agreements of the Seller, allow its
funds to be commingled with those of any Affiliate of the Seller.
(i) The Seller shall maintain its assets and transactions separately from
those of any other Person, reflect such assets and transactions in financial
statements separate and distinct from those of any other Person and evidence
such assets and transactions by appropriate entries in books and records
separate and distinct from those of any other Person.
(j) The Seller shall ensure that all material transactions between the
Seller and any of its Affiliates shall be only on an arm's-length basis and
shall receive the approval of its board of directors, including at least both
Independent Directors.
(k) The Seller shall hold itself out to the public under its own name as a
legal entity separate and distinct from any other Person, shall act solely in
its own corporate name and through its own authorized officers and agents, and
no Affiliate of the Seller shall be appointed to act as agent by the Seller,
except as may be expressly permitted by any agreements of the Seller.
(l) The Seller shall not hold itself out as having agreed to pay, or as
being liable, primarily or secondarily, for any obligations of any other Person,
except as may be expressly permitted in any agreements of the Seller.
(m) The Seller shall not maintain any joint account with any other Person
or become liable as a guarantor or otherwise with respect to any debt or
contractual obligation of any other Person.
(n) The Seller shall not make any payment or distribution of assets with
respect to any obligation of any other Person or grant any lien, security
interest or encumbrance on any of its assets to secure any obligation of any
other Person.
(o) The Seller shall not make loans, advances or otherwise extend credit
to any other Person, except on an arm's-length basis, and shall not permit any
Affiliate of the Seller to advance funds to the Seller or otherwise supply funds
to, or guaranty debts of, the Seller.
(p) The Seller shall hold regular duly noticed meetings of its sole member
and board of directors, no less than once annually, and make and retain minutes
of such meetings.
(q) The Seller shall ensure that decisions with respect to its business
and daily operations shall be independently made by the Seller (although the
officer making any particular decision may also be an officer or director of any
Affiliate of the Seller) and shall not be dictated by an Affiliate of the
Seller.
(r) The Seller shall have bills of sale (or other similar instruments of
assignment)
82
and, if appropriate, UCC-1 financing statements, with respect to all assets
purchased from any other Person.
(s) The Seller shall ensure that any financial reports required of the
Seller shall comply with GAAP and shall be issued separately from, but may be
consolidated with, any reports prepared for any of its Affiliates and the Seller
shall comply with the filing requirements under applicable tax laws.
(t) The Seller shall not fail to maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person.
(u) The Seller shall comply with all provisions of its articles of
organization and operating agreement and shall observe all necessary,
appropriate and customary corporate formalities.
SECTION 9.13. Purchase and Contribution Agreement; Purchase and Sale
Agreement; Custodial Agreement; Global Servicing Agreement. The Seller will not
amend, waive or modify any provision of the Purchase and Contribution Agreement,
Purchase and Sale Agreement or the Custodial Agreement or Section 2.13 of the
Global Servicing Agreement in any respect or waive the occurrence of any default
under any such agreement, without in each case the prior written consent of the
Agent. The Seller will perform all of its obligations under the Purchase and
Sale Agreement and the Custodial Agreement in all respects and will enforce the
Purchase and Sale Agreement and the Custodial Agreement in accordance with its
terms in all respects.
SECTION 9.14. Nature of Business. The Seller will not engage in any
business other than as permitted under its articles of organization. The Seller
will not create or form any Subsidiary.
SECTION 9.15. Mergers, Etc. The Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by this Agreement and the Purchase
and Sale Agreement.
SECTION 9.16. Distributions, Etc. The Seller will not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of equity interests of the Seller, or
return any equity to its shareholders as such, or purchase, retire, defease,
redeem or otherwise acquire for value or make any payment in respect of any
equity interests of the Seller or any warrants, rights or options to acquire any
such equity interests, now or hereafter outstanding.
83
SECTION 9.17. Debt. The Seller will not incur any Debt, other than any
Debt incurred pursuant to this Agreement and the other Transaction Documents.
SECTION 9.18. Certificate of Incorporation and By-Laws. The Seller will
not amend or delete its Certificate of Incorporation or its By-Laws without the
prior written consent of the Agent except to correct clerical errors.
SECTION 9.19. Inspections. (a) The Seller and each Servicer Party will, at
their respective expenses, during regular business hours as requested by the
Agent, upon reasonable prior notice to the Seller or such Servicer Party, permit
the Agent or its agents or representatives (including independent public
accountants, which may be the Seller's or such Servicer Party's independent
public accountants), (i) to conduct annual audits of the Receivables, the
Related Security and the related books and records and collections systems of
such Servicer Party or the Seller, (ii) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the Seller
or such Servicer Party relating to Pool Receivables and the Related Security,
including, without limitation, the Contracts, and (iii) to visit the offices and
properties of the Parent, such Servicer Party or the Seller for the purpose of
examining such materials described in clause (ii) above, and to discuss matters
relating to Pool Receivables and the Related Security or the Seller's or such
Servicer Party's performance under the Transaction Documents or under the
Contracts with any of the officers or employees of such Servicer Party or the
Seller having knowledge of such matters; provided, however, that, prior to
occurrence of a Termination Event or Event of Default, the Agent shall not
exercise its rights in clauses (i) through (iii) of this sentence more than once
per each calendar quarter. The Agent or its agents or representatives shall at
the expense of the Seller or the Servicer and as frequently as the Agent may
desire, has the right under this Agreement after the occurrence and during the
continuance of a Termination Event, or an Event of Default, upon reasonable
prior notice to the Seller or either Servicer Party, to examine and audit,
during business hours or at such other times as might be reasonable under
applicable circumstances, any and all of the books, records, or other
information of such Servicer Party or the Seller, or held by another for such
Servicer Party or the Seller or on its behalf, concerning this Agreement and to
conduct any other activities described in clauses (ii) and (iii) above. The
Agent shall make commercially reasonable efforts to schedule the audits,
examinations and visits provided for under this Section 9.19(a) so that they
occur, to the degree reasonably feasible, concurrently with similar audits,
examinations and visits to be conducted by HomePride in connection with the
Global Servicing Agreement.
(b) Upon the Agent's request, the Seller will, at its expense, utilize the
Agent's representatives or auditors, to prepare and deliver to the Agent a
written report with respect to the Pool Receivables and the Credit and
Collection Policy (including, in each case, the systems, procedures and records
relating thereto) on a scope and in a form requested by the Agent.
SECTION 9.20. Take-Out Securitization. (a) Upon the request of the Agent,
each of the Seller and the Servicer agrees that it shall amend this Agreement to
be consistent with
84
any documents executed by the Seller or any Affiliate of the Seller in
connection with a Take-Out Securitization or Term Securitization to the extent
any provisions included therein for the benefit of any holders of asset backed
securities issued in connection therewith are more favorable to the terms
provided to the Investors and the Banks herein.
(b) The Seller shall give the Agent not less than 30 days prior written
notice of any proposed Take-Out Securitization (which notice shall set forth the
proposed date of such Take-Out Securitization); provided, that the Seller shall
promptly update any such notice if the proposed date of any Take-Out
Securitization is changed.
SECTION 9.21. Minimum Rating. Each of the Seller and the Servicer shall
take such actions as are reasonably requested by the Agent and as otherwise are
necessary to obtain and thereafter maintain from (i) ▇▇▇▇▇'▇ a rating indication
consistent with an "A2" for the financing facility provided hereunder and (ii)
S&P, a rating of the timely payment of Yield, subject to the Available Funds
Cap, and the ultimate repayment of the aggregate Capital Investment on or prior
to the Rated Final Maturity Date of at least "A" (collectively, the "Minimum
Rating") on or prior to August 9, 2002 (including, without limitation, modifying
the calculation of Advance Rate and Excess Concentration Amount and agreeing to
other amendments to this Agreement and the other Transaction Documents
(including, without limitation, amendments of provisions with respect to
Eligible Receivables criteria) to the extent necessary to obtain and thereafter
maintain such a Minimum Rating).
▇▇▇▇▇'▇ and S&P intend to monitor the aforementioned ratings on an ongoing
basis subject to the conditions agreed to by ▇▇▇▇▇'▇ and S&P, respectively.
SECTION 9.22. Intentionally Omitted.
SECTION 9.23. Changes in Payment Instructions to Obligors. The Seller and
Servicer Parties will not terminate the Specified Account Bank or make any
change in its instructions to Obligors regarding payments to be made to the
Seller or payments to be made to the Specified Account, unless CIT Group/Sales
is no longer the Sub-Servicer hereunder and such termination or change has been
consented to in writing by the Agent or such termination or change is otherwise
required by this Agreement.
SECTION 9.24. Deposits to Specified Accounts. Subject to Section 9.23
hereof, the Seller and Servicer Parties will instruct all Obligors to remit all
their payments in respect of Receivables to the Specified Account. If the Seller
or either Servicer Party shall receive any Collections directly from an Obligor,
it shall deposit the same into the Specified Account or, if applicable, a
Lock-Box Account within one (1) Business Day of receipt. The Seller will not
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to the Specified Account cash or cash proceeds other than Collections of
Receivables.
SECTION 9.25. Lock-Box Accounts; Lock-Box Banks. As and when required
85
pursuant to Section 11.03(c) hereof, the Seller and the Servicer Parties will
instruct all Obligors to remit all their payments in respect of Receivables to
one or more Lock-Box Accounts. In such case, the Seller and the Servicer Parties
(i) will not add or terminate any bank as a Lock-Box Bank or make any change in
its instructions to Obligors regarding payments to be made to the Seller or
payments to be made to any Lock-Box Account, unless the Agent shall have
approved in writing such addition, termination or change, (ii) will not deposit
or otherwise credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections of Receivables and
(iii) shall cause any Collections received from an Obligor to be deposited
immediately (and in any event within one Business Day) to a Lock-Box Account.
ARTICLE X
GRANT OF SECURITY INTEREST
SECTION 10.01. Seller's Grant of Security Interest; Assignment of Purchase
and Sale Agreement. (a) As collateral security for the performance by the Seller
of all the terms, covenants and agreements on the part of the Seller (whether as
Seller or otherwise) to be performed under this Agreement or any document
delivered in connection with this Agreement in accordance with the terms
thereof, the Seller hereby assigns (and hereby confirms the assignment under the
Original Agreement) to the Agent for its benefit and the ratable benefit of the
Investors and the Banks and hereby grants a security interest (and hereby
confirms the grant of a security interest under the Original Agreement) to the
Agent for its benefit and the ratable benefit of the Investors and the Banks in
all of the Seller's right, title and interest in, to and under (i) the Purchase
and Sale Agreement, the Purchase and Contribution Agreement (which right, title
and interest in and to the Purchase and Contribution Agreement shall be assigned
to the Seller under the Purchase and Sale Agreement) and the Global Servicing
Agreement (which right, title and interest shall be assigned to the Seller under
the Purchase and Sale Agreement), including, without limitation, (A) all
property and rights assigned or pledged thereunder and all rights of the Seller
to receive monies due or to become due under or pursuant to such agreements,
whether payable as fees, costs, expenses or otherwise, (B) all security
interests and property subject thereto from time to time purporting to secure
payment of monies due or to become due under or pursuant to such agreements, (C)
all rights of the Seller to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to such agreements, including, without
limitation, the Parent Guaranty, (D) claims of the Seller for damages arising
out of or for breach of or default under such agreements (including any breach
of any representation or warranty thereunder), (E) the rights of the Seller to
amend, waive or terminate such agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (which rights shall
be exerciseable by the Agent upon the occurrence of a Termination Event), (F)
all other rights, remedies, powers, privileges and claims of the Seller under or
in connection with such agreements (whether arising pursuant to such agreements
or otherwise available to the Seller at law or in equity), including the rights
of the Seller to enforce such agreements and to give or withhold any and all
consents, requests, notices, directions, approvals, extensions or waivers under
or in connection therewith, including, without limitation, the right of the
Seller to compel performance and otherwise exercise all remedies thereunder (all
of which shall
86
be exerciseable by the Agent upon the occurrence of a Termination Event), and
(G) all monies due or to become due and all amounts received with respect to the
items listed in clauses (A) through (F) and all proceeds (including, without
limitation, whatever is received upon the sale, exchange, collection or other
disposition of the foregoing and all "proceeds" as defined in Section 9-102 of
the UCC as in effect in the State of New York) thereof, including all Recoveries
relating thereto (collectively, the "Transferred Agreements"), (ii) all
Receivables, whether now owned and existing or hereafter acquired or arising,
the Related Security with respect thereto and the Collections and all other
assets, including, without limitation, accounts, chattel paper, instruments,
payment intangibles and general intangibles (as those terms are defined in the
UCC), including undivided interests in any of the foregoing, owned by the Seller
and not otherwise purchased under this Agreement, (iii) all existing and
hereafter acquired or hereafter arising Pool Receivables, together with all
Related Security, Collections and proceeds with respect thereto, (iv) each Bank
Account and all cash, securities entitlements and other financial assets as
shall be deposited therein from time to time, (v) the Interest Rate ▇▇▇▇▇▇ and
(vi) to the extent not included in the foregoing, all proceeds of any and all of
the foregoing.
(b) As collateral security for the performance by the Seller of all the
terms, covenants and agreements on the part of the Seller (whether as Seller or
otherwise) to be performed under this Agreement or any document delivered in
connection with this Agreement in accordance with the terms hereof, the Seller
hereby grants (and hereby confirms the grant under the Original Agreement) to
the Agent for its benefit and the ratable benefit of the Investors and the
Banks, a first priority perfected and continuing security interest in each Bank
Account and in all cash, securities entitlements and other financial assets as
shall be deposited therein from time to time.
SECTION 10.02. Characterization of Transaction. It is the intention of the
parties that the transactions contemplated hereby constitute sales of Receivable
Interests to the Agent, on behalf of the Banks and Investors, as applicable,
pursuant to the terms of this Agreement. Each of the parties hereto will treat
the transactions contemplated by this Agreement in a manner consistent with the
sale of such Receivable Interests in the Pool Receivables, together with Related
Security, Collections and proceeds with respect thereto, by the Seller to the
Agent on behalf of the Banks and Investors, as applicable. Subject to the terms
of this Agreement, the Seller shall hold legal title to the Pool Receivables,
together with Related Security, Collections and proceeds with respect thereto,
on behalf of and for the benefit of the Agent (on behalf of the Investors and
the Banks). Each of the parties hereto hereby agrees to treat each purchase of
interests in Receivables hereunder (and the payment of the related Purchase
Prices) as debt for income tax purposes under the tax laws currently in effect,
and as sales of such interests for all other purposes.
SECTION 10.03. Seller Remains Liable. (a) Notwithstanding anything in this
Agreement, (i) the Seller shall remain liable under the Pool Receivables, all
Related Security, the Transferred Agreements and any Interest Rate ▇▇▇▇▇▇ and to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Agent, an
Investor or a Bank of any of its rights under this Agreement shall not release
the Seller or the Servicer from any of their respective duties or obligations
under the Pool Receivables, all Related
87
Security, the Transferred Agreements or any Interest Rate ▇▇▇▇▇▇, (iii) the
Agent, the Investors, the Banks, and the Custodian shall not have any obligation
or liability under the Pool Receivables, the Related Security, the Transferred
Agreements or any Interest Rate ▇▇▇▇▇▇ by reason of this Agreement, and (iv)
neither the Agent, the Custodian, the Investors or Banks shall be obligated to
perform any of the obligations or duties of the Seller or the Servicer under the
Pool Receivables, the Related Security, the Transferred Agreements or any
Interest Rate ▇▇▇▇▇▇ or to take any action to collect or enforce any claim for
payment assigned under this Agreement.
(b) The Seller shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller (or by the Agent on behalf of the
Seller) in accordance with the terms hereof seriously misleading within the
meaning of the UCC, unless the Seller shall have given the Agent at least 60
days prior written notice thereof, and shall promptly file appropriate
amendments to all previously filed financing statements and continuation
statements. The Seller shall give the Agent at least 30 days prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement. The Seller shall at all times maintain its
principal executive office within the United States of America.
ARTICLE XI
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 11.01. Designation of Servicer Parties. (a) The servicing,
administration and collection of Pool Receivables shall be conducted by the
Servicer Parties so designated hereunder from time to time.
(b) Until the Agent gives notice to the Seller of the designation of a
Successor Servicer pursuant to the provisions of Section 13.03, HomePride is
hereby designated as, and hereby agrees to perform the duties and obligations
of, the Servicer pursuant to the terms hereof. Notwithstanding the appointment
of the Sub-Servicer pursuant to Section 11.01(c), the Servicer shall be liable
and responsible for all covenants, obligations, duties, liabilities,
responsibilities, representations and warranties of the Sub-Servicer under this
Agreement.
(c) The Servicer hereby appoints CIT Group/Sales as Sub-Servicer under
this Agreement and agrees that CIT Group/Sales shall perform the covenants,
obligations and duties of Sub-Servicer under this Agreement. CIT Group/Sales
hereby accepts its appointment as Sub-Servicer under this Agreement and hereby
agrees and covenants to perform all covenants, obligations and duties, and be
responsible for all liabilities, representations and warranties, of Sub-Servicer
under this Agreement. The Servicer shall have the right to terminate the
appointment of CIT Group/Sales as Sub-Servicer hereunder solely in accordance
with the terms and provisions of the Global Servicing Agreement and with the
prior written consent of the Agent, and the Agent shall have the right to
terminate the appointment of CIT Group/Sales as Sub-Servicer hereunder in
88
accordance with the terms and provisions of the CIT Guaranty. Upon any
termination by the Servicer of the appointment of CIT Group/Sales as
Sub-Servicer hereunder in accordance with the terms and provisions of the Global
Servicing Agreement and this Agreement, or any termination by the Agent of the
appointment of CIT Group/Sales as Sub-Servicer hereunder in accordance with the
terms and provisions of the CIT Guaranty, the Servicer may, with the prior
written consent of the Agent, (i) appoint an Eligible Sub-Servicer as
Sub-Servicer hereunder and, in such case, such Eligible Sub-Servicer so
appointed shall be responsible for all covenants, obligations, duties,
liabilities, representations and warranties, and be entitled to all rights,
benefits and privileges, of the Sub-Servicer hereunder on and after the date of
such appointment or (ii) designate that there shall no longer be a Sub-Servicer
under this Agreement and, in such case, all covenants, obligations, duties,
liabilities, representations and warranties which were theretofore covenants,
obligations, duties, liabilities, representations and warranties of the
Sub-Servicer hereunder shall, upon such designation, become covenants,
obligations, duties, liabilities, representations and warranties of the
Servicer, and all rights, benefits and privileges which were theretofore rights,
benefits and privileges of the Sub-Servicer hereunder shall, upon such
designation, become rights, benefits and privileges of the Servicer.
The Agent shall have the right to terminate the appointment of CIT
Group/Sales as Sub-Servicer hereunder in connection with its designation of a
Successor Servicer pursuant to Section 13.03.
CIT Group/Sales hereby agrees to perform, and be responsible for, all of
its covenants, obligations, duties, liabilities, representations and warranties
hereunder in its capacity as Sub-Servicer until the effective date of (w) the
appointment of an Eligible Sub-Servicer as Sub-Servicer hereunder pursuant to
this Section 11.01(c), (x) the designation by the Servicer, pursuant to this
Section 11.01(c), that there shall no longer be a Sub-Servicer hereunder, (y)
the termination by the Agent of CIT Group/Sales appointment as Sub-Servicer
hereunder pursuant to this Section 11.01(c) and Section 13.03 and (z) the
appointment of an Eligible Sub-Servicer as Sub-Servicer hereunder following CIT
Group/Sales' resignation as Sub-Servicer pursuant to Section 12.05 hereof or
Section 2.13 of the Global Servicing Agreement (the date upon which any of the
events described in the immediately-preceding clauses (w), (x), (y) and (z)
shall occur is herein referred to as "CIT Group/Sales Termination Date").
Notwithstanding the occurrence of a CIT Group/Sales Termination Date, CIT
Group/Sales shall be responsible for all covenants, obligations, duties,
liabilities, representations and warranties made by it in its capacity as
Sub-Servicer, to be performed, or arising, made or accruing, prior to the CIT
Group/Sales Termination Date and shall be entitled to all Sub-Servicing Fees and
expense reimbursements owed to it as Sub-Servicer which shall have accrued prior
to the CIT Group/Sales Termination Date.
SECTION 11.02. Duties of the Servicer Parties. (a) The Servicer is hereby
authorized to act for the Seller and in such capacity shall perform the duties
of managing, servicing, administering and making collections on the Pool
Receivables, and perform the other actions required of the Servicer under this
Agreement for the benefit of the Investors and the Banks and, pursuant to its
appointment pursuant to Section 11.01(c), the Sub-Servicer is authorized to
perform
89
certain of such duties and actions, all as set forth in this Agreement. Each of
the Servicer Parties agrees that its servicing of the Pool Receivables shall be
carried out in accordance with customary and usual procedures of prudent
institutions which service manufactured housing loans similar to the Receivables
and, to the extent more exacting, the degree of skill and attention that such
Servicer Party exercises from time to time with respect to all comparable
manufactured housing loans that it services for itself or others in accordance
with the Credit and Collection Policy and Global Servicing Agreement as in
effect from time to time; provided, however, to the extent that the terms and
provisions of this Agreement shall be in conflict with the terms and provisions
of the Credit and Collection Policy or the Global Servicing Agreement, the terms
and provisions of this Agreement shall control. The duties of the Servicer
Parties shall include, without limitation, collection and posting of all
payments, responding to inquiries of Obligors on the Pool Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
any required tax information to Obligors, monitoring the collateral, accounting
for collections and furnishing monthly servicing reports to the Agent with
respect to distributions, monitoring the status of Insurance Policies and
performing the other duties specified herein, in each case in accordance with
the Credit and Collection Policy as in effect from time to time. The Servicer
Parties shall also administer and enforce in accordance with the Credit and
Collection Policy as in effect from time to time all rights and responsibilities
of the holder of the Pool Receivables provided for in the Insurance Policies, to
the extent that such Insurance Policies relate to the Pool Receivables, the
Manufactured Homes, the Mortgaged Properties or the Obligors. The Sub-Servicer
shall be responsible for solely those covenants, obligations, duties,
liabilities, representations and warranties in respect of the servicing and
administration of the Receivables and Related Security which, according to the
terms of this Agreement, the Sub-Servicer is responsible to perform or
undertake. However, the Servicer shall be responsible for the performance of all
covenants, obligations, duties, liabilities, representations and warranties in
respect of the servicing and administration of the Receivables and Related
Security set forth in this Agreement, notwithstanding the fact that the
Sub-Servicer shall be responsible for, and/or performing, certain of such
covenants, obligations, duties, liabilities, representations and warranties.
(b) To the extent consistent with the standards, policies and procedures
otherwise required hereby, each of the Servicer Parties shall follow its
customary standards, policies and procedures and shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, each of the
Servicer Parties is hereby authorized and empowered by the Seller to execute and
deliver, on behalf of the Seller, the Investors, the Banks or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Pool Receivables; provided, however, that notwithstanding the foregoing, such
Servicer Party shall not, except pursuant
to an order from a court of competent jurisdiction, release an Obligor from
payment of any unpaid amount under any Pool Receivable or waive the right to
collect the unpaid balance of any Pool Receivable from the Obligor (other than
as permitted by the Agent and the Seller), except that such Servicer Party may
forego collection efforts if the amount subject to collection is de minimis and
if it would forego collection in accordance with its customary procedures. Each
of the Servicer Parties
90
is hereby authorized to commence, in its own name or in the name of the Seller,
the Investors and the Banks, a legal proceeding to enforce a Pool Receivable
pursuant to Section 11.03 or to commence or participate in any other legal
proceeding (including, without limitation, a bankruptcy proceeding) relating to
or involving a Pool Receivable or an Obligor. If such Servicer Party commences
or participates in such a legal proceeding in its own name, the Seller, the
Banks or the Investors, as the case may be, shall thereupon be deemed to have
automatically assigned such Pool Receivable to such Servicer Party solely for
purposes of commencing or participating in any such proceeding as a party or
claimant, and such Servicer Party is authorized and empowered by the Seller, the
Banks or the Investors, as the case may be, to execute and deliver in its name
any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. The Seller, the
Banks or the Investors, as the case may be, shall furnish each Servicer Party
with any powers of attorney and other documents which each Servicer Party may
reasonably request in writing and which such Servicer Party deems necessary or
appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable it to carry out its servicing and administrative duties
under this Agreement. The Servicer Parties shall not make the Agent, any Bank or
any Investor a party to any litigation described in this Section 11.02(b)
without the prior written consent of such Person.
(c) Notwithstanding any provision contained herein or in the Global
Servicing Agreement or Credit and Collection Policy to the contrary, if the
terms and provisions of the Global Servicing Agreement or the Credit and
Collection Policy shall be in conflict with the terms and provisions of this
Agreement then, to the extent of such conflict, the terms and provisions of this
Agreement shall control.
SECTION 11.03. Collection of Receivable Payments; Modification and
Amendment of Receivables. (a) Consistent with the standards, policies and
procedures required by this Agreement, the Sub-Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of the
Pool Receivables as and when the same shall become due, and shall follow such
collection procedures which are comparable to those which it follows with
respect to all comparable manufactured housing loans that it services for itself
or institutional investors and otherwise act with respect to the Pool
Receivables and the Insurance Policies as required of it hereunder and in such
manner as will, in the reasonable judgment of the Sub-Servicer, maximize the
amount to be received by the Seller and the Investors with respect thereto. In
connection therewith, the Sub-Servicer shall use commercially reasonable efforts
to diligently pursue, foreclose upon, or otherwise comparably convert the
ownership of Manufactured Homes and Mortgaged Properties securing a Pool
Receivable that continues in default (including default in payment of taxes and
insurance), unless the Sub-Servicer, in its commercially reasonable judgment,
believes that such Receivable can be returned to current status within a
reasonable period of time or, solely with respect to defaults due solely to
default in payment of taxes, insurance or other amounts, unless the Sub-
Servicer, in its commercially reasonable judgment, believes it is most
appropriate, under the circumstances, and not as a general matter, not to pursue
outstanding taxes, insurance or other amounts. The Sub-Servicer is authorized,
in its sole discretion, to waive any prepayment charge, late payment charge or
any other similar fees that may be collected in the ordinary course of
91
servicing any Pool Receivable.
(b) So long as no Termination Event shall have occurred and be continuing,
the Sub-Servicer may grant payment extensions on, or other modifications or
amendments to, a Pool Receivable (including those modifications permitted by
Section 11.02) in accordance with the Credit and Collection Policy and its
customary procedures if the Sub-Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a default on such
Pool Receivable, will maximize the amount to be received by the Seller, the
Investors and the Banks with respect to such Pool Receivable, and is otherwise
in the best interests of the Seller, the Investors and the Banks; provided,
however, that the Sub-Servicer shall not amend or modify a Pool Receivable
(except as provided in Section 11.02 and this Section 11.03(b)) without the
written consent of the Agent and Servicer.
(c) For so long as CIT Group/Sales shall be the Sub-Servicer hereunder,
the Servicer and Sub-Servicer shall (i) instruct all Obligors to make all
payments in respect of the Receivables to the Specified Account and (ii) deposit
all Liquidation Proceeds and Insurance Proceeds in respect of the Receivables
and Related Security into the Specified Account within one (1) Business Day of
receipt thereof by the Servicer or Sub-Servicer, as the case may be. The Sub-
Servicer shall cause, by direction to the Specified Account Bank, all
Collections deposited into the Specified Account to be transferred to account
number 161907.1 (the "Collection Account"), in the name of Seller, at ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ Bank (the "Collection Account Bank"), within two (2) Business Days of the
date upon which such Collections shall be so deposited into the Specified
Account. At such time as the senior unsecured long-term debt rating of CIT shall
be first downgraded to B or lower from S&P or B2 or lower from ▇▇▇▇▇'▇ (or if
such rating is withdrawn or cancelled by S&P or ▇▇▇▇▇'▇), the Servicer and
Sub-Servicer shall (I) within thirty (30) days thereof, take all such actions as
shall be necessary (i) for the Seller to enter into one or more Lock-Box
Agreements and establish one or more Lock-Box Accounts and (ii) to instruct all
Obligors to make all payments in respect of the Receivables directly to such
Lock-Box Accounts and (II) deposit all Liquidation Proceeds and Insurance
Proceeds directly into the Collection Account within one (1) Business Day of
receipt thereof by the Servicer or Sub-Servicer, as the case may be. If CIT
Group/Sales shall no longer be the Sub-Servicer hereunder, then the Servicer
shall immediately (i) take all such actions as shall be necessary for the Seller
to enter into one or more Lock-Box Agreements and establish one or more Lock-Box
Accounts, (ii) instruct all Obligors to make all payments in respect of the
Receivables directly to such Lock-Box Accounts and (iii) deposit, and shall
cause any Successor Sub-Servicer to deposit, all Liquidation Proceeds and
Insurance Proceeds directly into the Collection Account within one (1) Business
Day of receipt thereof by the Servicer or Successor Sub-Servicer, as the case
may be.
(d) If the Servicer has reason to believe that any Manufactured Home or
Mortgaged Property has been abandoned or that the value thereof has been
significantly impaired, then the Servicer shall use its customary and reasonable
efforts to physically inspect or visit such Manufactured Home or Mortgaged
Property. The Servicer shall use its customary and reasonable efforts to
physically inspect or visit each Manufactured Home and Mortgaged Property which
shall
92
have become an Acquired Property.
(e) The Sub-Servicer shall, with respect to Manufactured Homes and
Mortgage Properties which are known by the Sub-Servicer to be abandoned or in
foreclosure, and the Servicer shall, with respect to Manufactured Homes and
Mortgaged Properties which have become Acquired Properties, take such action as
it deems necessary in its commercially reasonable judgment and not in violation
of law to protect such Manufactured Homes and Mortgaged Properties from
vandalism or damage by the elements.
(f) In connection with each Purchase hereunder, the Servicer shall take
all such actions as shall be necessary to (i) deliver the Receivable Files
related to such Purchase to the Custodian as required under the Custodial
Agreement and (ii) to cause the Custodian to deliver to the Agent a Trust
Receipt with respect to such Receivable Files.
SECTION 11.04. Realization Upon Receivables. (a) The Sub-Servicer shall be
entitled to be reimbursed by the Servicer for all reasonable expenses incurred
by the Sub-Servicer in the course of foreclosing upon a Pool Receivable
(including repossession, replevin or other related realization upon a defaulted
Contract). The Servicer shall reimburse the Sub-Servicer for any such expenses
within 30 days of receipt of a written demand for reimbursement of such expenses
or, if sooner, the date upon which the Liquidation Proceeds in respect of such
foreclosure of such Pool Receivable shall be made available to the Servicer. The
Servicer shall be entitled to be reimbursed out of the Liquidation Proceeds of,
or any deficiency judgment in respect of, any Pool Receivable for (i) any
reasonable expenses as to which it provided reimbursement to the Servicer
pursuant to this Section 11.04(a) with respect to such Pool Receivable and (ii)
any reasonable expenses incurred by the Servicer in connection with the
remarketing and sale of any Manufactured Home or Mortgaged Property which became
an Acquired Property.
(b) The deed to any Acquired Property delivered as a result of any
foreclosure or similar proceeding or deed in lieu thereof shall name the
Servicer as grantee unless the Servicer deems it necessary to foreclose or
otherwise comparably convert title to any Mortgaged Property in the name of a
party other than the Servicer, in which case, the Servicer may designate such a
party to hold title to the Acquired Property. The party designated to hold such
title shall sign a written acknowledgment that it is holding title on behalf of
the Investors and the Banks and any such acknowledgment shall be delivered to
the Custodian together with the deed to such Acquired Property.
(c) Upon acquisition of an Acquired Property by the Seller, the Servicer
shall prepare an Acquired Property Mortgage and file it for recordation in the
appropriate office of the jurisdiction in which such Acquired Property is
located. Such Acquired Property Mortgage shall be in a form appropriate in such
jurisdiction. The Servicer shall furnish such Acquired Property Mortgage
(together with evidence of such filing) to the Custodian within twenty Business
Days of acquiring a deed in respect of such Acquired Property. The Servicer
shall furnish each recorded Acquired Property Mortgage (together with evidence
of recordation) to the Custodian promptly upon
93
receipt thereof.
(d) Upon the acquisition of an Acquired Property, the Servicer shall (i)
deliver the deed or certificate of sale to the Custodian, (ii) advance all taxes
and standard hazard insurance premiums relating to the Acquired Property, (iii)
process any claims for redemption and otherwise comply with any redemption
procedures required by law, (iv) use its reasonable best efforts to promptly
sell or otherwise dispose of such Acquired Property at a price which in its best
judgment represents reasonable value and remit the proceeds to the Specified
Account or, as may be required hereunder, to the Collection Account within one
Business Day of receipt thereof, and (v) if, in order to sell the property at
what it reasonably determines to be the best price available, the Servicer deems
it reasonably necessary for the Servicer to provide mortgage financing to the
prospective buyer, the Servicer shall undertake, as agent for the Seller, to
apply substantially the same underwriting standards as the Servicer applies to
similar transactions originated by it for its own account. The Servicer shall be
under no obligation to provide such mortgage financing.
In connection with the sale of an Acquired Property, any contract of sale
or deed shall be executed by the Servicer in its individual capacity and as
agent and attorney-in-fact for the Seller. The Servicer shall request release of
the Acquired Property Mortgage by the Custodian. Immediately upon consummation
of the sale, the Servicer shall assign all of its right, title, and interest in
the new Receivable to the Seller and the Seller shall assign all of its right,
title, and interest in the new Receivable to the Agent. The Servicer shall
record the release, the deed, the Mortgage, the assignment of the Servicer's
interest to the Seller and an assignment of the Mortgage by the Seller to the
Agent immediately.
(e) The Servicer shall deposit all funds collected and received in
connection with the rental or sale of any Acquired Property in the Collection
Account as soon as practicable but in any event within two Business Days of
receipt thereof.
SECTION 11.05. Insurance and Dealer Recourse. (a) The Servicer Parties
shall monitor the status of the Insurance Policies in accordance with their
customary servicing procedures and in accordance with the terms and provisions
of this Agreement.
(b) (i) Except as otherwise proved in subsection (ii) of this Section
11.05, the Sub-Servicer shall cause to be maintained with respect to each
Contract one or more Insurance Policies which provide, at a minimum, the same
coverage as a standard form fire and extended coverage insurance policy that is
customary for manufactured housing, issued by a company authorized to issue such
policies in the state in which the Manufactured Home is located, and in an
amount which is not less than the maximum insurable value of such Manufactured
Home or the principal balance due from the Obligor on the related Contract,
whichever is less; provided, however, that such Insurance Policies may provide
for customary deductible amounts, and, provided, further, that the amount of
coverage provided by each Insurance Policy shall be sufficient to avoid the
application of any co-insurance clause contained therein. If a Manufactured Home
is located within a federally designated special flood hazard area, the Servicer
shall also cause such flood insurance to be
94
maintained by either Servicer Party shall contain a standard loss payee clause
in favor of such Servicer Party and its successors and assigns. If any Obligor
is in default in the payment of premiums on its Insurance Policy or Policies,
the Servicer shall pay such premiums out of its own funds, and may add
separately such premium to the Obligor's obligation as provided by the Contract,
but may not add such premium to the remaining principal balance of the Contract
for purposes of this Agreement. If the Obligor does not reimburse the Servicer
for payment of such premiums and the related Contract is liquidated after a
default, the Servicer shall be reimbursed for its payment of such premiums out
of the related Liquidation Proceeds.
(ii) The applicable Servicer Party may, in lieu of causing
individual Insurance Policies to be maintained with respect to each Manufactured
Home pursuant to subsection (i) of this Section 11.05, and the Servicer shall,
to the extent that the related Contract does not require the Obligor to maintain
a Insurance Policy with respect to the related Manufactured Home, maintain one
or more blanket insurance policies covering losses as provided in subsection (i)
of this Section 11.05 resulting from the absence or insufficiency of individual
Insurance Policies. Any such blanket policy shall be substantially in the form
that is the industry standard for blanket insurance policies issued to cover
Manufactured Homes and in the amount sufficient to cover all losses on the
Contracts. The Servicer shall pay, out of its own funds, the premium for such
policy on the basis described therein and shall deposit in the Collection
Account, on the Business Day next preceding the Determination Date following the
Collection Period in which the Insurance Proceeds from claims in respect to any
Contracts under such blanket policy are or would have been received, the
deductible amount with respect to such claims. The Servicer shall not, however,
be required to deposit any deductible amount with respect to claims under
individual Insurance Policies maintained pursuant to subsection (i) of this
Section 11.05(b).
(iii) If the Servicer shall have repossessed a Manufactured Home on
behalf of the Agent, the Investors and the Banks, or foreclosed upon or
otherwise acquired any Mortgaged Property, the Servicer shall either (x)
maintain at its expense a Insurance Policy with respect to such Manufactured
Home or Mortgaged Property meeting the requirements of subsections (i) or (ii)
above, except that the Servicer shall be responsible for depositing any
deductible above amount with respect to all claims under individual Insurance
Policies, or (y) indemnify the Agent, the Investors and the Banks against any
damage to such Manufactured Home prior to resale or other disposition.
Any cost incurred by the Servicer in maintaining any of the foregoing insurance,
for the purposes of calculating monthly distributions to the Investors and the
Banks, shall be not added to the amount owing under the Contract,
notwithstanding that the terms of the Contract so permit.
(c) The applicable Servicer Party may ▇▇▇ to enforce or collect upon
the Insurance Policies, in its own name, if possible, or as agent of the Seller,
the Investors and the Banks. If the applicable Servicer Party elects to commence
a legal proceeding to enforce an Insurance Policy, such Servicer Party shall
provide notice thereof and the act of commencement shall be deemed to be an
95
automatic assignment of the rights of the Seller, the Agent, the Investors and
the Banks under such Insurance Policy to such Servicer Party for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that such Servicer Party may not enforce an Insurance Policy on the grounds
that it is not a real party in interest or a holder entitled to enforce the
Insurance Policy, the Seller shall take such steps as such Servicer Party deems
necessary to enforce such Insurance Policy, including bringing suit in its name.
The Servicer shall deposit into the Collection Account or, as may be required
hereunder, into the Collection Account, as soon as practicable, but in no event
later than one Business Days after receipt thereof, all Insurance Proceeds
received by it.
(d) The Servicer shall perform all administrative responsibilities
relating to Dealers in respect of the Contracts. The Servicer shall use diligent
efforts to pursue any claims with respect to Dealer Recourse.
SECTION 11.06. Covenants, Representations and Warranties of Servicer
Parties. Unless otherwise indicated in this Section 11.06, each of the Servicer
Parties hereby makes the following representations, warranties and covenants, in
respect of itself, to the other parties hereto and the Investors and the Banks
shall rely in making the Purchases:
(a) Until the later of (x) the Facility Termination Date and (y) the
date on which no Capital Investment or Yield on any Receivable Interest shall be
outstanding or the date all Other Amounts owed hereunder to the Investors, the
Bank, or the Agent are paid in full:
(i) The collateral securing each Pool Receivable shall not be
released in whole or in part from the security interest granted by the related
Contract, except upon payment in full of such Pool Receivable or as otherwise
contemplated herein;
(ii) Such Servicer Party shall do nothing to impair the rights of
the Seller, the Investors or the Banks in the Pool Receivables or the Insurance
Policies;
(iii) Such Servicer Party shall not extend or otherwise amend the
terms of any Pool Receivable, except to the extent permitted by the Agent or
otherwise in accordance with Article XI;
(iv) Such Servicer Party shall service the Pool Receivables as
required by the terms of this Agreement and in compliance with the current
Credit and Collection Policy and such Servicer Party shall not change the manner
in which it services the Pool Receivables in any way that can have an adverse
effect on the Pool Receivables;
(v) Such Servicer Party shall comply with the laws of each state in
which a Pool Receivable is located, including, without limitation, all federal
and state laws regarding the collection and enforcement of consumer debt;
(vi) Such Servicer Party shall give the Agent at least 30 days prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable
96
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. Such Servicer Party shall at all times maintain each office from
which it services the Pool Receivables and its principal executive office within
the United States of America;
(vii) Such Servicer Party shall maintain its computer systems so
that, from and after the time of the first Purchase under this Agreement, such
Servicer Party's master computer records (including archives) that shall refer
to the Pool Receivables indicate clearly that Receivable Interests in such Pool
Receivables have been conveyed to, and are owned by, the Investors and the
Banks;
(viii) The Servicer shall take such steps as are necessary to
maintain perfection of the Seller's security interest created by each Contract
in the related Manufactured Home and any related Mortgage or Mortgaged Property.
The Servicer is hereby authorized to take such steps as are necessary to
re-perfect such security interest in the event of the relocation of a
Manufactured Home or for any other reason. Servicer shall, at the request of the
Agent, deliver to the Custodian a power of attorney authorizing the Custodian
to, among other things, record, at the expense of Seller, assignments of
Mortgages securing Land and Home Contracts, if directed to do so by the Agent
after the failure of the Servicer to take such action. The representations,
warranties and covenants set forth in this clause (viii) are made solely by the
Servicer;
(ix) If an Incipient Termination Event or Termination Event has
occurred, such Servicer Party shall, immediately upon the written direction of
the Agent, (i) direct all Obligors to make payments to such account as directed
by the Agent and (ii) take all actions necessary to name the Agent or such other
Person designated by the Agent as the loss payee under the Insurance Policies
relating to the Pool Receivables;
(x) Such Servicer Party will not make any change in the Credit and
Collection Policy that would impair the collectibility of any portion of the
Pool Receivables, other than an inconsequential portion thereof, or the ability
of such Servicer Party to perform its obligations under this Agreement. In the
event that such Servicer Party makes any change to the Credit and Collection
Policy, other than a change that would impair the collectibility of only an
inconsequential portion of the Pool Receivables it shall, contemporaneously with
such change, provide the Agent with an updated Credit and Collection Policy and
a summary of all changes;
(xi) The Sub-Servicer shall furnish, or cause to be furnished, to
the Agent:
(1) as soon as available and in any event within 120
days after the end of each fiscal year of CIT, a copy of the
audited consolidated financial statements for such year of CIT
and its consolidated Subsidiaries, certified by independent
accountants of nationally recognized standing; and
(2) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each
fiscal year of the CIT, a
97
consolidated balance sheet of CIT and its consolidated
Subsidiaries as of the end of such quarter and including the
prior comparable period, and consolidated statements of income
of CIT and its consolidated Subsidiaries for such quarter and
for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter prepared in
accordance with GAAP, such balance sheet and statements of
income to be certified by the chief financial officer or chief
accounting officer of CIT identifying such balance sheets or
statements as being the balance sheets or statements described
in this paragraph (2) and stating that the information set
forth therein fairly presents the financial condition of CIT
and its consolidated Subsidiaries as of and for the periods
then ended, subject to year-end adjustments consisting only of
normal, recurring accruals and subject to the auditors' year
end report.
The requirements of clauses (1) and (2) of this Section 11.06(a)(xi)
may be satisfied by delivery, within the time periods required by
such clauses, of the Form 10-K and Form 10-Q filed by CIT with the
Securities and Exchange Commission and containing the applicable
financial statements.
(xii) Such Servicer Party hereby agrees that the Agent shall be a
third-party beneficiary of the terms and provisions of Section 2.13 of the
Global Servicing Agreement and hereby agrees that the Agent shall have the right
to enforce the terms and provisions of such Section 2.13 as if it were a party
to the Global Servicing Agreement. Such Servicer Party will not amend,
supplement or terminate Section 2.13 of the Global Servicing Agreement (as in
effect on the date thereof) without the prior written consent of the Agent; and
(xiii) Such Servicer Party will provide the Agent with a copy of any
notice, demand or request it shall provide or make pursuant to Section 2.13 of
the Global Servicing Agreement (as in effect on the date thereof).
(b) Unless otherwise indicated below, each of the Servicer Parties
represents and warrants, in respect of itself, to the Seller, the Agent, the
Investors and the Banks that:
(i) Such Servicer Party is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and is duly qualified to do business, and is in good standing, in every
jurisdiction where the nature of its business requires it to be so qualified.
Such Servicer Party has full corporate power and authority to execute and
deliver this Agreement and the Transaction Documents to which it is a party and
to carry out its terms and their terms, respectively;
(ii) The execution, delivery and performance by such Servicer Party
of the Transaction Documents to which it is a party and the other documents to
be delivered by it hereunder, (i) have been duly authorized by all necessary
corporate action, (ii) do not contravene (1) such Servicer Party's charter or
by-laws, (2) any law, rule or regulation applicable to such
98
Servicer Party, (3) any contractual restriction binding on or affecting such
Servicer Party or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting such Servicer Party or its
property, and (iii) do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to any of
its properties (except for the interest created pursuant to this Agreement).
Each of the Transaction Documents as to which such Servicer Party is a party has
been duly executed and delivered by such Servicer Party;
(iii) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Servicer Party of the
Transaction Documents or any other document to be delivered by it thereunder;
(iv) This Agreement and the Transaction Documents to which it is a
party shall constitute legal, valid and binding obligations of such Servicer
Party enforceable against such Servicer Party in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(v) There are no pending or, to such Servicer Party's knowledge,
threatened action or proceeding against such Servicer Party, before any court,
governmental agency or arbitrator (A) asserting the invalidity of this Agreement
or any of the Transaction Documents, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or any of the Transaction
Documents, (C) seeking any determination or ruling that might adversely affect
the performance by such Servicer Party of its obligations under, or the validity
or enforceability of, this Agreement or any of the Transaction Documents, or (D)
that would have a material adverse effect on the Pool Receivables;
(vi) The balance sheets of the Parent and its Subsidiaries as at
December 29, 2001, and the related statements of income of the Parent and its
Subsidiaries for the fiscal year ended December 29, 2001, copies of which have
been furnished to the Agent, fairly present the financial condition of the
Parent and its Subsidiaries as at such date and the results of the operations of
the Parent and its Subsidiaries for the period ended on such date, all in
accordance with GAAP consistently applied, and since December 29, 2001 there has
been no material adverse change in the business, operations, property or
financial or other condition of the Parent. The representations and warranties
set forth in this clause (vi) are made solely by the Servicer; and
(vii) There is no pending or threatened action or proceeding
affecting the Parent or any of its Subsidiaries before any court, governmental
agency or arbitrator which, if adversely determined, would adversely affect the
financial condition or operations of the Parent and Subsidiaries taken as a
whole or the ability of the Parent, the Servicer or the Seller to perform their
respective obligations under the Transaction Documents, or which purports to
affect the legality, validity or enforceability of the Transaction Documents;
neither the Parent nor any Subsidiary is in
99
default with respect to any order of any court, arbitration or governmental body
except for defaults with respect to orders of governmental agencies which
defaults are not material to the business or operations of the Parent and its
Subsidiaries, taken as a whole. The representations and warranties set forth in
this clause (vii) are made solely by the Servicer.
Notwithstanding anything to the contrary contained in this Section
11.06, all representations, warranties and covenants made by Sub-Servicer in
subsections (a) and (b) of this Section 11.06 in respect of itself shall also be
deemed to be made by Servicer, and Servicer shall be responsible and liable, in
accordance with the terms and provisions of this Agreement and applicable law,
for any breach of any of such representations, warranties and covenants by
Sub-Servicer. The Sub-Servicer shall not be responsible or liable for any
representations, warranties or covenants made in this Agreement by any party to
this Agreement, except for those representations, warranties and covenants made
in this Agreement by the Sub-Servicer.
SECTION 11.07. Servicing and Sub-Servicing Fee; Payment of Certain
Expenses by Servicer and Sub-Servicer. (a) Subject to, and in accordance with,
Section 5.02, on each Distribution Date, the Servicer shall be entitled to
receive out of the Collection Account a fee (the "Servicing Fee"), in respect of
the immediately-preceding Collection Period, equal to the product of (A)
one-twelfth (1/12) of 0.10 % per annum and (B) the average daily Aggregate
Outstanding Balance of All Receivables in the Receivables Pool during such
Collection Period. The Servicing Fee shall be due from the date of purchase of
any Receivable Interest hereunder until the later of the Termination Date for
such Receivable Interest or the date on which the Capital Investment is reduced
to zero. Upon receipt of the prior written consent to the Agent, the Servicer
(if not HomePride, the Seller or its designee or an Affiliate of HomePride or
the Seller) may elect to be paid, a Servicing Fee calculated at a different
percentage per annum on the average daily Aggregate Outstanding Balance of All
Receivables in the Receivables Pool, but in no event in excess of 110% of the
reasonable costs and expenses of the Servicer in performing its duties and
obligations hereunder with respect to the administration and collection of the
Receivables in the Receivables Pool. The Servicing Fee shall be payable only
from Collections pursuant to, and subject to the priority of payments set forth
in, Section 5.02. So long as HomePride is acting as the Servicer hereunder,
amounts paid as the Servicing Fee pursuant to this Section 11.07(a) shall
reduce, on a dollar-for-dollar basis, the obligation of HomePride SPV to pay
the "Servicing Fee" pursuant to Section 6.03 of the Purchase and Contribution
Agreement, provided that such obligation of HomePride SPV shall in no event be
reduced below zero.
(b) Subject to, and in accordance with, Section 5.02, on each
Distribution Date, the Sub-Servicer shall be entitled to receive out of the
Collection Account a fee (the "Sub-Servicing Fee"), in respect of the
immediately preceding Collection Period, equal to the product of (A) one twelfth
(1/12) of 1.00% per annum and (B) the average daily Aggregate Outstanding
Balance of All Receivables in the Receivables Pool during such Collection
Period. The Sub-Servicing Fee shall be due from the date of purchase of any
Receivable Interest hereunder until the later of the Termination Date for such
Receivable Interest or the date on which the Capital Investment is reduced to
zero. Upon receipt of the prior written consent of the Agent, the Sub-Servicer
(if not CIT
100
Group/Sales, an Affiliate of CIT Group/Sales, the Seller, or a designee or
Affiliate of the Seller, or an Affiliate of HomePride) may elect to be paid, a
Sub-Servicing Fee calculated at a different percentage per annum as the daily
average Aggregate Outstanding Balance of all Receivables in the Receivables
Pool, but in no event in excess of 110% of the reasonable costs and expenses of
Sub- Servicer in performing its duties and obligations hereunder with respect to
the administration and collection of the Receivables in the Receivable Pool. The
Sub-Servicing Fee shall be payable only from Collections pursuant to, and
subject to the priority of payments set forth in, Section 5.02.
(c) Except as otherwise provided herein, each Servicer Party shall
be required to pay all expenses incurred by it in connection with its servicing
and custodial activities under this Agreement (including taxes imposed on such
Servicer Party). Each Servicer Party shall be liable for the fees and expenses
of the Independent Accountants retained by it pursuant to Section 11.10.
SECTION 11.08. Servicer's Certificate. (a) On each Determination
Date, the Servicer shall deliver to the Seller and the Agent a Servicer's
Certificate executed by a Responsible Officer of the Servicer. Pool Receivables
purchased by the Servicer and each Pool Receivable which became a Liquidated
Receivable or which was paid in full during the related Collection Period shall
be identified by account number (as set forth in the Schedule of Receivables
attached thereto).
(b) In addition to the information required by Section 11.09, the
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Seller and the Agent a certification as to (i) whether any Termination Event
or Incipient Termination Event has occurred as of such Determination Date and
(ii) whether any Termination Event or Incipient Termination Event that may have
occurred as of a prior Determination Date is deemed cured as of such
Determination Date.
SECTION 11.09. Annual Statement as to Compliance; Notice of Servicer
Termination Event. (a) Each Servicer Party shall deliver to the Seller and the
Agent, on or before March 31st of each calendar year, beginning on the first
March 31st next following the Original Closing Date, an Officer's Certificate
for such Servicer Party, dated as of March 31st of such year, stating that (i) a
review of the activities of such Servicer Party during the preceding calendar
year (or such portion thereof as shall have elapsed from the Original Closing
Date to the end of such calendar year) and of its performance under this
Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, such Servicer Party has fulfilled in
all material respects all its obligations under this Agreement throughout such
period, or, if there has been a material default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. The Seller shall promptly deliver to each Rating Agency each
Officer's Certificate that it receives pursuant to this Section 11.09(a).
(b) Each Servicer Party shall deliver to the Seller and the Agent,
promptly after having obtained knowledge thereof, but in no event later than two
Business Days thereafter, written notice in an Officer's Certificate of such
Servicer Party of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 13.01. The Seller
shall promptly deliver to each Rating Agency each Officer's Certificate that it
receives
101
pursuant to this Section 11.09(b).
SECTION 11.10. Annual Independent Accountant's Report. (a) Each
Servicer Party shall, at its expense, cause a firm of nationally recognized
independent certified public accountants acceptable to the Agent (the
"Independent Accountants"), who may also render other services to such Servicer
Party or to the Seller, to deliver to the Seller and the Agent, on or before
March 31st of each calendar year, beginning on the first March 31st (or other
applicable date) after the Original Closing Date, with respect to the preceding
calendar year (or such other period as shall have elapsed from the Original
Closing Date to the end of such calendar year), a statement (the "Accountant's
Report") to the Agent to the effect that (i) such firm has audited the financial
statements of such Servicer Party for such Servicer Party's most recently ended
calendar year and issued its report thereon; (ii) such audit included tests of
the records and documents relating to the manufactured housing installment sale
contracts and mortgage loans serviced by such Servicer Party for others in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, or any successor program promulgated by the accounting
profession ("USAP"); and (iii) such other statements as are contemplated under
USAP, including, if called for under USAP, a statement as to whether such
Servicer Party's management's written assertion to such firm (which shall be
attached to the statement of such firm) that its servicing during such calendar
year substantially complied with USAP's minimum servicing standards (except in a
manner as such firm believes to be immaterial and for other exceptions that, in
the opinion of such firm, GAAP standards require it to report). The Seller shall
promptly deliver to each Rating Agency each Accountant's report that it receives
pursuant to this Section 11.10(a).
(b) The Accountants' Report shall indicate that the firm preparing
such Report is independent of such Servicer Party and the Seller within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
SECTION 11.11. Access to Certain Documentation and Information
Regarding Receivables. Each Servicer Party shall provide to representatives of
the Seller and the Agent reasonable access to the documentation regarding the
Pool Receivables. Nothing in this Sec tion 11.11 shall derogate from the
obligation of such Servicer Party to observe any applicable law prohibiting
disclosure of information regarding the Obligors or any other matters, and the
failure of such Servicer Party to provide access as provided in this Section
11.11, as a result of such obligation, shall not constitute a breach of this
Section 11.11.
SECTION 11.12. Fidelity Bond. The Servicer shall maintain a fidelity
bond (or other comparable coverage) insuring against wrongful actions of
employees involved in servicing the Pool Receivables in an amount not less than
$5,000,000 and an "errors and omissions" insurance policy in an amount of not
less than $5,000,000.
SECTION 11.13. Insurance. The Servicer shall maintain customary
amounts and types of insurance coverage for a corporation engaged in similar
business and having a similar net worth.
102
SECTION 11.14. Accounts. (a) As and when required under the terms of
this Agreement, the Servicer Parties shall establish the Lock-Box Account in the
name of the Seller for the benefit of the Agent for the purpose of receiving
Collections and other amounts to be paid hereunder. The Lock-Box Account shall
be an Eligible Account and shall be a segregated trust or custodial account
established and maintained with the Lock-Box Bank.
(b) The Servicer shall establish the Collection Account in the name
of the Seller for the benefit of the Agent for the purpose of receiving
Collections from the Specified Amount and Lock-Box Account. The Collection
Account shall be an Eligible Account and initially shall be a segregated
non-interest bearing trust or custodial account established and maintained with
the Collection Account Bank.
(c) The Servicer shall establish the Reserve Account in the name of
the Seller for the benefit of the Agent for the purpose of holding the Required
Reserve Account Amount. The Reserve Account shall be an Eligible Account and
initially shall be a segregated non-interest bearing trust or custodial account
established and maintained with the Collection Account Bank.
(d) The Servicer shall establish the Excess Collections Account in
the name of the Seller for the benefit of the Agent. The Excess Collections
Account shall be an Eligible Account and initially shall be a segregated
non-interest bearing trust or custodial account established and maintained with
the Collection Account Bank.
(e) All or a portion of the amounts on deposit in the Collection
Account, the Reserve Account, the Lock-Box Accounts and the Excess Collections
Account shall be invested and reinvested by the Agent by written direction to
the Collection Account Bank or the Lock-Box Bank, as the case may be, in one or
more Permitted Investments bearing interest or sold at discount. No such
investment shall mature later than One Business Day prior to the next
Distribution Date. All income or other gains from investment of moneys deposited
in the Collection Account, the Reserve Account, the Lock-Box Account and the
Excess Collections Account shall be deposited by the Agent in the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be deducted from the amount on deposit in the applicable account. If any
amounts are needed for disbursement from the Collection Account, the Excess
Collections Account, the Lock-Box Accounts or the Reserve Account and sufficient
uninvested funds are not available therein to make such disbursement, the Agent
shall cause to be sold or otherwise converted to cash a sufficient amount of the
investments in such Account to make such disbursement. The Collection Account
Bank shall have no obligation to invest and reinvest any cash held in the
absence of timely and specific written investment direction from the Agent
(including any written standing investment direction). In no event shall the
Collection Account Bank be liable for the Agent's selection of investments or
for investment losses incurred thereon. The Collection Account Bank shall have
no liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Agent to provide
timely written investment direction. The Servicer shall promptly deposit into
the Collection Account, the Reserve Account, any Lock-Box Account
103
or the Excess Collections Account, as applicable, an amount of funds equal to
any losses incurred as a result of the liquidation of any investment of funds in
such account prior to its stated maturity.
(f) If at any time the Collection Account, the Excess Collections
Account, the Lock-Box Accounts or the Reserve Account ceases to be an Eligible
Account, the Agent shall transfer such account to another institution such that
such account shall meet the requirements of an Eligible Account.
(g) None of the Seller, Servicer or Sub-Servicer shall create,
incur, assume or suffer to exist any Lien (other than a Lien contemplated under
this Agreement) upon the Lock-Box Account, Collection Account, Reserve Account
or Excess Collections Account; provided, that, with the written consent of the
Agent, a Lien may be placed upon the Lock-Box Account so long as the Agent is
also granted a Lien thereon pursuant to an intercreditor arrangement
satisfactory to the Agent. Any breach of this Section 11.14(g) shall constitute
an immediate Event of Default hereunder.
ARTICLE XII
THE SERVICER
SECTION 12.01. Liability of Servicer Parties; Indemnities. (a)
Without limiting any other rights that the Agent, the Collection Account Bank,
any Investor, any Bank or any of their respective Affiliates (each, a "Special
Indemnified Party") may have hereunder or under applicable law, and in
consideration of its appointment as a Servicer Party hereunder, such Servicer
Party, except to the extent otherwise indicated below, hereby agrees to
indemnify each Special Indemnified Party from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "Special Indemnified Amounts")
arising out of, or resulting from, any of the following (excluding, however, (a)
Special Indemnified Amounts to the extent found in a final non-appealable
judgment of a court of competent jurisdiction to have resulted from gross
negligence or willful misconduct on the part of such Special Indemnified Party,
(b) recourse for uncollectible Receivables or (c) any income taxes or any other
tax or fee measured by income incurred by such Special Indemnified Party arising
out of or as a result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract):
(i) any representation made or deemed made by such Servicer Party
under or in connection with this Agreement which shall have been incorrect in
any material respect when made;
(ii) the failure by such Servicer Party to comply with any
applicable law, rule or regulation with respect to any Pool Receivable or
Contract;
(iii) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivables
in, or purporting to be in, the Receivables Pool, the Contracts
104
and the Related Security and Collections in respect thereof, whether at the time
of any purchase or reinvestment or at any subsequent time; or the failure of any
Pool Receivable or Contract to conform to any applicable law, rule or regulation
with respect to such Pool Receivable or Contract; provided, however, that solely
the Servicer shall be required to indemnify each Special Indemnified Party from
and against Special Indemnified Amounts arising out of, or resulting from, any
failure described in this clause (iii);
(iv) any failure of such Servicer Party to perform its duties or
obligations in accordance with the provisions of this Agreement;
(v) the commingling of Collections of Pool Receivables at any time
by such Servicer Party with other funds;
(vi) any action or omission by such Servicer Party reducing or
impairing the rights of the Investors or the Banks with respect to any Pool
Receivable or the value of any Pool Receivable;
(vii) with respect to the Servicer only, any Servicing Fees, or
other costs and expenses, payable to any replacement or Substitute Servicer in
excess of the Servicing Fee payable to the Servicer, but only in the event that
the Servicer is terminated pursuant to Article VIII hereof or resigned in
violation of Section 12.05 hereof; or
(viii) with respect to the Sub-Servicer only, any Sub-Servicing
Fees, or other costs and expenses, payable to any replacement or Substitute
Sub-Servicer in excess of the Sub-Servicing Fee payable to the Sub-Servicer, but
only in the event that the Sub-Servicer is terminated pursuant to Article VIII
hereof or resigns in violation of Section 12.05 hereof; or
(ix) any claim brought by any Person other than a Special
Indemnified Party arising from any activity by such Servicer Party or its
Affiliates in servicing, administering or collecting any Receivable.
Notwithstanding anything to the contrary contained in this Section
12.01, the Servicer shall be liable and responsible for all Special Indemnified
Amounts which shall be owed by the Sub-Servicer to any Special Indemnified
Party pursuant to the terms and provisions of this Section 12.01.
SECTION 12.02. Consolidations, Mergers and Sales of Assets. Each
Servicer Party shall not merge or consolidate with any other corporation or
accept a merger of any other corporation into such Servicer Party or permit the
Servicer Party to be merged into any other corporation, or sell its properties
and assets as, or substantially as, an entirety; provided, however, that nothing
contained in this Agreement shall be deemed to prevent (i) the merger into a
Servicer Party of another corporation, (ii) the consolidation of a Servicer
Party and another corporation, (iii) the merger a Servicer Party into another
corporation, (iv) the sale of the property or assets of a Servicer Party to
another corporation, so long as (a) no Termination Event, Incipient Termination
105
Event or Event of Default shall have occurred and be continuing, (b) any such
action shall be with a corporation engaged solely in the same line of business
as such Servicer Party, or in a reasonably related business, (c) after the
merger, consolidation, conveyance, transfer, lease or succession, the successor
or surviving entity shall be an Eligible Servicer or Eligible Sub-Servicer, as
applicable, and shall be capable of fulfilling the duties of such Servicer Party
contained in this Agreement, (d) with respect to clauses (ii), (iii) and (iv)
above, the surviving corporation of the merger or the purchaser of the assets of
such Servicer Party as the case may be, shall expressly assume the obligations
of such Servicer Party under this Agreement and the other relevant Transaction
Documents and expressly agree to be bound by all other provisions applicable to
such Servicer Party under this Agreement or such other relevant Transaction
Document and (e) in the case of any such transaction proposed by the Servicer
(except to the extent CIT Group/Sales shall be the Servicer hereunder), the
Servicer shall have received the prior written consent of the Agent thereof.
SECTION 12.03. Limitation on Liability of Servicer Parties and
Others. Each Servicer Party and its respective directors, officers, employees
and agents of the Servicer shall not be under any liability to the Seller, the
Investors, the Banks, the Agent or the Custodian, except as provided in this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement; provided, however, that this provision shall not
protect such Servicer Party or any such person against any liability that would
otherwise be imposed by reason of a breach of this Agreement or willful
misfeasance, bad faith or negligence in the performance of its duties. Each
Servicer Party and any director, officer, employee or agent of such Servicer
Party may rely in good faith on the written advice of counsel or on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
SECTION 12.04. Delegation of Duties. (a) So long as HomePride is the
Servicer, the Servicer may delegate duties under this Agreement to an Affiliate
of HomePride without the prior written consent of the Agent or perform other
specific duties through such sub-contractors in accordance with its customary
servicing policies and procedures without the prior consent of the Agent;
provided, however, that no such delegation or subcontracting of duties by the
Servicer shall relieve the Servicer of its responsibility with respect to such
duties. Notwithstanding the foregoing, neither HomePride nor any other party
acting as Servicer hereunder shall delegate all or substantially all of its
duties hereunder without the prior written consent of the Agent.
(b) So long as CIT Group/Sales is the Sub-Servicer, the Sub-Servicer
may delegate duties under this Agreement to CIT or to an Affiliate of CIT
without the prior written consent of the Agent or perform other specific duties
through such sub-contractors in accordance with its customary servicing policies
and procedures without the prior consent of the Agent; provided, however, that
no such delegation or subcontracting of duties by the Sub-Servicer shall relieve
the Sub-Servicer of its responsibility with respect to such duties.
Notwithstanding the foregoing, neither CIT Group/Sales nor any other party
acting as Sub-Servicer hereunder shall delegate all or substantially all of its
duties hereunder without the prior written consent of the Agent.
SECTION 12.05. Servicer Parties Not to Resign. Subject to the
provisions of
106
Section 12.02, neither Servicer Party shall resign from the obligations and
duties imposed on it by this Agreement as Servicer or Sub-Servicer, as the case
may be, except upon a determination that by reason of a change in legal
requirements the performance of its duties under this Agreement would cause it
to be in violation of such legal requirements in a manner which would result in
a material adverse effect on such Servicer Party, and the Agent does not elect
to waive the obligations of such Servicer Party to perform the duties which
render it legally unable to act or to delegate those duties to another Person.
Any such determination permitting the resignation of such Servicer Party shall
be evidenced by an Opinion of Counsel to such effect delivered to the Agent. No
resignation of such Servicer Party shall become effective until an entity
acceptable to the Agent shall have assumed the responsibilities and obligations
of such Servicer Party; provided, however, that in the event a successor is not
appointed within 60 days after such Servicer Party has given notice of its
resignation as permitted by this Section 12.05, such Servicer Party may petition
a court for its removal. The Seller shall promptly deliver to each Rating Agency
notice of the replacement of any Servicer Party hereunder.
ARTICLE XIII
SERVICER TERMINATION EVENTS
SECTION 13.01. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by either Servicer Party or, so long as HomePride or
an Affiliate of HomePride is the Servicer, the Seller to make when due any
payment or deposit to be made by it under this Agreement, and such failure shall
remain unremedied for two (2) Business Days;
(b) Failure by the Servicer to deliver the Servicer's Certificate
required on each Determination Date, and such failure shall remain unremedied
for two (2) Business Days;
(c) Default on the part of either Servicer Party duly to observe or
perform any other term, covenant or agreement of such Servicer Party set forth
in this Agreement (and, as to HomePride, if HomePride is the Servicer, the
Purchase and Contribution Agreement or the Purchase and Sale Agreement), and
such default shall result in a Material Adverse Effect in respect of such
Servicer Party and shall remain unremedied for a fifteen (15)-day period
following notice thereof by the Agent or the other Servicer Party; provided,
however, that if such default is of a nature such that it cannot be remedied
within such fifteen (15)-day period and such Servicer Party is making diligent
efforts to remedy such default, then such default shall not constitute a
Servicer Termination Event unless it shall remain unremedied for a thirty
(30)-day period following such notice thereof; provided further, however, that
no such notice shall be required if the applicable Servicer Party shall have
knowledge (or should have knowledge, as a prudent servicer) of such default and
such time periods shall be determined without regard to the giving of such
notice.
(d) The occurrence of an Event of Bankruptcy with respect to either
Servicer Party;
107
(e) Any representation, warranty or statement of either Servicer
Party made in this Agreement or any certificate, report or other writing
delivered by it pursuant hereto (or any of its officers) shall prove to be
incorrect or untrue as of the time when the same shall have been made or deemed
to have been made or delivered and, as a result thereof, a Material Adverse
Effect shall occur with respect to such Servicer Party;
(f) Failure by the Parent or any of its Subsidiaries to pay when due
amounts due under any agreement to which any such Person is a party and under
which any Debt greater than $5,000,000 is governed; or the default by the Parent
or any of its Subsidiaries in the performance of any term, provision or
condition contained in any agreement or instrument under which any Debt greater
than $5,000,000 was created or is governed; or any Debt of the Parent or any of
its Subsidiaries greater than $5,000,000 shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled payment),
redeemed, purchased or defeased or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made, in each case, prior to the date
of maturity thereof;
(g) HomePride shall have been replaced as "servicer" in connection
with any Term Securitization undertaken by HomePride;
(h) There shall have occurred any material adverse change in the
operations of either Servicer Party since the end of the last fiscal year of
such Servicer Party ending prior to the date of its appointment as a Servicer
Party hereunder or any other event shall have occurred which materially and
adversely affects such Servicer Party's ability to either collect the
Receivables or to perform under this Agreement;
(i) The occurrence of a Termination Event described under Section
14.01(k) or 14.01(l);
(j) A default shall occur under the, Parent Guaranty, CIT Guaranty
or Section 2.13 of the Global Servicing Agreement or the Parent Guaranty, CIT
Guaranty or Section 2.13 of the Global Servicing Agreement, or any material
portion of any of the foregoing, shall not be in full force and effect or
enforceable in accordance with its respective terms; or
(k) The occurrence of an Event of Default.
SECTION 13.02. Consequences of a Servicer Termination Event. (a) If
a Servicer Termination Event shall occur and be continuing, the Agent, by
written notice given to the Servicer Parties, may terminate all of the rights
and obligations of the Servicer Parties under this Agreement; provided, however,
that notwithstanding such termination, the Servicer and Sub-Servicer shall be
entitled to receive all accrued (through the occurrence of the Servicer
Termination Event) and unpaid Servicing Fees and Sub-Servicing Fees,
respectively, and all expense reimbursements owed to the Servicer and
Sub-Servicer, respectively, pursuant to the terms of this Agreement. On
108
or after the receipt by the Servicer Parties of such written notice, all
authority, power, obligations and responsibilities of the Servicer Parties under
this Agreement automatically shall pass to, be vested in and become obligations
and responsibilities of the Person appointed as Successor Servicer pursuant to
Section 13.03.
Notwithstanding any provision of this Agreement to the contrary, if
a Servicer Termination Event shall occur solely due to a failure, breach,
action, inaction, event or circumstance by, or related to, the Sub-Servicer (a
"Limited Servicer Termination Event"), then the Servicer shall have (i) a period
of thirty (30) days from the occurrence of such Limited Servicer Termination
Event to identify a replacement for such Sub-Servicer, which replacement shall
be an Eligible Sub-Servicer (a "Successor Sub-Servicer") and (ii) an additional
period of time, commencing on the date of the date of the identification of such
Successor Sub-Servicer and ending on the sixtieth (60th) day following the
occurrence of such Limited Servicer Termination Event, to cause such Successor
Sub- Servicer to assume all obligations, duties and liabilities of the
Sub-Servicer hereunder. If the Servicer shall so identify a Successor
Sub-Servicer and cause such Successor Sub-Servicer to assume all obligations,
duties and liabilities of the Sub-Servicer hereunder in the time periods set
forth in the immediately-preceding sentence (a "Sub-Servicer Replacement
Event"), then such Limited Servicer Termination Event shall not constitute a
Servicer Termination Event hereunder. The Sub-Servicer agrees that it shall
continue to perform, in all material respects, all of the obligations and duties
of Sub-Servicer hereunder during the period commencing on the date of occurrence
of such Limited Servicer Termination Event and ending on the date of occurrence
of such Sub-Servicer Replacement Event.
Any Successor Sub-Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Sub-Servicer
would have been entitled to under this Agreement if the Sub-Servicer had not
resigned or been terminated hereunder. If any Successor Sub-Servicer is
appointed for any reason, additional compensation may be paid to such Successor
Sub-Servicer as approved by the Agent. The Successor Sub-Servicer appointed
hereunder is authorized and empowered by this Agreement to execute and deliver,
on behalf of the prior Sub- Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect its succession as Successor Sub-
Servicer hereunder, including, without limitation, completing the transfer and
endorsement of the Pool Receivables in accordance with the terms hereof or
otherwise. The prior Sub-Servicer agrees to continue to perform the obligations
and duties of Sub-Servicer hereunder until the Successor Sub- Servicer shall
have assumed such obligations and duties, and also agrees to cooperate with the
Successor Sub-Servicer in effecting the termination of the responsibilities and
rights of the prior Sub-Servicer under this Agreement, including, without
limitation and at the prior Sub-Servicer's expense, the transfer to the
Successor Sub-Servicer, for administration by it, of all cash amounts that shall
at the time be held by the prior Sub-Servicer for deposit, or have been
deposited by the prior Sub-Servicer, in the Collection Account or thereafter
received with respect to the Pool Receivables and the delivery to the Custodian
or Successor Sub-Servicer, as designated by the Servicer or Agent, of all
Receivable Files, and all files and records relating to the Pool Receivables and
a Computer Tape containing all information necessary to enable the Successor
Sub-Servicer to service the Pool
109
Receivables. The terminated Sub-Servicer shall grant the Agent and any Successor
Sub-Servicer access to the terminated Sub-Servicer's premises at the terminated
Sub-Servicer's expense.
(b) Upon the occurrence of a Servicer Termination Event, each
Servicer Party shall, if so requested by the Agent, deliver to any Successor
Servicer all files and records relating to the Pool Receivables in its
possession within five (5) Business Days after demand therefor and a Computer
Tape or diskette containing as of the close of business on the date of demand
all of the data maintained by such prior Servicer Party in computer format in
connection with servicing the Pool Receivables.
(c) Within two Business Days of written demand by the Agent
following the occurrence of a Servicer Termination Event or a Termination Event,
the Servicer shall cause, or shall cause the Seller to cause delivery to the
Agent of (x) as to each Contract, other than a Land and Home Contract, the
assignment of the Contract (which may be in a blanket form that also covers
other Contracts or contracts) from HomePride to HomePride SPV and, in turn, from
HomePride SPV to Seller and, further in turn, from Seller to the Agent and (y)
as to each Land and Home Contract and Mortgage Loan, an original assignment of
the related Mortgage, in recordable form, showing an assignment from HomePride
to HomePride SPV and, in turn, from HomePride SPV to Seller and, further in
turn, from Seller to the Agent.
(d) Upon written demand of the Agent following the occurrence of a
Servicer Termination Event or a Termination Event, the Servicer shall ensure
that:
(i) for each Contract where the related Manufactured Home is located
in a jurisdiction in which notation of the Seller's security interest in such
Manufactured Home on the related Title is required or permitted to perfect such
security interest, the Title shall show, or if a new or replacement Title with
respect to such Manufactured Home is being applied for such Title will be issued
within 180 days of such written demand and will show, the Seller as the holder
of a first priority security interest in such Manufactured Home;
(ii) for each Contract where the related Manufactured Home is
located in a jurisdiction in which the filing of a financing statement or the
making of a fixture filing under the UCC is required to perfect the Seller's or
the Agent's security interest in manufactured housing, such filings or
recordings shall be duly made within ten (10) Business Days of such written
demand and show the Seller and/or the Agent as the secured party; and
(iii) for each Contract where the related Manufactured Home secures
a Land and Home Contract, the related land securing such Land and Home Contract
shall be subject to a Mortgage properly filed in the appropriate public
recording office showing the assignment from HomePride to HomePride SPV and, in
turn, from HomePride SPV to the Seller and, further in turn, from the Seller to
the Agent, as mortgagee under such Mortgage within 10 Business Days of such
written demand.
110
SECTION 13.03. Appointment of Successor Servicer. (a) On and after
(i) the delivery of a notice of termination to the Servicer Parties pursuant to
Section 13.02 or (ii) the resignation of the Servicer pursuant to Section 12.05,
the Agent may exercise at any time its right to appoint, as successor to the
Servicer, a Person other than the Person serving as Servicer at the time, if
such Person shall consent and agree to the terms hereby (a "Successor
Servicer"). Upon the occurrence of either of the events described in clauses (i)
and (ii) of the immediately-preceding sentence, the Agent shall have the option
to appoint CIT Group/Sales as Successor Servicer hereunder, and CIT Group/Sales
agrees to accept such appointment if so made by the Agent. If either of the
events described in clauses (i) and (ii) of the second immediately-preceding
sentence shall occur and the Agent shall not exercise its option described in
the immediately-preceding sentence, then, provided that, at such time (x) CIT
Group/Sales shall not be in default of its obligations and duties contained
herein, (y) no Limited Servicer Termination Event shall have occurred and (z)
CIT Group/Sales shall be an Eligible Sub-Servicer, the Agent shall be required
to negotiate with CIT Group/Sales, on an exclusive basis, for a period of 10
days in an effort to reach an agreement whereby CIT Group/Sales shall become the
Successor Servicer hereunder. If CIT Group/Sales shall become the Successor
Servicer hereunder, then (A) CIT Group/Sales shall perform, and be responsible
for, all covenants, obligations, duties, liabilities, representations and
warranties of Servicer hereunder and (B) there shall no longer be a Sub-Servicer
under this Agreement and, in such case, all covenants, obligations, duties,
liabilities, representations and warranties which were theretofore covenants,
obligations, duties, liabilities, representations and warranties of the
Sub-Servicer hereunder shall become covenants, obligations, duties, liabilities,
representations and warranties of CIT Group/Sales, in its capacity as Successor
Servicer hereunder, and all rights, benefits and privileges which were
theretofore rights, benefits and privileges of the Sub-Servicer hereunder shall
become rights, benefits and privileges of CIT Group/Sales, in its capacity as
Successor Servicer hereunder.
(b) Any Successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder. If any Successor Servicer is appointed
for any reason, additional compensation may be paid to such Successor Servicer
as approved by the Agent. In addition, any Successor Servicer shall be entitled
to reasonable transition expenses incurred in acting as Successor Servicer which
will be payable pursuant to Section 5.02.
(c) The Successor Servicer appointed hereunder is authorized and
empowered by this Agreement to execute and deliver, on behalf of the prior
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect its succession as Successor Servicer hereunder, including,
without limitation, completing the transfer and endorsement of the Pool
Receivables in accordance with the terms hereof or otherwise. The prior Servicer
agrees to continue to perform the obligations and duties of Servicer hereunder
until the Successor Servicer shall have assumed such obligations and duties, and
also agrees to cooperate with the Successor Servicer in effecting the
termination of the responsibilities and rights of the prior Servicer under this
Agreement, including, without limitation and at the prior Servicer's expense,
the transfer to the Successor Servicer, for
111
administration by it, of all cash amounts that shall at the time be held by the
prior Servicer for deposit, or have been deposited by the prior Servicer, in the
Collection Account or thereafter received with respect to the Pool Receivables
and the delivery to the Custodian or Successor Servicer, as designated by the
Successor Servicer or Agent, of all Receivable Files, and all files and records
relating to the Pool Receivables and a Computer Tape containing all information
necessary to enable the Successor Servicer to service the Pool Receivables.
(d) The terminated Servicer shall grant the Agent and any Successor
Servicer access to the terminated Servicer's premises at the terminated
Servicer's expense.
SECTION 13.04. Certain Rights of the Agent. The Seller hereby
transfers to the Agent, the exclusive ownership and control of the Lock-Box
Accounts to which the Obligors of Pool Receivables shall make payments at the
times set forth in this Agreement. At any time following the designation of a
Successor Servicer (other than the Seller, HomePride or any Affiliate of the
Seller or HomePride) pursuant to Section 13.03 hereof or after the occurrence
and during the occurrence of a Servicer Termination Event or a Termination
Event:
(i) The Agent may direct that payment of all amounts payable under
any Contract be made directly to the Agent or its designee in accordance with
the terms hereof.
(ii) The Seller shall, at the Agent's request and at the Seller's
expense, notify each Obligor of Pool Receivables of the ownership of Receivable
Interests under this Agreement and direct that payments be made directly to the
Agent or its designee in accordance with the terms hereof.
(iii) The Seller shall, at the request of the Agent, (A) assemble
all of the Records, and shall make the same available to the Agent or its
designee at a place selected by the Agent or its designee, and (B) segregate all
cash, checks and other instruments received by it from time to time constituting
Collections of Pool Receivables in a manner acceptable to the Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent or its
designee in accordance with the terms hereof.
(iv) Each of the Seller, HomePride and CIT Group/Sales hereby
authorizes the Agent to take any and all steps in its name and on its behalf
necessary or desirable, in the determination of the Agent, to collect all
amounts due under any and all Pool Receivables, including, without limitation,
endorsing, placing and/or signing its name on checks, documents and instruments
representing Pool Receivables and/or Collections thereon and enforcing the Pool
Receivables, the Related Security and the related Contracts.
112
ARTICLE XIV
TERMINATION EVENTS
SECTION 14.01. Termination Events. Each of the following shall
constitute a "Termination Event" under this Agreement:
(a) One or more final, non-appealable judgments or decrees for the
payment of money in an aggregate amount in excess of $5,000,000 (net of
insurance proceeds received in respect of any such judgment or decree) shall be
entered against the Parent and/or its Subsidiaries and remain outstanding; or
(b) An Event of Default shall have occurred and be continuing; or
(c) The amount on deposit in the Reserve Account at any time shall
be less than the Required Reserve Account Amount at such time; or
(d) The Internal Revenue Service shall file notice of a lien against
the Seller pursuant to Section 6323 of the Internal Revenue Code with regard to
any of the assets of the Seller; or
(e) A Servicer Termination Event shall have occurred and be
continuing; or
(f) The failure of the Parent, HomePride or any Subsidiary of the
Parent or HomePride to pay when due any amounts due under any agreement to which
any such Person is a party and under which Debt greater than $5,000,000 is
governed; or the default by the Parent, HomePride or any Subsidiary of the
Parent in the performance of any term, provision or condition contained in any
agreement or instrument to which any such Person is a party and under which any
Debt owing by the Parent, HomePride or any Subsidiary of the Parent greater than
$5,000,000 was created or is governed, regardless of whether such event is an
"event of default" or "default" under any such agreement; or any Debt owing by
the Parent, HomePride or any Subsidiary of the Parent greater than $5,000,000
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment), redeemed, purchased or defeased, or an offer to
repay, redeem, purchase or defease such Debt shall be required to be made, in
each case prior to the date of maturity thereof; or
(g) An "Event of Termination" or "Facility Termination Date" shall
occur under the Purchase and Contribution Agreement; or
(h) An "Event of Termination" or "Facility Termination Date" shall
occur under the Purchase and Sale Agreement; or
(i) The Facility Termination Date shall have occurred hereunder;
113
(j) The Parent's or CHBC's long term public senior unsecured debt
securities shall (i) be rated less than B- by S&P or B3 by ▇▇▇▇▇'▇ or (ii) no
longer be rated by both S&P and ▇▇▇▇▇'▇; or
(k) (i) an ERISA Event shall have occurred; or (ii) a notice of Lien shall
have been filed by the PBGC against the Parent or any of its Subsidiaries under
Section 412(n) of the Code or Section 302(f) of ERISA for a failure to make a
required installment or other payment to a plan to which Section 412(n) of the
Code or Section 302(f) of ERISA applies unless there shall have been delivered
to the Administrative Agent proof of release of such Lien; or
(l) As of any date of determination, the Tier 1 Delinquency Ratio for all
Pool Receivables averaged over the three Collection Periods preceding such date
of determination (or such lesser number of Collection Periods that shall have
elapsed since the Original Closing Date) exceeds 2 1/2%; or
(m) As of any date of determination, the Delinquency/Repossession Ratio
for all Pool Receivables for the Collection Period immediately preceding such
date of determination exceeds 3%;
(n) As of any date of determination, the Excess Collections Percentage
averaged over the three Collection Periods preceding such date of determination
(or such lesser number of Collection Periods which shall have elapsed since the
Original Closing Date) shall be less than 4.0%; or
(o) The Seller's Parent shall cease to own 100% of the Capital Stock of
the Seller; or
(p) The Agent shall not have obtained the Minimum Rating for the financing
facility provided hereunder on or prior to the sixtieth (60th) day following the
Original Closing Date; or
(q) (i) ▇▇▇▇▇'▇ reduces its Rating to "A3" or "Baa1" and does not increase
its Rating back to at least "A2" within 30 days of such event, (ii) ▇▇▇▇▇'▇
reduces its Rating below "Baa1" or (iii) ▇▇▇▇▇'▇ suspends or withdraws it
Rating; or
(r) (i) S&P reduces its Rating to "A-" or "BBB+" and does not increase its
Rating back to at least "A" within 30 days of such event, (ii) S&P reduces its
Rating below "BBB+" or (iii) S&P suspends or withdraws it Rating.
SECTION 14.02. Effect of Termination Event. Upon the occurrence of a
Termination Event (and, in the case of a Termination Event under paragraph (i)
above, the passage
114
of 30 days without the Capital Investment, plus all Yield, Fees and Other
Amounts having been paid in full pursuant to the terms hereof), any or all of
the following actions may be taken by notice to the Seller: (i) the Agent may
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred), (ii) without
limiting any right under this Agreement to replace the Servicer Parties, the
Agent may designate another Person to succeed HomePride as the Servicer and/or
CIT Group/Sales as the Sub-Servicer; provided, that, automatically upon the
occurrence of any event (without any requirement for the passage of time or the
giving of notice) described in paragraph (a) of Section 14.03, the Facility
Termination Date shall occur, HomePride (if it is then serving as the Servicer)
shall cease to be the Servicer and CIT Group/Sales shall cease to be the
Sub-Servicer, and the Agent or its designee shall become the Servicer and (iii)
at the option of the Agent in its sole discretion, the Agent may instruct the
Servicer to take all additional steps, if any, as are necessary or desirable, in
the determination of the Agent, to create and/or maintain perfection of the
security interest in the Mortgaged Property or Manufactured Home related to each
Pool Receivable (and the proceeds thereon) on behalf of the Seller and to create
and/or maintain perfection of the security interest in the security interest of
the Seller in the Mortgaged Property or Manufactured Home related to each Pool
Receivable (and the proceeds thereon) on behalf of the Agent (for the benefit of
the Investors and the Banks), including, without limitation, having a notation
of the Seller's and/or the Agent's security interest recorded on the relevant
Title or other applicable records of title, endorsing any Mortgage Note to the
Seller or the Agent (as the Agent may request) and preparing and recording
assignments to the Seller or the Agent (as the Agent may request) of any
Mortgages (or completing any existing assignments of Mortgages previously
delivered in blank in the name of the Seller and/or Agent, as assignee(s), and
recording any of such assignments, all as directed by the Agent), and if the
Servicer fails to take all such steps, the Agent may take such steps at the sole
expense of the Seller, and each of the Seller and the Servicer hereby grants to
the Agent an irrevocable power of attorney and license to take any and all such
steps in the Seller's or the Servicer's name, as applicable, and on behalf of
the Seller or the Servicer, as are necessary or desirable, in the determination
of the Agent to create and/or maintain perfection of such security interests of
the Seller and the Agent (for the benefit of the Investors and the Banks).
SECTION 14.03. Events of Default. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) An Event of Bankruptcy shall have occurred with respect to the Seller,
the Seller's Parent, either Servicer Party, the Parent or any Significant
Subsidiary of any of the foregoing; or
(b) There shall have occurred a Change of Control; or
(c) A material adverse change shall have occurred in (i) (A) the business,
financial condition, results of operations or properties of the Parent and its
Subsidiaries, taken as a whole, or (B) the ability of the Servicer or the Parent
to perform its obligations under any of the Transaction Documents to which it is
a party; (ii) the value, collectibility or enforceability of the Pool
115
Receivables, taken as a whole; (iii) the practical realization by the Investors
or the Banks of the benefits or security afforded under any of the Transaction
Documents; (iv) the ability of the Servicer to execute a Take-Out Securitization
involving the Pool Receivables; or (v) the first priority perfected ownership
interest to the extent of the pertinent Receivable Interest in each applicable
Pool Receivable and the Related Security and Collections with respect thereto;
or
(d) HomePride, or an Affiliate of HomePride acceptable to the Agent, shall
resign as, or otherwise cease to act as, Servicer hereunder, or CIT Group/Sales
shall resign as, or otherwise cease to act as, Sub-Servicer hereunder, in each
case in violation of the terms of this Agreement (any such resignation to
constitute an Event of Default hereunder upon the effective date of such
resignation); or
(e) The Seller shall default under or fail to maintain in effect any
Interest Rate ▇▇▇▇▇▇ assigned to the Agent or the Seller shall fail to purchase
any Interest Rate Hedge when the Agent requests that such Interest Rate Hedge be
purchased in accordance with the terms hereof (whether or not there exists
sufficient funds in the Reserve Account to purchase such Interest Rate Hedge);
or
(f) A default in the payment when due of any Yield, any Fees, Other
Amounts or any Capital Investment or any other payment or deposit to be made
hereunder and such failure shall remain unremedied for one (1) Business Day, or
a Capital Deficiency shall exist and shall not be cured within two (2) Business
Days of the date of calculation of such Capital Deficiency by the Agent; or
(g) (i) Any Transaction Document shall (except in accordance with its
terms), in whole or in part, terminate, cease to be effective or cease to be the
legally valid, binding and enforceable obligation of the Seller or either
Servicer Party; or (ii) the Seller or either Servicer Party or any other party
shall, directly or indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability; or (iii) any Purchase pursuant to
this Agreement shall for any reason (other than pursuant to the terms hereof)
cease to create, or any Receivable Interest shall for any reason cease to be, a
valid and perfected first priority undivided percentage ownership or security
interest to the extent of the pertinent Receivable Interest in each applicable
Pool Receivable and the Related Security and Collections with respect thereto;
or (iv) the security interest created pursuant to Section 10.01 shall for any
reason cease to be a valid and perfected first priority security interest in the
collateral security referred to in that section; or
(h) Any representation or warranty of the Parent, the Seller or either
Servicer Party (or any of their respective officers) made or deemed to have been
made hereunder or in any other Transaction Document or any other writing or
certificate furnished by or on behalf of the Parent, Seller or either Servicer
Party to the Agent for purposes of or in connection with this Agreement or any
other Transaction Document (including any Servicer's Certificate delivered
pursuant to Section 11.08) shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered; or
116
(i) One or more judgments for the payment of money in an aggregate amount
in excess of $10,000 shall be entered against the Seller; or
(j) Intentionally Omitted; or
(k) (i) Consolidated Net Income (Loss), to the extent that it is a loss,
shall be a larger loss during any fiscal quarter of the Parent than the Required
Quarterly Consolidated Net Income (Loss), to the extent that it is a loss, with
respect to such fiscal quarter, (ii) Consolidated Net Income (Loss) is a loss
during any fiscal quarter of the Parent with respect to which the related
Required Quarterly Consolidated Net Income (Loss) is a gain and (iii)
Consolidated Net Income (Loss), to the extent that it is a gain, shall be a
smaller gain during any fiscal quarter of the Parent than the Required Quarterly
Consolidated Net Income (Loss), to the extent that it is a gain, with respect to
such fiscal quarter; or
(l) (i) Any Interest Rate Hedge purchased in connection herewith shall
cease to be in full force and effect, (ii) the Eligible Counterparty shall
default in the observance or performance of any of the terms and provisions of
any Interest Rate Hedge purchased in connection herewith or (iii) any interest
rate hedge agreement purchased in connection herewith shall fail to, or cease
to, satisfy the definition of "Interest Rate Hedge"; or
(m) The transactions contemplated under the 2002 Indenture have not closed
within two (2) Business Days from the Original Closing Date; or
(n) The occurrence of any event described in Section 11.14(g) as
constituting an Event of Default; or
(o) Any default shall occur under the Parent Guaranty, or the Parent
Guaranty or any material portion thereof, shall not be in full force and effect
or enforceable in accordance with its terms; or
(p) Any default shall occur under the Limited Recourse Guaranty, or the
Limited Recourse Guaranty or any material portion thereof, shall not be in full
force and effect or enforceable in accordance with its terms; or
(q) Any default shall occur under the CIT Guaranty, or the CIT Guaranty or
any material portion thereof, shall not be in full force and effect or
enforceable in accordance with its terms; or
(r) Any default shall occur under the Management Agreement, or the
Management Agreement or any material portion thereof, shall not be in full force
and effect or enforceable in accordance with its terms; or
117
(s) Any default shall occur under Section 2.13 of the Global Servicing
Agreement, or Section 2.13 of the Global Servicing Agreement or any material
portion thereof, shall not be in full force and effect and enforceable in
accordance with its terms;
(t) The Seller or either Servicer Party shall fail to perform or observe
in any material respect any covenant of agreement contained in this Agreement,
or any other Transaction Document, on its part to be performed or observed which
is not referred to, or described, above in this Section 14.03, and such failure
shall remain unremedied for thirty (30) days;
(u) if the Capital Investment, plus all Yield, Fees and Other Amounts have
not been paid in full pursuant to the terms hereof by the 30th day following the
Facility Termination Date; or
(v) any Available Funds Cap Carryforward Amount is not paid in full on any
Distribution Date and such failure to pay shall remain unremedied for one (1)
Business Day.
Upon the occurrence of an Event of Default, (i) the Agent, Banks and
Investors shall have the same rights and remedies afforded to them under Section
14.02 upon the occurrence of a Termination Event and (ii) the then outstanding
Yield, any Fees, Other Amounts or any Capital Investment shall be due and
payable and the Administrative Agent may proceed to sell, dispose of, or
otherwise liquidate the Receivables and the Related Property in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids and the Agent shall proceed to consummate the
sale, liquidation or disposition of the Receivables and the Related Property as
provided above with the highest bidder for the Receivables and the Related
Property. The Seller or any of its Affiliates shall be permitted to bid for the
Receivables and the Related Property. All reasonable costs and expenses incurred
by the Agent in such sale shall be reimbursed to the Agent as provided herein.
The proceeds from the sale, disposition or liquidation of the Receivables shall
be treated as Collections on the Receivables and such proceeds shall be applied
in accordance with Section 5.02(c).
ARTICLE XV
THE AGENT
SECTION 15.01. Authorization and Action. Each Investor and each Bank
hereby appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.
SECTION 15.02. Exculpation. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them as Agent under or in connection with this Agreement
(including, without limitation, the Agent's servicing, administering of Pool
Receivables as Servicer), except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the Agent:
118
(a) may at its own expense consult with legal counsel (including counsel for the
Seller and the Servicer), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to any Investor
or Bank (whether written or oral) and shall not be responsible to any Investor
or Bank for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (c) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Seller, the
Servicer or any Custodian or to inspect the property (including the books and
records) of the Seller, the Servicer or any Custodian; (d) shall not be
responsible to any Investor or Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (e) shall incur no
liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telecopier or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 15.03. CSFB and Affiliates. The obligation of CSFB to purchase
Receivable Interests under this Agreement may be satisfied by CSFB or any of its
Affiliates. With respect to any Receivable Interest or interest therein owned by
it, CSFB shall have the same rights and powers under this agreement as any Bank
and may exercise the same as though it were not the Agent. CSFB and any of its
Affiliates may generally engage in any kind of business with the Seller, the
Servicer, any Custodian or any Obligor, any of their respective Affiliates and
any Person who may do business with or own securities of the Seller, the
Servicer, any Custodian or any Obligor or any of their respective Affiliates,
all as if CSFB were not the Agent and without any duty to account therefor to
the Investors.
SECTION 15.04. Bank's Purchase Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent, any of its Affiliates or
any other Bank and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and without reliance
upon the Agent, any of its Affiliates or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under this Agreement.
SECTION 15.05. Notice by Agent. The Agent shall notify the Servicer of any
purchase by CSFB of any Receivable Interest under any Asset Purchase Agreement
entered into by the Conduit and CSFB.
119
ARTICLE XVI
INDEMNIFICATION
SECTION 16.01. Indemnities by the Seller. Without limiting any other
rights that the Agent, the Investors, the Collection Account Bank, the Banks or
any of their respective Affiliates (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) (all of the foregoing being collectively
referred to as "Indemnified Amounts") arising out of or resulting from this
Agreement or the other Transaction Documents or the use of proceeds of purchases
or reinvestments or the ownership of Receivable Interests or in respect of any
Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the
extent found in a final non-appealable judgment of a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct on the
part of such Indemnified Party, (b) recourse (except as otherwise specifically
provided in this Agreement) for uncollectible Receivables or (c) any income
taxes incurred by such Indemnified Party arising out of or as a result of this
Agreement or the ownership of Receivable Interests or in respect of any
Receivable or any Contract. Without limiting or being limited by the foregoing,
the Seller shall, after written demand (which written demand shall set forth
reasonable evidence of any such Indemnified Amounts), pay, from Collections and
amounts on deposit in the Excess Collections Account and Reserve Account in
accordance with Section 5.02, to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
(i) the characterization in any Servicer's Certificate or other written
statement made by or on behalf of the Seller of any Receivable as an Eligible
Receivable or as included in the Net Receivables Pool Balance which, as of the
date of such Servicer's Certificate or other statement, is not an Eligible
Receivable or should not be included in the Net Receivables Pool Balance;
(ii) any representation or warranty or statement made or deemed made by
the Seller (or any of its officers) under or in connection with this Agreement
or any of the other Transaction Documents which shall have been incorrect in any
material respect when made;
(iii) the failure by the Seller or HomePride to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Investors or the Banks, as the case may
be, (a) a perfected undivided percentage ownership or security interest, to the
extent of each Receivable Interest, in the Receivables in, or purporting to be
in, the Receivables Pool and the Related Security and Collections in respect
thereof, or (b) a perfected security interest as provided in Section 10.01, in
each case free and clear of any Lien;
120
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivables
in, or purporting to be in, the Receivables Pool and the Related Security and
Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in,
or purporting to be in, the Receivables Pool (including, without limitation, a
defense based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), any claim resulting from the sale, or purported
sale, of a Receivable Interest in a Receivable in the Receivables Pool
notwithstanding any provision in the related Contract that requires the consent
of the applicable Obligor to the transfer, sale or assignment of the rights and
duties of the Seller, the Dealer or HomePride thereunder, or any other claim
resulting from the sale of the services related to such Receivable or the
furnishing or failure to furnish such services or relating to collection
activities with respect to such Receivable (if such collection activities were
performed by the Seller or any of its Affiliates acting as Servicer);
(vii) any failure of the Seller to perform its duties or obligations in
accordance with the provisions hereof or to perform its duties or obligations
under the Contracts;
(viii) any products liability or other claim arising out of or in
connection with services which are the subject of any Contract;
(ix) the commingling of Collections of Pool Receivables at any time with
other funds;
(x) any investigation, litigation or proceeding related to this Agreement
or the use of proceeds of purchases or reinvestments or the ownership of
Receivable Interests or in respect of any Receivable or Related Security or
Contract;
(xi) any failure of the Seller to comply with its covenants contained in
this Agreement or any other Transaction Document;
(xii) any claim brought by any Person other than an Indemnified Party
arising from any activity by the Seller or any Affiliate of the Seller in
servicing, administering or collecting any Receivable; or
(xiii) the failure of the Seller or HomePride to pay when due any taxes,
including without limitation, sales, excise or personal property taxes payable
in connection with any of the Contract;
(xiv) any inability to obtain any judgment in or utilize the court or
other adjudication
121
system of, any state in which an Obligor may be located as a result of the
failure of the Seller or HomePride to qualify to do business or file any notice
of business activity report or any similar report;
(xv) any failure of the Seller to give reasonably equivalent value to
HomePride in consideration of the purchase by the Seller from HomePride of any
Receivable, or any attempt by any Person to void, rescind or set aside any such
transfer under statutory provisions or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code; or
(xvi) any Purchase is, for any reason, characterized as other than debt
for federal or state income tax purposes.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.01. No Waiver; Remedies. No failure on the part of any
Investor, any Bank, the Agent, any Indemnified Party or any Affected Person to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by any of
them of any right, power or remedy hereunder preclude any other or further
exercise thereof, or the exercise of any other right, power or remedy. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 17.02. Amendments. No amendment or waiver of any provision of this
Agreement or consent to any departure by the Seller therefrom shall be effective
unless in a writing signed by the Agent, as agent for the Investors and the
Banks (and, in the case of any amendment, also signed by the Seller and
HomePride), and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by the Custodian or the Collection Account Bank, as the case may be, in
addition to the Agent, affect the rights or duties of the Custodian or the
Collection Account Bank, as the case may be, under this Agreement; provided,
further, that no amendment, waiver or consent shall affect the rights or duties
of a Servicer Party under this Agreement, unless such amendment, waiver or
consent shall be in writing and signed by such Servicer Party. No Material
Amendment to this Agreement shall become effective unless (i) the Agent shall
have received prior written confirmation from S&P that its Rating will not be
withdrawn or downgraded as a result of such Material Amendment and (ii) the
Agent shall have provided ten Business Day's prior notice of such Material
Amendment to ▇▇▇▇▇'▇ and the Agent shall not have been advised by ▇▇▇▇▇'▇ that
its Rating will be withdrawn or downgraded as a result of such Material
Amendment.
Notwithstanding any other term hereof, none of the Agent, the Investor or
the Banks shall waive any provision of the defined term Eligible Receivable or
any representation or warranty hereunder, in each case, to the extent that it
relates to the Pool Receivables being free and clear of
122
any lien or other right that may impair the interests of the Investors or the
Banks under this Agreement or the Agent's security interest or other interests
in Pool Receivables or related collateral.
SECTION 17.03. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and faxed or delivered, to each party hereto,
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent, and notices and communications sent by other means shall be effective
when received.
SECTION 17.04. Assignability. (a) This Agreement and the Investors' rights
and obligations herein (including ownership of each Receivable Interest) shall
be assignable by the Investors and their successors and assigns. Each assignor
of a Receivable Interest or any interest therein shall notify the Agent and the
Seller of any such assignment. Each assignor of a Receivable Interest or any
interest therein may, in connection with the assignment, disclose to the
assignee or participant any information relating to the Seller, HomePride SPV or
the Servicer Parties, including the Receivables, furnished to such assignor by
or on behalf of the Seller or by the Agent.
(b) Each Bank may assign to any Eligible Assignee or to any other Bank all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Bank Commitment and any Receivables
Interests or interests therein owned by it). The parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance, with a copy
thereof to be sent to the Servicer. In addition, CSFB or any of its Affiliates
may assign any of its rights (including, without limitation, rights to payment
of Capital Investment and Yield) under this Agreement to any Federal Reserve
Bank without notice to or consent of the Seller or the Agent.
(c) This Agreement and the rights and obligations of the Agent herein
shall be assignable by the Agent and its successors and assigns.
(d) The Seller may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Agent.
(e) Notice of each assignment made by a Person pursuant to Sections
17.04(a), (b) and (c) shall be sent by the assignor Person to the Seller and
HomePride.
SECTION 17.05. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification granted under Section 16.01 hereof, the Seller agrees to pay on
demand all costs and expenses in connection with the preparation, execution,
delivery and administration (including periodic auditing and the other
activities contemplated in Section 9.19) of this Agreement, any Asset Purchase
Agreement and the other documents and agreements to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent, CSFB, Conduit and their respective Affiliates with
respect thereto and with respect to advising the Agent,
123
CSFB, Conduit and their respective Affiliates as to their rights and remedies
under this Agreement, and all costs and expenses, if any (including reasonable
counsel fees and expenses), of the Agent, CSFB, the Investors, the Banks and
their respective Affiliates, in connection with the enforcement of this
Agreement and the other documents and agreements to be delivered hereunder.
(b) The Seller also shall pay on demand all other costs, expenses and
taxes (excluding the cost of auditing Conduit's books by certified public
accountants, the cost of rating Conduit's commercial paper by independent
financial rating agencies and income taxes) incurred by Conduit or any
stockholder of Conduit ("Other Costs"), including the taxes (excluding income
taxes) resulting from Conduit's operations, and the reasonable fees and
out-of-pocket expenses of counsel for any stockholder of Conduit with respect to
advising as to rights and remedies under this Agreement, the enforcement of this
Agreement or advising as to matters relating to Conduit's operations; provided
that the Seller and any other Persons who from time to time sell receivables or
interests therein to Conduit ("Other Sellers") each shall be liable for such
Other Costs ratably in accordance with the usage under their respective
facilities; and provided further that if such Other Costs are attributable to
the Seller and not attributable to any Other Seller, the Seller shall be solely
liable for such Other Costs.
SECTION 17.06. No Proceedings. (a) Each of the Seller, each Servicer
Party, the Agent, each Investor, each Bank, each assignee of a Receivable
Interest or any interest therein and each entity which enters into a commitment
to purchase Receivable Interest or interests therein hereby agrees that it will
not institute against Conduit any proceeding of the type referred to in clause
(a) of the definition of Event of Bankruptcy so long as any commercial paper or
other senior indebtedness issued by Conduit shall be outstanding or there shall
not have elapsed one year plus one day since the last day on which any such
commercial paper or other senior indebtedness shall have been outstanding.
(b) Each of the Seller and each Servicer Party hereby agrees that it will
not institute against the Seller or HomePride SPV any proceeding of the type
referred to in clause (a) of the definition of Event of Bankruptcy so long as
the Seller or the Servicer owe any amounts hereunder or there shall not have
elapsed one year plus one day since the last day on which any such amounts were
owed.
SECTION 17.07. Confidentiality. (a) Each of the Seller and the Servicer
Parties agrees to maintain the confidentiality of this Agreement in
communications with third parties and otherwise; provided that this Agreement
may be disclosed (i) to third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
satisfactory to the Agent, (ii) to the legal counsel and auditors of such Person
if they agree to hold it confidential and (iii) to the extent required by
applicable law or regulation or by any court, regulatory body or agency having
jurisdiction over such party; and provided, further, that such party shall have
no obligation of confidentiality in respect of any information which may be
generally available to the public or becomes available to the public through no
fault of such party.
124
(b) Each Investor, each Bank and the Agent agrees to maintain the
confidentiality of all information with respect to the Seller, HomePride, the
Parent, the Custodian, each Servicer Party or the Receivables (including the
Servicer's Certificates) furnished or delivered to it pursuant to this
Agreement; provided, that such information may be disclosed (i) to such party's
legal counsel and auditors and to such party's assignees and participants and
potential assignees and participants and their respective counsel if they agree
to hold it confidential, (ii) to the rating agencies and the providers of credit
enhancement or liquidity for each Investor, and (iii) to the extent required by
applicable law or regulation or by any court, regulatory body or agency having
jurisdiction over such party; and provided, further, that such party shall have
no obligation of confidentiality in respect of any information which may be
generally available to the public or becomes available to the public through no
fault of such party.
(c) Notwithstanding anything to the contrary described herein, the Parties
hereto and each of their respective employees, representatives or other agents,
are, and hereby confirm that they have been at all times, permitted to disclose
to any and all Persons, without limitations of any kind, the tax treatment and
tax structure of the transactions contemplated hereunder and all materials of
any kind (including opinions or other tax analyses) that are or have been
provided to such Parties related to such tax treatment and tax structure.
SECTION 17.08. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Schedule or Exhibit are to such
Section of or Schedule or Exhibit to this Agreement, as the case may be, and
references in any Section, subsection, or clause to any subsection, clause or
subclause are to such subsection, clause or subclause of such Section,
subsection or clause.
SECTION 17.09. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 17.10. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO
THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF THE INVESTORS AND THE BANKS
IN THE RECEIVABLES, THE PURCHASE AND CONTRIBUTION AGREEMENT, OR REMEDIES
HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
125
SECTION 17.11. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
SECTION 17.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE SELLER, THE AGENT, THE INVESTORS OR ANY OTHER
AFFECTED PERSON. THE SELLER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE INVESTORS ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER TRANSACTION DOCUMENT.
SECTION 17.13. Survival of Termination. The provisions of Sections 6.01,
6.02, 12.01, 16.01, 17.05 and 17.06 shall survive any termination of this
Agreement.
SECTION 17.14. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS EXECUTED AND DELIVERED HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
SECTION 17.15. Consent to Jurisdiction. (a) Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out
of or relating to this Agreement, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the Seller, Servicer Parties and the Custodian consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to it at its address specified in Section 17.03.
Nothing in this Section 17.15 shall affect the right of the Investors, any Bank
or the Agent to serve legal process in any other manner permitted by law.
126
SECTION 17.16. Lienholder Nominee. (a) The Agent (individually and on
behalf of the Investors and the Banks) and the Seller hereby appoint HomePride
as their nominee lienholder with respect to the Manufactured Homes related to
Receivables included in the Receivables Pool (each, a "Subject Manufactured
Home"), and HomePride hereby agrees to serve in such capacity as described
herein. As stated lienholder on the Titles to all of the Subject Manufactured
Homes, HomePride agrees to take any and all actions as the Seller (with the
consent of the Agent) or the Agent may request in writing including, without
limitation, all actions for which HomePride's consent, waiver, release, vote or
signature (or other action of similar nature) is necessary or advisable in the
judgment of the Seller or the Agent in order to maintain, preserve and protect
the Seller's security interest in the Subject Manufactured Homes and the
Receivable Interest purchased by the Investors and the Banks hereunder
(provided, however, that, prior to the occurrence of a Servicer Termination
Event or a Termination Event and the request by the Agent for the recordation of
the Seller's lien on such Subject Manufactured Homes' Titles, no such
recordation shall be required) and if HomePride fails to take any or all such
actions, the Agent or any designee of the Agent, may take such actions at the
sole expense of HomePride, and HomePride hereby grants to the Agent and any such
designee an irrevocable power of attorney and license to take any and all such
actions in HomePride's name and on behalf of HomePride. The obligations of
HomePride under this Agreement are in addition to, are not limited by, and in no
way limit, the obligations of HomePride in its capacity as Servicer under this
Agreement.
(b) Notwithstanding the fact that HomePride will remain noted as the
lienholder on the Titles with respect to the Subject Manufactured Homes on and
after the Original Closing Date, HomePride, the Seller and the Agent each hereby
agrees that, on and after the Original Closing Date:
(i) subject to the other terms and provisions of this Agreement, the
Seller is entitled to all incidents, benefits and risks of a holder of a first
priority perfected security interest in and lien on the Subject Manufactured
Homes;
(ii) HomePride has no direct or indirect ownership or other interest
(including any security interest) in any Subject Manufactured Homes;
(iii) except in its capacity as Servicer under this Agreement, HomePride
will take no action with respect to the Subject Manufactured Homes unless such
action is consented to by the Agent or otherwise permitted hereunder; and
(iv) HomePride shall not represent to any lender, financing source or
other Person, that it has, or in any other manner hold itself out as having, a
direct or indirect ownership interest or any other rights or interests in the
Subject Manufactured Homes, except for any rights it may have as nominee
lienholder or as Servicer hereunder.
SECTION 17.17. Amended and Restatement. Each of the parties hereto hereby
127
agrees that, as of the date hereof, (i) the Original Agreement is amended and
restated in its entirety by this Agreement and (ii) each reference to the
Original Agreement in any Transaction Document shall be deemed to be a reference
to this Agreement.
[Signature pages to follow]
128
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
SELLER: GSS HOMEPRIDE CORP.
By:
-----------------------------------------------------
Name:
Title:
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Suite 1715
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
INVESTOR: GREENWICH FUNDING CORP.
By: Credit Suisse First Boston, New York Branch, as its
Attorney-In-Fact
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Asset Finance Dept.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
129
BANK: CREDIT SUISSE FIRST BOSTON, NEW YORK
BRANCH
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Asset Finance Dept.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
AGENT: CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH, AS AGENT
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Asset Finance Dept.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
130
SERVICER: HOMEPRIDE FINANCE CORP., AS SERVICER
By:
--------------------------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel Office
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
SUB-SERVICER: THE CIT GROUP/SALES FINANCING, INC.
By:
--------------------------------------------------
Name:
Title:
▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
131