Exhibit 4.1
Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-2
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
and
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
Dated as of March 1, 1998
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS....................................................I-1
SECTION 1.01.General.................................................I-1
SECTION 1.02.Specific Terms..........................................I-1
SECTION 1.03.Calculations...........................................I-32
ARTICLE II - ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS................II-1
SECTION 2.01.Closing................................................II-1
SECTION 2.02.Conditions to the Closing..............................II-2
SECTION 2.03.Conveyance of the Subsequent Contracts.................II-4
SECTION 2.04.Acceptance by Trustee..................................II-6
SECTION 2.05.REMIC Provisions.......................................II-6
ARTICLE III - REPRESENTATIONS AND WARRANTIES.............................III-1
SECTION 3.01. Representations and Warranties Regarding the
Company .........................................III-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract.........................................III-2
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate.......................III-6
SECTION 3.04. Representations and Warranties Regarding the
Contract Files...................................III-9
SECTION 3.05. Repurchase of Contracts or Substitution of
Contracts for Breach of Representations and
Warranties.......................................III-9
SECTION 3.06. No Repurchase or Substitution Under Certain
Circumstances...................................III-13
SECTION 3.07. Staged-Funding Contract Reserve Account.........III-14
ARTICLE IV - PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
INTERESTS...........................................................IV-1
SECTION 4.01. Custody of Contracts..............................IV-1
SECTION 4.02. Filings...........................................IV-2
SECTION 4.03. Name Change or Relocation.........................IV-2
SECTION 4.04. Chief Executive Office............................IV-3
SECTION 4.05. Costs and Expenses................................IV-3
ARTICLE V - SERVICING OF CONTRACTS.........................................V-1
SECTION 5.01. Responsibility for Contract Administration.........V-1
SECTION 5.02. Standard of Care...................................V-1
SECTION 5.03. Records............................................V-1
SECTION 5.04. Inspection; Computer Tape..........................V-2
SECTION 5.05. Certificate Account................................V-2
SECTION 5.06. Enforcement........................................V-4
SECTION 5.07. Trustee to Cooperate...............................V-5
SECTION 5.08. Costs and Expenses.................................V-6
SECTION 5.09. Maintenance of Insurance...........................V-6
SECTION 5.10. Repossession.......................................V-8
SECTION 5.11. Commingling of Funds...............................V-8
SECTION 5.12. Retitling; Security Interests......................V-8
ARTICLE VI - REPORTS AND TAX MATTERS......................................VI-1
SECTION 6.01. Monthly Reports...................................VI-1
SECTION 6.02. Certificate of Servicing Officer..................VI-1
SECTION 6.03. Other Data........................................VI-1
SECTION 6.04. Annual Report of Accountants......................VI-1
SECTION 6.05 Statements to Certificateholders..................VI-2
SECTION 6.06. Payment of Taxes..................................VI-7
ARTICLE VII - SERVICE TRANSFER...........................................VII-1
SECTION 7.01. Event of Termination.............................VII-1
SECTION 7.02. Transfer.........................................VII-2
SECTION 7.03. Trustee to Act; Appointment of Successor.........VII-2
SECTION 7.04. Notification to Certificateholders...............VII-3
SECTION 7.05. Effect of Transfer...............................VII-3
SECTION 7.06. Transfer of Certificate Account..................VII-4
ARTICLE VIII - PAYMENTS.................................................VIII-1
SECTION 8.01. Monthly Payments................................VIII-1
SECTION 8.02. Permitted Withdrawals from the Certificate
Account.........................................VIII-2
SECTION 8.03. Payments........................................VIII-2
SECTION 8.04. Limited Guarantee...............................VIII-8
SECTION 8.05. Company's or Servicer's Repurchase .............VIII-9
SECTION 8.06. Capitalized Interest Account...................VIII-10
SECTION 8.07. Pre-Funding Account............................VIII-11
ARTICLE IX - THE CERTIFICATES AND UNCERTIFICATED SUBSIDIARY
INTERESTS.................................................................IX-1
SECTION 9.01. The Certificates..................................IX-1
SECTION 9.02. Registration of Transfer and Exchange of
Certificates......................................IX-2
SECTION 9.03. No Charge; Disposition of Void Certificates.......IX-5
SECTION 9.05. Persons Deemed Owners.............................IX-6
SECTION 9.06. Access to List of Certificateholders' Names and
Addresses.........................................IX-6
SECTION 9.07. Authenticating Agents.............................IX-7
ARTICLE X - INDEMNITIES....................................................X-1
SECTION 10.01. Company's Indemnities..............................X-1
SECTION 10.02. Liabilities to Obligors............................X-1
SECTION 10.03. Tax Indemnification................................X-1
SECTION 10.04. Servicer's Indemnities.............................X-2
SECTION 10.05. Operation of Indemnities...........................X-2
SECTION 10.06. REMIC Tax Matters..................................X-2
ARTICLE XI - THE TRUSTEE..................................................XI-1
SECTION 11.01. Duties of Trustee.................................XI-1
SECTION 11.02. Certain Matters Affecting the Trustee.............XI-2
SECTION 11.03. Trustee Not Liable for Certificates or Contracts..XI-3
SECTION 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Event of Termination.................XI-3
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses...XI-4
SECTION 11.06. Eligibility Requirements for Trustee..............XI-5
SECTION 11.07. Resignation or Removal of Trustee.................XI-5
SECTION 11.08. Successor Trustee.................................XI-6
SECTION 11.09. Merger or Consolidation of Trustee................XI-6
SECTION 11.10. Tax Returns.......................................XI-7
SECTION 11.11. Obligor Claims....................................XI-7
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee.....XI-8
SECTION 11.13. Agents of Trustee.................................XI-9
ARTICLE XII - MISCELLANEOUS..............................................XII-1
SECTION 12.01. Servicer Not to Assign Duties or Resign;
Delegation of Servicing Functions................XII-1
SECTION 12.02. Maintenance of Office or Agency..................XII-1
SECTION 12.03. Termination......................................XII-2
SECTION 12.04. Acts of Certificateholders.......................XII-3
SECTION 12.05. Calculations.....................................XII-4
SECTION 12.06. Assignment or Delegation by Company..............XII-4
SECTION 12.07. Amendment........................................XII-5
SECTION 12.08. Notices..........................................XII-7
SECTION 12.09. Merger and Integration...........................XII-8
SECTION 12.10. Headings.........................................XII-8
SECTION 12.11. Governing Law....................................XII-8
EXHIBIT A - FORM OF CLASS A- [1] - [6] CERTIFICATE.........................A-1
EXHIBIT B - FORM OF CLASS M-1 CERTIFICATE..................................B-1
EXHIBIT C-1 - FORM OF CLASS B-[1][2] CERTIFICATE.........................C-1-1
EXHIBIT C-2 - FORM OF CLASS B-3I CERTIFICATE.............................C-2-1
EXHIBIT D - FORM OF ASSIGNMENT.............................................D-1
EXHIBIT E - FORM OF CERTIFICATE OF OFFICER.................................E-1
EXHIBIT F - FORM OF OPINION OF COUNSEL FOR THE COMPANY.....................F-1
EXHIBIT G - FORM OF TRUSTEE'S ACKNOWLEDGEMENT..............................G-1
EXHIBIT H - FORM OF CUSTODIAN'S ACKNOWLEDGMENT.............................H-1
EXHIBIT I - FORM OF CERTIFICATE OF SERVICING OFFICER.......................I-1
EXHIBIT J - FORM OF CLASS C SUBSIDIARY CERTIFICATE.........................J-1
EXHIBIT K - FORM OF CLASS C MASTER CERTIFICATE.............................K-1
EXHIBIT L-1 - FORM OF CERTIFICATE REGARDING REPURCHASED CONTRACTS........L-1-1
EXHIBIT L-2 - FORM OF CERTIFICATE REGARDING SUBSTITUTED CONTRACTS........L-2-1
EXHIBIT M - FORM OF REPRESENTATION LETTER..................................M-1
EXHIBIT N - FORM OF MONTHLY REPORT.........................................N-1
EXHIBIT O - FORM OF ADDITION NOTICE........................................O-1
EXHIBIT P - FORM OF SUBSEQUENT TRANSFER INSTRUMENT.........................P-1
EXHIBIT Q - FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)............Q-1
AGREEMENT, dated as of March 1, 1998, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Delaware, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as Trustee (the "Trustee").
WHEREAS, in the regular course of its business, the Company originates,
purchases and services manufactured housing installment sales contracts and
installment loan agreements, which contracts provide for installment payments by
or on behalf of the owner of the manufactured home and grant security interests
in the related manufactured home (or, in certain cases, mortgages or deeds of
trust on the real estate to which such manufactured home is deemed permanently
affixed);
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the "Trust," as hereinafter defined, will acquire
the "Contracts," as hereinafter defined, and the Company will manage and service
the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Trustee agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. General.
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections of the Agreement.
SECTION 1.02. Specific Terms.
"Addition Notice" means, with respect to each transfer of Subsequent
Contracts to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit O, which shall be given not less than five
Business Days prior to the related Subsequent Transfer Date, of the Company's
designation of Subsequent Contracts to be sold to the Trust and the aggregate
Cut-off Date Principal Balances of such Subsequent Contracts.
"Additional Contract" means a Contract identified in the List of Contracts
delivered pursuant to Section 2.02(a) that is not an Initial Contract.
"Adjusted Certificate Principal Balance" means, as of any Remittance Date,
the sum of the Class A Principal Balance, the Class M-1 Adjusted Principal
Balance, the Class B-1 Adjusted Principal Balance and the Class B-2 Principal
Balance as of that Distribution Date.
"Advance Payment" means any payment by an Obligor in advance of the
related Due Period in which it would be due under such Contract and which
payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Remittance Date, an amount equal to
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(a) the sum of
(i) the amount on deposit in the Certificate Account as of the
close of business on the last day of the related Due Period,
(ii) any amounts required to be deposited in the Certificate
Account on the Business Day immediately preceding such
Remittance Date pursuant to Section 5.09, and
(iii) all collections in respect of principal on the Contracts
received after the last day of the related Due Period up to
and including the third Business Day prior to such Remittance
Date (but in no event later than the 25th day of the month
prior to such Remittance Date), minus
(b) the sum as of the close of business on the Business Day preceding
such Remittance Date of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from the
Certificate Account pursuant to clauses (b) - (e), inclusive,
of Section 8.02, and
(iii) with respect to all Remittance Dates other than the Remittance
Date in May 1998, all collections in respect of principal on
the Contracts received on or after the first day of the
related Due Period up to and including the third Business Day
prior to the preceding Remittance Date (but in no event later
than the 25th day of the prior month).
"Amount Held for Future Distribution" means, as to any Remittance Date,
the total of the amounts held in the Certificate Account on the last day of the
related Due Period on account of Advance Payments in respect of such related Due
Period (not including any portion of Advance Payments received during such
related Due Period that was distributed on the prior Remittance Date pursuant to
clause (vi) of the definition of "Formula Principal Distribution Amount").
"Applicants" has the meaning assigned in Section 9.06.
"Appraised Value" means, with respect to any Manufactured Home, the value
of such Manufactured Home as determined by a professional appraiser (who may be
an employee of the Company).
"Assumption Fee" means any assumption or other similar fee paid by the
Obligor on a Contract.
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"Authenticating Agent" means any authenticating agent appointed pursuant
to Section 9.07.
"Average Sixty-Day Delinquency Ratio" means the arithmetic average of the
Sixty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates.
"Average Thirty-Day Delinquency Ratio" means the arithmetic average of the
Thirty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates.
"Book-Entry Certificate" means any Certificate registered in the name of
the Depository or its nominee ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in the city in which a Person is
taking action hereunder are authorized or obligated by law, executive order or
governmental decree to be closed.
"Capitalized Interest Account" means the account established and
maintained pursuant to Section 8.06.
"Certificates" means the Class A, Class M-1, Class B, Class B-3I, and
Class C Certificates, collectively.
"Certificate Account" means the account established and maintained
pursuant to Section 5.05.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Regular Certificate registered in the name of the Company or any
Affiliate shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been
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obtained; provided, however, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such consent, waiver, request or
demand, only Regular Certificates which the Trustee knows to be so owned shall
be so disregarded.
"Class," "Class A, " "Class ▇-▇," "▇▇▇▇▇ ▇", "▇▇▇▇▇ ▇-▇▇" or "Class C"
means pertaining to each Class of Class A Certificates, Class M-1 Certificates,
Class B Certificates, Class B-3I Certificates and/or Class C Certificates, as
the case may be.
"Class A Certificate" means any one of the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class
A-3, Class A-4, Class A-5 and Class A-6 Certificates executed and delivered by
the Trustee substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A Distribution Amount" means, as to any Remittance Date, the lesser
of (a) the Amount Available for such Remittance Date (less any amounts paid to
the Servicer pursuant to Section 8.03(a)(1)) and (b) the Class A Formula
Distribution Amount for such Remittance Date; provided that after the Class A-6
Cross-over Date the Class A Distribution Amount shall be zero.
"Class A-1 Cross-over Date" means the Remittance Date on which the Class
A-1 Principal Balance (after giving effect to the distributions of principal on
the Class A-1 Certificates on such Remittance Date) is reduced to zero.
"Class A-2 Cross-over Date" means the Remittance Date on which the Class
A-2 Principal Balance (after giving effect to the distributions of principal on
the Class A-2 Certificates on such Remittance Date) is reduced to zero.
"Class A-3 Cross-over Date" means the Remittance Date on which the Class
A-3 Principal Balance (after giving effect to the distributions of principal on
the Class A-3 Certificates on such Remittance Date) is reduced to zero.
"Class A-4 Cross-over Date" means the Remittance Date on which the Class
A-4 Principal Balance (after giving effect to the distributions of principal on
the Class A-4 Certificates on such Remittance Date) is reduced to zero.
"Class A-5 Cross-over Date" means the Remittance Date on which the Class
A-5 Principal Balance (after giving effect to the distributions of principal on
the Class A-5 Certificates on such Remittance Date) is reduced to zero.
"Class A-6 Cross-over Date" means the Remittance Date on which the Class
A-6 Principal Balance (after giving effect to the distributions of principal on
the Class A-6 Certificates on such Remittance Date) is reduced to zero.
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"Class A Formula Distribution Amount" means, as to any Remittance Date, an
amount equal to the sum of (a) interest (calculated in the manner specified in
Section 1.03) at (i) the Class A-1 Remittance Rate on the Class A-1 Principal
Balance, (ii) the Class A-2 Remittance Rate on the Class A-2 Principal Balance,
(iii) the Class A-3 Remittance Rate on the Class A-3 Principal Balance, (iv) the
Class A-4 Remittance Rate on the Class A-4 Principal Balance, (v) the Class A-5
Remittance Rate on the Class A-5 Principal Balance, and (vi) the Class A-6
Remittance Rate on the Class A-6 Principal Balance, in each case calculated
immediately prior to such Remittance Date, (b) the aggregate Unpaid Class A
Interest Shortfall, if any, (c) the Class A Percentage of the Formula Principal
Distribution Amount and (d) any Unpaid Class A Principal Shortfall; provided,
however, that the aggregate of all amounts distributed for all Remittance Dates
pursuant to clauses (c) and (d) shall not exceed the sum of the Original Class
A-l Principal Balance, the Original Class A-2 Principal Balance, the Original
Class A-3 Principal Balance, the Original Class A-4 Principal Balance, the
Original Class A-5 Principal Balance and the Original Class A-6 Principal
Balance.
"Class A Interest Distribution Amount" means, as to each Class of Class A
Certificates and any Remittance Date, the sum of the amounts specified in clause
(a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(v) and (a)(vi), as appropriate, of the
definition of the term "Class A Formula Distribution Amount" and the Unpaid
Class A Interest Shortfall, if any, with respect to such Class.
"Class A Interest Shortfall" means, as to any Remittance Rate and with
respect to each Class of Class A Certificates, the amount, if any, by which the
amount distributed to Holders of such Class of Class A Certificates on such
Remittance Date pursuant to Section 8.03(a)(2) is less than the Class A Interest
Distribution Amount for such Class.
"Class A Percentage" means:
(i) as to any Remittance Date on or prior to the Class A-6 Cross-Over
Date, and on which the Class M-1 Distribution Test is not satisfied,
100%,
(ii) as to any Remittance Date on which the Class M-1 Distribution Test
is satisfied but the Class B Distribution Test is not satisfied, a
fraction, expressed as a percentage, the numerator of which is the
Class A Principal Balance as of such Remittance Date, and the
denominator of which is the sum of the Class A Principal Balance and
the Class M-1 Principal Balance (minus the Unpaid Class M-1
Principal Shortfall, if any) as of such Remittance Date,
(iii) as to any Remittance Date on which both the Class M-1 Distribution
Test and the Class B Distribution Test are satisfied, a fraction,
expressed as a percentage, the numerator of which is the Class A
Principal Balance as of such Remittance Date, and the denominator of
which is the Pool Scheduled Principal Balance as of the immediately
preceding Remittance Date, and
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(iv) as to any Remittance Date after the Class A-6 Cross-Over Date, 0%.
"Class A Principal Balance" means, as to any Remittance Date, the sum of
the Class Principal Balances of the Class A Certificates.
"Class A Principal Deficiency Amount" means, as to any Remittance Date,
the amount, if any, by which the Pool Scheduled Principal Balance is less than
the Class A Principal Balance.
"Class A Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class A
Certificates on such Remittance Date pursuant to Section 8.03(a)(5)(iii) is less
than the Class A Percentage of the Formula Principal Distribution Amount for
such Remittance Date.
"Class A-1 Remittance Rate" means 5.66875% per annum.
"Class A-2 Remittance Rate" means 5.98% per annum.
"Class A-3 Remittance Rate" means 6.05% per annum.
"Class A-4 Remittance Rate" means 6.08% per annum.
"Class A-5 Remittance Rate" means 6.24% per annum.
"Class A-6 Remittance Rate" means a floating rate (determined each Due
Period on each Remittance Date) equal to the Weighted Average Contract Rate, but
in no event greater than 6.81% per annum.
"Class A-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class A-S2 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class A-S3 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class A-S4 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
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"Class A-S5 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class A-S6 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class B-1 Adjusted Principal Balance" means, as of any Remittance Date,
the Class B-1 Principal Balance as of that Remittance Date minus the Class B-1
Liquidation Loss Amount (if any) as of the prior Remittance Date.
"Class B Certificate" means any one of the Class B-1 or Class B-2
Certificates executed and delivered by the Trustee substantially in the form set
forth in Exhibit C-1 hereto and evidencing an interest designated as a "regular
interest" in the Master REMIC for purposes of the REMIC Provisions.
"Class B-1 Cross-over Date" means the Remittance Date on which the Class
B-1 Principal Balance (after giving effect to the distributions of principal on
the Class B-1 Certificates on such Remittance Date) is reduced to zero.
"Class B-1 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available less the sum of (i) any amounts paid to the
Servicer pursuant to Section 8.03(a)(1), (ii) the Class A Distribution Amount
and (iii) the Class M-1 Distribution Amount and (b) the Class B-1 Formula
Distribution Amount for such Remittance Date; provided that after the Class B-1
Cross-over Date the Class B-1 Distribution Amount shall be zero.
"Class B-2 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Remaining Amount Available and (b) the Class B-2 Formula
Distribution Amount for such Remittance Date.
"Class B Distribution Test" means, to be considered "satisfied" for any
Remittance Date, that (i) such Remittance Date occurs in or after May 2002; (ii)
the Average Sixty-Day Delinquency Ratio for such Remittance Date is less than or
equal to 3.5%; (iii) the Average Thirty-Day Delinquency Ratio for such
Remittance Date is less than or equal to 5.5%; (iv) the Cumulative Realized
Losses Test for such Remittance Date is satisfied; (v) the Current Realized Loss
Ratio for such Remittance Date is less than or equal to 2.25%; (vi) the
fraction, expressed as a percentage, the numerator of which is the Class B
Principal Balance as of such Remittance Date and the denominator of which is the
Pool Scheduled Principal Balance as of the immediately preceding Remittance
Date, is equal to or greater than 12.75%; and (vii) the Class B Principal
Balance as of such Remittance Date is greater than or equal to $15,000,000.
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"Class B-1 Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) interest (calculated in the manner specified
in Section 1.03) at the Class B-1 Remittance Rate on the Class B-1 Adjusted
Principal Balance as of such Remittance Date, (b) any Unpaid Class B-1 Interest
Shortfall, (c) the Class B Percentage of the Formula Principal Distribution
Amount, (d) any Unpaid Class B-1 Principal Shortfall, (e) any Class B-1
Liquidation Loss Interest Amount, and (f) any Unpaid Class B-1 Liquidation Loss
Interest Shortfall; provided, however, that on the Class M-1 Cross-over Date,
the balance of any amounts that would have been distributable on such date
pursuant to clauses (c) and (d) of the term "Class M-1 Formula Distribution
Amount" (assuming a sufficient Amount Available) but for the operation of the
second proviso to such term shall instead be included in clause (c) of this
definition; provided, further, that the aggregate of all amounts distributed
pursuant to clauses (c) and (d) of this definition shall not exceed the Original
Class B-1 Principal Balance.
"Class B-2 Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) interest (calculated in the manner specified
in Section 1.03) at the Class B-2 Remittance Rate on the Class B-2 Principal
Balance as calculated immediately prior to such Remittance Date, (b) any Unpaid
Class B-2 Interest Shortfall, (c) (i) if such Remittance Date is prior to or on
the Class B-1 Cross-over Date, zero or (ii) if such Remittance Date is after the
Class B-1 Cross-over Date, the Class B Percentage of the Formula Principal
Distribution Amount, (d) the Class B-2 Liquidation Loss Amount and (e) any
Unpaid Class B-2 Principal Shortfall; provided, however, that on the Class B-1
Cross-over Date, the balance of any amounts that would have been distributable
on such date pursuant to clauses (c) and (d) of the term "Class B-1 Formula
Distribution Amount" (assuming a sufficient Remaining Amount Available) but for
the operation of the second proviso to such term shall instead be included in
clause (c) of this definition; provided, further, that the aggregate of all
amounts distributed pursuant to clauses (c), (d) and (e) of this definition
shall not exceed the Original Class B-2 Principal Balance.
"Class B-1 Interest Deficiency Amount" means, as to the Class B-1
Certificates and any Remittance Date, the difference, if any, between (i) the
sum of the amounts described in clauses (a), (b), (e) and (f) of the definition
of the term "Class B-1 Formula Distribution Amount" and (ii) the amount
available for distribution to the Class B-1 Certificateholders pursuant to
Section 8.03(a)(4)(i) and (ii) and Section 8.03(a)(7)(iii) and (iv) on such
Remittance Date.
"Class B-1 Interest Shortfall" means, as to any Remittance Date, the
difference, if any, between (A) the sum of (i) the amount distributed to Holders
of the Class B-1 Certificates on such Remittance Date pursuant to Sections
8.03(a)(4)(i) and (ii), and (ii) any amount distributed to the Holders of the
Class B-1 Certificates pursuant to Section 8.03(b) on such Remittance Date, and
(B) the amounts specified in clauses (a) and (b) of the definition of the term
"Class B-1 Formula Distribution Amount" for such Remittance Date.
"Class B-2 Interest Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-2
Certificates on such Remittance Date pursuant to Sections 8.03(a)(6)(i) and
(ii), together with any Guarantee Payment, is less than the
I-8
sum of the amounts specified in clauses (a) and (b) of the definition of the
term "Class B-2 Formula Distribution Amount."
"Class B-1 Liquidation Loss Amount" means, as of any Remittance Date, the
lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance, the Class M-1 Principal Balance and the Class B-1 Principal Balance for
such Remittance Date exceeds the sum of the Pre-Funded Amount plus the Pool
Scheduled Principal Balance for such Remittance Date (after giving effect to all
distributions of principal on the Class A, Class M-1 and Class B-1 Certificates
on such Remittance Date) and (y) the Class B-1 Principal Balance (after giving
effect to all distributions of principal on the Class B-1 Certificates on such
Remittance Date).
"Class B-2 Liquidation Loss Amount" means, as to any Remittance Date, the
lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance, the Class M-1 Principal Balance, the Class B-1 Principal Balance and
the Class B-2 Principal Balance for such Remittance Date exceeds the sum of the
Pre-Funded Amount plus the Pool Scheduled Principal Balance for such Remittance
Date (after giving effect to all distributions of principal on the Class A,
Class M-1 and Class B-1 Certificates on such Remittance Date, and all other
distributions of principal on the Class B-2 Certificates on such Remittance
Date) and (y) the Class B-2 Principal Balance.
"Class B-1 Liquidation Loss Interest Amount" means, as to any Remittance
Date, an amount equal to interest (calculated in the manner specified in Section
1.03) at the Class B-1 Remittance Rate on the Class B-1 Liquidation Loss Amount
(if any) for the immediately preceding Remittance Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the amount, if any, by which the amount distributed to Holders
of the Class B-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(7)(iii) is less than the Class B-1 Liquidation Loss Interest Amount for
such Remittance Date.
"Class B Percentage" means:
(i) as to any Remittance Date on which the Class B Principal
Distribution Test is not satisfied, and the Class A Principal
Balance and the Class M-1 Principal Balance have not been reduced to
zero, 0%,
(ii) as to any Remittance Date on which both the Class M-1 Distribution
Test and the Class B Distribution Test are satisfied, 100% minus the
sum of the Class A Percentage and the Class M-1 Percentage, and
(iii) as to any Remittance Date after the Class M-1 Cross-over Date, 100%.
I-9
"Class B Principal Balance" means, as to any Remittance Date, the sum of
the Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B-1 Principal Balance" means, as to any Remittance Date, the
Original Class B-1 Principal Balance less all amounts previously distributed to
Holders of Class B-1 Certificates on account of principal.
"Class B-2 Principal Balance" means, as to any Remittance Date, the
Original Class B-2 Principal Balance less all amounts previously distributed to
Holders of Class B-2 Certificates on account of principal (including any
Guarantee Payments).
"Class B-1 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-1
Certificates on such Remittance Date pursuant to Section 8.03(a)(7)(ii) is less
than the amount described in clause (c) of the definition of the term "Class B-1
Formula Distribution Amount."
"Class B-2 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-2
Certificates on such Remittance Date pursuant to Section 8.03(a)(8)(iv),
together with any Guarantee Payment, is less than the sum of the amounts
described in clauses (c) and (d) of the definition of the term "Class B-2
Formula Distribution Amount."
"Class B-1 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 7.36% per annum.
"Class B-2 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 8.44% per annum.
"Class B-3I Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Remaining Amount Available less the sum of (i) the Class B-2
Distribution Amount plus (ii) any amounts paid to the Servicer pursuant to
Section 8.03(a)(9), and (b) the Class B-3I Formula Distribution Amount for such
Remittance Date.
"Class B-3I Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) the Excess Interest for such Remittance Date,
and (b) any Unpaid Class B-3I Shortfall as of such Remittance Date.
"Class B-3I Shortfall" means, as to any Remittance Date, the amount, if
any, by which (a) the Class B-3I Formula Distribution Amount for such Remittance
Date exceeds (b) the Class B-3I Distribution Amount for such Remittance Date.
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"Class B-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class B-S2 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class C Certificate" means any one of the Class C Subsidiary Certificates
or Class C Master Certificates.
"Class C Certificateholder" means the person in whose name a Class C
Certificate is registered on the Certificate Register.
"Class C Master Certificate" means a Class C Master Certificate executed
and delivered by the Trustee substantially in the form of Exhibit K, and
evidencing an interest designated as the "residual interest" in the Master REMIC
for purposes of the REMIC Provisions.
"Class C Master Distribution Amount" means, as to any Remittance Date, the
amount, if any, distributable pursuant to Section 8.03(a)(12).
"Class C Subsidiary Certificate" means a Class C Subsidiary Certificate
executed and delivered by the Trustee substantially in the form of Exhibit J,
and evidencing an interest designated as the "residual interest" in the
Subsidiary REMIC for purposes of the REMIC Provisions.
"Class C Subsidiary Distribution Amount" means, as to any Remittance Date,
the amounts, if any, distributable pursuant to Section 8.03(b)(5).
"Class M-1 Adjusted Principal Balance" means, as to any Remittance Date,
the Class M-1 Principal Balance as of that Remittance Date minus the Class M-1
Liquidation Loss Amount (if any) as of the prior Remittance Date.
"Class M-1 Certificate" means any one of the Class M-1 Certificates
executed and delivered by the Trustee substantially in the form set forth in
Exhibit B and evidencing an interest designated as a "regular interest" in the
Trust for the purposes of the REMIC Provisions.
"Class M-1 Cross-over Date" means the Remittance Date on which the Class
M-1 Principal Balance (after giving effect to the distributions of principal on
the Class M-1 Certificates on such Remittance Date) is reduced to zero.
"Class M-1 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available less the sum of (i) any amounts paid to the
Servicer pursuant to Section
I-11
8.03(a)(1) and (ii) the Class A Distribution Amount and (b) the Class M-1
Formula Distribution Amount for such Remittance Date; provided that after the
Class M-1 Cross-over Date the Class M-1 Distribution Amount shall be zero.
"Class M-1 Distribution Test" means, to be considered "satisfied" for any
Remittance Date, that (i) such Remittance Date occurs in or after May 2002; (ii)
the Average Sixty-Day Delinquency Ratio for such Remittance Date is less than or
equal to 3.5%; (iii) the Average Thirty-Day Delinquency Ratio for such
Remittance Date is less than or equal to 5.5%; (iv) the Cumulative Realized
Losses Test for such Remittance Date is satisfied; (v) the Current Realized Loss
Ratio for such Remittance Date is less than or equal to 2.25%; and (vi) the
fraction, expressed as a percentage, the numerator of which is the sum of the
Class M-1 Principal Balance and the Class B Principal Balance as of such
Remittance Date and the denominator of which is the Pool Scheduled Principal
Balance as of the immediately preceding Remittance Date, is equal to or greater
than 23.25%.
Class M-1 Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) interest (calculated in the manner specified
in Section 1.03) at the Class M-1 Remittance Rate on the Class M-1 Adjusted
Principal Balance as of such Remittance Date, (b) the aggregate Unpaid Class M-1
Interest Shortfall, if any, (c) the Class M-1 Percentage of the Formula
Principal Distribution Amount, (d) any Unpaid Class M-1 Principal Shortfall, (e)
any Class M-1 Liquidation Loss Interest Amount, and (f) any Unpaid Class M-1
Liquidation Loss Interest Shortfall; provided, however, that on the Class A-6
Cross-Over Date, the balance of any amounts that would have been distributable
on such date pursuant to clauses (c) and (d) of the term "Class A Formula
Distribution Amount" (assuming a sufficient Amount Available) but for the
operation of the proviso to such term shall instead be included in clause (c) of
this definition; provided, further, that the aggregate of all amounts
distributed for all Remittance Dates pursuant to clauses (c) and (d) shall not
exceed the Original Class M-1 Principal Balance.
"Class M-1 Interest Deficiency Amount" means, as to the Class M-1
Certificates and any Remittance Date, the difference, if any, between (i) the
sum of the amounts described in clauses (a), (b), (e) and (f) of the definition
of the term "Class M-1 Formula Distribution Amount" and (ii) the amount
available for distribution to the Class M-1 Certificateholders pursuant to
Section 8.03(a)(3)(i) and (ii) and Section 8.03(a)(6)(iii) and (iv) on such
Remittance Date.
"Class M-1 Interest Distribution Amount" means, as to any Remittance Date,
the amount specified in clause (a) of the definition of the term "Class M-1
Formula Distribution Amount" plus the Unpaid Class M-1 Interest Shortfall, if
any.
"Class M-1 Interest Shortfall" means, as to any Remittance Date, the
difference, if any, between (A) the sum of (i) the amount distributed to Holders
of the Class M-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(3)(i) and (ii), and (ii) any amount distributed to the Holders of the
Class M-1 Certificates pursuant to Section 8.03(b) on such Remittance Date, and
(B) the Class M-1 Interest Distribution Amount for such Remittance Date.
I-12
"Class M-1 Liquidation Loss Amount" means, as to any Remittance Date, the
lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance and the Class M-1 Principal Balance for such Remittance Date exceeds the
sum of the Pre-Funded Amount plus the Pool Scheduled Principal Balance for such
Remittance Date (after giving effect to all distributions of principal on the
Class A and Class M-1 Certificates on such Remittance Date) and (y) the Class
M-1 Principal Balance (after giving effect to all distributions of principal on
the Class M-1 Certificates on such Remittance Date).
"Class M-1 Liquidation Loss Interest Amount" means, as to any Remittance
Date, an amount equal to interest (calculated in the manner specified in Section
1.03) at the Class M-1 Remittance Rate on the Class M-1 Liquidation Loss Amount
(if any) for the immediately preceding Remittance Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the amount, if any, by which the amount distributed to Holders
of the Class M-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(6)(iii) is less than the Class M-1 Liquidation Loss Interest Amount for
such Remittance Date.
"Class M-1 Percentage" means:
(i) as to any Remittance Date prior to the Class A-6 Cross-Over Date and
on which the Class M-1 Principal Distribution Test is not satisfied,
0%,
(ii) as to any Remittance Date on which the Class M-1 Distribution Test
is satisfied but the Class B Distribution Test is not satisfied,
100% minus the Class A Percentage,
(iii) as to any Remittance Date on which both the Class M-1 Distribution
Test and the Class B Distribution Test are satisfied, a fraction,
expressed as a percentage, the numerator of which is the Class M-1
Principal Balance as of such Remittance Date, and the denominator of
which is the Pool Scheduled Principal Balance as of the immediately
preceding Remittance Date, and
(iv) as to any Remittance Date after the Class A-6 Cross-Over Date and on
which the Class B Distribution Test is not satisfied, 100%.
"Class M-1 Principal Balance" means, as to any Remittance Date, the
Original Class M-1 Principal Balance less all amounts previously distributed to
Holders of Class M-1 Certificates on account of principal.
"Class M-1 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class M-1
Certificates on such Remittance Date
I-13
pursuant to Sections 8.03(a)(6)(ii) is less than the Class M-1 Percentage of the
Formula Principal Distribution Amount for such Remittance Date.
"Class M-1 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 6.94% per annum.
"Class Principal Balance" means, as to any Remittance Date and each Class
of Certificates, the Original Principal Balance of such Class less all amounts
previously distributed to Holders of such Class of Certificates on account of
principal.
"Class M-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Closing Date" means March 18, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Contract, (i) the
security interests granted by or on behalf of the related Obligor with respect
thereto, including a first priority perfected security interest in the related
Manufactured Home, (ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such Contract,
whether pursuant to the agreement giving rise to such Contract or otherwise,
together with all financing statements signed by the Obligor describing any
collateral securing such Contract, (iii) all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Contract whether pursuant to the agreement giving rise
to such Contract or otherwise, and (iv) all records in respect of such Contract.
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contracts" means the manufactured housing installment sales contracts and
installment loan agreements, including any Land-and-Home Contracts, described in
the List of Contracts and constituting part of the corpus of the Trust, which
Contracts are to be assigned and conveyed by the Company to the Trust, and
includes, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after the
applicable Cut-off Date, but excluding any rights to receive payments which are
due pursuant thereto prior to the applicable Cut-off Date.
I-14
"Contract File" means, as to each Contract, other than a Land-and-Home
Contract, (a) the original copy of the Contract, (b) either (i) the original
title document for the related Manufactured Home or a duplicate certified by the
appropriate governmental authority which issued the original thereof or the
application for such title document or (ii) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the issuance
of title documents for manufactured housing, other evidence of ownership of the
related Manufactured Home which is customarily relied upon in such jurisdiction
as evidence of title to a manufactured housing unit, (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 appropriate: (i) notation of such
security interest on the title document, (ii) a financing statement meeting the
requirements of the UCC, with evidence of recording indicated thereon, or (iii)
such other evidence of perfection of a security interest in a manufactured
housing unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located, (d) the assignment of the Contract from
the originator (if other than the Company) to the Company and (e) any extension,
modification or waiver agreement(s).
"Contract Rate" means, with respect to any particular Contract, the rate
of interest specified in that Contract and computed on a precomputed basis with
an actuarial rebate of unearned interest upon prepayment, provided that the
rebate upon prepayment of Contracts originated in California or Oklahoma may be
computed on the simple interest method if so required by applicable law or
regulations.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.08.
"Corresponding Certificate Class" means, with respect to each Class of
Uncertificated Subsidiary Interests, as follows:
Uncertificated Subsidiary Interest Corresponding Certificate Class
---------------------------------- -------------------------------
Class A-S1 Class A-1
Class A-S2 Class A-2
Class A-S3 Class A-3
Class A-S4 Class A-4
Class A-S5 Class A-5
Class A-S6 Class A-6
Class M-S1 Class M-1
Class B-S1 Class B-1
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Class B-S2 Class B-2
"Counsel for the Company" means ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Professional
Association, or other legal counsel for the Company.
"Cumulative Realized Losses" means, as to any Remittance Date, the sum of
the Realized Losses for that Remittance Date and each preceding Remittance Date
since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied" for
any Remittance Date:
(i) if such Remittance Date occurs between May 1, 2001 and April 28,
2002, that the Cumulative Realized Losses as of such Remittance Date
are less than or equal to 5.5% of the Cut-off Date Pool Principal
Balance;
(ii) if such Remittance Date occurs between May 1, 2002 and April 28,
2003, that the Cumulative Realized Losses as of such Remittance Date
are less than or equal to 6.5% of the Cut-off Date Pool Principal
Balance;
(iii) if such Remittance Date occurs between May 1, 2003 and April 29,
2004, that the Cumulative Realized Losses as of such Remittance Date
are less than or equal to 8.5% of the Cut-off Date Pool Principal
Balance; and
(iv) if such Remittance Date occurs after May 1, 2004, that the
Cumulative Realized Losses as of such Remittance Date are less than
or equal to 9.5% of the Cut-off Date Pool Principal Balance.
"Current Realized Loss Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Realized Losses for such Remittance Date and each of the two immediately
preceding Remittance Dates, multiplied by four, and the denominator of which is
the arithmetic average of the Pool Scheduled Principal Balance as of the third
preceding Remittance Date and the Pool Scheduled Principal Balance as of such
Remittance Date.
"Custodian" means at any time the Trustee or a financial institution
organized under the laws of the United States or any State, which is subject to
supervision and examination by Federal or State authorities and which is not the
Company or an Affiliate of the Company, that is acting at such time as Custodian
of the Land-and-Home Contract Files pursuant to Section 4.01.
"Cut-off Date" means with respect to each Initial and Additional Contract,
February 15, 1998 (or the date of origination, if later).
I-16
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Contracts. With respect to any Staged-Funding
Contract, the Cut-off Date Principal Balance means the principal amount stated
on such Contract.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cut-off Date, or Subsequent Cut-off Date if a
Subsequent Contract, after giving effect to all installments of principal due
prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced repossession or foreclosure procedures, made a sale of such Contract
to a third party for repossession, foreclosure or other enforcement, or as to
which there was a payment delinquent 180 or more days (excluding any Contract
deemed delinquent solely because the Obligor's required monthly payment was
reduced as a result of bankruptcy or similar proceedings).
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., as the registered Holder of:
(i) one Certificate evidencing $36,000,000 in initial aggregate
principal balance of the Class A-1 Certificates,
(ii) one Certificate evidencing $39,000,000 in initial aggregate
principal balance of the Class A-2 Certificates,
(iii) one Certificate evidencing $95,000,000 in initial aggregate
principal balance of the Class A-3 Certificates,
(iv) one Certificate evidencing $41,500,000 in initial aggregate
principal balance of Class A-4 Certificates,
(v) one Certificate evidencing $162,000,000 in initial aggregate
principal balance of Class A-5 Certificates,
(vi) one Certificate evidencing $260,250,000 in initial aggregate
principal balance of Class A-6 Certificates,
(vii) one Certificate evidencing $52,500,000 in initial aggregate
principal balance of the Class M-1 Certificates,
(viii) one Certificate evidencing $33,750,000 in initial aggregate
principal balance of the Class B-1 Certificates, and
(ix) one Certificate evidencing $30,000,000 in initial aggregate
principal balance of Class B-2 Certificates,
I-17
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in the Uniform Commercial Code of the State of
New York.
"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the second Business Day preceding each
Remittance Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in Section
9.02(b)(3).
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
"Due Period" means with respect to any Remittance Date, the period from
and including the 15th day of the second month preceding such Remittance Date,
to and including the 14th day of the month immediately preceding such Remittance
Date, provided, however, with respect to the Remittance Date in May 1998, the
Due Period shall be the period from and including February 15, 1998 to and
including April 14, 1998.
"Electronic Ledger" means the electronic master record of installment sale
contracts of the Company.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) a trust
account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee hereunder, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the bank holding company shall have capital and surplus) of not less than
$50,000,000 and the securities of such depository institution or trust company
(or, if such depository institution or trust company is a subsidiary of a bank
holding company system and such depository institution's or trust company's
securities are not rated, the securities of the bank holding company) shall have
a credit rating from each of ▇▇▇▇▇'▇, Standard & Poor's (if rated by Standard &
Poor's) and Fitch (if rated by Fitch) in one of its generic credit rating
categories which signifies investment grade; or (iii) an account that will not
cause ▇▇▇▇▇'▇ and Standard & Poor's to downgrade or withdraw its then-current
rating assigned to the Certificates, as confirmed in writing by ▇▇▇▇▇'▇ and
Fitch.
"Eligible Institution" means any depository institution (which may be the
Trustee or an Affiliate of the Trustee) organized under the laws of the United
States or any State, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently
I-18
administered by the Federal Deposit Insurance Corporation), which is subject to
supervision and examination by federal or state authorities and whose short-term
deposits have been rated P-1 by ▇▇▇▇▇'▇, A-1+ by Standard & Poor's and F-1 by
Fitch (if rated by Fitch), or whose unsecured long-term debt has been rated in
one of the two highest rating categories by ▇▇▇▇▇'▇, Standard & Poor's (not
lower than AA) and Fitch (if rated by Fitch) in the case of unsecured long-term
debt.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means the Company or any Person qualified to act as
Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than an aggregate of $100,000,000 in
outstanding principal amount of manufactured housing conditional sales contracts
and installment loan agreements and, so long as any FHA/VA Contract is
outstanding, which Person is qualified under FHA/VA Regulations to act as a
servicer of all such FHA/VA Contracts.
"Eligible Substitute Contract" means, as to any Replaced Contract for
which such Eligible Substitute Contract is being substituted pursuant to Section
3.05(b), a Contract that (a) as of the date of its substitution, satisfies all
of the representations and warranties (which, except when expressly stated to be
as of origination, shall be deemed to be determined as of the date of its
substitution rather than as of the Cut-off Date or the Closing Date) in Section
3.02 and does not cause any of the representations and warranties in Section
3.03, after giving effect to such substitution, to be incorrect, (b) after
giving effect to the scheduled payment due in the month of such substitution,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of such Replaced Contract, (c) has a Contract Rate that is at
least equal to the Contract Rate of such Replaced Contract, (d) has a remaining
term to scheduled maturity that is not greater than the remaining term to
scheduled maturity of the Replaced Contract, and (e) is secured by a
Manufactured Home that is similar in type and value to the collateral serving
the Replaced Contract. If more than one Contract is being substituted pursuant
to Section 3.05(b) for more than one Replaced Contract on a particular date,
then the conditions specified above shall be applied to the Contracts being
substituted, in the aggregate, and the Replaced Contracts, in the aggregate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Excess Interest" means, as to any Remittance Date, the sum of (a)
interest accrued on the Class A-S1 Subsidiary Interest Principal Balance as of
such Remittance Date at a rate per annum
I-19
equal to the difference between the Weighted Average Contract Rate as of such
Remittance Date and the Class A-1 Remittance Rate, (b) interest accrued on the
Class A-S2 Subsidiary Interest Principal Balance at a rate per annum equal to
the difference between the Weighted Average Contract Rate as of such Remittance
Date and the Class A-2 Remittance Rate, (c) interest accrued on the Class A-S3
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class A-3 Remittance Rate, (d) interest accrued on the Class A-S4
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class A-4 Remittance Rate, (e) interest accrued on the Class A-S5
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class A-5 Remittance Rate, (f) interest accrued on the Class A-S6
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class A-6 Remittance Rate, (g) interest accrued on the Class M-S1
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class M-1 Remittance Rate, (h) interest accrued on the Class B-S1
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class B-1 Remittance Rate, and (i) interest accrued on the Class B-S2
Subsidiary Interest Principal Balance at a rate per annum equal to the
difference between the Weighted Average Contract Rate as of such Remittance Date
and the Class B-2 Remittance Rate.
"FHA/VA Contract" means a Contract that, at its origination, was insured
by the Federal Housing Administration or partially guaranteed by the Veterans
Administration.
"FHA/VA Regulations" means, as to any FHA/VA Contract, the contractual
agreements and regulations of the Federal Housing Administration or the Veterans
Administration, as the case may be, providing or governing the terms of the
insurance for such Contract by the Federal Housing Administration or the partial
guarantee for such Contract by the Veterans Administration, as the case may be.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Final Remittance Date" means the Remittance Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
12.03.
"Fitch" means Fitch IBCA, Inc., or any successor thereto.
"Formula Principal Distribution Amount" means, as of any Remittance Date,
the sum of:
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(i) all scheduled payments of principal due on each outstanding Contract
during the related Due Period as specified in the amortization
schedule at the time applicable thereto (after adjustments for
previous Principal Prepayments and any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor or
similar proceeding or any moratorium or similar waiver or grace
period, or by reason of any other waiver modification or extension
granted by the Servicer in accordance with Section 5.06); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the related Due Period; plus
(iii) the aggregate Scheduled Principal Balance of all Contracts that
became Liquidated Contracts during the related Due Period plus the
amount of any reduction in principal balance of any Contract during
the related Due Period pursuant to bankruptcy proceedings involving
the related Obligor; plus
(iv) the aggregate Scheduled Principal Balance of all Contracts
repurchased during the related Due Period pursuant to Section 3.05;
plus
(v) with respect to the Remittance Date in July 1998, the Unfunded
Contract Shortfall, if any; plus
(vi) without duplication of the foregoing, all collections in respect of
principal on the Contracts received after the last day of the
related Due Period up to and including the third Business Day prior
to such Remittance Date (but in no event later than the 25th day of
the month in which such Remittance Date occurs); minus
(vii) with respect to all Remittance Dates other than the Remittance Date
in May 1998, the amount, if any, included in the Formula Principal
Distribution Amount for the preceding Remittance Date by virtue of
clause (vi) of the definition of Formula Principal Distribution
Amount; plus
(viii) with respect to the Remittance Date in April 1999, the amount, if
any, by which the Class A-1 Principal Balance as of such Remittance
Date exceeds the sum of the amounts described above in clauses (i)
through (vii); minus
(ix) with respect to the Remittance Date in May 1999, the amount, if any,
distributed in respect of principal on the Class A-1 Certificates on
the Remittance Date in April 1999 pursuant to clause (viii) above;
plus
(x) on the Post-Funding Remittance Date, the Pre-Funded Amount.
"Funding Termination Date" means June 16, 1998.
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"Guarantee Payment" means, the amount, if any, by which (A) the Class B-2
Formula Distribution Amount for such Remittance Date exceeds (B) the Remaining
Amount Available.
"Hazard Insurance Policy" means, with respect to each Contract, the policy
of fire and extended coverage insurance (and federal flood insurance, if the
Manufactured Home is secured by an FHA/VA Contract and such Manufactured Home is
located in a federally designated special flood area) required to be maintained
for the related Manufactured Home, as provided in Section 5.09, and which, as
provided in said Section 5.09, may be a blanket mortgage impairment policy
maintained by the Servicer in accordance with the terms and conditions of said
Section 5.09.
"Independent" means, when used with respect to any specified Person,
▇▇▇▇▇▇ and ▇▇▇▇▇▇, Professional Association, or any Person who (i) is in fact
independent of the Company and the Servicer, (ii) does not have any direct
financial interest or any material indirect financial interest in the Company or
the Servicer or in an Affiliate of either and (iii) is not connected with the
Company or the Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided herein that any Independent Person's opinion or certificate shall be
furnished to the Trustee, such opinion or certificate shall state that the
signatory has read this definition and is Independent within the meaning set
forth herein.
"Initial Contracts" means certain Contracts identified in the List of
Contracts delivered pursuant to Section 2.02(a), all of which were originated on
or before February 28, 1998, and which have an aggregate principal balance as of
the Cut-off Date of approximately $481,315,682.45.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract or any FHA/VA Contract.
"Land-and-Home Contract" means a Contract that is secured by 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, as to each Land-and-Home Contract,
(a) the original copy of the Land-and-Home Contract; (b) the original related
Mortgage with evidence of recording thereon (or, if the original Mortgage has
not yet been returned by the applicable recording office, a copy thereof,
certified by such recording office, which will be replaced by the original
Mortgage when it is so returned) and any title document for the related
Manufactured Home; (c) the assignment of the Land-and-Home Contract from the
originator (if other than the Company) to the Company; (d) if such Land-and-Home
Contract was originated by the Company, an endorsement of such Land-and-Home
Contract by the Company; and (e) any extension, modification or waiver
agreement(s).
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"Land-in-Lieu Contract" means a Contract that is secured by (i) a security
interest in a Manufactured Home and (ii) a mortgage or deed of trust on real
estate on which such Manufactured Home is situated, but such Manufactured Home
is not considered or classified as part of the real estate under the laws of the
jurisdiction in which it is located.
"Limited Guarantee" means the obligation of the Company to make Guarantee
Payments pursuant to Section 8.04.
"Liquidated Contract" means any defaulted Contract as to which the
Servicer has determined that all amounts which it expects to recover from or on
account of such Contract have been recovered; provided that any defaulted
Contract in respect of which the related Manufactured Home and, in the case of
Land-and-Home Contracts, Mortgaged Property, have been realized upon and
disposed of and the proceeds of such disposition have been received shall be
deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any defaulted Contract, on or prior to the date on which the
related Manufactured Home and, in the case of Land-and-Home Contracts, Mortgaged
Property, are disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds) received
in connection with the liquidation of defaulted Contracts, whether through
repossession, foreclosure sale or otherwise, including any rental income
realized from the repossessed Manufactured Home.
"List of Contracts" means the lists identifying each Contract constituting
part of the corpus of the Trust, and which lists are either delivered pursuant
to Section 2.02(a) of this Agreement or attached to a Subsequent Transfer
Instrument as Exhibit A, as such lists may be amended from time to time pursuant
to Section 3.05(b) to add Eligible Substitute Contracts and delete Replaced
Contracts. Each List of Contracts shall set forth as to each Contract identified
on it (i) the Cut-off Date Principal Balance, (ii) the amount of monthly
payments due from the Obligor, (iii) the Contract Rate and (iv) the maturity
date.
"Loan-to-Value Ratio" means, (a) with respect to any Contract other than a
Land-in-Lieu Contract, one minus a fraction, the numerator of which is the total
amount down (which may include both cash and, for certain Contracts, the amount
of any equity in land on which a lien has been granted) and the denominator of
which is the sum of the original principal amount and such amount down, and (b)
with respect to Land-in-Lieu Contracts, one minus a fraction, the numerator of
which is the appraised value of land and the denominator of which is the
original principal amount.
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"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"Master Certificates" means all of the Certificates other than the Class C
Subsidiary Certificates.
"Master REMIC" means one of the two separate REMICs comprising the corpus
of the Trust created by this Agreement, the assets of which shall consist of the
Uncertificated Subsidiary Interests and the Limited Guarantee.
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Servicing Fee" means, as of any Remittance Date, one-twelfth of
the product of 0.50% and the Pool Scheduled Principal Balance for the
immediately preceding Remittance Date (or, with respect to the first Remittance
Date, the Cut-off Date Pool Principal Balance as of the Closing Date).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto;
provided that, if Moody's provided a rating on any of the Certificates, as
required by Section 2.01, and does not as of any subsequent date have a rating
outstanding on any of the Class A, Class M-1 or Class B Certificates, then
references herein to "Moody's" shall be deemed to refer to the NRSRO then rating
any Class of the Certificates (or, if more than one such NRSRO is then rating
any Class of the Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Moody's shall
be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Mortgage" means the mortgage, deed of trust, security deed or similar
evidence of lien, creating a first lien on an estate in fee simple in the real
property securing a Land-and-Home Contract.
"Mortgaged Property" means the property subject to the lien of a Mortgage.
"Net Liquidation Loss" means, as to a Liquidated Contract, the amount, if
any, by which (a) the outstanding principal balance of such Liquidated Contract
plus accrued and unpaid interest thereon to the date on which such Liquidated
Contract became a Liquidated Contract exceeds (b) the Net Liquidation Proceeds
for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, all
Liquidation Proceeds received on or prior to the last day of the month in which
such Contract became a Liquidated Contract, net of Liquidation Expenses.
"NRSRO" means any nationally recognized statistical rating organization.
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"Obligor" means each Person who is indebted under a Contract.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may, except
as expressly provided herein, be salaried counsel for the Company, acceptable to
the Trustee and the Company, provided that any opinion of counsel relating to
the qualification of the Subsidiary REMIC or the Master REMIC as a REMIC or
compliance with the REMIC Provisions must be an opinion of Independent counsel.
"Original Principal Balance" means as to each Class of Master
Certificates, the amount set forth with respect to such Class in Section
2.05(b).
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the provision in Section 3.05(a) or pursuant to
Section 3.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(c).
"Percentage Interest" means, as to any Certificate, the percentage
interest evidenced thereby in distributions made on the related Class, such
percentage interest being equal to, in the case of the Class A, Class M-1, and
Class B Certificates, the percentage (carried to eight places) obtained from
dividing the denomination of such Certificate by the Original Principal Balance
of the related Class; and in the case of the Class B-3I, Class C Master and
Class C Subsidiary Certificates, the percentage specified on the face of such
Certificate. The aggregate Percentage Interests for each Class of Certificates
shall equal 100%, respectively.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock Company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
"Pool Factor" means, at any time, the percentage derived from a fraction,
the numerator of which is the aggregate Principal Balance of each Class of
Certificates at such time and the denominator of which is the Cut-off Date Pool
Principal Balance.
"Pool Scheduled Principal Balance" means, as of any Remittance Date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the immediately preceding month.
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"Post-Funding Remittance Date" means the Remittance Date on, or the first
Remittance Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means with respect to any date of determination, the
amount then on deposit in the Pre-Funding Account, after giving effect to any
sale of Subsequent Contracts to the Trust on such date, excluding any investment
earnings.
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 8.07.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000 or (b) June 16, 1998 or (c) the date on
which an Event of Termination occurs.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Ratings Adjustment Date" has the meaning assigned in Section 3.07.
"Realized Losses" means, as to any Remittance Date, the aggregate Net
Liquidation Losses of all Contracts that became Liquidated Contracts during the
immediately preceding month.
"Record Date" means the Business Day immediately preceding the related
Remittance Date.
"Regular Certificate" means a Class A, Class M-1, Class B or Class B-3I
Certificate.
"Remaining Amount Available" means, as to any Remittance Date, the Amount
Available less the sum of (i) any amounts paid to the Servicer pursuant to
Section 8.03(a)(1), (ii) the Class A Distribution Amount, (iii) the Class M-1
Distribution Amount and (iv) the Class B-1 Distribution Amount.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
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"REMIC Provisions" means the provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Date" means the first day of each month during the term of
this Agreement, or if such day is not a Business Day, the next succeeding
Business Day, commencing on May 1, 1998.
"Remittance Rate" means with respect to each Class of Certificates, the
rate set forth for such Class in Section 2.05(b).
"Replaced Contract" has the meaning assigned in Section 3.05(b).
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05, an amount equal to (a) the remaining principal amount
outstanding on such Contract (or, with respect to an Unfunded Contract being
repurchased pursuant to Section 3.05(c), the Cut-off Date Principal Balance of
such Unfunded Contract), plus (b) interest at the Contract Rate on such Contract
from the end of the Due Period with respect to which the Obligor last made a
payment through the end of the immediately preceding Due Period.
"Responsible Officer" means, with respect to the Trustee, the chairman and
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"Scheduled Principal Balance" means, as to any Contract and any Remittance
Date, or the Cut-off Date or the Subsequent Cut-off, as applicable, the
principal balance of such Contract as of the Due Date in the related Due Period
or as of the Due Date immediately preceding the Cut-off Date or the Subsequent
Cut-off, as applicable, as the case may be, as specified in the amortization
schedule at the time relating thereto (after any adjustment to such amortization
schedule by reason of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to any
previous Partial Principal Prepayments and to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by, or extension
granted to, the related Obligor.
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"Senior Credit Depletion Date" means the Remittance Date on which the
Class M-1 Adjusted Principal Balance and the Class B-1 Adjusted Principal
Balance have each been reduced to zero.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
"Sixty-Day Delinquency Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Contracts that were delinquent 60 days or more
as of the end of the related Due Period (including Contracts in respect of which
the related Manufactured Homes have been repossessed but are still in
inventory), and the denominator of which is the Pool Scheduled Principal Balance
as of such Remittance Date.
"Staged-Funding Contract" means an Initial Contract with respect to which
the Company has agreed to make multiple disbursements (up to the related Cut-off
Date Principal Balance) with respect to the purchase of the related Manufactured
Home and improvement of the related real estate, but not all such disbursements
have been made as of the Closing Date.
"Staged-Funding Contract Reserve Account" means the account established
and maintained pursuant to Section 3.07.
"Standard & Poor's" means Standard & Poor's Rating Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto; provided that, if
Standard & Poor's does not then have a rating outstanding on any of the Class A,
Class M-1 or Class B Certificates, then references herein to "Standard & Poor's"
shall be deemed to refer to the NRSRO then rating any Class of the Certificates
(or, if more than one such NRSRO is then rating any Class of the Certificates,
to such NRSRO as may be designated by the Servicer), and references herein to
ratings by or requirements of Standard & Poor's shall be deemed to have the
equivalent meanings with respect to ratings by or requirements of such NRSRO.
"Step-up Rate Contract" means any Contract bearing interest during an
initial period or periods at a fixed rate or fixed rates that are lower than the
fixed rate borne thereafter.
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"Subsequent Contract" means a Contract sold by the Company to the Trust
pursuant to Section 2.03, such Contract being identified on Exhibit A attached
to a Subsequent Transfer Instrument.
"Subsequent Cut-off Date" means, with respect to a Subsequent Contract,
the related Subsequent Transfer Date.
"Subsequent Transfer Date" means, with respect to each Subsequent Transfer
Instrument, the date on which the related Subsequent Contracts are sold to the
Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer Instrument
dated as of a Subsequent Transfer Date executed by the Trustee and the Company
substantially in the form of Exhibit P, by which the Company sells Subsequent
Contracts to the Trust.
"Subsidiary Interest Principal Balance" means, with respect to each Class
of Uncertificated Subsidiary Interests, the Principal Balance of the
Corresponding Certificate Class.
"Subsidiary Interest Shortfall" means, with respect to each Class of
Uncertificated Subsidiary Interests and any Remittance Date, the amount, if any,
by which the amount distributed on such Class on such Remittance Date pursuant
to Section 8.03(b)(3) is less than the amount specified in Section 8.03(b)(3).
"Subsidiary REMIC" means one of the two separate REMICs comprising the
corpus of the Trust created by this Agreement, the assets of which shall consist
of (a) all the rights, benefits, and obligations arising from and in connection
with each Contract and any related Mortgage, (b) all rights under any Hazard
Insurance Policy relating to a Manufactured Home securing a Contract for the
benefit of the creditor of such Contract and proceeds from the Errors and
Omissions Protection Policy and any blanket hazard policy to the extent such
proceeds relate to any Manufactured Home, (c) all rights under any FHA/VA
Regulation pertaining to any FHA/VA Contract, (d) all remittances, deposits and
payments made into the Certificate Account and amounts in the Certificate
Account (other than payments on the Subsidiary Interests and any Guarantee
Payments), (e) all proceeds in any way derived from any of the foregoing items,
and (f) all documents contained in the Contract Files or the Land-and-Home
Contract Files.
"Thirty-Day Delinquency Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Contracts that were delinquent 30 days or more
as of the end of the related Due Period (including Contracts in respect of which
the related Manufactured Homes have been repossessed but are still in
inventory), and the denominator of which is the Pool Scheduled Principal Balance
as of such Remittance Date.
"Trust" means the trust created by this Agreement, the corpus of which
consists of (a) all the rights, benefits, and obligations arising from and in
connection with each Contract and any
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related Mortgage, (b) all rights under any Hazard Insurance Policy relating to a
Manufactured Home securing a Contract for the benefit of the creditor of such
Contract and proceeds from the Errors and Omissions Protection Policy and any
blanket hazard policy to the extent such proceeds relate to any Manufactured
Home, (c) all rights under any FHA/VA Regulation pertaining to any FHA/VA
Contract, (d) all remittances, deposits and payments made into the Certificate
Account and amounts in the Certificate Account, (e) all proceeds in any way
derived from any of the foregoing items, (f) all documents contained in the
Contract Files or the Land-and-Home Contract Files, together with the
assignments of mortgage described in Section 2.02(i), (g) the Limited Guarantee
for the benefit of the Class B-2 Certificateholders, if any, (h) the obligations
and related demand note of the Company delivered pursuant to Section 3.05(c),
and the related Staged-Funding Contract Reserve Account, if any, (i) the
Capitalized Interest Account and (j) the Pre-Funded Amount.
"Uncertificated Subsidiary Interests" means the Class ▇-▇▇, ▇-▇▇, ▇-▇▇,
▇-▇▇, ▇-▇▇, ▇-▇▇, M-S1, B-S1 and B-S2 Interests, collectively.
"Unfunded Contract" has the meaning specified in Section 3.05(c).
"Unfunded Contract Shortfall" has the meaning specified in Section
3.05(c).
"Unpaid Class A Interest Shortfall" means, as to each Class of Class A
Certificates and any Remittance Date, the amount, if any, of the Class A
Interest Shortfall for the prior Remittance Date, plus accrued interest (to the
extent payment thereof is legally permissible) at the related Remittance Rate on
the amount thereof from such prior Remittance Date to such current Remittance
Date (calculated in the manner specified in Section 1.03).
"Unpaid Class A Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the aggregate of the Class A Principal Shortfalls for
prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class A Certificates pursuant to Section
8.03(a)(5)(ii).
"Unpaid Class B-1 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class B-1 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class B-1 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date (calculated in the manner
specified in Section 1.03).
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the sum of (i) the amount, if any, of the remainder of (x) the
Class B-1 Liquidation Loss Interest Amount, if any, for the immediately prior
Remittance Date, plus (y) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall determined as of such immediately prior Remittance Date, minus (z) all
amounts distributed to the Holders of the Class B-1 Certificates on account of
any Unpaid Class B-1 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(7)(iv) on
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such immediately prior Remittance Date, plus (ii) accrued interest (to the
extent payment thereof is legally permissible) at the Class B-1 Remittance Rate
on the amount specified in clause (i) from such prior Remittance Date to such
current Remittance Date (calculated in the manner specified in Section 1.03).
"Unpaid Class B-1 Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class B-1 Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class B-1 Certificates pursuant to Section
8.03(a)(7)(i).
"Unpaid Class B-2 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class B-2 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class B-2 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date (calculated in the manner
specified in Section 1.03).
"Unpaid Class B-2 Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class B-2 Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class B-2 Certificates pursuant to Section
8.03(a)(8)(iii), together with any Guarantee Payments allocable to principal.
"Unpaid Class B-3I Shortfall" means, as to any Remittance Date, the
amount, if any, by which the aggregate of the Class B-3I Shortfalls for prior
Remittance Dates is in excess of the amounts distributed on prior Remittance
Dates to Holders of Class B-3I Certificates pursuant to Section 8.03(a)(10) in
respect of any Unpaid Class B-3I Shortfall.
"Unpaid Class M-1 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class M-1 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class M-1 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date (calculated in the manner
specified in Section 1.03).
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the sum of (i) the amount, if any, of the remainder of (x) the
Class M-1 Liquidation Loss Interest Amount, if any, for the immediately prior
Remittance Date, plus (y) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall determined as of such immediately prior Remittance Date, minus (z) all
amounts distributed to the Holders of the Class M-1 Certificates on account of
any Unpaid Class M-1 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(6)(iv) on such immediately prior Remittance Date, plus (ii) accrued
interest (to the extent payment thereof is legally permissible) at the Class M-1
Remittance Rate on the amount specified in clause (i) from such prior Remittance
Date to such current Remittance Date (calculated in the manner specified in
Section 1.03).
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"Unpaid Class M-1 Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class M-1 Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class M-1 Certificates pursuant to Section
8.03(a)(6)(i).
"Unpaid Subsidiary Interest Shortfall" means, as to any Remittance Date
and any Class of Uncertificated Subsidiary Interests, the amount, if any, of the
Subsidiary Interest Shortfall for the prior Remittance Date with respect to such
Class, plus accrued interest (to the extent payment thereof is legally
permissible) at 1/12th of the Weighted Average Contract Rate on the amount
thereof from such prior Remittance Date to such current Remittance Date.
"Weighted Average Contract Rate" means, as to any Remittance Date, the
weighted average (determined by Scheduled Principal Balance) of the Contract
Rates of all Contracts that were outstanding during the related Due Period.
SECTION 1.03. Calculations.
All calculations of the amount of interest accrued on the
Certificates with respect to any Remittance Date shall be determined as follows:
a. with respect to the Class A-1 Certificates and the Remittance Date in
May 1998, interest shall accrue from and including the Closing Date to but
excluding May 1, 1998, and shall be calculated on the basis of actual days
elapsed in a 360-day year;
b. with respect to the Class A-1 Certificates and any subsequent
Remittance Date, interest shall accrue from and including the prior Remittance
Date to but excluding the current Remittance Date, and shall be calculated on
the basis of actual days elapsed in a 360-day year;
c. with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5, Class
A-6, Class M-1, Class B and Class B-3I Certificates and the Remittance Date in
May 1998, interest shall accrue from and including the Closing Date to but
excluding May 1, 1998, and shall be calculated on the basis of a 360-day year of
twelve 30-day months; and
d. with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5, Class
A-6, Class M-1, Class B and Class B-3I Certificates and any subsequent
Remittance Date, one month's interest shall accrue, calculated on the basis of a
360-day year of twelve 30-day months.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. Closing.
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate Trust 1998-2. By the execution and delivery of this
Agreement, the Company has agreed that it will elect or will cause an election
to be made to treat the pool of assets comprising each of the Subsidiary REMIC
and the Master REMIC, excluding the Staged-Funding Contract Reserve Account, the
obligation and related demand note of the Company pursuant to Section 3.05(c),
the Capitalized Interest Account and the Pre-Funding Account, as a REMIC. The
Trust shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders.
b. The Company hereby transfers, assigns, delivers, sells, sets over and
otherwise conveys to the Trustee on behalf of the Trust, by execution of an
assignment substantially in the form of Exhibit D hereto, (1) all the right,
title and interest of the Company in and to the Contracts, including, without
limitation, all right, title and interest in and to the Collateral Security and
all rights to receive payments on or with respect to the Contracts (other than
the principal and interest due on the Contracts before the applicable Cut-off
Date or Subsequent Cutoff Date), (2) all rights under every Hazard Insurance
Policy relating to a Manufactured Home securing a Contract for the benefit of
the creditor of such Contract, (3) all rights under all FHA/VA Regulations
pertaining to any Contract that is an FHA/VA Contract, (4) the proceeds from the
Errors and Omissions Protection Policy and all rights under any blanket hazard
insurance policy to the extent they relate to the Manufactured Homes, (5) all
documents contained in the Contract Files and the Land-and-Home Contract Files,
(6) $13,322,050.36 paid by the underwriters of the Certificates to the Trust by
order of the Company out of the proceeds of the sale of the Certificates (which
such underwriters shall, by order of the Trust, remit directly to the Company
pursuant to Section 2.01(c)), (7) amounts on deposit in the Capitalized Interest
Account, (8) the Pre-Funded Amount and (9) all proceeds and products in any way
derived from any of the foregoing.
c. The Company hereby acknowledges receipt from the Trust of
$13,322,050.36 paid to the Company by the underwriters of the Certificates by
order of the Trust, equal to the difference between the aggregate Cut-off Date
Principal Balances of the Staged-Funding Contracts and the principal balance of
the Staged-Funding Contracts as of the Closing Date. The Company agrees, in
consideration for such funds, that it will use its best efforts (consistent with
prudent lending practices) to cause each Staged-Funding Contract to be fully
disbursed on or before the Funding Termination Date. The additional payment
obligations of any Obligor attributable to any further disbursements on any
Staged-Funding Contract made on or before the Funding Termination Date shall
automatically become the property of the Trust, without further
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action by the Company or the Trust. The payment to the Company by the Trust and
the transfer of additional obligations to the Trust pursuant to this Section
2.01(c) shall be a purchase by the Trust of qualified mortgages pursuant to a
fixed price contract within the meaning of Section 860G(a)(3) of the Code.
d. Although the parties intend that the conveyance of the Company's right,
title and interest in and to the Contracts and the Collateral Security pursuant
to this Agreement and each Subsequent Transfer Instrument shall constitute a
purchase and sale and not a pledge of security for loans from the
Certificateholders, it is the intent of this Agreement that if such conveyances
are deemed to be a pledge of security for loans from the Certificateholders or
any other Persons (the "Secured Obligations"), the parties intend that the
rights and obligations of the parties to the Secured Obligations shall be
established pursuant to the terms of this Agreement. The parties also intend and
agree that the Company shall be deemed to have granted to the Trustee, and the
Company does hereby grant to the Trustee, a perfected first-priority security
interest in the items designated in Section 2.01(b)(1) through 2.01(b)(8) above
and in each Subsequent Transfer Instrument, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificates or the Secured Obligations, the security interest created hereby
shall continue in full force and effect and the Trustee shall be deemed to be
the collateral agent for the benefit of such Person.
SECTION 2.02. Conditions to the Closing.
On or before the Closing Date, the Company shall deliver or cause to be
delivered the following documents to the Trustee:
a. The List of Contracts identifying all Initial and Additional Contracts,
certified by the Chairman of the Board, President or any Vice President of the
Company.
b. A certificate of an officer of the Company substantially in the form of
Exhibit E hereto.
c. An Opinion of Counsel for the Company substantially in the form of
Exhibit F hereto.
d. The Trustee's acknowledgement in the form of Exhibit G hereto.
e. A letter from KPMG Peat Marwick LLP or another nationally recognized
accounting firm, stating that such firm has reviewed the Initial Contracts on a
statistical sampling basis and, based on such sampling, concluding that such
Contracts conform in all material respects to the List of Contracts, to a
confidence level of 97.5%, with an error rate generally not in excess of 1.8%,
specifying those Contracts which do not so conform.
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f. Copies of resolutions of the board of directors of the Company or of
the executive committee of the board of directors of the Company approving the
execution, delivery and performance of this Agreement, the creation of the Trust
and the transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Company.
g. Officially certified recent evidence of due incorporation and good
standing of the Company under the laws of the State of Delaware.
h. Evidence of filing with the Secretary of State of Minnesota of a UCC-1
financing statement, executed by the Company as debtor, naming the Trustee as
secured party and listing the Contracts as Collateral.
i. Executed assignments to the Trustee on behalf of the Trust in
recordable form of each Mortgage securing an Initial or Additional Contract that
is a Land-and-Home Contract.
j. An executed copy of the Assignment substantially in the form of Exhibit
D hereto.
k. An Officer's Certificate listing the Servicer's Servicing Officers.
l. Evidence of continued coverage of the Company under the Errors and
Omissions Protection Policy.
m. Evidence of deposit in the Certificate Account of all funds received
with respect to the Initial and Additional Contracts from the Cut-off Date to
the Closing Date, other than amounts due before the Cut-off Date, together with
an Officer's Certificate to the effect that such amount is correct.
n. An Officer's Certificate confirming that the Company's internal audit
department has reviewed the original or a copy of each Initial and Additional
Contract and each related Contract File or Land-and-Home Contract File, as
applicable, that each Initial and Additional Contract and related Contract File
or Land-and-Home Contract File, as applicable, conforms in all material respects
with the List of Contracts and that each such Contract File or Land-and-Home
Contract File, as applicable, is complete in all material respects and that each
Manufactured Home securing a Contract is covered by a Hazard Insurance Policy as
required by Section 3.02(f).
o. Letter from Standard & Poor's confirming that the Class A-1
Certificates have been assigned a rating of "A-1+" by Standard & Poor's and the
Class A-2 through Class A-6 Certificates have been assigned a rating of "AAA" by
Standard & Poor's and a letter from Moody's confirming that the Class A-1
Certificates have been assigned a
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rating of "P-1" by Moody's and the Class A-2 through Class A-6 Certificates have
been assigned a rating of "Aaa" by Moody's.
p. Letter from Standard & Poor's confirming that the Class M-1
Certificates have been assigned a rating of "AA" by Standard & Poor's and a
letter from Moody's confirming that the Class M-1 Certificates have been
assigned a rating of "Aa3" by Moody's.
q. Letter from Standard & Poor's confirming that the Class B-1
Certificates have been assigned a rating of "BBB+" and the Class B-2
Certificates have been assigned a rating of "BBB-" by Standard & Poor's and a
letter from Moody's confirming that the Class B-1 Certificates have been
assigned a rating of "Baa1" and the Class B-2 Certificates have been assigned a
rating of "Baa3" by Moody's.
r. The demand note described in Section 3.05(c)(v).
s. Evidence of the deposit of $0.00 in the Capitalized Interest Account.
t. Evidence of the deposit of $108,030,561.38 in the Pre-Funding Account.
u. Any other documents or certificates that the Trustee may reasonably
request.
SECTION 2.03. Conveyance of the Subsequent Contracts.
a. Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Company of all or a portion of the balance of funds
in the Pre-Funding Account, the Company shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey to the Trust by execution and
delivery of a Subsequent Transfer Instrument, all the right, title and interest
of the Company in and to the Subsequent Contracts identified on the List of
Contracts attached to the Subsequent Transfer Instrument, including all rights
to receive payments on or with respect to the Subsequent Contracts due after the
related Subsequent Cut-off Date, and all items with respect to such Subsequent
Contracts in the related Contract Files and Land-and-Home Contract Files. The
transfer to the Trustee by the Company of the Subsequent Contracts shall be
absolute and is intended by the Company, the Trustee and the Certificateholders
to constitute and to be treated as a sale of the Subsequent Contracts by the
Company to the Trust.
The purchase price paid by the Trustee shall be one hundred percent (100%)
of the aggregate Cut-off Date Principal Balances of such Subsequent Contracts.
The purchase price of Subsequent Contracts shall be paid solely with amounts in
the Pre-Funding Account. This Agreement shall constitute a fixed price contract
in accordance with Section 860G(a)(3)(A)(ii) of the Code.
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b. The Company shall transfer to the Trustee the Subsequent Contracts, and
the Trustee shall release funds from the Pre-Funding Account, only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Company shall have provided the Trustee with an Addition
Notice at least five Business Days prior to the Subsequent Transfer Date
and shall have provided any information reasonably requested by the
Trustee with respect to the Subsequent Contracts;
(ii) the Company shall have delivered the related Land-and-Home
Contract File for each Subsequent Contract that is a Land-and-Home
Contract to the Custodian at least two Business Days prior to the
Subsequent Transfer Date;
(iii) the Company shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument substantially in the form of
Exhibit P, which shall include a List of Contracts identifying the related
Subsequent Contracts;
(iv) as of each Subsequent Transfer Date, as evidenced by delivery
of the Subsequent Transfer Instrument, the Company shall not be insolvent
nor shall it have been made insolvent by such transfer nor shall it be
aware of any pending insolvency;
(v) such sale and transfer shall not result in a material adverse
tax consequence to the Trust (including the Master REMIC and the
Subsidiary REMIC) or the Certificateholders or Class C Certificateholders;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Company shall have delivered to the Trustee an Officer's
Certificate, substantially in the form attached hereto as Exhibit Q,
confirming the satisfaction of each condition precedent and the
representations specified in this Section 2.03 and in Sections 3.01, 3.02,
3.03 and 3.04; and
(viii) the Company shall have delivered to the Trustee Opinions of
Counsel addressed to the Rating Agencies and the Trustee with respect to
the transfer of the Subsequent Contracts substantially in the form of the
Opinions of Counsel delivered to the Trustee on the Closing Date regarding
certain bankruptcy, corporate and tax matters.
c. Before the last day of the Pre-Funding Period, the Company shall
deliver to the Trustee:
(i) A letter from KPMG Peat Marwick LLP or another nationally
recognized accounting firm retained by the Company (with copies provided
to Standard & Poor's and Moody's, the Underwriters and the Trustee) that
is in form, substance and methodology
II-5
the same as that dated March 18, 1998 and delivered under Section 2.02(e)
of this Agreement, except that it shall address the Subsequent Contracts
and their conformity in all material respects to the characteristics
described in Section 3.03(c) of this Agreement.
(ii) Evidence that as a result of the purchase by the Trust of the
Subsequent Contracts, the Class A Certificates shall not receive from
Standard & Poor's or Moody's a lower credit rating than the rating
assigned to such Certificates as of the Closing Date.
(iii) Evidence that the aggregate Cut-off Date Principal Balance of
the Subsequent Contracts, not specifically identified as Subsequent
Contracts as of the Closing Date, does not exceed 25% of the Original
Principal Balance.
SECTION 2.04. Acceptance by Trustee.
a. On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Company substantially
in the form of Exhibit G hereto acknowledging conveyance of the Contracts,
identified on the applicable List of Contracts and the related Contract Files
and Land-and-Home Contract Files to the Trustee and declaring that the Trustee,
directly or through a custodian, will hold all Contracts that have been
delivered in trust, upon the terms herein set forth, for the use and benefit of
all Certificateholders and on the Closing Date the Trustee shall issue to or
upon the order of the Company Certificates representing ownership of a
beneficial interest in 100% of the Trust.
b. If, in its review of the Land-and-Home Contract Files as described in
Exhibit G, the Trustee or its Custodian discovers a breach of the
representations or warranties set forth in Sections 2.02(n), 3.02, 3.03 or 3.04,
the Company shall cure such breach or repurchase or replace such Contract
pursuant to Section 3.05.
SECTION 2.05. REMIC Provisions.
a. The Company, as Servicer, and the Class C Subsidiary Certificateholder
and the Class C Master Certificateholder, by acceptance thereof, each agrees
that, in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of each of the Subsidiary REMIC and the Master REMIC for its
first taxable year shall provide that the Subsidiary REMIC or the Master REMIC,
as the case may be (excluding the Capitalized Interest Account, the obligation
and related demand note of the Company pursuant to Section 3.05(c), the
Staged-Funding Contract Reserve Account and the Pre-Funding Account) elects to
be treated as a REMIC for such taxable year and all subsequent taxable years. In
furtherance of the foregoing, the Trustee (at the direction of the Company) and
the Company shall take, or refrain from taking, all such action as is necessary
to maintain the status of each of the Subsidiary REMIC or the Master REMIC as a
REMIC under the REMIC provisions of the Code, including, but not limited to, the
taking of such action as is necessary to cure any inadvertent termination of
REMIC status.
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b. The Master Certificates are being issued in ten classes and are hereby
designated by the Company as constituting the "regular interests" in the Master
REMIC for the purposes of Section 860G(a)(1) of the Code. The following terms of
the Master Certificates are irrevocably established as of the Closing Date:
Expected Final
Pass-Through Rate Original Class Maturity
Class Per Annum Principal Balance Date
Class A-1 5.66875% $ 36,000,000 April 1, 1999
Class A-2 5.98% 39,000,000 January 2, 2030
Class A-3 6.03% 95,000,000 January 2, 2030
Class A-4 6.11% 41,500,000 January 2, 2030
Class A-5 6.24% 162,000,000 January 2, 2030
Class A-6 *6.81% 260,250,000 January 2, 2030
Class M-1 *6.94% 52,500,000 January 2, 2030
Class B-1 *7.36% 33,750,000 January 2, 2030
Class B-2 *8.44% 30,000,000 January 2, 2030
Class B-3I ** 0 January 2, 2030
----------
* A floating rate (determined monthly on each Remittance Date) equal to the
Weighted Average Contract Rate, but in no event greater than the related
Remittance Rate specified above.
** An amount equal to the Excess Interest for each Remittance Date.
The expected final maturity of each Class of Master Certificates as set forth
above is based on the assumptions that there are no defaults, prepayments or
delinquencies with respect to payments due under the Contracts, and that the
repurchase option is not exercised. The Company does not represent that any
Class of Master Certificates will, in fact, mature on any given date. The Class
C Master Certificates are being issued in a single class and are hereby
designated by the Company as constituting the sole class of "residual interests"
in the Master REMIC for purposes of Section 860G(a)(2) of the Code.
c. The Uncertificated Subsidiary Interests are being issued in nine
classes and are hereby designated by the Company as constituting the "regular
interests" in the Subsidiary REMIC for the purposes of Section 860G(a)(1) of the
Code. The following terms of the Uncertificated Subsidiary Interests are
irrevocably established as of the Closing Date:
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Original Subsidiary Expected Final
Pass-Through Rate Interest Maturity
Class Per Annum Principal Balance Date
Class A-S1 Weighted Average $ 36,000,000 January 2, 2030
Contract Rate
Class A-S2 Weighted Average 39,000,000 January 2, 2030
Contract Rate
Class A-S3 Weighted Average 95,000,000 January 2, 2030
Contract Rate
Class A-S4 Weighted Average 41,500,000 January 2, 2030
Contract Rate
Class A-S5 Weighted Average 162,000,000 January 2, 2030
Contract Rate
Class A-S6 Weighted Average 260,250,000 January 2, 2030
Contract Rate
Class M-S1 Weighted Average 52,500,000 January 2, 2030
Contract Rate
Class B-S1 Weighted Average 33,750,000 January 2, 2030
Contract Rate
Class B-S2 Weighted Average 30,000,000 January 2, 2030
Contract Rate
The expected final maturity of each Class of Uncertificated Subsidiary Interests
as set forth above is based on the assumptions that there are no defaults,
prepayments or delinquencies with respect to payments due under the Contracts,
and that the repurchase option is not exercised. The Company does not represent
that any Class of Uncertificated Subsidiary Interests will, in fact, mature on
any given date. The Class C Subsidiary Certificates are being issued in a single
class and are hereby designated by the Company as constituting the sole class of
"residual interests" in the Subsidiary REMIC for purposes of Section 860G(a)(2)
of the Code.
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d. The Closing Date, which is the day on which each of the Subsidiary
REMIC and the Master REMIC will issue all of its regular and residual interests,
is hereby designated as the "startup day" of both the Subsidiary REMIC and the
Master REMIC within the meaning of Section 860G(a)(9) of the Code.
e. After the Closing Date, neither the Trustee, the Company nor any
Servicer shall (i) accept any contribution of assets to the Subsidiary REMIC or
the Master REMIC, (ii) dispose of any portion of the Subsidiary REMIC or the
Master REMIC, other than as provided in Sections 3.05, 3.06 and 8.05, (iii)
engage in any "prohibited transaction," as defined in Sections 860F(a)(2) and
(5) of the Code, except as may be contemplated by Section 3.05(c), (iv) accept
any contribution after the Closing Date that is subject to the tax imposed by
Section 860G(d) of the Code or (v) engage in any activity or enter into any
agreement that would result in the receipt by the Subsidiary REMIC or the Master
REMIC of any "net income from foreclosure property" as defined in Section
860G(c)(2) of the Code, unless, prior to any such action set forth in clauses
(i), (ii), (iii), (iv) or (v) the Trustee shall have received an unqualified
Opinion of Counsel, which opinion shall not be an expense of the Trust, stating
that such action will not, directly or indirectly, (A) adversely affect the
status of the Subsidiary REMIC or the Master REMIC as a REMIC or the status of
the Uncertificated Subsidiary Interests as "regular interests" in the Subsidiary
REMIC, the status of the Class C Subsidiary Certificates as the sole class of
"residual interests" in the Subsidiary REMIC, the status of the Regular
Certificates as "regular interests" in the Master REMIC, or the status of the
Class C Master Certificates as the sole class of "residual interests" in the
Master REMIC, (B) affect the distributions payable hereunder to the
Certificateholders or (C) result in the imposition of any lien, charge or
encumbrance upon the Subsidiary REMIC or the Master REMIC.
f. Upon the acquisition of any real property (including interests in real
property), or any personal property incident thereto, in connection with the
default of a Contract, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Subsidiary REMIC or the Master REMIC of such property subsequent to the period
then permitted by the Code will not result in the imposition of any taxes on
"prohibited transactions" of the Subsidiary REMIC or the Master REMIC, as
defined in Section 860F of the Code, or cause the Subsidiary REMIC or the Master
REMIC to fail to qualify as a REMIC at any time that the Uncertificated
Subsidiary Interests, Class C Subsidiary Certificates, Regular Certificates or
Class C Master Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate such real property, or any personal property
incident thereto, so that such property will not fail to qualify as "foreclosure
property," as defined in Section 860G(a)(8) of the Code, and that the
management, conservation, protection and operation of such property will not
result in the receipt by the Subsidiary REMIC or the Master REMIC of any "income
from nonpermitted assets," within the meaning of Section 860F(a)(2)(B) of the
Code.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties,
effective as of the Closing Date, on which the Trustee will rely in accepting
the Contracts in trust and issuing the Certificates on behalf of the Trust. The
repurchase or substitution obligation of the Company set forth in Section 3.05
constitutes the sole remedy available to the Trust or the Certificateholders for
a breach of a representation or warranty of the Company set forth in Section
2.02(n), 3.02, 3.03 or 3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
The Company represents and warrants to the Trustee and the
Certificateholders, effective on the Closing Date and each Subsequent Transfer
Date, that:
a. Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Company is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Company.
b. Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and to create the
Trust and cause it to make, execute, deliver and perform its obligations
under this Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and to
cause the Trust to be created. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
c. No Consent Required. The Company is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
d. No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing
law or
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regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Company, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company may be bound.
e. Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or
to the knowledge of the Company threatened, against the Company or any of
its properties or with respect to this Agreement or the Certificates
which, if adversely determined, would in the opinion of the Company have a
material adverse effect on the transactions contemplated by this
Agreement.
f. Licensing. The Company is duly registered as a finance Company in
each state in which Contracts were originated, to the extent such
registration is required by applicable law.
SECTION 3.02. Representations and Warranties Regarding Each
Contract.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to each Initial or
Additional Contract, and as of the applicable Subsequent Transfer Date with
respect to each Subsequent Contract:
a. List of Contracts. The information set forth in the applicable
List of Contracts is true and correct as of its date.
b. Payments. As of the Cut-off Date, the most recent scheduled
payment was made by or on behalf of the Obligor (without any advance from
the Company or any Person acting at the request of the Company) or was not
delinquent for more than 59 days (in the case of an Initial or Additional
Contract) or 30 days (in the case of a Subsequent Contract).
c. No Waivers. The terms of the Contract have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the Contract File or Land-and-Home Contract File, as
applicable.
d. Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with
its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally.
e. No Defenses. The Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the Contract or the
exercise of any right thereunder will not render the Contract
III-2
unenforceable in whole or in part or subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and no
such right of rescission, setoff, counterclaim or defense has been
asserted with respect thereto.
f. Insurance Coverage. The Manufactured Home securing the Contract
is covered by a Hazard Insurance Policy in the amount required by Section
5.09. Each Manufactured Home secured by an FHA/VA Contract which was, at
the time of origination of the related Contract, located within a
federally designated special flood hazard area is covered by insurance
coverage at least equal to that required by Section 5.09 or such lesser
coverage as may be available under the federal flood insurance program.
With respect to any other Contract that is not an FHA/VA Contract, the
Company has obtained: (a) a statement from the Obligor's insurance agent
that the Manufactured Home was, at the time of origination of the
Contract, not in a federally designated special flood hazard area; or (b)
evidence that, at the time of origination, flood insurance was in effect,
which coverage is at least equal to that required by Section 5.09 or such
lesser coverage as may be available under the federal flood insurance
program. All premiums due as of the Closing Date on such insurance have
been paid in full.
g. [Reserved]
h. Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer
of the Contract pursuant to this Agreement or pursuant to transfers of
Certificates, or the ownership of the Contract by the Trust, unlawful or
render the Contract unenforceable.
i. Compliance with Law. At the date of origination of the Contract,
all requirements of any federal and state laws, rules and regulations
applicable to the Contract, including, without limitation, usury, truth in
lending and equal credit opportunity laws, have been complied with, and
the Company shall for at least the period of this Agreement, maintain in
its possession, available for the Trustee's inspection, and shall deliver
to the Trustee upon demand, evidence of compliance with all such
requirements. Such compliance is not affected by the Trust's ownership of
the Contract.
j. Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured Home
securing the Contract has not been released from the lien of the Contract
in whole or in part.
k. Valid Security Interest. Each Contract (other than the
Land-and-Home Contracts) creates a valid and enforceable perfected first
priority security interest in favor of the Company in the Manufactured
Home covered thereby as security for payment of the Cut-off Date Principal
Balance of such Contract. The Company has assigned all of its right, title
and interest in such Contract, including the security interest in the
Manufactured Home covered thereby, to the Trustee. The Trustee has and
will have a
III-3
valid and perfected and enforceable first priority security interest in
such Contract and Manufactured Home.
Each Mortgage is a valid first lien in favor of the Company on real
property securing the amount owed by the Obligor under the related
Land-and-Home Contract subject only to (a) the lien of current real
property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, such exceptions appearing of
record being acceptable to mortgage lending institutions generally in the
area wherein the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in connection with the
origination of the related Land-and-Home Contract obtained by the Company
and (c) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended to
be provided by such Mortgage. The Company has assigned all of its right,
title and interest in such Land-and-Home Contract and related Mortgage,
including the security interest in the Manufactured Home covered thereby,
to the Trustee. The Trustee has and will have a valid and perfected and
enforceable first priority security interest in such Land-and-Home
Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal
capacity to execute the Contract.
m. Good Title. In the case of a Contract purchased from a
manufactured housing dealer, the Company purchased the Contract for fair
value and took possession thereof in the ordinary course of its business,
without knowledge that the Contract was subject to a security interest.
The Company has not sold, assigned or pledged the Contract to any person
and prior to the transfer of the Contract by the Company to the Trustee,
the Company had good and marketable title thereto free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest and
was the sole owner thereof with full right to transfer the Contract to the
Trustee. With respect to any Contract bearing a stamp indicating that such
Contract has been sold to another party, such other party's interest in
such Contract has been released.
n. No Defaults. As of the Cut-off Date or Subsequent Cut-off Date,
as applicable, there was no default, breach, violation or event permitting
acceleration existing under the Contract and no event which, with notice
and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such
Contract (except payment delinquencies permitted by clause (b) above). The
Company has not waived any such default, breach, violation or event
permitting acceleration except payment delinquencies permitted by clause
(b) above. As of the Closing Date or the Subsequent Transfer Date, as
applicable, the related Manufactured Home is, to the best of the Company's
knowledge, free of damage and in
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good repair. No Manufactured Home has suffered hurricane or earthquake
damage that is not covered by a Hazard Insurance Policy.
o. No Liens. As of the Closing Date or the Subsequent Transfer Date,
as applicable, there are, to the best of the Company's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Manufactured Home or any related Mortgaged Property securing the Contract
which are or may be liens prior to, or equal or coordinate with, the lien
of the Contract.
p. Equal Installments. Except for 462 Step-up Rate Contracts
included among the Initial Contracts and 158 Step-up Rate Contracts
included among the Additional Contracts, each Contract has a fixed
Contract Rate and provides for level monthly payments which fully amortize
the loan over its term. Of the Step-up Rate Contracts, 471 provide for a
single rate increase and 149 provide for two rate increases.
q. Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
r. One Original. There is only one original executed Contract (other
than the original executed copy retained by the Obligor), which Contract
has been delivered to the Trustee or its custodian on or before the
Closing Date or the Subsequent Transfer Date, as applicable. Each Contract
(other than the Land-and-Home Contracts) has been stamped to reflect the
assignment of such Contract to the Trustee.
s. Loan-to-Value Ratio. At the time of their origination all of the
Contracts had Loan-to-Value Ratios not greater than 100%; if the related
Manufactured Home was new at the time such Contract was originated, the
original principal balance of such Contract did not exceed 130% of the
manufacturer's invoice price, plus 100% of the taxes and license fees,
130% of the freight charges, 100% of the dealer's cost of additional
dealer-installed equipment (not to exceed 25% of the original principal
balance of such Contract in all states except California; not to exceed
70% of the manufacturer's invoice price in California if required to meet
park requirements) and up to $1,500 of set-up costs per module.
t. Primary Resident. At the time of origination of the Contract the
Obligor was the primary resident of the related Manufactured Home.
u. Not Real Estate. With respect to each Contract other than a
Land-and-Home Contract, the related Manufactured Home is not 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.
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v. Notation of Security Interest. With respect to each Contract
other than a Land-and-Home Contract, if the related Manufactured Home is
located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the
title document shows, or if a new or replacement title document with
respect to such Manufactured Home is being applied for such title document
will be issued within 180 days and will show, the Company as the holder of
a first priority security interest in such Manufactured Home; if the
related Manufactured Home is located in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in manufactured housing, such filings or recordings have been
duly made and show the Company as secured party. If the related
Manufactured Home secures a Land-and-Home Contract, such Manufactured Home
is subject to a Mortgage properly filed in the appropriate public
recording office or such Mortgage will be properly filed in the
appropriate public recording office within 180 days, naming the Company as
mortgagee. In either case, the Trustee 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 (including the Company and any trustee
in bankruptcy of the Company) claiming an interest in such Manufactured
Home.
w. Secondary Mortgage Market Enhancement Act. The related
Manufactured Home is a "manufactured home" within the meaning of ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Code, Section 5402(6). Each manufactured housing dealer from whom
the Company purchased such Contract, if any, was then approved by the
Company in accordance with the requirements of the Secretary of Housing
and Urban Development set forth in 24 CFR ss. 201.27. At the origination
of each Contract, the Company was approved for insurance by the Secretary
of Housing and Urban Development pursuant to Section 2 of the National
Housing Act.
x. Qualified Mortgage. The Contract represents a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code. The
Company represents and warrants that, either as of the date of origination
or the Closing Date, the fair market value of the property securing each
Contract was not less than 80% of the "adjusted issue price" (within the
meaning of the REMIC Provisions) of such Contract.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to the Initial and
Additional Contracts, and as of each Subsequent Transfer Date with respect to
the related Subsequent Contracts, that:
a. Amounts. The aggregate principal amounts payable by Obligors
under the Contracts (assuming all Staged-Funding Contracts were fully
disbursed) as of the Cut-off Date equal the Cut-off Date Pool Principal
Balance. The aggregate principal amounts
III-6
payable by Obligors under the Initial Contracts (assuming all
Staged-Funding Contracts included among the Initial Contracts were fully
disbursed) as of the Cut-off Date equal $481,315,682.45. The aggregate
principal amounts payable by Obligors under the Additional Contracts
(assuming all Staged-Funding Contracts included among the Additional
Contracts were fully disbursed) as of the Cut-off Date equal
$160,663,946.87.
b. Characteristics of Initial and Additional Contracts. The Initial
and Additional Contracts have the following characteristics as of the
Cut-off Date:
(i) the Obligors on not more than 10% of the Initial and
Additional Contracts by Cut-off Date Pool Principal Balance are
located in any one state (except for Initial and Additional
Contracts with Obligors located in North Carolina, which represent
approximately 10.17% of the Initial and Additional Contracts by
Cut-off Date Pool Principal Balance), the Obligors on not more than
5% of the Contracts by Cut-off Date Pool Principal Balance are
located in an area with the same zip code and the Obligors on not
more than 1% of the Contracts by Cut-off Date Pool Principal Balance
are located in California in an area with the same zip code;
(ii) no Initial or Additional Contract has a remaining
maturity of fewer than six months or more than 360 months;
(iii) the final scheduled payment date on the Initial or
Additional Contract with the latest maturity is in December 2028;
(iv) approximately 73% of the Initial and Additional Contracts
by Cut-off Date Pool Principal Balance is attributable to loans for
purchases of new Manufactured Homes and approximately 27% is
attributable to loans for purchases of used Manufactured Homes;
(vii) no less than 24% of the Initial and Additional Contracts
by Cut-off Date Pool Principal Balance is attributable to
Land-and-Home Contracts;
(viii) the Weighted Average Contract Rate of the Initial and
Additional Contracts as of the Cut-off Date is at least 9.78% per
annum;
(ix) at least 64% of the Initial and Additional Contracts by
Cut-off Date Pool Principal Balance is attributable to loans for the
purchase of multi-section Manufactured Homes;
(x) the weighted average (by Cut-off Date Pool Principal
Balance) loan to value ratio of the Initial and Additional Contracts
is not more than 88.08%;
III-7
(xi) no Initial or Additional Contract was originated before
October 1978; and
(xii) not more than 35% of the Initial and Additional
Contracts by Cut-off Date Pool Principal Balance are secured by
Manufactured Homes located in mobile home parks.
c. Characteristics of All Contracts. The Contracts have the
following characteristics as of the end of the Pre-Funding Period:
(i) the Weighted Average Contract Rate is not less than 9.60%,
and not more than .02% of the Cut-off Date Pool Principal Balance is
attributable to Contracts with a Contract Rate of less than 5.0%;
(ii) the weighted average (by Cut-off Date Pool Principal
Balance) Loan-to-Value Ratio of the Contracts is not more than 89%;
(iii) not less than 70% of the Cut-off Date Pool Principal
Balance is attributable to loans for purchases of new Manufactured
Homes;
(iv) not more than 40% of the Cut-off Date Pool Principal
Balance is attributable to loans for the purchase of single-section
Manufactured Homes, and not less than 60% of the Cut-off Date Pool
Principal Balance is attributable to loans for the purchase of
double-section Manufactured Homes;
(v) not less than 18% of the Cut-off Date Pool Principal
Balance is attributable to Land-and-Home Contracts; and
(vi) not more than 38% of the Cut-off Date Pool Principal
Balance is attributable to loans secured by Manufactured Homes
located in parks.
d. Staged-Funding Contracts. Approximately $73,853,756 of the
Initial and Additional Contracts, by Cut-off Date Principal Balance, are
Staged-Funding Contracts that had not been fully disbursed by the Cut-off
Date. Approximately $60,531,706 of such amount had been disbursed by the
Closing Date, and approximately $13,322,050 remained to be disbursed on or
before the Funding Termination Date.
e. Computer Tape. The Computer Tape made available by the Company
was complete and accurate as of its date and includes a description of the
same Contracts that are described in the List of Contracts.
f. Marking Records. By the Closing Date or Subsequent Transfer Date,
as applicable, the Company has caused the portions of the Electronic
Ledger relating to the
III-8
Contracts to be clearly and unambiguously marked to indicate that such
Contracts constitute part of the Trust and are owned by the Trust in
accordance with the terms of the trust created hereunder.
g. No Adverse Selection. Except for the effect of the
representations and warranties made in Sections 3.02 and 3.03 hereof, no
adverse selection procedures have been employed in selecting the
Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to the Initial and
Additional Contracts, and as of each Subsequent Transfer Date with respect to
the related Subsequent Contracts, that:
a. Possession. Immediately prior to the Closing Date or the
Subsequent Transfer Date, as applicable, the Company will have possession
of each original Contract and the related Contract File or Land-and-Home
Contract File and there are and there will be no custodial agreements in
effect materially and adversely affecting the rights of the Company to
make, or cause to be made, any delivery required hereunder.
b. Bulk Transfer Laws. The transfer, assignment and conveyance of
the Contracts and the Contract Files and Land-and-Home Contract Files by
the Company pursuant to this Agreement is not subject to the bulk transfer
or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.05. Repurchase of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.
a. The Company shall repurchase a Contract, at its Repurchase Price, not
later than the last day of the month prior to the month that is 90 days after
the day on which the Company, the Servicer or the Trustee first discovers or
should have discovered a breach of a representation or warranty of the Company
set forth in Sections 2.02(n), 3.02, 3.03 or 3.04 of this Agreement that
materially adversely affects the Trust's or the Certificateholders' interest in
such Contract and which breach has not been cured; provided, however, that (i)
in the event that a party other than the Company first becomes aware of such
breach, such discovering party shall notify the Company in writing within five
Business Days of the date of such discovery and (ii) with respect to any
Contract incorrectly described on the List of Contracts with respect to unpaid
principal balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such
Contract, deposit in the Certificate Account no later than the first
Determination Date that is 90 or more days from the date of such discovery cash
in an amount sufficient to cure such deficiency or discrepancy. Any such cash so
deposited shall be distributed to Certificateholders on the immediately
following Remittance Date as a collection of principal or interest on such
Contract, according to the nature of the deficiency or
III-9
discrepancy. Notwithstanding any other provision of this Agreement, the
obligation of the Company under this Section shall not terminate upon a Service
Transfer pursuant to Article VII. Notwithstanding the foregoing, the Company
shall repurchase any Contract, at such Contract's Repurchase Price, if the
Company has failed to deliver the related Contract File to the Trustee within 30
days of the Closing Date.
b. On or prior to the date that is the second anniversary of the Closing
Date, the Company, at its election, may substitute one or more Eligible
Substitute Contracts for any Contracts that the Company is obligated to
repurchase pursuant to Section 3.05(a) (such Contracts being referred to as the
"Replaced Contracts") upon satisfaction of the following conditions:
(i) the Company shall have conveyed to the Trustee the Contracts to be
substituted for the Replaced Contracts and the Contract Files
related to such Contracts and the Company shall have marked the
Electronic Ledger indicating that such Contracts constitute part of
the Trust;
(ii) the Contracts to be substituted for the Replaced Contracts are
Eligible Substitute Contracts and the Company delivers an Officers'
Certificate, substantially in the form of Exhibit L-2 hereto, to the
Trustee certifying that such Contracts are Eligible Substitute
Contracts;
(iii) the Company shall have delivered to the Trustee evidence of filing
of a UCC-1 financing statement executed by the Company as debtor,
naming the Trustee as secured party and filed in Minnesota, listing
such Contracts as collateral, or shall have delivered to the Trustee
an amended List of Contracts;
(iv) in respect of Eligible Substitute Contracts that are Land-and-Home
Contracts:
(x) if the sum of the aggregate principal balances of all
Land-and-Home Contracts then held by the Trustee (but
excluding those Land-and-Home Contracts, if any, that are to
become Replaced Contracts as a consequence of the
substitution) and the aggregate principal balances of all
Land-and-Home Contracts that are Eligible Substitute Contracts
is less than 10% of the Pool Scheduled Principal Balance as of
the Remittance Date immediately preceding the substitution,
the Company shall have delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable
form for each Mortgage securing such Eligible Substitute
Contracts; and
(y) if the sum of the aggregate principal balances of all
Land-and-Home Contracts then held by the Trustee (but
excluding those Land-and-Home Contracts, if any, that are to
become Replaced Contracts as a consequence
III-10
of the substitution) and the aggregate principal balances of
all Land-and-Home Contracts that are included in the Eligible
Substitute Contracts equals or exceeds 10% of the Pool
Scheduled Principal Balance as of the Remittance Date
immediately preceding the substitution, the Company shall have
delivered to the Trustee an opinion of counsel satisfactory to
the Trustee to the effect that the Trustee holds a perfected
first priority lien in the real estate securing such Eligible
Substitute Contracts, or evidence of recordation of the
assignment to the Trustee on behalf of the Trust of (A) each
Mortgage securing such Eligible Contracts or, if less (B) of
the number of Mortgages securing such Eligible Substitute
Contracts needed to reduce the aggregate principal balances of
all Land-and-Home Contracts with respect to which such
assignments are not so recorded to less than 10% of the Pool
Scheduled Principal Balance as of the Remittance Date
immediately preceding the substitution;
(v) the Company shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such Contracts
for such Replaced Contracts will not cause the Trust to fail to
qualify as a REMIC at any time under then applicable REMIC
Provisions or cause any "prohibited transaction" that will result in
the imposition of a tax under such REMIC Provisions and (b) to the
effect of paragraph 9 of Exhibit F hereto; and
(vi) if the aggregate Scheduled Principal Balance of such Replaced
Contracts is greater than the aggregate Scheduled Principal Balance
of the Contracts being substituted, the Company shall have deposited
in the Certificate Account the amount of such excess and shall have
included in the Officers' Certificate required by clause (ii) above
a certification that such deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such Contracts
to, and delete such Replaced Contracts from, the List of Contracts. Such
substitution shall be effected prior to the first Determination Date that occurs
more than 90 days after the Company becomes aware, or should have become aware,
or receives written notice from the Trustee, of the breach referred to in
Section 3.05(a). Promptly after any substitution of a Contract, the Company
shall give written notice of such substitution to ▇▇▇▇▇'▇ and Standard & Poor's.
c. (i) On or before the Funding Termination Date, the Company shall
deliver an Officer's Certificate to the Trustee, stating that each
Staged-Funding Contract was fully disbursed in accordance with the terms of such
Contract on or before the Funding Termination Date, or specifying any
Staged-Funding Contracts which were not fully disbursed by the Funding
Termination Date (each Staged-Funding Contract that was not so fully disbursed
being hereinafter referred to as an "Unfunded Contract"), and the Cut-off Date
Principal Balance of each Unfunded Contract.
III-11
(ii) On or before the Funding Termination Date, the Company shall
either repurchase any Unfunded Contract in accordance with Section 3.05(a) (or
the unfunded portion thereof, by depositing in the Certificate Account any
undisbursed amount with respect to such Unfunded Contract), or shall substitute
an Eligible Substitute Contract for such Unfunded Contract in accordance with
Section 3.05(b). With respect to the repurchase of an Unfunded Contract pursuant
to this Section 3.05(c), an amount of the Repurchase Price equal to the Unfunded
Contract Shortfall attributable to such Unfunded Contract shall be treated as a
refund to the Trust of the purchase price paid by the Trust for additional
obligations of the Obligor on such Contract under Section 2.01(c), and the
remainder of the Repurchase Price shall be treated as paid to the Trust for such
Unfunded Contract.
(iii) If the Company shall have failed to repurchase an Unfunded
Contract (or the unfunded portion thereof, by depositing in the Certificate
Account any undisbursed amount with respect to such Unfunded Contract) or to
substitute an Eligible Substitute Contract therefor in accordance with
subsection (ii) above, then the disbursed principal balance of such Unfunded
Contract as owned by the Trust shall not be increased after the Funding
Termination Date, notwithstanding any further disbursements that may be made to
the related Obligor by the Company after the Funding Termination Date. The
Servicer shall thereafter allocate principal and interest collected on the
Contract between the Trust and the Company on a pro rata basis in accordance
with the disbursed principal balance as of the Funding Termination Date, with
the result that payments of interest and principal collected with respect to
such disbursed principal balance as of the Funding Termination Date shall be
deemed collected by the Trust. The aggregate differential between the Cut-off
Date Principal Balance of all such Unfunded Contracts as specified in the List
of Contracts and the disbursed principal balance of such Unfunded Contracts as
of the Funding Termination Date (the "Unfunded Contract Shortfall") shall be
added to the Formula Principal Distribution Amount with respect to the
Remittance Date in May 1998.
(iv) On the Business Day prior to each Remittance Date until and
including the Remittance Date in July 1998, the Company shall pay any Class A
Interest Shortfall, Class M-1 Interest Shortfall or Class B-1 Interest Shortfall
occurring on such Remittance Date, if and to the extent such shortfall is caused
by the difference between (A) the interest that would have been payable on all
Staged-Funding Contracts in the related month had such Contracts been fully
disbursed on the Closing Date and (B) the interest actually payable on such
Contracts in the related month according to the terms of such Contracts.
(v) To further evidence its obligation to repurchase Unfunded
Contracts pursuant to subsection (ii) above and to deposit any Class A Interest
Shortfall, Class M-1 Interest Shortfall and Class B-1 Interest Shortfall
pursuant to subsection (iv) above, the Company shall deliver to the Trustee, on
the Closing Date, a demand note in an amount no less than the aggregate Cut-off
Date Principal Balances of the Staged-Funding Contracts. After the Funding
Termination Date or such earlier date on which the Company either has fully
disbursed or repurchased each Staged-Funding Contract as required herein, the
Trustee shall return such demand note to the Company for cancellation and/or
destruction.
III-12
d. Upon receipt by the Trust by deposit in the Certificate Account of the
Repurchase Price under subsection (a) or (c) above, or the delivery of an
Eligible Substitute Contract pursuant to subsection (b) or (c) above, and upon
receipt of a certificate of a Servicing Officer in the form attached hereto as
Exhibit L-1 or L-2, the Trustee shall convey and assign to the Company all of
the Trust's right, title and interest in the repurchased Contract or Replaced
Contract without recourse, representation or warranty, except as to the absence
of liens, charges or encumbrances created by or arising as a result of actions
of the Trustee.
e. The Company shall defend and indemnify the Trustee and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, arising out of
any claims which may be asserted against or incurred by any of them as a result
of any third-party action arising out of any breach of any such representation
and warranty.
SECTION 3.06. No Repurchase or Substitution Under Certain Circumstances.
Notwithstanding any provision of this Agreement to the contrary, no
repurchase or substitution pursuant to Section 3.05 (other than a repurchase or
substitution pursuant to Section 3.05(c)) shall be made unless the Company
obtains for the Trustee an Opinion of Counsel addressed to the Trustee that any
such repurchase or substitution would not, under the REMIC Provisions, (i) cause
the Subsidiary REMIC or the Master REMIC to fail to qualify as a REMIC while any
regular interest in the Subsidiary REMIC or the Master REMIC, respectively, is
outstanding, (ii) result in a tax on prohibited transactions within the meaning
of Section 860F(a)(2) of the Code or (iii) constitute a contribution after the
startup day subject to tax under Section 860G(d) of the Code. The Servicer shall
attempt to obtain such Opinion of Counsel. In the case of a repurchase or
deposit pursuant to Section 3.05(a) or 3.05(c), the Company shall,
notwithstanding the absence of such opinion as to the imposition of any tax as
the result of such purchase or deposit, repurchase such Contract or make such
deposit and shall guarantee the payment of such tax by paying to the Trustee the
amount of such tax not later than five Business Days before such tax shall be
due and payable to the extent that amounts previously paid over to and then held
by the Trustee pursuant to Section 6.06 hereof are insufficient to pay such tax
and all other taxes chargeable under Section 6.06. Pursuant to Section 6.06, the
Servicer is hereby directed to withhold, and shall withhold and pay over to the
Trustee, an amount sufficient to pay such tax and any other taxes imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or imposed on
"contributions after start up date" under Section 860G(d) of the Code from
amounts otherwise distributable to Class C Subsidiary Certificateholders. The
Servicer shall give notice to the Trustee at the time of such repurchase of the
amounts due from the Company pursuant to the guarantee of the Company described
above and notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by the Company or from moneys
held in the funds and
III-13
accounts created under this Agreement. The Trustee shall be deemed conclusively
to have complied with this Section if it follows the directions of the Company.
In the event any tax that is guaranteed by the Company pursuant to this
Section 3.06 is refunded to the Trust or otherwise is determined not to be
payable, the Company shall be repaid the amount of such refund or that portion
of any guarantee payment made by the Company that is not applied to the payment
of such tax.
SECTION 3.07. Staged-Funding Contract Reserve Account.
a. Within one Business Day after any date prior to the Funding Termination
Date on which the Company's long-term debt securities are rated BB+ or lower by
Standard & Poor's and Ba1 or lower by ▇▇▇▇▇'▇ (the "Ratings Adjustment Date"),
the Company shall give written and telephonic notice thereof to the Trustee and
shall deposit with the Trustee an amount equal to the unfunded portion of the
Contracts that were Unfunded Contracts on the Ratings Adjustment Date. Upon
receipt of such notice the Trustee shall establish the Staged-Funding Contract
Reserve Account on behalf of the Trust, which must be an Eligible Account, and
shall deposit therein the amount received from the Company pursuant to the
previous sentence. The Account shall be entitled "U.S. Bank National
Association, as Trustee for the benefit of holders of Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates, Series 1998-2."
b. If the Company fails to satisfy its obligations under Section
3.05(c)(ii) hereof the Trustee shall withdraw from the Staged-Funding Contract
Reserve Account that amount necessary to satisfy the Company's obligations under
Section 3.05(c)(ii), and shall apply said funds in the fashion provided in the
second sentence in Section 3.05(c)(ii). Any amount so applied shall be treated
for all purposes under this Agreement as an amount paid by the Company to
repurchase Contracts under Section 3.05(c).
c. The Staged-Funding Contract Reserve Account shall be part of the Trust
but not part of the Subsidiary REMIC or Master REMIC. The Trustee on behalf of
the Trust shall be the legal owner of the Staged-Funding Contract Reserve
Account. The Company shall be the beneficial owner of the Staged-Funding
Contract Reserve Account, subject to the foregoing power of the Trustee to apply
amounts in the Staged-Funding Contract Reserve Account to satisfy the
obligations of the Company under Section 3.05(c)(ii). Funds in the
Staged-Funding Contract Reserve Account shall, at the direction of the Company,
be invested in Eligible Investments that mature no later than the Funding
Termination Date. All net income and gain from such investments shall be
distributed to the Company on the Funding Termination Date. Any losses on such
investments shall be deposited in the Staged-Funding Contract Reserve Account by
the Company out of its own funds immediately as realized. All amounts earned on
amounts on deposit in the Staged-Funding Contract Reserve Account shall be
taxable to the Company.
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d. Any funds remaining in the Staged-Funding Contract Reserve Account
after the Funding Termination Date shall be distributed to the Company.
III-15
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
a. Subject to the terms and conditions of this Section the Trustee
appoints the Servicer to maintain custody of the Contract Files for the benefit
of the Certificateholders and the Trustee. The Custodian shall maintain custody
of the Land-and-Home Contract Files. In the event that the Trustee is no longer
acting as Custodian of the Land-and-Home Contract Files, upon execution and
delivery of an agreement between the Trustee and the Person assuming the duties
of the Trustee hereunder as Custodian with respect to the Land-and-Home Contract
Files, the replacement Custodian shall concurrently execute an acknowledgement
of receipt of the Land-and-Home Contract Files substantially in the form of
Exhibit H hereto.
b. The Servicer agrees to maintain the related Contract Files at its
office where they are currently maintained, or at such other offices of the
Servicer in the State of Minnesota as shall from time to time be identified to
the Trustee by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures.
c. As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Certificateholders and the
Trustee, maintain accurate records pertaining to each Contract to
enable it to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof, conduct annual physical
inspections of Contract Files held by it under this Agreement and
certify to the Trustee annually that it continues to maintain
possession of such Contract Files;
(ii) implement policies and procedures, in writing and signed by a
Servicing Officer, with respect to persons authorized to have access
to the Contract Files on the Servicer's premises and the receipting
for Contract Files taken from their storage area by an employee of
the Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody of the
Contract Files on behalf of the Certificateholders and the Trustee.
d. In performing its duties under this Section, the Servicer agrees to act
with reasonable care, using that degree of skill and care that it exercises with
respect to similar
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contracts owned and/or serviced by it. The Servicer shall promptly report to the
Trustee any failure by it to hold the Contract Files as herein provided and
shall promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer agrees further not to assert any
beneficial ownership interests in the Contracts or the Contract Files. The
Servicer agrees to indemnify the Certificateholders and the Trustee for any and
all liabilities, obligations, losses, damages, payments, costs or expenses of
any kind whatsoever which may be imposed on, incurred or asserted against the
Certificateholders and the Trustee as the result of any act or omission by the
Servicer relating to the maintenance and custody of the Contract Files;
provided, however, that the Servicer will not be liable for any portion of any
such amount resulting from the negligence or willful misconduct of any
Certificateholder or the Trustee.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statement referred to in Section 2.02(h) to be filed. The Trustee
shall cause to be filed all necessary continuation statements of the UCC-1
financing statement. From time to time the Servicer shall take and cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Certificateholders' interest in the Contracts and their proceeds and
the Manufactured Homes against all other persons, including, without limitation,
the filing of financing statements, amendments thereto and continuation
statements, the execution of transfer instruments and the making of notations on
or taking possession of all records or documents of title. The Servicer will
maintain the Trustee's first priority perfected security interest in each
Manufactured Home and a first lien on each Mortgaged Property so long as the
related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation.
a. During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Trustee and the Servicer. In addition, following
any such change in the name, identity, structure or location of the chief
executive office of the Company, the Company shall given written notice of any
such change to Standard & Poor's and ▇▇▇▇▇'▇.
b. If any change in the Company's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause any such financing or continuation statement or notice of
lien to become unperfected (whether immediately or with lapse of time), the
Company, no later than five days after the effective date of such change, shall
file, or cause to be filed, such amendments or financing statements as may be
required to preserve, perfect and protect the Certificateholders' interest in
the Contracts and proceeds thereof and in the Manufactured Homes.
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SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Company will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Certificateholders' right, title and interest in and to
the Contracts (including, without limitation, the security interests in the
Manufactured Homes granted thereby).
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ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Company, if it is the Servicer, may delegate some or all of its
servicing duties to a wholly owned subsidiary of the Company, for so long as
such subsidiary remains, directly or indirectly, a wholly owned subsidiary of
the Company. Notwithstanding any such delegation the Company shall retain all of
the rights and obligations of the Servicer hereunder. The Trustee, at the
request of a Servicing Officer, shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. The Company is
hereby appointed the Servicer until such time as any Service Transfer shall be
effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the highest degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer;
provided, however, that (i) such degree of skill and care shall be at least as
favorable as the degree of skill and care generally applied by servicers of
manufactured housing installment sales contracts for institutional investors and
(ii) notwithstanding the foregoing, the Servicer shall not release or waive the
right to collect the unpaid balance on any Contract. The Servicer shall comply
with FHA/VA Regulations in servicing any FHA/VA Contracts (and will pay any
required premiums) so that the related insurance of the Federal Housing
Administration or partial guarantee of the Veterans Administration remains in
full force and effect, except for good faith disputes relating to FHA/VA
Regulations that will not cause the termination or reduction of such insurance
or guarantee.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder, maintain
such books of account and other records as will enable the Trustee to determine
the status of each Contract.
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SECTION 5.04. Inspection; Computer Tape.
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records, which have not previously been provided to the Trust,
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trustee or its authorized agents. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Trustee may make, the Trustee may, using generally accepted audit procedures,
verify the status of each Contract and review the Electronic Ledger and records
relating thereto for conformity to Monthly Reports prepared pursuant to Article
VI and compliance with the standards represented to exist as to each Contract in
this Agreement.
b. At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
c. On or before the ninth Business Day of each Due Period, the Servicer
will provide to the Trustee a Computer Tape setting forth a list of all the
outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the preceding Due Period.
SECTION 5.05. Certificate Account.
a. On or before the Closing Date, the Trustee shall establish the
Certificate Account on behalf of the Trust, which must be an Eligible Account.
The Certificate Account shall be entitled "[Trustee] as Trustee for the benefit
of holders of Manufactured Housing Contract Pass-Through Certificates, Series
1998-2 (Green Tree Financial Corporation, Servicer)." The Servicer shall pay
into the Certificate Account as promptly as practicable (not later than the next
Business Day) following receipt thereof all payments from Obligors and Net
Liquidation Proceeds, other than late payment penalty fees, extension fees and
assumption fees, which shall be retained by the Servicer as additional
compensation for servicing the Contracts. All amounts paid into the Certificate
Account under this Agreement shall be held in trust for the Trustee and the
Certificateholders until payment of any such amounts is authorized under this
Agreement.
Only the Trustee may withdraw funds from the Certificate Account.
b. If the Servicer so directs, the institution maintaining the Certificate
Account shall, in the name of the Trustee in its capacity as such, invest the
amounts in the Certificate Account in Eligible Investments that mature not later
than one Business Day prior to the next succeeding Remittance Date. Once such
funds are invested, such institution shall not change the investment of such
funds. All income and gain from such investments shall be added to the
Certificate Account and distributed on such Remittance Date pursuant to Section
8.03(a). An amount equal to any net loss on such investments shall be deposited
in the Certificate Account by the Class C Subsidiary Certificateholder out of
its own funds immediately as realized. The Company, the
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Servicer and the Trustee shall in no way be liable for losses on amounts
invested in accordance with the provisions hereof. Funds in the Certificate
Account not so invested must be insured to the extent permitted by law by the
Federal Deposit Insurance Corporation. "Eligible Investments" are any of the
following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America and which are noncallable;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust Company (including the Trustee or
any Affiliate of the Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment
or contractual commitment providing for such investment, the
commercial paper or other short-term deposits of such depository
institution or trust Company (or, in the case of a depository
institution which is the principal subsidiary of a holding Company,
the commercial paper or other short-term debt obligations of such
holding Company) are rated at least P-1 by ▇▇▇▇▇'▇, at least A-1 by
Standard & Poor's and at least F-1 by Fitch (if rated by Fitch) and
(B) any other demand or time deposit or certificate of deposit which
is fully insured by the Federal Deposit Insurance Corporation;
(iii) shares of an investment Company registered under the Investment
Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from ▇▇▇▇▇'▇ and Fitch (if rated by Fitch) and are rated
AAAm or AAAm-G by Standard & Poor's and whose only investments are
in securities described in clauses (i), (ii) above and (iv) below;
(iv) repurchase obligations with respect to (A) any security described in
clause (i) above or (B) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, in
either case entered into with a depository institution or trust
Company (acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least
Aa2 from ▇▇▇▇▇'▇, at least AAA by Standard & Poor's and in one of
the two highest rating categories from Fitch (if rated by Fitch) at
the time of such investment; provided, however, that securities
V-3
issued by any particular corporation will not be Eligible
Investments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by such
corporation and held as part of the corpus of the Trust to exceed
10% of amounts held in the Certificate Account; and
(vi) commercial paper having a rating of at least A-1+ from Standard &
Poor's and at least P-1 from ▇▇▇▇▇'▇ (if rated by ▇▇▇▇▇'▇) at the
time of such investment or pledge as a security; and
(vii) other obligations or securities that are acceptable to both Standard
& Poor's and ▇▇▇▇▇'▇ as an Eligible Investment hereunder and will
not reduce the rating assigned to any Class of Certificates by both
Standard & Poor's and ▇▇▇▇▇'▇ below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing
Date by both Standard & Poor's and ▇▇▇▇▇'▇, as evidenced in writing;
provided that any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments.
c. If at any time the Trustee receives notice (from any of ▇▇▇▇▇'▇,
Standard & Poor's, the Servicer or otherwise) that the Certificate Account has
ceased to be an Eligible Account, the Trustee must, as soon as practicable but
in no event later than 5 Business Days of the Trustee's receipt of such notice,
transfer the Certificate Account and all funds and Eligible Investments therein
to an Eligible Account. Following any such transfer, the Trustee must notify
each of ▇▇▇▇▇'▇, Standard & Poor's, and the Servicer of the location of the
Certificate Account.
SECTION 5.06. Enforcement.
a. The Servicer shall, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on such Contracts and
Liquidation Proceeds with respect to Liquidated Contracts.
b. The Servicer may ▇▇▇ to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of
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the Contract to the Servicer for purposes of collection only. If, however, in
any enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, the Trustee on behalf of the Trust
shall, at the Servicer's expense, take such steps as the Servicer deems
necessary to enforce the Contract, including bringing suit in its name or the
names of the Certificateholders.
c. The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the Contract or to resell the
related Manufactured Home to the person against whom recourse exists at the
price set forth in the document creating the recourse.
d. So long as the Company is the Servicer, the Servicer may grant to the
Obligor on any Contract any rebate, refund or adjustment out of the Certificate
Account that the Servicer in good faith believes is required because of
prepayment in full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract.
e. So long as the Company is the Servicer, the Servicer may, consistent
with its customary servicing procedures and consistent with Section 5.02, grant
to the Obligor on any Contract an extension of payments due under such Contract,
provided that Obligors may not be solicited for extensions, no such extension
may extend beyond December 1, 2028, and no more than one extension of payments
under a Contract may be granted in any twelve-month period.
f. The Servicer may enforce any due-on-sale clause in a Contract if such
enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer
upon conveyance of the related Manufactured Home, the Servicer shall use its
best efforts to obtain an assumption agreement in connection therewith and add
such assumption agreement to the related Contract File or Land-and-Home Contract
File.
g. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract if such modification or waiver would be treated as a taxable exchange
under the REMIC Provisions.
SECTION 5.07. Trustee to Cooperate.
a. Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Company (if the Company is not the Servicer) on the next
succeeding Remittance Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Certificate Account pursuant to Section 5.05 have been so deposited). The
Servicer is authorized to execute an instrument in satisfaction of such Contract
and to do such other acts and execute
V-5
such other documents as the Servicer deems necessary to discharge the Obligor
thereunder and eliminate the lien on the related real estate. The Servicer shall
determine when a Contract has been paid in full; to the extent that insufficient
payments are received on a Contract credited by the Servicer as prepaid or paid
in full and satisfied, the shortfall shall be paid by the Servicer out of its
own funds.
b. From time to time as appropriate for servicing and foreclosure in
connection with any Land-and-Home Contract, the Trustee shall, upon written
request of a Servicing Officer and delivery to the Trustee of a receipt signed
by such Servicing Officer, cause the original Land-and-Home Contract and the
related Land-and-Home Contract File to be released to the Servicer and shall
execute such documents as the Servicer shall deem necessary to the prosecution
of any such proceedings. The Trustee shall stamp the face of each such
Land-and-Home Contract to be released to the Servicer with a notation that the
Land-and-Home Contract has been assigned to the Trustee. Upon request of a
Servicing Officer, the Trustee shall perform such other acts as reasonably
requested by the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholders' and Class C Certificateholders' rights
and remedies with respect to Contracts.
c. The Servicer's receipt of a Land-and-Home Contract and/or Land-and-Home
Contract File shall obligate the Servicer to return the original Land-and-Home
Contract and the related Land-and-Home Contract File to the Trustee when its
need by the Servicer has ceased unless the Contract shall be liquidated or
repurchased or replaced as described in Section 3.05.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its duties
hereunder, including all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Manufactured Homes securing such Contracts) shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder,
except that the Servicer shall be reimbursed out of the Liquidation Proceeds of
a Liquidated Contract for Liquidation Expenses incurred by it. The Servicer
shall not incur such Liquidation Expenses unless it determines in its good faith
business judgment that incurring such expenses will increase the Net Liquidation
Proceeds on the related Contract.
SECTION 5.09. Maintenance of Insurance.
a. Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract one or
more Hazard 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 related 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,
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however, that the amount of coverage provided by each Hazard Insurance Policy
shall be sufficient to avoid the application of any co-insurance clause
contained therein; and provided, further, that such Hazard Insurance Policies
may provide for customary deductible amounts. With respect to: (a) a
Manufactured Home securing an FHA/VA Contract, if such Manufactured Home's
location was, at the time of origination of the related FHA/VA Contract, within
a federally designated special flood hazard area, the Servicer shall also cause
such flood insurance to be maintained, which coverage shall be at least equal to
the minimum amount specified in the preceding sentence or such lesser amount as
may be available under the federal flood insurance program; and (b) any Contract
that is not an FHA/VA Contract, the Company shall obtain (i) a statement from
the Obligor's insurance agent that the Manufactured Home was, at the time of
origination of the Contract, not in a federally designated special flood hazard
area, or (ii) evidence that, at the time of origination, flood insurance was in
effect, which coverage was at least equal to the minimum amount specified in the
preceding sentence or such lesser amount as may be available under the federal
flood insurance program. Each Hazard Insurance Policy caused to be maintained by
the Servicer shall contain a standard loss payee clause in favor of the Servicer
and its successors and assigns. If any Obligor is in default in the payment of
premiums on its Hazard Insurance Policy or Policies, the Servicer shall pay such
premiums out of its own funds and may separately add such premium to the
Obligor's obligation as provided by the Contract, but shall not add such premium
to the remaining principal balance of the Contract.
b. The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured Home pursuant to
subsection (a) of this Section 5.09, and shall, to the extent that the related
Contract does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Manufactured Home, maintain one or more blanket insurance
policies covering losses on the Obligor's interest in the Contracts resulting
from the absence or insufficiency of individual Hazard Insurance Policies. Any
such blanket policy shall be substantially in the form and in the amount carried
by the Servicer as of the date of this Agreement. The Servicer shall pay the
premium for such policy on the basis described therein and shall deposit into
the Certificate Account from its own funds any deductible amount with respect to
claims under such blanket insurance policy relating to the Contracts. The
Servicer shall not, however, be required to deposit any deductible amount with
respect to claims under individual Hazard Insurance Policies maintained pursuant
to subsection (a) of this Section. If the insurer under such blanket insurance
policy shall cease to be acceptable to the Servicer, the Servicer shall exercise
its best reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy.
c. With respect to each Manufactured Home that has been repossessed in
connection with a defaulted Contract, the Servicer shall either (i) maintain one
or more Hazard Insurance Policies thereon or (ii) self-insure such Manufactured
Homes and deposit into the Certificate Account from its own funds any losses
caused by damage to such Manufactured Home that would have been covered by a
Hazard Insurance Policy.
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d. The Servicer shall keep in force throughout the term of this Agreement
(i) a policy or policies of insurance covering errors and omissions for failure
to maintain insurance as required by this Agreement and (ii) a fidelity bond.
Such policy or policies and such fidelity bond shall be in such form and amount
as is generally customary among Persons which service a portfolio of
manufactured housing installment sales contracts and installment loan agreements
having an aggregate principal amount of $100,000,000 or more and which are
generally regarded as servicers acceptable to institutional investors.
SECTION 5.10. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Manufactured Home
or the foreclosure upon any Mortgaged Property or take such other steps that in
the Servicer's reasonable judgment will maximize the receipt of principal and
interest or Net Liquidation Proceeds with respect to the Contract secured by
such Manufactured Home or Mortgaged Property (which may include retitling or
filing a recorded assignment of the Mortgage) subject to the requirements of the
applicable state and federal law, no later than five Business Days after the
time when such Contract becomes a Defaulted Contract; provided that if the
Servicer has actual knowledge that a Mortgaged Property is affected by hazardous
waste, then the Servicer shall not cause the Company to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. For purposes of the
proviso in the preceding sentence, the Servicer shall not be deemed to have
actual knowledge that a Mortgaged Property is affected by hazardous waste unless
it shall have received written notice that hazardous waste is present on such
property and such written notice has been made a part of the Land-and-Home
Contract File with respect to the related Contract. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be consistent
with Section 5.02. In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee, as Trustee, or, at its election, to its
nominee on behalf of the Trustee, as Trustee.
SECTION 5.11. Commingling of Funds.
So long as the Company is Servicer, any collections in respect of
Contracts collected by the Company shall, prior to the deposit thereof in the
Certificate Account, be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for U.S. Bank National Association as Trustee,
other trustees, and Green Tree Financial Corporation, as their interests may
appear."
SECTION 5.12. Retitling; Security Interests.
a. If, at any time, a Service Transfer has occurred and the Company is no
longer the Servicer and the new Servicer is unable to foreclose upon a
Manufactured Home because the title document for such Manufactured Home does not
show such Servicer or the Trustee as the holder
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of the first priority security interest in the Manufactured Home, such Servicer
shall take all necessary steps to apply for a replacement title document showing
it or the Trustee as the secured party.
b. In order to facilitate the Servicer's actions, as described in
subsection (a) of this section, the Company will provide the Servicer with any
necessary power of attorney permitting it to retitle the Manufactured Home.
c. If the Servicer is still unable to retitle the Manufactured Home, the
Company will take all actions necessary to act with the Servicer to foreclose
upon the Manufactured Home, including, as appropriate, the filing of any UCC-1
or UCC-2 financing statements necessary to perfect the security interest in any
Manufactured Home that constitutes a fixture under the laws of the jurisdiction
in which it is located and all actions necessary to perfect the security
interest in any Manufactured Home that is 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.
d. If the aggregate Cut-off Date Principal Balances of all Land-and-Home
Contracts equals or exceeds 10% of the Cut-off Date Pool Principal Balance, the
Company shall (i) within 60 days of the Closing Date submit to the appropriate
recording offices the assignments to the Trustee on behalf of the Trust of the
number of Mortgages securing Land-and-Home Contracts needed to reduce the
aggregate Cut-off Date Principal Balances of all Land-and-Home Contracts with
respect to which such assignments are not so recorded to less than 10% of the
Cut-off Date Pool Principal Balance or (ii) at the Closing Date, deliver an
Opinion of Counsel satisfactory to the Trustee to the effect that the Trustee
holds a perfected first priority lien in the real estate securing the
Land-and-Home Contracts, with the exception of real estate located in such
states as may be identified in such Opinion of Counsel, provided that the
Land-and-Home Contracts secured by real estate located in such identified states
does not exceed 10% of the Cut-off Date Pool Principal Balance.
If at any time during the term of this Agreement, the Trustee receives
written notice from the Company or the Servicer that the Company does not have a
long-term senior debt rating from Moody's of Baa3 or higher, from Standard &
Poor's of BBB- or higher and from Fitch of BBB-or higher, or if the Trustee
otherwise becomes aware of the same, the Trustee, at the Company's expense,
shall file promptly in the appropriate recording offices the assignments to the
Trustee on behalf of the Trust of each Mortgage securing a Land-and-Home
Contract.
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ARTICLE VI
REPORTS AND TAX MATTERS
SECTION 6.01. Monthly Reports.
a. No later than 1:00 p.m. on each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, the Company (if the Company is not the
Servicer), Moody's and Standard & Poor's a "Monthly Report," substantially in
the form of Exhibit N hereto.
b. If the applicable Monthly Report indicates that there is a Class M-1
Interest Deficiency Amount and/or a Class B-1 Interest Deficiency Amount, the
Servicer shall promptly notify the Trustee, by telephone, of the aggregate
amount of such Class M-1 Interest Deficiency Amount and Class B-1 Interest
Deficiency Amount. On the day one Business Day prior to the related Remittance
Date, the Trustee shall determine the total amount of funds in the Certificate
Account available to pay such deficiency in accordance with Section 8.03(b) and
shall promptly notify the Servicer of such amount. If the total amount of funds
in the Certificate Account is not sufficient to pay the deficiency, the Trustee
shall promptly notify the Servicer, and shall reflect such deficiency in the
reports delivered to Certificateholders pursuant to Section 6.05.
SECTION 6.02. Certificate of Servicing Officer.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit I,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
In addition, the Company and (if different from the Company) the Servicer
shall, on request of the Trustee, Moody's, Standard & Poor's or a
Certificateholder, furnish the Trustee and/or Moody's, Standard & Poor's or a
Certificateholder such underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants.
On or before May 1 of each year, commencing May 1, 1999, the Servicer at
its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to issue to the
Servicer a report that such firm has examined selected documents, records and
management's assertions relating to loans serviced by the Servicer and stating
that, on the basis of such examination, such servicing has been conducted in
compliance with the minimum servicing standards identified in the Mortgage
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Bankers Association of America's Uniform Single Attestation Program for Mortgage
Bankers, or any successor uniform program, except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted attestation standards requires it to report.
SECTION 6.05. Statements to Certificateholders.
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Class A Certificates, Class M-1 Certificates,
Class B-1 Certificates and Class B-2 Certificates on or before the third
Business Day next preceding each Remittance Date. The Trustee and the Servicer
shall inform any Certificateholder, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, and Salomon Brothers Inc,
inquiring by telephone of the information contained in the most recent Monthly
Report.
b. Concurrently with each distribution charged to the Certificate Account
the Trustee, so long as it has received the Monthly Report from the Servicer,
shall forward or cause to be forwarded by mail to each Holder of a Class A
Certificate and (if the Company is not the Servicer) the Company a statement
setting forth the following:
(i) the amount of such distribution to Holders of each Class of Class A
Certificates allocable to interest, separately identifying any
Unpaid Class A Interest Shortfall included in such distribution and
any remaining Unpaid Class A Interest Shortfall after giving effect
to such distribution;
(ii) the amount of such distribution to Holders of each Class of Class A
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein, and
any remaining Unpaid Class A Principal Shortfall after giving effect
to such distribution;
(iii) the amount, if any, by which the Class A Formula Distribution Amount
for such Remittance Date exceeds the Class A Distribution Amount for
such Remittance Date;
(iv) the Class Principal Balance for each Class of Class A Certificates,
after giving effect to the distribution of principal on such
Remittance Date;
(v) the Class A Percentage for such Remittance Date and the following
Remittance Date;
(vi) the Pool Scheduled Principal Balance of the Contracts for such
Remittance Date;
(vii) the Pool Factor;
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(viii) the number and aggregate principal balances of Contracts delinquent
(a) 30-59 days and (b) 60 or more days;
(ix) the number of Manufactured Homes that were repossessed during the
month ending immediately prior to such Remittance Date;
(x) the number of Manufactured Homes that were repossessed but remain in
inventory as of the last day of the related Due Period ending
immediately prior to such Remittance Date;
(xi) the Class M-1 Distribution Test (as set forth in Exhibit N hereto);
(xii) the Class B Distribution Test (as set forth in Exhibit N hereto);
(xiii) the Weighted Average Contract Rate of all outstanding Contracts;
(xiv) the Class M-1 Interest Deficiency Amount, if any, for such
Remittance Date; and
(xv) the Class B-1 Interest Deficiency Amount, if any, for such
Remittance Date.
In the case of information furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount per Class A Certificate
with a 1% Percentage Interest or per $1,000 denomination of Class A Certificate.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class A Certificate a
statement containing the information with respect to interest accrued and
principal paid on its Certificates during such calendar year. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time in force.
c. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-1 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A Certificates on such
Remittance Date. The Servicer shall also furnish to the Trustee, which shall
forward such report to the Class M-1 Certificateholders as part of the Monthly
Report, the following information:
(i) the amount of such distribution to Holders of Class M-1 Certificates
allocable to interest, separately identifying any Unpaid Class M-1
Interest Shortfall included in such distribution, any remaining
Unpaid Class M-1 Interest Shortfall after giving effect to such
distribution, any Class M-1 Liquidation Loss Interest
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Amount included in such distribution and any remaining unpaid Class
M-1 Liquidation Loss Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class M-1 Certificates
allocable to principal, separately identifying the aggregate amount
of any Principal Prepayments included therein and any remaining
Unpaid Class M-1 Principal Shortfall after giving effect to such
distribution;
(iii) the amount, if any, by which the Class M-1 Formula Distribution
Amount for such Remittance Date exceeds the Amount Available less
the Class A Distribution Amount for such Remittance Date;
(iv) the Class M-1 Principal Balance and the Class M-1 Adjusted Principal
Balance (if different) after giving effect to the distribution of
principal on such Remittance Date;
(v) the Class M-1 Percentage for such Remittance Date and the following
Remittance Date; and
(vi) the information described above in Section 6.05(b)(vi) through (xv).
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class M-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-1 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class M-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class M-1 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
d. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-1 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A and Class M-1 Certificates on
such Remittance Date. The Servicer shall also furnish to the Trustee, which
shall forward such report to the Class B-1 Certificateholders as part of the
Monthly Report, the following information:
(i) the amount of such distribution to Holders of Class B-1 Certificates
allocable to interest, separately identifying any Unpaid Class B-1
Interest Shortfall included in such distribution, any remaining
Unpaid Class B-1 Interest Shortfall after giving
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effect to such distribution, any Class B-1 Liquidation Loss Interest
Amount included in such distribution and any remaining Unpaid Class
B-1 Liquidation Loss Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class B-1 Certificates
allocable to principal, separately identifying the aggregate amount
of any Principal Prepayments included therein, and any remaining
Unpaid Class B-1 Principal Shortfall after giving effect to such
distribution;
(iii) the amount, if any, by which the Class B-1 Formula Distribution
Amount for such Remittance Date exceeds the Amount Available less
the Class A Distribution Amount and M-1 Distribution Amount for such
Remittance Date;
(iv) the Class B-1 Principal Balance and the Class B-1 Adjusted Principal
Balance (if different) after giving effect to the distribution of
principal on such Remittance Date;
(v) the Class B Percentage for such Remittance Date and the following
Remittance Date; and
(vi) the information described above in Section 6.05(b)(vi) through (xv).
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-1 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class B-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class B-1 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
e. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-2 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A, Class M-1 and Class B-1
Certificates on such Remittance Date. The Servicer shall also furnish to the
Trustee, which shall forward such report to the Class B-2 Certificateholders as
part of the Monthly Report, the following information:
(i) the amount of such distribution to Holders of Class B-2 Certificates
allocable to interest, separately identifying any Unpaid Class B-2
Interest Shortfall included in
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such distribution and any remaining Unpaid Class B-2 Interest
Shortfall after giving effect to such distribution;
(ii) the amount of such distribution to Holders of Class B-2 Certificates
allocable to principal, separately identifying the aggregate amount
of any Principal Prepayments included therein, and any Unpaid Class
B-2 Principal Shortfall after giving effect to such distribution;
(iii) the amount, if any, by which the Class B-2 Formula Distribution
Amount for such Remittance Date exceeds the Remaining Amount
Available for such Remittance Date;
(iv) the Class B-2 Principal Balance after giving effect to the
distribution of principal on such Remittance Date;
(v) the Class B Percentage for such Remittance Date and the following
Remittance Date;
(vi) the information described above in Section 6.05(b)(vi) through (xv);
(vii) the Class B-2 Liquidation Loss Amount, if any, for such Remittance
Date;
(viii) the Guarantee Payment, if any, for such Remittance Date; and
(ix) the Weighted Average Contract Rate of all outstanding Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-2 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class B-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class B-2 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
f. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-3I Certificate a copy of the
Monthly Report forwarded to the Holders of Class A, Class M, Class B-1 and Class
B-2 Certificates on such Remittance Date.
VI-6
The Servicer shall also furnish to the Trustee, which shall forward such report
to the Class B-3I Certificateholders as part of the Monthly Report, the
following information:
(i) the Class B-3I Formula Distribution Amount for such Remittance Date,
including any Unpaid Class B-3I Shortfall immediately prior to such
Remittance Date;
(ii) the Class B-3I Distribution Amount for such Remittance Date; and
(iii) the Unpaid Class B-3I Shortfall immediately following such
Distribution Date.
g. Copies of all reports provided to the Trustee for the
Certificateholders shall also be provided to Moody's, Standard & Poor's and to
the Class C Certificateholders. In addition, Certificate Owners may receive
copies of any reports provided to the Trustee for the Certificateholders, upon
written request together with a certification that they are Certificate Owners
and payment of reproduction and postage expenses associated with the
distribution of such reports, from the Trustee at the Corporate Trust Office.
SECTION 6.06. Payment of Taxes.
The Servicer shall be responsible for and agrees to prepare, make and file
all federal, state, local or other tax returns, information statements and other
returns and documents of every kind and nature whatsoever required to be made or
filed by or on behalf of the Subsidiary REMIC or Master REMIC pursuant to the
Code and other applicable tax laws and regulations. Each such return, statement
and document shall, to the extent required by the Code or other applicable law
and at the request of the Servicer, be signed on behalf of the Subsidiary REMIC
or Master REMIC by the Trustee. The Trustee shall have no responsibility
whatsoever for the accuracy or completeness of any such return, statement or
document. The Servicer agrees to indemnify the Trustee and hold it harmless for,
from, against and in respect to any and all liability, loss, damage and expense
which may be incurred by the Trustee based upon or as a result of the Trustee's
execution of any and all such tax returns, statements and documents. The
Servicer, if and for so long as it is a Class C Certificateholder, shall be
designated the "tax matters person" on behalf of the Subsidiary REMIC and the
Master REMIC, respectively, in the same manner as a partnership may designate a
"tax matters partner," as such term is defined in Section 6231(a)(7) of the
Code. To the extent permitted by the REMIC Provisions, any subsequent holder of
a Class C Certificate, by acceptance thereof, irrevocably designates and
appoints the Servicer as its agent to perform the responsibilities of the "tax
matters person" on behalf of the Subsidiary REMIC and the Master REMIC,
respectively, if, and during such time as, the Servicer is not the holder of a
Class C Certificate. The Servicer may, at its expense, retain such outside
assistance as it deems necessary in the performance of its obligations under
this paragraph.
Each of the Holders of the Certificates, by acceptance thereof, agrees to
file tax returns consistent with and in accordance with any elections, decisions
or other reports made or filed
VI-7
with regard to federal, state or local taxes on behalf of the Subsidiary REMIC
or the Master REMIC. The Company, as agent for the tax matters person, shall
represent the Subsidiary REMIC or the Master REMIC in connection with all
examinations of the Subsidiary REMIC's or the Master REMIC's affairs by tax
authorities, including resulting administrative and judicial proceedings. Each
of the holders of the Certificates, by acceptance thereof, agrees to cooperate
with the Company in such matters and to do or refrain from doing any or all
things reasonably required by the Company to conduct such proceedings, provided
that no such action shall be required by the Company of any Certificateholder
that would entail unnecessary or unreasonable expenses for such
Certificateholder in the performance of such action.
The Class C Subsidiary Certificateholders and the Class C Master
Certificateholders shall pay, on behalf of the Subsidiary REMIC or the Master
REMIC, respectively, any foreign, federal, state or local income, property,
excise, sales, receipts or any other similar or related taxes or charges which
may be imposed upon the Subsidiary REMIC or the Master REMIC as a REMIC or
otherwise and shall, to the extent provided in Section 10.06, be entitled to be
reimbursed out of the Certificate Account or, if such tax or charge results from
a failure by the Trustee, the Company or any Servicer to comply with the
provisions of Section 2.04 or 3.06, the Trustee, the Company or such Servicer,
as the case may be, shall indemnify the Class C Certificateholders for the
payment of any such tax or charge. The Trustee shall be entitled to withhold
from amounts otherwise distributable to the Class C Certificateholders any taxes
or charges payable by the Class C Certificateholders hereunder.
In the event a Class C Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Company shall provide to the Internal
Revenue Service and the persons specified in Sections 860E(e)(3) and (6) of the
Code all information necessary for the application of Section 860E(e) and any
other applicable provision of the Code with respect to the transfer of such
Class C Certificate to such a disqualified organization including, without
limitation, a computation showing the present value of the total anticipated
excess inclusions with respect to such Class C Certificate for periods after the
transfer as defined in the REMIC Provisions. In addition, to the extent required
by the REMIC Provisions, the Company shall, upon the written request of persons
designated in Section 860E(e)(3) of the Code, furnish to such requesting party
and the Internal Revenue Service information sufficient to compute the present
value of anticipated excess inclusions within 60 days of the receipt of such
written request.
VI-8
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following:
a. Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware, or should have become
aware, that such deposit was required;
b. Failure on the Servicer's part to observe or perform in any material
respect any covenant or agreement in this Agreement (other than a covenant or
agreement which is elsewhere in this Section specifically dealt with) which
continues unremedied for 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by Holders of Class A
Certificates, Class M-1 Certificates and Class B Certificates evidencing, as to
any such Class, Percentage Interests aggregating not less than 25%;
c. Any assignment by the Servicer of its duties hereunder except as
specifically permitted hereunder, or any attempt to make such an assignment;
d. A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
e. The Servicer shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
have consented to the entry of an order for relief in an involuntary case under
any such law, or shall have consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial part of its
property, or shall have made any general assignment for the benefit of its
creditors, or shall have failed to, or admitted in writing its inability to, pay
its debts as they become due, or shall have taken any corporate action in
furtherance of the foregoing; or
f. The failure of the Servicer to be an Eligible Servicer.
VII-1
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trustee or Certificateholders with aggregate Percentage Interests representing
25% or more of the Trust, by notice in writing to the Servicer (and to the
Trustee if given by the Certificateholders) may terminate all (but not less than
all) of the Servicer's management, administrative, servicing and collection
functions (such termination being herein called a "Service Transfer"). On
receipt of such notice (or, if later, on a date designated therein), or upon
resignation of the Servicer in accordance with Section 12.01, all authority and
power of the Servicer under this Agreement, whether with respect to the
Contracts, the Contract Files, the Land-and-Home Contract Files or otherwise
(except with respect to the Certificate Account, the transfer of which shall be
governed by Section 7.06), shall pass to and be vested in the Trustee pursuant
to and under this Section 7.02; and, without limitation, the Trustee is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments
(including, without limitation, documents required to make the Trustee or a
successor servicer the sole lienholder or legal title holder of record of each
Manufactured Home) and to do any and all acts or things necessary or appropriate
to effect the purposes of such notice of termination. Each of the Company and
the Servicer agrees to cooperate with the Trustee in effecting the termination
of the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Trustee for administration by it of all cash
amounts which shall at the time be held by the Servicer for deposit, or have
been deposited by the Servicer, in the Certificate Account, or for its own
account in connection with its services hereafter or thereafter received with
respect to the Contracts and the execution of any documents required to make the
Trustee or a successor servicer the sole lienholder or legal title holder of
record in respect of each Manufactured Home. The Servicer shall be entitled to
receive any other amounts which are payable to the Servicer under the Agreement,
at the time of the termination of its activities as Servicer. The Servicer shall
transfer to the new servicer (i) the Servicer's records relating to the
Contracts in such electronic form as the new servicer may reasonably request and
(ii) any Contracts, Contract Files and Land-and-Home Contract Files in the
Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02 or the resignation of the Servicer in accordance with
Section 12.01, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Trustee will not assume any obligations of the
Company pursuant to Section 3.05 and (ii) the Trustee shall not be liable for
any acts or omissions of the Servicer occurring prior to such Service Transfer
or for any breach by the Servicer of any of its obligations contained herein or
in any related document or agreement. As compensation therefor, the Trustee
shall be entitled to receive reasonable compensation out of the Monthly
VII-2
Servicing Fee. Notwithstanding the above, the Trustee may, if it shall be
unwilling so to act, or shall, if it is legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, an Eligible Servicer as
the successor to the Servicer hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Contracts as it and such successor shall agree; provided, however,
that no such monthly compensation shall, without the written consent of 100% of
the Certificateholders, exceed the Monthly Servicing Fee. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Moody's, Standard &
Poor's and the Certificateholders at their respective addresses appearing on the
Certificate Register.
b. Within ten days following any termination or appointment of a successor
to the Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to Moody's, Standard & Poor's and the Certificateholders at their
respective addresses appearing on the Certificate Register.
c. The Trustee shall give written notice to Moody's and Standard & Poor's
at least 30 days prior to the date upon which any Eligible Servicer (other than
the Trustee) is to assume the responsibilities of Servicer pursuant to Section
7.03, naming such successor Servicer.
SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Trustee or new Servicer may notify
Obligors to make payments directly to the new Servicer that are due under the
Contracts after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no further
obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
VII-3
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article X and Sections 3.05, 11.06 and 11.11(f))
other than those relating to the management, administration, servicing or
collection of the Contracts.
SECTION 7.06. Transfer of Certificate Account.
Notwithstanding the provisions of Section 7.02, if the Certificate Account
shall be maintained with the Servicer and an Event of Termination shall occur
and be continuing, the Servicer shall, after five days' written notice from the
Trustee, or in any event within ten days after the occurrence of the Event of
Termination, establish an Eligible Account with an institution other than the
Servicer and promptly transfer all funds in the Certificate Account to such new
account, which shall thereafter be deemed the Certificate Account for the
purposes hereof.
VII-4
ARTICLE VIII
PAYMENTS
SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each Holder of a Certificate
as of a Record Date shall be paid on the next succeeding Remittance Date by
check mailed on such Remittance Date to such Certificateholder at the address
for such Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds a Class of Class A Certificates, Class M-1 Certificates
or a Class of Class B Certificates with an aggregate Percentage Interest of at
least 5% or a Class B-3I, Class C Subsidiary or Class C Master Certificateholder
holds Class B-3I, Class C Subsidiary or Class C Master Certificates with an
aggregate Percentage Interest of at least 20% and so requests, by wire transfer
pursuant to instructions delivered to the Trustee at least ten days prior to
such Remittance Date), the sum equal to such Certificateholder's Percentage
Interest of the Class A Distribution Amount, the Class M-1 Distribution Amount,
the Class B-1 Distribution Amount, the Class B-2 Distribution Amount, any
Guarantee Payment, the Class B-3I Distribution Amount, the Class C Subsidiary
Distribution Amount or the Class C Master Distribution Amount, as applicable.
Final payment of any Certificate shall be made only upon presentation of such
Certificate at the office or agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book Entry Certificates. Neither the Trustee, the Certificate Registrar, the
Seller nor the Servicer shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the forms of the Class A, Class M-1 and Class B Certificates as set forth in
Exhibits A, B and C hereto.
c. The Trustee shall either act as the paying agent or shall appoint an
institution meeting the eligibility requirements set forth in Section 11.06 to
be the paying agent (in either case, the "Paying Agent") and cause it to make
the payments to the Certificateholders required hereunder. The Trustee's
corporate trust office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇, shall initially act as Paying Agent. The Trustee
shall require the Paying Agent (if other than the Trustee) to agree in writing
that all amounts held by the Paying Agent for payment hereunder will be held in
trust for the benefit of the
VIII-1
Certificateholders and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates.
SECTION 8.02. Permitted Withdrawals from the Certificate Account.
The Trustee may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts for the following purposes:
a. to make payments in the amounts and in the manner provided for in
Section 8.03;
b. to pay to the Company with respect to each Contract or property
acquired in respect thereof that has been repurchased or replaced pursuant
to Section 3.05, all amounts received thereon and not required to be
distributed to Certificateholders as of the date on which the related
Scheduled Principal Balance or Repurchase Price is determined;
c. to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement is
permitted pursuant to Section 5.08;
d. to withdraw any amount deposited in the Certificate Account that
was not required to be deposited therein; or
e. to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (b), the
Company's entitlement thereto is limited to collections or other recoveries on
the related Contract, the Servicer shall keep and maintain separate accounting,
on a Contract by Contract basis, for the purpose of justifying any withdrawal
from the Certificate Account pursuant to such clause.
SECTION 8.03. Payments.
a. On each Remittance Date the Trustee shall withdraw from the Certificate
Account the Amount Available (as determined on the immediately preceding
Determination Date), plus on the Post-Funding Remittance Date any Pre-Funded
Amount, and on the first Remittance Date any amount withdrawn from the
Capitalized Interest Account and deposited in the Certificate Account, and apply
such funds to make payment in the following order of priority, subject to
Section 8.03(c):
VIII-2
1. if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay the Monthly Servicing Fee and any other
compensation owed to the Servicer pursuant to Section 7.03;
2. to pay the Class A Interest Distribution Amount as follows:
(i) the amount in clause (a)(i) of the definition of Class A
Formula Distribution Amount to the Class A-1
Certificateholders; the amount in clause (a)(ii) of the
definition of Class A Formula Distribution Amount to the Class
A-2 Certificateholders; the amount in clause (a)(iii) of the
definition of Class A Formula Distribution Amount to the Class
A-3 Certificateholders; the amount in clause (a)(iv) of the
definition of Class A Formula Distribution Amount to the Class
A-4 Certificateholders; the amount in clause (a)(v) of the
definition of Class A Formula Distribution Amount to the Class
A-5 Certificateholders; the amount in clause (a)(vi) of the
definition of Class A Formula Distribution Amount to the Class
A-6 Certificateholders; or, if the Amount Available is less
than the sum of the amounts specified in this clause (i), pro
rata to each Class of Class A Certificates based on the amount
of interest payable pursuant to this clause;
(ii) the aggregate Unpaid Class A Interest Shortfall pro rata to
each Class of Class A Certificates based on the Unpaid Class A
Interest Shortfall of each such Class;
3. after payment of the amounts specified in clauses (1) - (2)
above, to the Class M-1 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class M-1
Formula Distribution Amount;
(ii) any Unpaid Class M-1 Interest Shortfall;
4. after payment of the amounts specified in clauses (1) - (3)
above, to the Class B-1 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class B-1
Formula Distribution Amount;
(ii) any Unpaid Class B-1 Interest Shortfall;
5. after payment of the amounts specified in clauses (1) - (4)
above, as follows:
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(i) if there is a Class A Principal Deficiency Amount as of such
Remittance Date, the remaining Amount Available, pro rata to
each Class of Class A Certificates based on the related Class
Principal Balance (but in no event shall such amount exceed
the related Class Principal Balance);
(ii) the Unpaid Class A Principal Shortfall, or, if the remaining
Amount Available is less than such amount, such remaining
Amount Available, pro rata to each Class of Class A
Certificates based on the Principal Balance of each such Class
(but in no event shall such amount exceed the Principal
Balance of any such Class);
(A) on the Remittance Date in April 1999 and on each
Remittance Date thereafter on which the Class A-1
Principal Balance has not been paid in full, to the
Class A-1 Certificates (but in no event shall such
amount exceed the Class A-1 Principal Balance), and
(B) on each Remittance Date on which the Class A-1
Certificates have been paid in full (reduced, if such
Remittance Date is on the Class A-1 Cross-over Date, by
the amount distributed to the Class A-1
Certificateholders on such date pursuant to clause (A)),
pro rata to each Class of Class A Certificates based on
the Principal Balance of each such Class (but in no
event shall such amount exceed the Principal Balance of
any such Class);
(iii) if such Remittance Date is on or prior to the Class A-6
Cross-over Date, the Class A Percentage of the Formula
Principal Distribution Amount as follows:
(A) if the remaining Amount Available is less than the Class
A Percentage of the Formula Principal Distribution
Amount, then pro rata to each Class of Class A
Certificates based upon the amounts that would have been
distributed pursuant to clause (B), below, had the
remaining Amount Available been equal to the Class A
Percentage of the Formula Principal Distribution Amount;
(B) if the remaining Amount Available is not less than the
Class A Percentage of the Formula Principal Distribution
Amount, then
(a) if such Remittance Date is on or prior to the
Class A-1 Cross-over Date, to the Class A-1
Certificateholders, but in no event more than the
Class A-1 Principal Balance;
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(b) if such Remittance Date is on or after the Class
A-1 Cross-over Date but not after the Class A-2
Cross-over Date, to the Class A-2
Certificateholders, but in no event more than the
Class A-2 Principal Balance;
(c) if such Remittance Date is on or after the Class
A-2 Cross-over Date but not after the Class A-3
Cross-over Date, to the Class A-3
Certificateholders, but in no event more than the
Class A-3 Principal Balance;
(d) if such Remittance Date is on or after the Class
A-3 Cross-over Date but not after the Class A-4
Cross-over Date, to the Class A-4
Certificateholders, but in no event more than the
Class A-4 Principal Balance;
(e) if such Remittance Date is on or after the Class
A-4 Cross-over Date but not after the Class A-5
Cross-over Date, to the Class A-5
Certificateholders, but in no event more than the
Class A-5 Principal Balance;
(f) if such Remittance Date is on or after the Class
A-5 Cross-over Date but not after the Class A-6
Cross-over Date, to the Class A-6
Certificateholders, but in no event more than the
Class A-6 Principal Balance;
(g) if such Remittance Date is on or after the Class
A-5 Cross-over Date but not after the Class A-6
Cross-over Date, to the Class A-6
Certificateholders, but in no event more than the
Class A-6 Principal Balance;
6. after payment of the amounts specified in clauses (1) - (5)
above, to the Class M-1 Certificateholders as follows:
(i) any Unpaid Class M-1 Principal Shortfall;
(ii) the Class M-1 Percentage of the Formula Principal Distribution
Amount to the Class M-1 Certificateholders (plus, if such
Remittance Date is on the Class A-6 Cross-over Date, the
amount by which the Class A Percentage of the Formula
Principal Distribution Amount exceeded the Class A Principal
Balance on such date), but in no event more than the Class M-1
Principal Balance;
(iii) any Class M-1 Liquidation Loss Interest Amount;
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(iv) any Unpaid Class M-1 Liquidation Loss Interest Shortfall;
7. after payment of the amounts specified in clauses (1) - (6)
above, to the Class B-1 Certificateholders as follows:
(i) any Unpaid Class B-1 Principal Shortfall;
(ii) the Class B Percentage of the Formula Principal Distribution
Amount to the Class B-1 Certificateholders (plus, if such
Remittance Date is on the Class M-1 Cross-over Date, the
amount by which the sum of the Class A Percentage plus the
Class M-1 Percentage of the Formula Principal Distribution
Amount exceeded the sum of the Class A Principal Balance plus
the Class M-1 Principal Balance on such date), but in no event
more than the Class B-1 Principal Balance;
(iii) any Class B-1 Liquidation Loss Interest Amount;
(iv) any Unpaid Class B-1 Liquidation Loss Interest Shortfall;
8. after payment of the amounts specified in clauses (1) - (7)
above, to the Class B-2 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class B-2
Formula Distribution Amount;
(ii) any Unpaid Class B-2 Interest Shortfall;
(iii) any Unpaid Class B-2 Principal Shortfall;
(iv) if such Remittance Date is on or after the Class B-1
Cross-over Date, the Class B Percentage of the Formula
Principal Distribution Amount to the Class B-2
Certificateholders (minus, if such Remittance Date is on the
Class B-1 Cross-over Date, the amount of the Class B
Percentage of the Formula Principal Distribution Amount
actually distributed to the Class B-1 Certificateholders on
such date, and plus, if such Remittance Date is on the Class
B-1 Cross-over Date, the amount, if any, by which the Formula
Principal Distribution Amount exceeded the sum of the Class A
Principal Balance, the Class M-1 Principal Balance and the
Class B-1 Principal Balance on such date);
9. if the Company or a wholly owned subsidiary of the Company is the
Servicer, after payment of the amounts specified in clauses (1) - (8)
above, to pay the
VIII-6
Monthly Servicing Fee and any other compensation owed to the Servicer
pursuant to Section 7.02;
10. after payment of the amounts specified in clauses (1) - (9)
above, to pay the Class B-3I Distribution Amount to the Class B-3I
Certificateholders;
11. after payment of the amounts specified in clauses (1) - (10)
above, to reimburse the Class C Certificateholders for expenses incurred
by and reimbursable to them pursuant to Section 10.06; and
12. after payment of the amounts specified in clauses (1) - (11)
above, any remaining funds shall be paid to the Class C Master
Certificateholders.
b. On each Remittance Date, the Uncertificated Subsidiary Interests shall
receive distributions, to the extent of the Amount Available, in the following
order of priority:
1. Each Class of Class A Uncertificated Subsidiary Interests shall
receive distributions of principal in an amount equal to the amount of
principal distributed to its respective Corresponding Certificate Class
pursuant to Section 8.03(a)(5);
2. The Class M-S1 Interest shall receive a distribution of principal
in an amount equal to the amount of principal distributed to the Class M-1
Certificates pursuant to Section 8.03(a)(6);
3. The Class B-S1 and Class B-S2 Interests shall receive
distributions of principal in an amount equal to the amount of principal
distributed to its respective Corresponding Certificate Class pursuant to
Section 8.03(a)(7)-(8);
4. Each Class of Uncertificated Subsidiary Interests shall receive
distributions of interest, pro rata in an amount equal to (i) 1/12th of
the Weighted Average Contract Rate times the outstanding Subsidiary
Interest Principal Balance of such Class of Uncertificated Subsidiary
Interests, plus (ii) any Unpaid Subsidiary Interest Shortfall with respect
to such Class; and
5. Any remaining Amount Available shall be distributed to the Class
C Subsidiary Certificateholders.
c. If the applicable Monthly Report indicates a Class M-1 Interest
Deficiency Amount and/or a Class B-1 Interest Deficiency Amount for such
Remittance Date, the Trustee shall withdraw from the Certificate Account (to the
extent of funds on deposit therein one Business Day prior to such Remittance
Date, after distribution of the Amount Available pursuant to Section 8.03(a)) an
amount equal to the Class M-1 Interest Deficiency Amount and the Class B-1
Interest Deficiency Amount (or the amount of such funds in the Certificate
Account, if less)
VIII-7
and distribute such amount, first to the Class M-1 Certificateholders up to the
amount of the Class M-1 Interest Deficiency Amount (or pro rata, if such funds
are less than the Class M-1 Interest Deficiency Amount), if any, and then to the
Class B-1 Certificateholders up to the amount of the Class B-1 Interest
Deficiency Amount (or pro rata, if such remaining funds are less than the Class
B-1 Interest Deficiency Amount); provided, however, that (i) no such withdrawal
shall be made with respect to the Class M-1 Interest Deficiency Amount if the
Cumulative Realized Losses as of such Remittance Date are greater than 24.75% of
the Original Principal Balance of all Master Certificates (i.e.,
$185,625,000.00); (ii) no withdrawal with respect to Class B-1 Interest
Deficiency Amount shall be made if the Cumulative Realized Losses as of such
Remittance Date are greater than 17.75% of the Original Principal Balance of all
Master Certificates (i.e., $133,125,000.00); (iii) no withdrawal with respect to
a Class M-1 Interest Deficiency Amount shall be made if the aggregate
withdrawals with respect to all prior Class M-1 Interest Deficiency Amounts
equal 0.30% of the Original Principal Balance of all Master Certificates (i.e.,
$2,250,000.00) and (iv) no withdrawal with respect to a Class B-1 Interest
Deficiency Amount shall be made if the aggregate withdrawals with respect to all
prior Class B-1 Interest Deficiency Amounts equal 0.15% of the Original
Principal Balance of all Master Certificates (i.e., $1,125,000.00). If such
applicable Monthly Report indicates that the Class B-2 Formula Distribution
Amount for such Remittance Date exceeds the Remaining Amount Available, the
Trustee shall withdraw from the Certificate Account (to the extent of funds on
deposit therein as a consequence of a deposit made by the Company pursuant to
Section 8.04(a)) an amount equal to the Guarantee Payment and distribute such
amount to the Class B-2 Certificateholders.
d. Notwithstanding the priorities set forth above, any Pre-Funded Amount
deposited in the Certificate Account shall be applied solely to pay principal of
the Class A-1 Certificates and any amount withdrawn from the Capitalized
Interest Account and deposited in the Certificate Account shall be applied
solely as described in Section 8.06.
e. If the Trustee shall not have received the applicable Monthly Report by
any Remittance Date, the Trustee shall distribute all funds then in the
Certificate Account to Certificateholders in accordance with Section 8.03(a), to
the extent of such funds, on such Remittance Date.
SECTION 8.04. Limited Guarantee.
a. No later than the third Business Day prior to each Remittance Date, the
Servicer (if other than the Company) shall notify the Company of the amount of
the Guarantee Payment (if any) for such Remittance Date. Not later than the
Business Day preceding each Remittance Date, the Company shall deposit the
Guarantee Payment, if any, for such Remittance Date into the Certificate
Account.
b. The obligations of the Company under this Section shall not terminate
upon or otherwise be affected by a Service Transfer pursuant to Article VII of
this Agreement.
VIII-8
c. The obligation of the Company to provide the Limited Guarantee under
this Agreement shall terminate on the Final Remittance Date.
d. The obligation of the Company to make the Guarantee Payments described
in subsection (a) above shall be unconditional and irrevocable. The Company
acknowledges that its obligation to make the Guarantee Payments described in
subsection (a) above shall be deemed a guarantee by the Company of indebtedness
of the Trust for money borrowed from the Class B-2 Certificateholders.
e. If the Company fails to make a Guarantee Payment in whole or in part,
the Company shall promptly notify the Trustee, and the Trustee shall promptly
notify ▇▇▇▇▇'▇ and Standard & Poor's.
f. The Class C Subsidiary Certificateholders may at any time, but are not
obligated to, supplement the Company's Limited Guarantee by depositing assets in
a "qualified reserve fund," within the meaning of ss. 860G(a)(7) of the Code in
accordance with ss. 860G(d)(2)(D) of the Code.
SECTION 8.05. Company's or Servicer's Repurchase Option.
a. Subject to the conditions in subsection (b) below, the Company or the
Servicer may repurchase all of the Contracts and all property acquired in
respect of any Contract remaining in the Trust at a price equal to the greater
of:
A. the sum of (x) 100% of the principal balance of each Contract (other
than any Contract as to which title to the underlying property has
been acquired and whose fair market value is included pursuant to
clause (y) below), plus (y) the fair market value of such acquired
property (as determined by the Company as of the close of business
on the third Business Day next preceding the date upon which notice
of any such termination is furnished to Certificateholders pursuant
to Section 12.04) or
B. the aggregate fair market value (as determined by the Company as of
the close of business on such third Business Day) of all of the
assets of the Trust,
plus, in either case, any Unpaid Class A Interest Shortfall, any Unpaid Class
M-1 Interest Shortfall, any Unpaid Class M-1 Liquidation Loss Interest
Shortfall, any Unpaid Class B-1 Interest Shortfall, any Unpaid Class B-1
Liquidation Loss Interest Shortfall and any Unpaid Class B-2 Interest Shortfall
as well as one month's interest at the applicable Contract Rate on the Scheduled
Principal Balance of each Contract (including any Contract as to which the
related Manufactured Home has been repossessed).
VIII-9
b. The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.05(a) above shall be at the option of the Company, but
shall be conditioned upon (1) the Pool Scheduled Principal Balance, at the time
of any such purchase, aggregating less than 10% of the Cut-off Date Pool
Principal Balance, (2) such purchase constituting a plan of complete liquidation
of each of the Subsidiary REMIC and the Master REMIC in accordance with Section
860F of the Code, (3) the Company or the Servicer having provided the Trustee
and the Depository (if any) with at least 30 days' written notice and (4) the
Company or the Servicer (as applicable) shall have delivered to the Trustee an
unqualified Opinion of Counsel stating that payment of the purchase price to the
Certificateholders will not constitute a voidable preference or fraudulent
transfer under the United States Bankruptcy Code. If such option is exercised,
the Company or the Servicer, as applicable, shall provide to the Trustee the
certification required by Section 12.03, which certificate shall constitute a
plan of complete liquidation of each of the Subsidiary REMIC and the Master
REMIC within the meaning of Section 860F of the Code, and the Trustee shall
promptly sign such certification and release to the Company or the Servicer, as
applicable, the Contract Files and Land-and-Home Contract Files pertaining to
the Contracts being repurchased.
SECTION 8.06. Capitalized Interest Account.
a. On or before the Closing Date, the Trustee shall establish the
Capitalized Interest Account on behalf of the Trust, which must be an Eligible
Account, and shall deposit therein $0.00 received from the Company pursuant to
Section 2.02(s). The Capitalized Interest Account shall be entitled "U.S. Bank
National Association as Trustee for the benefit of holders of Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificates Series 1998-2." On
the Remittance Date occurring in May 1998, if the Monthly Report for such
Remittance Date indicates that the Amount Available (after payment of the amount
specified in clause (1) of Section 8.03(a) and including in the Amount Available
only payments in respect of interest on the Contracts) is not sufficient to pay
the Class A Interest Distribution Amount, plus the Class M-1 Interest
Distribution Amount, plus the Class B-1 Interest Distribution Amount, the
Trustee shall withdraw the amount of such deficiency, or the amount of funds in
the Capitalized Interest Account (net of any investment earnings thereon), if
less, and shall deposit such funds in the Certificate Account for distribution
on such Remittance Date in order first to pay any deficiency in the Amount
Available to pay the Class A Interest Distribution Amount, second to pay any
deficiency in the Amount Available to pay the Class M-1 Interest Distribution
Amount, and third to pay any deficiency in the Amount Available to pay the Class
B-1 Interest Distribution Amount.
b. The Capitalized Interest Account shall be part of the Trust but not
part of the Subsidiary REMIC or the Master REMIC. The Trustee on behalf of the
Trust shall be the legal owner of the Capitalized Interest Account. Green Tree
Finance Corp.--Two shall be the beneficial owner of the Capitalized Interest
Account, subject to the foregoing power of the Trustee to transfer amounts in
the Capitalized Interest Account to the Certificate Account. Funds in the
Capitalized Interest Account shall, at the direction of Green Tree Finance
Corp.--Two, be
VIII-10
invested in Eligible Investments that mature no later than the Business Day
prior to the next succeeding Remittance Date. All net income and gain from such
investments shall be distributed to Green Tree Finance Corp.--Two on such
Remittance Date. All amounts earned on amounts on deposit in the Capitalized
Interest Account shall be taxable to Green Tree Finance Corp.--Two.
c. Any funds remaining in the Capitalized Interest Account after the
Remittance Date in May 1998 shall be distributed to Green Tree Finance
Corp.--Two. After such date no further amounts shall be deposited in or
withdrawn from the Capitalized Interest Account. Any losses on such investments
shall be deposited in the Capitalized Interest Account by Green Tree Finance
Corp.--Two out of its own funds immediately as realized.
SECTION 8.07. Pre-Funding Account.
a. On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust, which must be an Eligible Account,
and shall deposit therein the amounts received from the Company pursuant to
Section 2.02(t). The Pre-Funding Account shall be entitled "Pre-Funding Account,
U.S. Bank National Association as Trustee for the benefit of holders of
Certificates, Series 1998-2." Funds deposited in the Pre-Funding Account shall
be held in trust by the Trustee for the Holders of the Certificates for the uses
and purposes set forth herein.
b. Amounts on deposit in the Pre-Funding Account shall be withdrawn by the
Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall withdraw an
amount equal to 100% of the Cut-off Date Principal Balance of each
Subsequent Contract transferred and assigned to the Trustee on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Company upon satisfaction of the conditions set forth in Section 2.03(b)
with respect to such transfer and assignment.
(ii) On the Business Day immediately preceding the Post-Funding
Remittance Date, the Trustee shall deposit into the Certificate Account
any amounts remaining in the Pre-Funding Account, net of investment
earnings.
c. The Pre-Funding Account shall be part of the Trust but not part of the
Master REMIC or Subsidiary REMIC. The Trustee on behalf of the Trust shall be
the legal owner of the Pre-Funding Account. The Company shall be the beneficial
owner of the Pre-Funding Account, subject to the foregoing power of the Trustee
to transfer amounts in the Pre-Funding Account to the Certificate Account. Funds
in the Pre-Funding Account shall, at the direction of the Servicer, be invested
in Eligible Investments of the kind described in clauses (i) and (ii)(A) of the
definition of "Eligible Investment" and that mature no later than the Business
Day prior to the next succeeding Remittance Date. All amounts earned on deposits
in the Pre-Funding Account
VIII-11
shall be taxable to the Company. The Trustee shall release to the Company all
investment earnings in the Pre-Funding Account on the Post-Funding Remittance
Date.
VIII-12
ARTICLE IX
THE CERTIFICATES AND UNCERTIFICATED SUBSIDIARY INTERESTS
SECTION 9.01. The Certificates.
a. The Uncertificated Subsidiary Interests shall be issued as
nontransferable (except to a successor Trustee) uncertificated interests
evidencing, as to each such Class, 100% of the interest in distributions
required to made to such Class, and having the original Subsidiary Interest
Principal Balance specified with respect to such Class of Uncertificated
Subsidiary Interests. The Class C Subsidiary Certificates shall be substantially
in the form set forth in Exhibit J hereto, and shall, on original issue, be
executed by the Trustee on behalf of the Trust upon the order of the Company.
The Class C Subsidiary Certificates shall be issuable in Percentage Interests,
and shall be evidenced by a single Class C Subsidiary Certificate issued on the
Closing Date to Green Tree Finance Corp.-Two.
b. The Class A, the Class M-1, the Class B, the Class B-3I and the Class C
Master Certificates shall be substantially in the forms set forth in Exhibits A,
B, C-1, C-2 and K, respectively, and shall, on original issue, be executed by
the Trustee on behalf of the Trust to or upon the order of the Company. The
Class A, the Class M-1 and the Class B Certificates shall be evidenced by (i)
one or more Class A-1 Certificates representing $36,000,000 initial aggregate
principal balance, (ii) one or more Class A-2 Certificates representing
$39,000,000 initial aggregate principal balance, (iii) one or more Class A-3
Certificates representing $95,000,000 initial aggregate principal balance, (iv)
one or more Class A-4 Certificates representing $41,500,000 initial aggregate
principal balance, (v) one or more Class A-5 Certificates representing
$162,000,000 initial aggregate principal balance, (vi) one or more Class A-6
Certificates representing $260,250,000 initial aggregate principal balance,
(vii) one or more Class M-1 Certificates representing $52,500,000 initial
aggregate principal balance, (viii) one or more Class B-1 Certificates
representing $33,750,000 initial aggregate principal balance, and (ix) one or
more Class B-2 Certificates $30,000,000 initial aggregate principal balance,
beneficial ownership of such Classes of Certificates to be held through
Book-Entry Certificates in minimum dollar denominations of $1,000 and integral
dollar multiples of $1,000 in excess thereof. The Class C Master Certificates
shall be issuable in Percentage Interests and shall be evidenced by a single
Class C Master Certificate issued on the Closing Date to Green Tree Finance
Corp.-Two.
c. The Certificates shall be executed by manual signature on behalf of the
Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificate or did not hold such offices at the
date of such Certificates. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless such Certificate has been
executed by manual signature in
IX-1
accordance with this Section, and such signature upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
executed and delivered hereunder. All Certificates shall be dated the date of
their execution, except for those Certificates executed on the Closing Date,
which shall be dated the Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates.
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. The Trustee will give prompt written notice to Certificateholders and
the Servicer of any change in the Certificate Registrar.
b. (1) Subject to clauses (2) and (3) below, no transfer of a Class B-3I
Certificate, Class C Subsidiary Certificate or Class C Master Certificate shall
be made by the Company or any other Person unless such transfer is exempt from
the registration requirements of the Securities Act of 1933 (the "Act"), as
amended, and any applicable state securities laws or is made in accordance with
the Act and laws. In the event that any such transfer is to be made, (A) the
Company may require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Company that such transfer may be made pursuant to
an exemption, describing the applicable exemption and the basis therefor, from
the Act and laws or is being made pursuant to the Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee or the Company, and (B) the
Trustee shall require the transferee to execute an investment letter
substantially in the form of Exhibit M attached hereto, which investment letter
shall not be an expense of the Trustee or the Company. The Class B-3I
Certificateholder, Class C Subsidiary Certificateholder or Class C Master
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Company and the Certificate Registrar against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(2) No transfer of a Class M-1 Certificate, a Class B Certificate, a
Class B-3I Certificate, a Class C Subsidiary Certificate or a Class C Master
Certificate or any interest therein shall be made to any employee benefit plan,
trust or account that is subject to ERISA, or that is described in Section
4975(e)(1) of the Code (each, a "Plan"), unless the prospective transferee of a
Certificate or interest therein provides the Servicer and the Trustee with a
certification of facts and, at its own expense, an Opinion of Counsel which
establish to the satisfaction of the Servicer and the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or cause the Servicer, the Company or the Trustee to be deemed a fiduciary
of such Plan or result in the imposition of an excise tax under Section 4975 of
the Code.
IX-2
(3) Notwithstanding anything to the contrary contained herein, (A)
neither the Class C Subsidiary Certificate nor the Class C Master Certificate,
nor any interest therein, shall be transferred, sold or otherwise disposed of to
a "disqualified organization," within the meaning of Section 860E(e)(5) of the
Code (a "Disqualified Organization"), including, but not limited to, (i) the
United States, a state or political subdivision thereof, a foreign government,
an international organization or an agency or instrumentality of any of the
foregoing, (ii) an organization (other than a cooperative described in Section
521 of the Code) which is exempt from the taxes imposed by Chapter 1 of the Code
and not subject to the tax imposed on unrelated business income by Section 511
of the Code, or (iii) a cooperative described in Section 1381(a)(2)(C) of the
Code, and (B) prior to any registration of any transfer, sale or other
disposition of the Class C Subsidiary Certificate or Class C Master Certificate,
the proposed transferee shall deliver to the Trustee, under penalties of
perjury, an affidavit that such transferee is not a Disqualified Organization,
with respect to which the Trustee shall have no actual knowledge that such
affidavit is false, and the transferor and the proposed transferee shall each
deliver for the Trustee an affidavit with respect to any other information
reasonably required by the Trustee pursuant to the REMIC Provisions, including,
without limitation, information regarding the transfer of noneconomic residual
interests and transfers of any residual interest to or by a foreign person;
provided, however, that, upon the delivery to the Trustee of an Opinion of
Counsel, in form and substance satisfactory to the Trustee and rendered by
Independent counsel, to the effect that the beneficial ownership of the Class C
Subsidiary Certificate or the Class C Master Certificate, as the case may be, by
any Disqualified Organization will not result in the imposition of federal
income tax upon the Subsidiary REMIC or the Master REMIC or any
Certificateholder or any other person or otherwise adversely affect the status
of the Subsidiary REMIC or the Master REMIC as a REMIC, the foregoing
prohibition on transfers, sales and other dispositions, as well as the foregoing
requirement to deliver a certificate prior to any registration thereof, shall,
with respect to such Disqualified Organization, terminate. Notwithstanding any
transfer, sale or other disposition of the Class C Subsidiary Certificate or
Class C Master Certificate, or any interest therein, to a Disqualified
Organization or the registration thereof in the Certificate Register, such
transfer, sale or other disposition and any registration thereof, unless
accompanied by the Opinion of Counsel described in the preceding sentence, shall
be deemed to be void and of no legal force or effect whatsoever and such
Disqualified Organization shall be deemed to not be the Class C Subsidiary or
Class C Master Certificateholder, as the case may be, for any purpose hereunder,
including, but not limited to, the receipt of distributions on the Class C
Subsidiary Certificate or Class C Master Certificate, and shall be deemed to
have no interest whatsoever in the Class C Subsidiary Certificate or Class C
Master Certificate. Each Class C Subsidiary or Class C Master Certificateholder,
by his acceptance thereof, shall be deemed for all purposes to have consented to
the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in compliance with
the provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed to not be
the Certificateholder for any purpose
IX-3
hereunder, including, but not limited to, the receipt of distributions on such
Certificate, and shall be deemed to have no interest whatsoever in such
Certificate.
(5) The Trustee shall give notice to ▇▇▇▇▇'▇ and Standard & Poor's
promptly following any transfer, sale or other disposition of a Class B-3I,
Class C Subsidiary or Class C Master Certificate.
c. At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing.
d. Except as provided in paragraph (e) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Class A, Class M-1, Class B-1
and Class B-2 Certificates may not be transferred by the Trustee except to
another Depository; (ii) the Depository shall maintain book-entry records with
respect to the Certificate Owners and with respect to ownership and transfers of
such Class A, Class M-1, Class B-1 and Class B-2 Certificates; (iii) ownership
and transfers of registration of the Class A, Class M-1, Class B-1 and Class B-2
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository, Depository Participants and indirect
participating firms as representatives of the Certificate Owners of the Class A,
Class M-1, Class B-1 and Class B-2 Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests and directions for and
votes of such representatives shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (vi) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository
IX-4
and (ii) the Trustee or the Company is unable to locate a qualified successor or
(y) the Company at its sole option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of definitive, fully registered Class A
Certificates, Class M-1 Certificates, Class B-1 and Class B-2 Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Class A Certificates, Class M-1 Certificates,
Class B-1 and Class B-2 Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Company nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one Class A-6
Certificate, one Class M-1 Certificate, one Class B-1 Certificate and one Class
B-2 Certificate, each in registered form registered in the name of the
Depository's nominee, Cede & Co., the total face amount of which represents 100%
of the related Original Principal Balance, respectively. If, however, the
aggregate principal amount of a Class of Class A Certificates, or the Class of
M-1 Certificates or a Class of Class B Certificates exceeds $200,000,000, one
Class A Certificate and/or one Class M-1 Certificate and/or one Class B
Certificate will be issued with respect to each $200,000,000 of principal amount
and an additional Certificate of such Class or Classes will be issued with
respect to any remaining principal amount. Each such Class A, Class M-1, Class
B-1 and Class B-2 Certificate registered in the name of the Depositary's nominee
shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or
IX-5
exchange of Certificates. All Certificates surrendered for transfer and exchange
shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and original denomination. Upon the issuance of any
new Certificate under this Section 9.04, the Trustee may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. Any
duplicate Certificate issued pursuant to this Section 9.04 shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Company, the Trustee, the Paying Agent and the Certificate
Registrar may treat the person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 8.01 and for all other purposes whatsoever, and none of the Servicer,
the Company, the Trustee, the Certificate Registrar, the Paying Agent or any
agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee and the Servicer,
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request
IX-6
from the Certificate Registrar a current list as provided above, and shall
afford such Applicants access to such list promptly upon receipt. Every
Certificateholder, by receiving and holding a Certificate, agrees with the
Certificate Registrar and the Trustee that none of the Company, the Certificate
Registrar or the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to
act on its behalf and subject to its direction in the execution and delivery of
the Certificates. For all purposes of this Agreement, the execution and delivery
of Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the execution and delivery of Certificates "by the Trustee."
IX-7
ARTICLE X
INDEMNITIES
SECTION 10.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Trustee (including
the Custodian, the Paying Agent and any other agents of the Trustee) and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation of any third-party claims (i) arising out of or resulting from the
origination of any Contract (including but not limited to truth in lending
requirements) or the servicing of such Contract prior to its transfer to the
Trust (but only to the extent such cost, expense, loss, damage, claim or
liability is not provided for by the Company's repurchase of such Contract
pursuant to Section 3.05) or (ii) arising out of or resulting from the use or
ownership of any Manufactured Homes by the Company or the Servicer or any
Affiliate of either. Notwithstanding any other provision of this Agreement, the
obligation of the Company under this Section shall not terminate upon a Service
Transfer pursuant to Article VII, except that the obligation of the Company
under this Section shall not relate to the actions of any subsequent Servicer
after a Service Transfer.
SECTION 10.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust or the Certificateholders under or as a
result of this Agreement and the transactions contemplated hereby and, to the
maximum extent permitted and valid under mandatory provisions of law, the Trust
and the Certificateholders expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification.
The Company agrees to pay, and to indemnify, defend and hold harmless the
Trust, the Trustee (including the Custodian, the Paying Agent and any other
agents of the Trustee) and the Certificateholders from, any taxes which may at
any time be asserted with respect to, and as of the date of, the transfer of the
Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates), any tax imposed on the Trust
as a result of the Company's repurchase of any Contract pursuant to Section
3.05(c), and costs, expenses and reasonable counsel fees in defending against
the same, whether arising by reason of the acts to be performed by the Company,
the Servicer or the Trustee under this Agreement or imposed against the Trust, a
Certificateholder or otherwise.
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SECTION 10.04. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Trustee (including
the Custodian, the Paying Agent and any other agents of the Trustee) and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, in respect of any action taken or omitted to be taken by the
Servicer with respect to any Contract. This indemnity shall survive any Service
Transfer (but the original Servicer's obligations under this Section 10.04 shall
not relate to any actions of any subsequent Servicer after a Service Transfer)
and any payment of the amount owing under, or any repurchase by the Company of,
any such Contract.
SECTION 10.05. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
SECTION 10.06. REMIC Tax Matters.
If Class C Subsidiary Certificateholders or Class C Master
Certificateholders, pursuant to Section 6.06, pay any taxes or charges imposed
upon the Subsidiary REMIC or the Master REMIC, as the case may be, as a REMIC or
otherwise, such taxes or charges, except to the extent set forth in the
following proviso, shall be expenses and costs of the Trust and the Class C
Subsidiary Certificateholders or Class C Master Certificateholders shall be
entitled to be reimbursed therefor out of the Certificate Account as provided in
Section 8.03; provided, however, that any such taxes or charges shall not be
expenses or costs of the Trust, nor will the Class C Subsidiary
Certificateholders or Class C Master Certificateholders be entitled to
reimbursement therefor out of the Certificate Account, if and to the extent that
such taxes or charges resulted from a failure by the Company, the Trustee or any
Servicer to comply with the provisions of Section 2.04.
X-2
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders with aggregate Percentage Interests
representing 25% or more of the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement; and
XI-1
d. The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such event or the Trustee receives
written notice of such event from the Servicer or the Holders of Certificates
evidencing, as to any Class, Percentage Interests representing 25% or more.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any counsel for
the Company or the Servicer shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
XI-2
d. Prior to the occurrence of an Event of Termination and after the curing
of all Events of Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and
e. The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein or in the Certificates (other than the Trustee's execution
thereof). The Trustee makes no representations as to the validity or sufficiency
of this Agreement, of the Certificates (other than its execution thereof) or of
any Contract, Contract File, Land-and-Home Contract File or related document.
The Trustee shall not be accountable for the use or application by the Servicer
or the Company of funds paid to the Company in consideration of conveyance of
the Contracts to the Trust by the Company or deposited into or withdrawn from
the Certificate Account by the Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Event of Termination.
Holders of each Class of Class A Certificates, Holders of Class M-1
Certificates, Holders of Class B-1 Certificates and Holders of Class B-2
Certificates evidencing, as to each such Class, Percentage Interests
representing 25% or more shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 11.01, the Trustee shall have the right to decline to follow
any such direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed
XI-3
proper by the Trustee and which is not inconsistent with such direction by the
Certificateholders; and provided further that the Trustee shall instead follow
the directions of Holders of each Class of Class A Certificates, Holders of
Class M-1 Certificates, Holder of Class B-1 Certificates and Holders of Class
B-2 Certificates evidencing, as to each such Class, Percentage Interests
aggregating 51% or more whenever it receives conflicting directions from each
Class of Class A Certificateholders, Class M-1 Certificateholders, Holder of
Class B-1 Certificates and Class B-2 Certificateholders. Holders of each Class
of Class A Certificates, Holders of Class M-1 Certificates, Holder of Class B-1
Certificates and Holders of Class B-2 Certificates evidencing, as to each such
Class, Percentage Interests representing 51% or more may on behalf of
Certificateholders waive any past Event of Termination hereunder and its
consequences, except a default in respect of a covenant or provision hereof
which under Section 12.07 cannot be modified or amended without the consent of
all Certificateholders, and upon any such waiver, such Event of Termination
shall cease to exist and shall be deemed to have been cured for every purpose of
this Agreement; but no such waiver shall extend to any subsequent or other Event
of Termination or impair any right consequent thereon. Following the Class M-1
Cross-over Date, if all distributions payable to the Class A Certificateholders
and the Class M-1 Certificateholders have either been made or provided for in
accordance with this Agreement, then the Holders of Class B-1 Certificates and
Class B-2 Certificates may exercise the rights given to the Class A
Certificateholders and the Class M-1 Certificateholders under this Section.
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services rendered
by it hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
b. except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
c. to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust and its duties hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
XI-4
All such payments by the Servicer shall be made from its own funds. The
covenants in this Section 11.05 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent and Certificate Registrar hereunder, and
shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a financial institution
organized and doing business under the laws of the United States of America or
any State, authorized under such laws to exercise corporate trust powers and a
Title I approved lender pursuant to FHA Regulations, shall not be an Affiliate
of the Company, and shall have a combined capital and surplus of at least
$50,000,000 or shall be a member of a bank holding system the aggregate combined
capital and surplus of which is $50,000,000, provided that the Trustee's
separate capital and surplus shall at all times be at least the amount required
by Section 310(a)(2) of the Trust Indenture Act of 1939, as amended. If such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of a supervising or examining authority, then for the purposes
of this Section 11.06, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In addition, the Trustee shall at all times
have a long-term deposit rating (or, if the Trustee is a wholly owned subsidiary
of a bank holding Company system and not rated, the bank holding Company shall
have a long-term senior unsecured debt rating) from ▇▇▇▇▇'▇ of at least Baa3 or
as shall be otherwise acceptable to ▇▇▇▇▇'▇, rated BBB or higher by Standard &
Poor's or as shall be otherwise acceptable to Standard & Poor's and a rating
from Fitch (if rated by Fitch) of at least BBB- or as shall be otherwise
acceptable to Fitch. In case at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 11.06, the Trustee shall
resign immediately in the manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer and the Company.
A copy of any such notice shall be sent to ▇▇▇▇▇'▇ and Standard & Poor's. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to each of the Servicer and the Company and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.06 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation,
XI-5
conservation or liquidation, then the Company may remove the Trustee. If the
Company shall have removed the Trustee under the authority of the immediately
preceding sentence, the Company shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.08.
SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall
execute, acknowledge and deliver to the Servicer, the Company and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The predecessor Trustee shall deliver or cause to be delivered
to the successor Trustee the Contracts, Contract Files and Land-and-Home
Contract Files and any related documents and statements held by it hereunder;
and, if the Land-and-Home Contract Files are then held by a custodian pursuant
to a custodial agreement, the predecessor Trustee and the custodian shall amend
such custodial agreement to make the successor Trustee the successor to the
predecessor Trustee thereunder; and the Servicer, the Company and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.08, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to each Certificateholder at their addresses as shown in
the Certificate Register. If the Servicer fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the
XI-6
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall promptly notify ▇▇▇▇▇'▇ and Standard
& Poor's in the event it is a party to any merger, conversion or consolidation.
SECTION 11.10. Tax Returns.
Upon the Servicer's request, the Trustee will furnish the Servicer with
all such information as the Servicer may reasonably require in connection with
preparing all tax returns of the Subsidiary REMIC and the Master REMIC and the
Trustee shall execute such returns.
SECTION 11.11. Obligor Claims.
In connection with any offset defenses, or affirmative claims for
recovery, asserted in legal actions brought by Obligors under one or more
Contracts based upon provisions therein complying with, or upon other rights or
remedies arising from, any legal requirements applicable to the Contracts,
including, without limitation, the Federal Trade Commission's Trade Regulation
Rule Concerning Preservation of Consumers' Claims and Defenses (16 C.F.R. ss.
433) as amended from time to time:
a. The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or
cooperation with, any seller of home improvements, in the arrangement,
origination or making of Contracts. The Trustee is the holder of the
Contracts only as trustee on behalf of the Certificateholders, and not as
a principal or in any individual or personal capacity;
b. The Trustee shall not be personally liable for or obligated to
pay Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments, pursuant to such legal actions;
c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final
judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders.
e. The Trustee will cooperate with and assist Certificateholders in
their defense of legal actions by Obligors to recover affirmative claims
if such cooperation and assistance is not contrary to the interests of the
Trustee as a party to such legal actions
XI-7
and if the Trustee is satisfactorily indemnified for all liability, costs
and expenses arising therefrom; and
f. The Company hereby agrees to indemnify, hold harmless and defend
the Trustee, Certificateholders from and against any and all liability,
loss, costs and expenses of the Trustee, Certificateholders resulting from
any affirmative claims for recovery asserted or collected by Obligors
under the Contracts. Notwithstanding any other provision of this
Agreement, the obligation of the Company under this Section 11.11(f) shall
not terminate upon a Service Transfer pursuant to Article VII.
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or as separate trustees, or as custodians, for the purpose of conforming to any
legal requirement, restriction or condition (i) with respect to the holding of
the Contracts, the Contract Files and the Land-and-Home Contract Files or (ii)
with respect to the enforcement of a Contract in any state in which a
Manufactured Home is located or in any state in which any portion of the Trust
is located. The separate trustees, co-trustees, or custodians so appointed shall
be trustees or custodians for the benefit of all Certificateholders and shall,
subject to the provisions of the following paragraph, have such powers, rights
and remedies as shall be specified in the instrument of appointment; provided,
however, that no such appointment shall, or shall be deemed to, constitute the
appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(A) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of monies shall be
exercised solely by the Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee, to the extent also imposed upon such separate
trustees, co-trustees or custodians, shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including holding of the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
XI-8
(C) no separate trustee, co-trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any other separate
trustee, co-trustee or custodian hereunder; and
(D) the Company may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian, so appointed by it.
If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Servicer if
and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unreasonably withheld.
SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms of
this Agreement (including, without limitation, Section 11.12), the Trustee may,
with the prior consent of the Company, appoint one or more agents to carry out
ministerial matters on behalf of the Trustee under this Agreement.
XI-9
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Functions.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee payable to it. The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon determination that the performance
of its duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel for the Servicer to such effect
addressed and delivered to the Trustee. No such resignation shall become
effective until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Sections
7.02 and 7.03.
Notwithstanding the foregoing:
a. Any person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation
to which the Servicer shall be a party, or any Person succeeding to the
business of the Servicer, shall be the successor of the Servicer
hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person
to the Servicer shall satisfy the criteria set forth in the definition of
an Eligible Servicer. The Servicer shall promptly notify Moody's and
Standard & Poor's of any such merger to which it is a party.
b. The Company, if it is the Servicer, may delegate some or all of
its servicing duties to a wholly owned subsidiary of the Company, for so
long as said subsidiary remains, directly or indirectly, a wholly owned
subsidiary of the Company. Notwithstanding any such delegation the Company
shall retain all of the rights and obligations of the Servicer hereunder.
SECTION 12.02. Maintenance of Office or Agency.
The Trustee will maintain in St. ▇▇▇▇, Minnesota, an office or agency
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. On the date hereof the Trustee's
office for such purposes is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇. The Trustee will give prompt
written notice
XII-1
to Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 12.03. Termination.
a. This Agreement shall terminate (after distribution of all amounts due
to Certificateholders pursuant to Sections 8.01 and 8.03) on the earlier of (a)
the Remittance Date on which the Pool Scheduled Principal Balance is reduced to
zero and all amounts payable to Certificateholders on such Remittance Date have
been distributed to Certificateholders or (b) the Remittance Date on which the
Company or the Servicer repurchases the Contracts pursuant to Section 8.05;
provided, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to the Court of St.
▇▇▇▇▇, living on the date hereof; and provided further, that the Servicer's and
the Company's representations and warranties and indemnities by the Company and
the Servicer shall survive termination.
b. Notice of any termination, specifying the Final Remittance Date (which
shall be a date that would otherwise be a Remittance Date) upon which all
Certificateholders may surrender their Certificates to the Company for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee (upon direction by the Company ten days prior to the date such notice is
to be mailed) by letter to Standard & Poor's, Moody's, and the
Certificateholders mailed no later than the fifth Business Day of the month of
the Final Remittance Date specifying (1) the Final Remittance Date upon which
final payment on the Certificates will be made upon presentation and surrender
of Certificates at the office or agency of the Company therein designated; (2)
the amount of any such final payment; and (3) that the Record Date otherwise
applicable to such Remittance Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office or agency of
the Company therein specified. Any notice of purchase of Contracts by the
Company pursuant to Section 8.05 shall constitute the adoption by the Trustee on
behalf of the Certificateholders of a plan of complete liquidation of the
Subsidiary REMIC and the Master REMIC within the meaning of Section 860F of the
Code on the date such notice is given when signed by the Trustee. Each such
notice shall, to the extent required by the REMIC Provisions or other applicable
law, be signed on behalf of the Subsidiary REMIC and the Master REMIC by the
Trustee. The Trustee shall give such notice to the Certificate Registrar at the
time such notice is given to the Certificateholders. In the event such notice is
given in connection with the Company's election to purchase the Contracts, the
Company shall deposit in the Certificate Account on the Final Remittance Date in
immediately available funds an amount equal to the above-described purchase
price and upon such deposit Certificateholders will be entitled to the amount of
such purchase price but not amounts in excess thereof, all as provided herein.
Upon certification to the Trustee by a Servicing Officer, following such final
deposit the Trustee shall promptly release to the Company the Contract Files for
the remaining Contracts, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
XII-2
c. Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed from the Certificate Account, in the following order of
priority, to Certificateholders on the Final Remittance Date in proportion to
their respective Percentage Interests an amount equal to (i) as to Class A
Certificates, the Class A-1 Principal Balance, the Class A-2 Principal Balance,
the Class A-3 Principal Balance, the Class A-4 Principal Balance, the Class A-5
Principal Balance and the Class A-6 Principal Balance together with any Unpaid
Class A Interest Shortfall and one month's interest at the related Remittance
Rate on the related Class, respectively (calculated in the manner specified in
Section 1.03), (ii) as to Class M-1 Certificates, the Class M-1 Principal
Balance together with any Unpaid Class M-1 Interest Shortfall, any Unpaid Class
M-1 Liquidation Loss Interest Shortfall and one month's interest at the Class
M-1 Remittance Rate on the Class M-1 Principal Balance, (iii) as to Class B-1
Certificates, the Class B-1 Principal Balance together with any Unpaid Class B-1
Interest Shortfall, any Unpaid Class B-1 Liquidation Loss Interest Shortfall and
one month's interest at the Class B-1 Remittance Rate on the Class B-1 Principal
Balance, (iv) as to Class B-2 Certificates, the Class B-2 Principal Balance
together with any Unpaid Class B-2 Interest Shortfall and one month's interest
at the Class B-2 Remittance Rate on the Class B-2 Principal Balance, (v) as to
Class B-3I Certificates, any Unpaid Class B-3I Shortfall, and (vi) as to Class C
Subsidiary Certificates, the amount which remains on deposit in the Certificate
Account (other than amounts retained to meet claims) after application pursuant
to clauses (i), (ii), (iii) and (iv) above; provided that any Guarantee Payment
deposited in the Certificate Account shall be distributed only to the Class B-2
Certificateholders. The distribution on the Final Remittance Date shall be in
lieu of the distribution otherwise required to be made on such Remittance Date
in respect of each Class of Certificates.
d. In the event that all of the Certificateholders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Company shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
three months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Company shall transfer to itself all amounts
remaining on deposit in the Certificate Account, to hold in trust for
Certificateholders who have not surrendered their Certificates for cancellation,
together with the final record list of Certificateholders, and the Company shall
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain in trust hereunder.
e. Each Certificateholder hereby irrevocably approves and appoints the
Trustee as its attorney-in-fact for the purposes of adoption of the plan of
complete liquidation.
SECTION 12.04. Acts of Certificateholders.
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver or
other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to
XII-3
have been given or taken on behalf of, and shall be binding upon, all
Certificateholders if agreed to by Holders of Certificates of the specified
Class or Classes evidencing, as to each such Class, Percentage Interests
aggregating 51% or more.
b. Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
c. The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
d. The ownership of Certificates shall be proved by the Certificate
Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
f. The Trustee may require such additional proof of any matter referred to
in this Section as it shall deem necessary.
SECTION 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and
basis point calculations under this Agreement will be made on the basis of a
360-day year and twelve 30-day months and will be carried out to at least three
decimal places.
SECTION 12.06. Assignment or Delegation by Company.
Except as specifically authorized hereunder, and except for its
obligations as Servicer which are dealt with under Article V and Article VII,
the Company may not convey and assign or delegate any of its rights or
obligations hereunder absent the prior written consent of Holders of
Certificates of each Class evidencing, as to each such Class, Percentage
Interests aggregating 66 2/3% or more, and any attempt to do so without such
consent shall be void. It is understood that the foregoing does not prohibit the
pledge or assignment by the Company of any right to payment pursuant to Article
VIII.
XII-4
Notwithstanding the foregoing, any person into which the Company may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Company shall promptly notify Moody's and Fitch of any such merger to which it
is a party.
SECTION 12.07. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, to make such changes as are necessary to maintain the status of
each of the Subsidiary REMIC and the Master REMIC as a "real estate mortgage
investment conduit" under the REMIC Provisions of the Code or to otherwise
effectuate the benefits of such status to the Subsidiary REMIC, the Master REMIC
and the Certificateholders, including, without limitation, to implement any
provision permitted by law that would enable a REMIC to avoid the imposition of
any tax, to add or amend any provision as required by Standard & Poor's,
Moody's, or any other nationally recognized statistical rating organization in
order to improve or maintain the rating of any Class of Class A Certificates,
the Class M-1 Certificates or any Class of Class B Certificates, or to make any
other provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel for the Company, adversely affect in any material respect the interests
of any Certificateholder.
b. This Agreement may also be amended from time to time by the Servicer,
the Company and the Trustee, with the consent of Holders of Certificates of each
Class affected thereby evidencing, as to each such Class, Percentage Interests
aggregating 51% or more, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Contracts or distributions which
are required to be made on any Certificate, (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders of
all Certificates then outstanding, (c) result in the disqualification of the
either the Subsidiary REMIC or the Master REMIC as a REMIC under the Code, (d)
adversely affect the status of either the Subsidiary REMIC or the Master REMIC
as a REMIC or the status of the Regular Certificates as "regular interests" in
the Master REMIC or (e) cause any tax (other than any tax imposed on "net income
from foreclosure property" under Section 860G(c)(1) of the Code that would be
imposed without regard to such amendment) to be imposed on the Trust, including,
without limitation, any tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section
XII-5
860G(d)(1) of the Code. This Agreement may not be amended without the consent of
all Class C Certificateholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
which would modify in any manner the rights of the Class C Certificateholders.
c. This Agreement shall not be amended under this Section without the
consent of 100% of Certificateholders if such amendment would result in the
disqualification of either Subsidiary REMIC or the Master REMIC as a REMIC under
the Code.
d. Concurrently with the solicitation of any consent pursuant to this
Section 12.07, the Trustee shall furnish written notification to Standard &
Poor's and Moody's of such solicitation. Promptly after the execution of any
amendment pursuant to this Section 12.07, the Trustee shall furnish written
notification of the substance of such amendment to Moody's, Standard & Poor's
and each Certificateholder.
e. It shall not be necessary for the consent of Certificateholders under
this Section 12.07 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
f. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
g. In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an unqualified Opinion of Counsel to the Servicer
to the effect that such amendment is authorized or permitted by the Agreement.
h. In the absence of the consent described in subsection (c) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the Subsidiary REMIC or the Master REMIC as a
REMIC or the status of the Regular Certificates as "regular interests" in the
Master REMIC, and (ii) will not cause any tax (other than any tax imposed on
"net income from foreclosure property" under Section 860G(c)(1) of the Code that
would be imposed without regard to such amendment) to be imposed on the Trust,
including, without limitation, any tax imposed on "prohibited transactions"
under Section 860F(a)(1) of the Code or on "contributions after the startup
date" under Section 860G(d)(1) of the Code.
i. Upon the execution of any amendment or consent pursuant to this Section
12.07, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every Certificateholder hereunder shall be bound thereby.
XII-6
SECTION 12.08. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company and the Trustee shall be in writing and delivered or mailed to it at the
appropriate following address:
If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee:
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇
Attention: Structured Finance, Manufactured Housing
Surveillance Group
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Standard & Poor's:
Standard & Poor's
Standard & Poor's Rating Services,
a division of The McGraw Hill Companies, Inc.
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Backed Securities Surveillance Group
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
XII-7
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
SECTION 12.09. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 12.10. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.11. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
XII-8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this ____
day of March, 1998.
GREEN TREE FINANCIAL
CORPORATION
By ______________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President, General Counsel
and Secretary
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but
solely as Trustee
By ______________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
Trust Officer
By ______________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
XII-9
EXHIBIT A
FORM OF CLASS A- [1] - [6] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
Class A-[1][2][3][4][5][6] No.
(Senior)
Cut-off Date: as defined in the Remittance Rate: ____%
Pooling and Servicing Agreement [Remittance Rate: Floating Rate equal to the
dated as of March 1, 1998 Weighted Average Contract Rate (subject to a
maximum of __%)]
First Remittance Date: Denomination: $___________
May 1, 1998
Servicer: Aggregate Denomination of
Green Tree Financial Corporation All Class A-[1][2][3][4][5][6] Certificates:
$____________
Maturity Date:
[April 1, 1999] [January 2, 2030]
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 1998-2, CLASS A-[1][2][3][4][5][6] (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
A-1
This certifies that Cede & Co. is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in Manufactured Housing Contract Senior/Subordinate Pass-Through Certificate
Trust 1998-2 (the "Trust"), which includes among its assets a pool of
manufactured housing installment sale contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after the
applicable Cut-off Date or Subsequent Cut-off Date. The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1998, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and U.S. Bank National Association, as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May, 1998, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds a Class of Class A Certificates with an aggregate
Percentage Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the portion of the Class A Distribution Amount to be distributed to
such Class of Class A Certificates. The Maturity Date of this Certificate is
[April 1, 1999] [January 2, 2030] or the next succeeding Business Day if such
January 2 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St.
A-2
▇▇▇▇, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By __________________________________
Authorized Signatory
A-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By ______________________________
Signature
A-5
EXHIBIT B
FORM OF CLASS M-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Class M-1 No.
(Subordinate)
Cut-off Date: as defined in the Remittance Rate: Floating Rate equal
Pooling and Servicing Agreement to the Weighted Average Contract Rate
dated as of March 1, 1998 (subject to a maximum of ______%)
Denomination: $_____________
First Remittance Date:
May 1, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ of
All Class M-1 Certificates:
$___________________
Servicer:
Green Tree Financial Corporation Maturity Date:
January 2, 2030
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 1998-2, CLASS M-1 (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
B-1
This certifies that Cede & Co. is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in Manufactured Housing Contract Senior/Subordinate Pass-Through Certificate
Trust 1998-2 (the "Trust"), which includes among its assets a pool of
manufactured housing installment sale contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after the
applicable Cut-off Date or Subsequent Cut-off Date. The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1998 between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and U.S. Bank National Association, as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May, 1998, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds a Class M-1 Certificate with an aggregate Percentage
Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the portion of the Class M-1 Distribution Amount for such Remittance
Date. The final scheduled Remittance Date of this Certificate is January 2, 2030
or the next succeeding Business Day if such January 2 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St.
B-2
▇▇▇▇, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
B-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By ________________________________
Authorized Signatory
B-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By _____________________________
Signature
B-5
EXHIBIT C-1
FORM OF CLASS B-[1][2] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES[,] [AND] THE CLASS M-1 CERTIFICATES [AND THE CLASS B-1
CERTIFICATES] AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Class B-[1][2] No.
(Subordinate)
Cut-off Date: as defined in the Remittance Rate: Floating Rate equal
Pooling and Servicing Agreement to the Weighted Average Contract Rate
dated as of March 1, 1998 (subject to a maximum of ____%)
Denomination: $___________
First Remittance Date:
May 1, 1998 Aggregate Denomination of
All Class B-[1][2] Certificates:
$_________________
Servicer:
Green Tree Financial Corporation Maturity Date:
January 2, 2030
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-2, CLASS B-[1][2]
(SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
This certifies that Cede & Co. is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in Manufactured Housing Contract Senior/Subordinate Pass-Through Certificate
Trust 1998-2 (the "Trust"), which includes among its assets a pool of
manufactured housing installment sale contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments
C-1-1
which are due pursuant thereto on or after the applicable Cut-off Date or
Subsequent Cut-off Date. The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of March 1, 1998, between Green
Tree Financial Corporation, as Seller and Servicer (the "Company"), and U.S.
Bank National Association, as Trustee of the Trust (the "Trustee"). This
Certificate is one of the Certificates described in the Agreement and is issued
pursuant and subject to the Agreement. By acceptance of this Certificate the
holder assents to and becomes bound by the Agreement. To the extent not defined
herein, all capitalized terms have the meanings assigned to such terms in the
Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May, 1998, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds a Class of Class B Certificates with an aggregate
Percentage Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the Class [B-1/B-2] Distribution Amount for such Remittance Date.
The final scheduled Remittance Date of this Certificate is January 2, 2030 or
the next succeeding Business Day if such January 2 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account [and the Limited
Guarantee of the Company] to the extent available for distribution to the
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St. ▇▇▇▇, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
C-1-2
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
C-1-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING
CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By ____________________________________
Authorized Officer
C-1-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By __________________________
Signature
C-1-5
EXHIBIT C-2
FORM OF CLASS B-3I CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class B-3I No.
(Subordinate)
Cut-off Date: as defined in the Percentage Interest:
Pooling and Servicing Agreement
dated as of March 1, 1998
First Remittance Date: Maturity Date:
May 1, 1998 January 2, 2030
(or if such day is not a
Business Day, then the next
succeeding Business Day)
Servicer:
Green Tree Financial Corporation
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-2,
CLASS B-3I (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
C-2-1
This certifies that Green Tree Finance Corp.--Two is the registered owner
of the undivided Percentage Interest set forth above in Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust 1998-2 (the "Trust"),
which includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after the applicable Cut-off Date or Subsequent
Cut-off Date. The Trust has been created pursuant to a Pooling and Servicing
Agreement (the "Agreement"), dated as of March 1, 1998, between Green Tree
Financial Corporation, as Seller and Servicer (the "Company"), and U.S. Bank
National Association, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May 1998 so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds Class B-3I Certificates with an aggregate Percentage Interest of at least
5% and so desires, by wire transfer pursuant to instructions delivered to the
Trustee at least 10 days prior to such Remittance Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Remittance Date, in an amount equal to
the Certificateholder's Percentage Interest of the Class B-3I Distribution
Amount for such Remittance Date. The final scheduled Remittance Date of this
Certificate is January 2, 2030, or the next succeeding Business Day if such
January 2 is not a Business Day.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT
TO THE CONTRACTS.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
C-2-2
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St. ▇▇▇▇, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
C-2-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By ___________________________________
Authorized Officer
C-2-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By ___________________________________
Signature
C-2-5
EXHIBIT D
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 1998 between Green Tree Financial Corporation (the
"Company") and U.S. Bank National Association, as Trustee (the "Trustee"), the
Company does hereby transfer, assign, set over and otherwise convey to the
Trustee (i) all the right, title and interest of the Company in and to the
Contracts, including, without limitation, all right, title and interest in and
to the Collateral Security and all rights to receive payments on or with respect
to the Contracts (other than the principal and interest due on the Contracts
before the applicable Cut-off Date or Subsequent Cut-off Date), (ii) all rights
under every Hazard Insurance Policy relating to a Manufactured Home securing a
Contract for the benefit of the creditor of such Contract, (iii) all rights
under all FHA/VA Regulations pertaining to any Contract that is an FHA/VA
Contract, (iv) the proceeds from the Errors and Omissions Protection Policy and
all rights under any blanket hazard insurance policy to the extent they relate
to the Manufactured Homes, (v) all documents contained in the Contract Files and
the Land-and-Home Contract Files, (vi) an amount equal to the difference between
the aggregate Cut-off Date Principal Balances of the Staged-Funding Contracts
and the principal balance of the Staged-Funding Contracts as of the Closing Date
paid by the underwriters of the Certificates to the Trust by order of the
Company out of the proceeds of the sale of the Certificates, (vii) amounts on
deposit in the Capitalized Interest Account, (viii) the Pre-Funded Amount, and
(ix) all proceeds and products in any way derived from any of the foregoing.
Capitalized terms used herein but not defined herein have the meanings assigned
to them in the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ___ day of March, 1998.
GREEN TREE FINANCIAL CORPORATION
[Seal] By _____________________________
[Name]
[Title]
D-1
EXHIBIT E
FORM OF CERTIFICATE OF OFFICER
GREEN TREE FINANCIAL CORPORATION
OFFICER'S CERTIFICATE
We, _________________________ hereby certify that we are the duly
elected ______________________________________________, respectively, of Green
Tree Financial Corporation ("Green Tree"), and that as such we are duly
authorized to execute and deliver this Certificate on behalf of Green Tree in
connection with the Pooling and Servicing Agreement, dated as of March 1, 1998
(the "Pooling and Servicing Agreement") between Green Tree and U.S. Bank
National Association, as Trustee, and the Underwriting Agreement relating to the
Class A, Class M-1 and Class B-1 Certificates, dated March 11, 1998 the
"Underwriting Agreement"), among Green Tree, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇
& Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, and Salomon Brothers
Inc (all capitalized terms used herein without definition having the respective
meanings specified in the Pooling and Servicing Agreement and the Underwriting
Agreement) and further certify as follows:
1. Attached hereto as Exhibits I and II, respectively, are true and
correct copies of the Certificate of Incorporation and Bylaws of Green
Tree, together with all amendments thereto, both of which are in full
force and effect on the date hereof, and attached hereto as Exhibit III
are Certificates of Good Standing for Green Tree issued by the Secretary
of State of each of the States of Delaware and Minnesota.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of Green Tree are pending or contemplated.
3. There is no litigation pending, or to our knowledge, threatened,
which, if determined adversely to Green Tree, would affect adversely the
sale of the Contracts, the execution, delivery or enforceability of the
Pooling and Servicing Agreement and the Underwriting Agreement, or the
ability of Green Tree to service and administer the Contracts in
accordance with the terms of the Pooling and Servicing Agreement.
4. Each person who, as an officer or representative of Green Tree,
signed the Pooling and Servicing Agreement, the Underwriting Agreement, or
any other document delivered prior hereto or on the date hereof in
connection with the sale and servicing of the Contracts in accordance with
the Pooling and Servicing Agreement or the Underwriting Agreement was at
the time of such signing and is as of the date hereof duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
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5. Neither the execution and delivery by Green Tree of the Pooling
and Servicing Agreement or the Underwriting Agreement, nor its compliance
with the terms and provisions thereof, will conflict with, or result in a
breach of, any of the terms of, or constitute a default under, any
judgment, order, injunction or decree of any domestic court or
governmental authority to which Green Tree is subject or any indenture,
agreement, contract or commitment to which Green Tree is a party or by
which it is bound, which conflict, breach or default presents a reasonable
possibility of having a materially adverse effect on the business or
operations of Green Tree.
6. Attached hereto as Exhibit IV is a certified true copy of the
resolutions of the Executive Committee of the Board of Directors of Green
Tree (the "Resolutions") adopted with respect to the authorization of
Green Tree to take such actions and enter into such agreements as are
necessary to sell and service the Contracts in accordance with the Pooling
and Servicing Agreement and the Underwriting Agreement; said resolutions
have not been amended, modified, annulled or revoked and are in full force
and effect on the date hereof.
7. The Registration Statement and the Prospectus, at the time the
Registration Statement became effective did comply, and as of the date
hereof comply, in all material respects with the requirements of the
Securities Act of 1933, as amended (the "1933 Act") and the Regulations.
The Registration Statement, at the time it became effective did not, and
as of the date hereof does not, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus as
of the date thereof did not, and as of the date hereof does not, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in, or omissions from, the Registration Statement
or Prospectus made in reliance upon and in conformity with information
furnished to the Green Tree in writing by the Underwriters expressly for
use in the Registration Statement or Prospectus. The conditions to the use
by the Green Tree of registration statement on Form S-3 under the 1933
Act, as set forth in the General Instructions to Form S-3, have been
satisfied with respect to the Registration Statement and the Prospectus.
There are no contracts or documents of the Green Tree which are required
to be filed as exhibits to the Registration Statement pursuant to the 1933
Act or the Regulations which have not been so filed.
8. Each of the representations and warranties contained in Sections
3.01 and 3.04 of the Pooling and Servicing Agreement and Section 1 of the
Underwriting Agreement is true and correct on and as of the date hereof.
To the best of our knowledge, the representations and warranties of Green
Tree contained in Sections 3.02 and 3.03 of the Pooling and Servicing
Agreement are true and correct on the date hereof.
9. Green Tree has complied with all the agreements by which it is
bound in connection with the transactions contemplated by the Pooling and
Servicing Agreement and
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Underwriting Agreement, and has satisfied all the conditions on its part
to be performed or satisfied prior to the Closing Date in connection with
the transactions contemplated by the Pooling and Servicing Agreement and
the Underwriting Agreement.
10. The Pooling and Servicing Agreement and the Underwriting
Agreement have been duly executed by Green Tree pursuant to and in
compliance with the Resolutions.
11. No event with respect to Green Tree has occurred or is
continuing which would constitute an Event of Termination or an event that
with notice or lapse of time or both would become an Event of Termination
under the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ___ day of
March, 1998.
GREEN TREE FINANCIAL CORPORATION
________________________________
[Name]
[Title]
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EXHIBIT F
FORM OF OPINION OF COUNSEL FOR THE COMPANY
The opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Professional Association, shall be to
the effect that (capitalized terms have the meanings set forth in the Pooling
and Servicing Agreement):
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with corporate power to
execute, deliver and perform its obligations under the Pooling and Servicing
Agreement (including the Limited Guarantee contained therein). The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the performance of its duties under the Pooling
and Servicing Agreement would require such qualification.
2. The Pooling and Servicing Agreement has been duly authorized by all
requisite corporate action, duly executed and delivered by the Company, and
constitutes the valid and binding obligations of the Company enforceable in
accordance with their terms. The Certificates have been duly authorized by all
requisite corporate action and, when duly and validly executed by the Trustee in
accordance with the Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the Company
for the consummation of the transactions contemplated by the Pooling and
Servicing Agreement, except such as may be required under blue sky laws under
any jurisdiction in connection with the offering of the Regular Certificates by
the Underwriter pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Contracts to the Trustee acting on behalf
of the Trust, nor the assignment of the Company's security interest in the
related Manufactured Homes, nor the issuance or sale of the Certificates, nor
the execution and delivery of the Pooling and Servicing Agreement (including the
Limited Guarantee contained therein), nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates or the Pooling and Servicing
Agreement by the Company will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of the
Certificate of Incorporation or Bylaws of the Company or of any indenture or
other agreement or instrument known to us to which the Company is a party or by
which it is bound, or result in a violation of, or contravene the terms of any
statute, order or regulation, applicable to the Company, of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it.
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6. There are no actions or proceedings pending or, to the best of our
knowledge, actions, proceedings or investigations pending or overtly threatened
against the Company before any court, administrative agency or other tribunal
(A) asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the hazard or flood insurance policies applicable to any Contracts
or the Errors and Omissions Protection Policy, (B) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by the Pooling and Servicing Agreement, (C) which is likely
materially and adversely to affect the performance by the Company of its
obligations under, or the validity or enforceability of the Pooling and
Servicing Agreement, the Certificates, or (D) seeking adversely to affect the
federal income tax attributes of the Certificates described in the Prospectus
under the heading "Certain Federal Income Tax Consequences."
7. The transfer of the Initial and Additional Contracts to the Trust in
accordance with Section 2.01 of the Pooling and Servicing Agreement would not be
avoidable as a preferential transfer under Section 547 of the United States
Bankruptcy Code (11 U.S.C. ss. 547), as in effect on the date hereof, in the
event that the Company became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Company has
transferred to the Trustee acting on behalf of the Trust all of the Company's
right, title and interest in the Initial and Additional Contracts, free and
clear of any and all other assignments, encumbrances, options, rights, claims,
liens or security interests (except tax or possessory liens) that may affect the
right of the Trustee in and to such Contracts, and has delivered the
Land-and-Home Contract Files relating to the Initial and Additional Contracts to
the Trustee or its custodian. No filing or other action, other than the filing
of a financing statement on Form UCC-1 with the Secretary of State of the State
of Minnesota identifying the Contracts as collateral and naming the Company as
debtor and the Trust as secured party, and the filing of continuation statements
as required by Section 4.02 of the Pooling and Servicing Agreement, is necessary
to perfect as against third parties the assignment of the Initial and Additional
Contracts by the Company to the Trust. We have separately provided you with our
opinion concerning whether such assignment could be recharacterized as a pledge
rather than a sale in the event the Company became a debtor under the United
States Bankruptcy Code. However, in the event such assignment were characterized
as a pledge securing a loan from the Certificateholders to the Company, it is
our opinion that the Trustee would be deemed to have a valid and perfected
security interest in the Initial and Additional Contracts and the proceeds
thereof, which security interest would be prior to any other security interest
that may be perfected under the Uniform Commercial Code as in effect in the
State of Minnesota and over any "lien creditor" (as defined in Minn. Stat.
ss.336.9-301(3)) who becomes such after the Closing Date, except that a
subsequent purchaser of any Initial and Additional Contract who gives new value
and takes possession thereof in the ordinary course of his business would have
priority over the Trustee's security interest in such Contract, if such
purchaser acts without knowledge that such Contract was subject to a security
interest. We have assumed for the purposes of this opinion that during the term
of the Pooling and Servicing Agreement the Trustee, or its custodian, shall
maintain possession of the Land-and-Home Contract Files for the purpose of
perfecting the assignment to the Trustee of the Land-and-Home Contracts.
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9. In reliance upon certain representations and warranties set forth in
the Pooling and Servicing Agreement and assuming that the Company and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing of a proper election, as of the date hereof each of the
Subsidiary REMIC and the Master REMIC created pursuant to the Pooling and
Servicing Agreement will qualify as a REMIC. Further, the Regular Certificates
will evidence ownership of the "regular interests" and the Class C Certificate
will evidence ownership of the single class of "residual interest" in the Master
REMIC. For Minnesota income tax purposes, and subject to the foregoing
assumptions, and the provisions of Minnesota law as of the date hereof, such
Trust will not be subject to tax and the income of such Trust will be taxable to
the holders of interests therein, all in accordance with the provisions of the
Code concerning REMICs as amended through December 31, 1996. Moreover, ownership
of a Certificate will not be a factor in determining whether such owner is
subject to Minnesota income taxes. Therefore, if the owner of a Certificate is
not otherwise subject to Minnesota income or franchise taxes in the State of
Minnesota, such owner will not become subject to such Minnesota taxes solely by
virtue of owning a Certificate.
10. The transfer of the Initial and Additional Contracts and the proceeds
thereof by the Company to the Trustee on the date hereof pursuant to the Pooling
and Servicing Agreement would not be avoidable as a fraudulent transfer under
the Uniform Fraudulent Transfer Act as in effect in Minnesota on the date hereof
(Minn. Stat. ▇▇.▇▇. 513.41 through 513.51), nor, should the Company become a
debtor under the United States Bankruptcy Code, as a fraudulent transfer under
Section 548 of the United States Bankruptcy Code (11 U.S.C. ss. 548) as in
effect on the date hereof.
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EXHIBIT G
FORM OF TRUSTEE'S ACKNOWLEDGEMENT
U.S. Bank National Association, a national banking association, acting as
trustee (the "Trustee") of the trust created pursuant to the Pooling and
Servicing Agreement, dated as of March 1, 1998, between Green Tree Financial
Corporation and the Trustee (the "Pooling and Servicing Agreement") (all
capitalized terms used herein without definition having the respective meanings
specified in the Pooling and Servicing Agreement), acknowledges, pursuant to
Section 2.04 of the Pooling and Servicing Agreement, that the Trustee has
received and holds in trust thereunder the following (i) all the right, title
and interest of the Company in and to the Contracts, including, without
limitation, all right, title and interest in and to the Collateral Security and
all rights to receive payments on or with respect to the Contracts (other than
the principal and interest due on the Contracts before the applicable Cut-off
Date or Subsequent Cut-off Date), (ii) all rights under every Hazard Insurance
Policy relating to a Manufactured Home securing a Contract for the benefit of
the creditor of such Contract, (iii) all rights under all FHA/VA Regulations
pertaining to any FHA/VA Contract, (iv) the proceeds from the Errors and
Omissions Protection Policy and all rights under any blanket hazard insurance
policy to the extent they relate to the Manufactured Homes, (v) all documents
contained in the Contract Files and the Land-and-Home Contract Files, (vi) all
amounts paid by the underwriters of the Certificates to the Trust by order of
the Company pursuant to Section 2.01(b) of the Pooling and Servicing Agreement
out of the proceeds of the sale of the Certificates, (vii) amounts on deposit in
the Capitalized Interest Account, (viii) the Pre-Funded Amount and (ix) all
proceeds and products in any way derived from any of the foregoing.
The Trustee further acknowledges receipt of the Land-and-Home Contract
Files, except for those Land-and-Home Contract Files identified on the exception
listing attached hereto, and acknowledges that it will, within 90 days of the
Closing Date, conduct a cursory review of the Land-and-Home Contract Files and
confirm that each Land-and-Home Contract File included (a) an original copy of
the Land-and-Home Contract, (b) an original or a copy of a mortgage or deed of
trust or similar evidence of a lien on the real estate on which the related
Manufactured Home is situated, (c) the assignment of the Land-and-Home Contract
and the mortgage or deed of trust from the originator (if other than the
Company) to the Company and (d) any extension, modification or waiver
agreement(s), except as noted on the document exception listing to be attached
to such confirmation. The Trustee will not otherwise review the Contracts and
Land-and-Home Contract Files for compliance with the terms of the Pooling and
Servicing Agreement.
The Trustee further acknowledges that the Trustee, directly or through a
custodian, will hold said rights, interests and proceeds in trust for the use
and benefit of all Certificateholders.
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IN WITNESS WHEREOF, U.S. Bank National Association, as Trustee, has caused
this acknowledgement to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this ___ day of March, 1998.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By _______________________________
Name:
Title:
By _______________________________
[seal] Name:
Title:
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EXHIBIT H
FORM OF CUSTODIAN'S ACKNOWLEDGMENT
First Trust National Association, a national banking association (the
"Custodian") acting as Custodian under a Custodial Agreement dated as of March
1, 1998, between the Custodian and U.S. Bank National Association, as Trustee
(the "Trustee") (the "Custodial Agreement") under the Pooling and Servicing
Agreement dated as of March 1, 1998 between Green Tree Financial Corporation
(the "Company"), as Seller and Servicer, and the Trustee, pursuant to which the
Custodian holds on behalf of the Trustee certain "Land-and-Home Contract Files,"
as described in the Pooling and Servicing Agreement, hereby acknowledges receipt
of such Land-and-Home Contract Files. The Custodian further acknowledges that it
will, within 90 days of the date of the Custodial Agreement, conduct a cursory
review of the Land-and-Home Contract Files and confirm to the Trustee and the
Company that each Land-and-Home Contract File included (a) an original copy of
the Land-and-Home Contract, (b) an original or a copy of a mortgage or deed of
trust or similar evidence of a lien on the real estate on which the related
Manufactured Home is situated, (c) the assignment of the Land-and-Home Contract
and the mortgage or deed of trust from the originator (if other than the
Company) to the Company, (d) if such Land and Home Contract was originated by
the Company, an endorsement of such Land and Home Contract by the Company, and
(e) any extension, modification or waiver agreement(s), except as noted on the
document exception listing to be attached to such confirmation. The Custodian
will not otherwise review the Contracts and Land-and-Home Contract Files for
compliance with the terms of the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, First Trust National Association has caused this
acknowledgment to be executed by its duly authorized officer and its corporate
seal affixed hereto as of this ___ day of March, 1998.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By ______________________________
Its___________________________
[Seal]
H-1
EXHIBIT I
FORM OF CERTIFICATE OF SERVICING OFFICER
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1998 between the Company and U.S. Bank
National Association, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Monthly Report for the period from ____________________ to
____________________ attached to this certificate is complete and accurate in
accordance with the requirements of Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this __________
day of __________.
GREEN TREE FINANCIAL CORPORATION
By _____________________________
[Name]
[Title]
I-1
EXHIBIT J
FORM OF CLASS C SUBSIDIARY CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE UNCERTIFICATED
SUBSIDIARY INTERESTS AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class C Subsidiary No.
(Subordinate)
Cut-off Date: as defined in the Percentage Interest:
Pooling and Servicing Agreement
dated as of March 1, 1998
First Remittance Date:
May 1, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-2, CLASS C SUBSIDIARY
(RESIDUAL INTEREST)
Cut-off Date Pool Principal Balance: $___________
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This certifies that Green Tree Finance Corp.--Two is the registered owner
of the Residual Interest represented by this Certificate, and entitled to
certain distributions out of Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate Trust 1998-2 (the "Trust"), which includes among its
assets a pool of manufactured housing installment sale contracts and installment
loan agreements (including, without limitation, all related security interests
and any and all rights to receive payments which are due pursuant thereto on or
after the Cut-off Date or Subsequent Cutoff Date) (the "Contracts"). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1998, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, as Trustee of the Trust (the "Trustee"). This Class C Subsidiary
Certificate is one of the Class C Subsidiary Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Class C Subsidiary Certificate the holder assents to and becomes bound by
the Agreement. To the extent not defined herein, all capitalized terms have the
meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May 1998, so long as
the Agreement has not been terminated, by check (or, if such Class C Subsidiary
Certificateholder holds Class C Subsidiary Certificates with an aggregate
Percentage Interest of at least 20% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class C Subsidiary Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Remittance Date, in an amount equal to the Class C Subsidiary
Distribution Amount.
The Class C Subsidiary Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds in the Certificate
Account to the extent available for distribution to the Class C Subsidiary
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the Class C
Subsidiary Certificateholder for any amounts payable under this Certificate or
the Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Class C Subsidiary Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and immunities of the Trustee. Copies of the
Agreement and all amendments thereto will be provided to any Class C
Certificateholder free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Subsidiary Certificate is registrable in
the Certificate Register of the Certificate Registrar upon surrender of this
Class C Subsidiary Certificate for registration of transfer at the office or
agency maintained by the Trustee in St. ▇▇▇▇, Minnesota, accompanied by a
written
J-2
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Class C Subsidiary
Certificates evidencing the same aggregate amount of Class C Subsidiary
Certificates will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, this Class C Subsidiary Certificate is exchangeable for new Class C
Subsidiary Certificates of authorized denominations evidencing the same
aggregate Percentage Interest as requested by the holder surrendering the same.
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Class C Subsidiary Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The holder of this Class C Subsidiary Certificate, by acceptance hereof,
agrees that, in accordance with the requirements of Section 860D(b)(1) of the
Code, the federal tax return of the Trust for its first taxable year shall
provide that the Subsidiary REMIC elects to be treated as a "real estate
mortgage investment conduit" (a "REMIC") under the Code for such taxable year
and all subsequent taxable years. The Uncertificated Subsidiary Interests shall
be "regular interests" in the Subsidiary REMIC and the Class C Subsidiary
Certificates shall be the "residual interest" in the Subsidiary REMIC. In
addition, the holder of this Class C Subsidiary Certificate, by acceptance
hereof, (i) agrees to file tax returns consistent with and in accordance with
any elections, decisions or other reports made or filed with regard to federal,
state or local taxes on behalf of the Subsidiary REMIC, and (ii) agrees to
cooperate with the Company in connection with examinations of the Subsidiary
REMIC's affairs by tax authorities, including administrative and judicial
proceedings, and (iii) makes the additional agreements, designations and
appointments, and undertakes the responsibilities, set forth in Section 6.06 of
the Agreement.
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IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By ______________________________
Authorized Officer
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, and does hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By ____________________________
Signature
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EXHIBIT K
FORM OF CLASS C MASTER CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS B CERTIFICATES AND THE CLASS
B-3I CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class C Master No.
(Subordinate)
Cut-off Date: as defined in the Percentage Interest:
Pooling and Servicing Agreement
dated as of March 1, 1998
First Remittance Date:
May 1, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-2, CLASS C MASTER
(RESIDUAL INTEREST)
Cut-off Date Pool Principal Balance: $___________
K-1
This certifies that Green Tree Finance Corp.--Two is the registered owner
of the Residual Interest represented by this Certificate, and entitled to
certain distributions out of Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate Trust 1998-2 (the "Trust"), which includes among its
assets a pool of manufactured housing installment sale contracts and installment
loan agreements (including, without limitation, all related security interests
and any and all rights to receive payments which are due pursuant thereto on or
after the Cut-off Date or Subsequent Cutoff Date) (the "Contracts"). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1998, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, as Trustee of the Trust (the "Trustee"). This Class C Master
Certificate is one of the Class C Master Certificates described in the Agreement
and is issued pursuant and subject to the Agreement. By acceptance of this Class
C Master Certificate the holder assents to and becomes bound by the Agreement.
To the extent not defined herein, all capitalized terms have the meanings
assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each related Due Period commencing in May 1998, so long as
the Agreement has not been terminated, by check (or, if such Class C Master
Certificateholder holds Class C Master Certificates with an aggregate Percentage
Interest of at least 20% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class C Master Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Remittance Date, in an amount equal to the Class C Master
Distribution Amount.
The Class C Master Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds in the Certificate
Account to the extent available for distribution to the Class C Master
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the Class C
Master Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Class C Master Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and immunities of the Trustee. Copies of the
Agreement and all amendments thereto will be provided to any Class C Master
Certificateholder free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Master Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class C
Master Certificate for registration of transfer at the office or agency
maintained by the Trustee in St. ▇▇▇▇, Minnesota, accompanied by a written
instrument of transfer
K-2
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder thereof or his or her attorney duly authorized in writing, and
thereupon one or more new Class C Master Certificates evidencing the same
aggregate amount of Class C Master Certificates will be issued to the designated
transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, this Class C Master Certificate is exchangeable for new Class C
Master Certificates of authorized denominations evidencing the same aggregate
Percentage Interest as requested by the holder surrendering the same.
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Class C Master Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The holder of this Class C Master Certificate, by acceptance hereof,
agrees that, in accordance with the requirements of Section 860D(b)(1) of the
Code, the federal tax return of the Trust for its first taxable year shall
provide that the Master REMIC elects to be treated as a "real estate mortgage
investment conduit" (a "REMIC") under the Code for such taxable year and all
subsequent taxable years. The Regular Certificates shall be "regular interests"
in the Master REMIC and the Class C Master Certificates shall be the "residual
interest" in the Master REMIC. In addition, the holder of this Class C Master
Certificate, by acceptance hereof, (i) agrees to file tax returns consistent
with and in accordance with any elections, decisions or other reports made or
filed with regard to federal, state or local taxes on behalf of the Master
REMIC, and (ii) agrees to cooperate with the Company in connection with
examinations of the Master REMIC's affairs by tax authorities, including
administrative and judicial proceedings, and (iii) makes the additional
agreements, designations and appointments, and undertakes the responsibilities,
set forth in Section 6.06 of the Agreement.
K-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-2 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-2
By U.S. BANK NATIONAL ASSOCIATION
By ______________________________
Authorized Officer
K-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By ___________________________
Signature
K-5
EXHIBIT L-1
FORM OF CERTIFICATE REGARDING REPURCHASED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 3.05 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1998 between the Company and U.S. Bank
National Association, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such Contracts
may, pursuant to Section 3.05 of the Agreement, be assigned by the Trustee to
the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
____________________.
GREEN TREE FINANCIAL CORPORATION
By ______________________________
[Name]
[Title]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CERTIFICATE REGARDING SUBSTITUTED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING SUBSTITUTED CONTRACTS
The undersigned certify that they are [title] and [title], respectively of
Green Tree Financial Corporation, a corporation organized under the laws of
Delaware ("the Company"), and that as such they are duly authorized to execute
and deliver this certificate on behalf of the Company pursuant to Section
3.05(b) of the Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1998 between the Company and U.S. Bank National Association, as Trustee
(all capitalized terms used herein without definition having the respective
meanings specified in the Agreement [or Land-and-Home Contract File, as
applicable]), and further certify that:
1. The Contract and [Contract File] [Land-and-Home Contract File] for each
such Eligible Substitute Contract [are being held by the Company, as Servicer]
[have been delivered to ________________, the successor Servicer] [have been
delivered to the Trustee or its Custodian].
2. The Contracts on the attached schedule are to be substituted on the
date hereof pursuant to Section 3.05(b) of the Agreement and each such Contract
is an Eligible Substitute Contract.
3. The UCC-1 financing statements in respect of the Contracts to be
substituted, in the form required by Section 3.05 (b)(iii) of the Agreement,
have been filed with the appropriate offices.
4. (x) if the sum of the aggregate principal balances of all Land-and-Home
Contracts then held by the Trustee (but excluding those Land-and-Home Contracts,
if any, that are to become Replaced Contracts as a consequence of the
substitution) and the aggregate principal balances of all Land-and-Home
Contracts that are Eligible Substitute Contracts is less than 10% of the Pool
Scheduled Principal Balance as of the Remittance Date immediately preceding the
substitution, the Company has delivered to the Trustee an executed assignment to
the Trustee on behalf of the Trust in recordable form for each Mortgage securing
such Eligible Substitute Contracts; and
(y) if the sum of the aggregate principal balances of all
Land-and-Home Contracts then held by the Trustee (but excluding those
Land-and-Home Contracts, if any, that are to become Replaced Contracts as a
consequence of the substitution) and the aggregate principal balances of all
Land-and-Home Contracts that are included in the Eligible Substitute Contracts
equals or exceeds 10% of the Pool Scheduled Principal Balance
L-2-1
as of the Remittance Date immediately preceding the substitution, the Company
has delivered to the Trustee an opinion of counsel satisfactory to the Trustee
to the effect that the Trustee holds a perfected first priority lien in the real
estate securing such Eligible Substitute Contracts, or evidence of recordation
of the assignment to the Trustee on behalf of the Trust of (A) each Mortgage
securing such Eligible Contracts or, if less (B) of the number of Mortgages
securing such Eligible Substitute Contracts needed to reduce the aggregate
principal balances of all Land-and-Home Contracts with respect to which such
assignments are not so recorded to less than 10% of the Pool Scheduled Principal
Balance as of the Remittance Date immediately preceding the substitution.
[5. There has been deposited in the Certificate Account the amounts listed
on the schedule attached hereto as the amount by which the Scheduled Principal
Balance of each Replaced Contract exceeds the Scheduled Principal Balance of
each Contract being substituted therefor.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ______
day of ________, 199_.
GREEN TREE FINANCIAL CORPORATION
By _____________________________
[Name]
[Title]
L-2-2
EXHIBIT M
FORM OF REPRESENTATION LETTER
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Green Tree Financial Corporation
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-2, Class [B-3I/C Subsidiary/C Master]
The undersigned purchaser (the "Purchaser") understands that the purchase
of the above-referenced certificates (the "Certificates") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), which includes
banks, savings and loan associations, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corporations, business trusts and
partnerships, not formed for the specific purpose of acquiring the Certificates
offered, with total assets in excess of $5,000,000. The undersigned represents
on behalf of the Purchaser that the Purchaser is an "Accredited Investor" within
the meaning of such definition. The Purchaser is urged to review carefully the
responses, representations and warranties it is making herein.
Representations and Warranties
The Purchaser makes the following representations and warranties in order
to permit the Trustee, Green Tree Financial Corporation, and [underwriter of the
B-3I/C Subsidiary/C Master Certificates] to determine its suitability as a
purchaser of Certificates and to determine that the exemption from registration
relied upon by Green Tree Financial Corporation under Section 4(2) of the 1933
Act is available to it.
1. The Purchaser understands that the Certificates have not been and will
not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Green Tree
Financial Corporation is not required to register the Certificates and that any
transfer must comply with Section 9.02 of the Pooling and Servicing Agreement
relating to the Certificates.
M-1
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The Purchaser has reviewed
the Prospectus dated March 11, 1998 and related Prospectus Supplement dated
March 11, 1998, with respect to the Certificates, and has been given such
information concerning the Certificates, the underlying installment sale
contracts and Green Tree Financial Corporation as it has requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser does not qualify as (i) an employee benefit plan (a
"Plan") as defined in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not it is subject to the
provisions of Title I of ERISA, (ii) a plan described in section 4975(e)(1) of
the Internal Revenue Code of 1986 (also a "Plan"), or (iii) an entity whose
underlying assets are deemed to be assets of a Plan by reason of such Plan's
investment in the entity (as determined under Department of Labor Regulations,
29 C.F.R. ss.2510.3-101 (1990)).
6. The Purchaser understands that such Certificate will bear a legend
substantially as set forth in the form of Certificate included in the Pooling
and Servicing Agreement.
7. The Purchaser, as holder of the B-3I/C Subsidiary/C Master Certificate,
acknowledges (i) it may incur tax liabilities in excess of any cash flows
generated by the interest and (ii) it intends to pay the taxes associated with
holding the B-3I/C Subsidiary/C Master Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of the
Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8.
The representations and warranties contained herein shall be binding upon
the heirs, executors, administrators and other successors of the undersigned. If
there is more than one
M-2
signatory hereto, the obligations, representations, warranties and agreements of
the undersigned are made jointly and severally.
Executed at ________________________________, ______________, this
___________ day of ___________________.
Purchaser's Name (Print)
By ________________________________
Signature
Its________________________________
Address of Purchaser
Purchaser's Taxpayer Identification Number
M-3
EXHIBIT N
FORM OF MONTHLY REPORT
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-2
Distribution Date:__________________
Class A Certificates
1(a) Amount Available (including Monthly
Servicing Fee) _______
(b) Class M-1 Interest Deficiency
Amount (if any) and Class B-1
Interest Deficiency Amount (if
any) withdrawn for prior
Remittance Date _______
(c) Amount Available after giving
effect to withdrawal of Class M-1
Interest Deficiency Amount and
Class B-1 Interest Deficiency
Amount for prior Remittance Date _______
(d) Amount withdrawn from [Capitalized
Interest] [Pre-Funding] Account _______
Interest
Class A Certificates
2. Aggregate Class A interest
(a) Class A-1 Remittance Rate (5.66875%) _______%
(b) Class A-1 Interest _______
(c) Class A-2 Remittance Rate (5.98%) _______%
(d) Class A-2 Interest _______
______(e) Class A-3 Remittance Rate (6.05%) _______%
(f) Class A-3 Interest _______
(g) Class A-4 Remittance Rate (6.08%) _______%
______(g) Class A-4 Interest _______
N-1
(h) Class A-5 Remittance Rate (6.24%), _______%
(i) Class A-5 Interest _______
(j) Class A-6 Remittance Rate (6.81%, _______%
unless the Weighted Average
Contract Rate is less than 6.81%)
(k) Class A-6 Interest _______
3. Amount applied to
(a) Unpaid Class A Interest Shortfall _______
4. Remaining
(a) Unpaid Class A Interest Shortfall _______
Class M-1 Certificates
5. Class M-1 Interest on Class M-1 Adjusted
Principal Balance _______
(a) Class M-1 Adjusted Principal Balance _______
(b) Class M-1 Remittance Rate
(6.94%, unless the Weighted
Average Contract Rate is
less than 6.94%) _______%
(c) Interest on Class M-1 Adjusted
Principal Balance _______
6. Amount applied to Unpaid Class M-1
Interest Shortfall _______
7. Remaining Unpaid Class M-1
Interest Shortfall _______
Class B-1 Certificates
8. Class B-1 interest on Class B-1 Adjusted
Principal Balance
(a) Class B-1 Adjusted Principal Balance _______
N-2
(b) Class B-1 Remittance Rate
(7.36%, unless the Weighted
Average Contract Rate is
less than 7.36%) _______
(c) Interest on Class B-1 Adjusted
Principal Balance _______
9. Amount applied to Unpaid
Class B-1 Interest Shortfall _______
10. Remaining Unpaid Class B-1
Interest Shortfall _______
Principal
11. Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Plus principal received during the
first 10 days of the next Due Period _______
(f) Minus principal received during the
first 10 days of the prior Due Period _______
12. Pool Scheduled Principal Balance _______
13. Unpaid Class A Principal Shortfall
(if any) following prior Remittance Date _______
14. Class A Percentage for such
Remittance Date _______
15. Class A Percentage for the following Remittance Date _______
16. Class A principal distribution:
(a) Class A-1 _______
(b) Class A-2 _______
(c) Class A-3 _______
N-3
(d) Class A-4 _______
(e) Class A-5 _______
(f) Class A-6 _______
17. (a) Class A-1 Principal Balance _______
(b) Class A-2 Principal Balance _______
(c) Class A-3 Principal Balance _______
(d) Class A-4 Principal Balance _______
(e) Class A-5 Principal Balance _______
(f) Class A-6 Principal Balance _______
18. Unpaid Class A Principal Shortfall
(if any) following current
Remittance Date _______
Class M-1 Distribution Test and Class B
Distribution Test (applicable on and after
the Remittance Date occurring in May 2002)
19. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Remittance Date _______
(b) Average Sixty-Day Delinquency
Ratio (arithmetic average of
ratios for this month and two
preceding months; may not exceed
3.5%) _______
20. Average Thirty-Day Delinquency Ratio Test
(a) Thirty-Day Delinquency Ratio for
current Remittance Date _______
(b) Average Thirty-Day Delinquency
Ratio (arithmetic average of
ratios for this month and two
preceding months; may not exceed
5.5%) _______
N-4
21. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Remittance Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 5.5% from May 1, 2001
to April 28, 2002; 6.5% from
May 1, 2002 to April 28, 2003;
8.5% from May 1, 2003, to
April 28, 2004 and 9.5% thereafter) _______
22. Current Realized Losses Test
(a) Current Realized Losses
for current Remittance Date _______
(b) Current Realized Loss Ratio
(total Realized Losses for most
recent three months, multiplied
by 4, divided by arithmetic
average of Pool Scheduled
Principal Balances for third
preceding Remittance Date and for
current Remittance Date; may not
exceed 2.25%) _______
23. Class M-1 Principal Balance Test
(a) Sum of Class M-1 Principal
Balance and Class B Principal
Balance (before distributions on
current Remittance Date) divided
by Pool Scheduled Principal
Balance as of preceding
Remittance Date is greater than
23.25% _______
24. Class B Principal Balance Test
(a) Class B Principal Balance (before
any distributions on current
Remittance Date) as of such
Remittance Date is greater than
$15,000,000 _______
N-5
(b) Class B Principal Balance (before
distributions on current
Remittance Date) divided by Pool
Scheduled Principal Balance as of
preceding Remittance Date is
equal to or greater than 12.75% _______
25. Class M-1 Percentage for such
Remittance Date _______
26. Class M-1 Percentage for the following
Remittance Date _______
27. Class M-1 principal distribution:
(a) Class M-1 (current) _______
(b) Unpaid Class M-1 Principal
Shortfall (if any) following
prior Remittance Date _______
28. Unpaid Class M-1 Principal Shortfall (if any)
following current Remittance Date _______
29. Class M-1 Liquidation Loss Interest
(a) Class M-1 Liquidation Loss Amount _______
(b) Amount applied to Class M-1
Liquidation Loss Interest Amount _______
(c) Remaining Class M-1 Liquidation Loss
Interest Amount _______
(d) Amount applied to Unpaid Class M-1
Loss Interest Shortfall _______
(e) Remaining Unpaid Class M-1
Liquidation Loss Interest Shortfalls _______
30. (a) Class B Percentage for such
N-6
Remittance Date _______
(b) Class B Percentage for the following
Remittance Date _______
31. Current Principal (Class B Percentage
of Formula Principal Distribution
Amount) _______
32. (a) Class B-1 Principal Shortfall _______
(b) Unpaid Class B-1 Principal Shortfall _______
33. Class B Principal Balance _______
34. Class B-1 Principal Balance _______
35. Class B-1 Liquidation Loss Interest _______
(a) Class B-1 Liquidation Loss Amount _______
(b) Amount applied to Class B-1
Liquidation Loss Interest Amount _______
(c) Remaining Class B-1 Liquidation Loss
Interest Amount _______
(d) Amount applied to Unpaid Class B-1
Liquidation Loss Interest Shortfall _______
(e) Remaining Unpaid Class B-1 Liquidation
Loss Interest Shortfall _______
Class B-2 Certificates
36. Remaining Amount Available _______
N-7
Interest
37. Class B-2 Remittance Rate (8.44%,
unless the Weighted Average Contract Rate
is less than 8.44%) _______%
38. Class B-2 Interest _______
39. Current interest _______
40. Amount applied to Unpaid Class
B-2 Interest Shortfall _______
41. Remaining Unpaid Class B-2
Interest Shortfall _______
Principal
42. Unpaid Class B-2 Principal Shortfall
(if any) following prior Remittance Date _______
43. Class B-2 Principal Liquidation Loss
Amount _______
44. Current principal (zero until Class B-1
paid down; thereafter, Class B
Percentage of Formula Principal
Distribution Amount) _______
45. Guarantee Payment _______
46. Class B-2 Principal Balance _______
47. Remaining Amount Available (after payment
of Class B-2 Distribution Amount) _______
48 Excess Interest _______
N-8
49. Class B-3I Distribution Amount _______
Class A, Class M-1, and Class B Certificates
Aggregate Scheduled Balances of delinquent Contracts as of Determination Date
50. 30 - 59 days _______
51. 60 days or more _______
52. Manufactured Homes repossessed _______
53. Manufactured Homes repossessed
but remaining in inventory _______
54. Weighted Average Contract Rate
of all outstanding Contracts _______
Class M-1 and Class B-2 Certificates
55. Class M-1 Interest Deficiency on
such Remittance Date _______
56. Class B-1 Interest Deficiency on
such Remittance Date _______
Repossessed Contracts
57. Repossessed Contracts _______
58. Repossessed Contracts Remaining in Inventory _______
N-9
Class B-3I Certificates
59. Class B-3I Formula Distribution Amount (all
Excess Interest plus Unpaid Class B-3I Shortfall) _______
60. Class B-3I Distribution Amount (remaining
Amount Available) _______
61. Class B-3I Shortfall (59 - 60) _______
62. Unpaid Class B-3I Shortfall _______
Class C Certificateholder
63. Class C Master Distribution Amount _______
[64. Class C Subsidiary Distribution Amount _______]
Please contact Bondholder Services Department of U.S. Bank National Association,
1-800-934-6802 with any questions regarding this Statement or your Distribution.
N-10
EXHIBIT O
FORM OF ADDITION NOTICE
______________, 1998
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of March
1, 1998, between Green Tree Financial Corporation (the "Company")
and U.S. Bank National Association as Trustee (the "Trustee")
relating to Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1998-2
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the meanings
given them in the Agreement. The Company hereby notifies the Trustee of an
assignment to the Trust of Subsequent Contracts on the date and in the amounts
set forth below:
Subsequent Transfer Date: __________________
Cut-off Date Principal Balance of Subsequent Contracts to be assigned to Trust
on Subsequent Transfer Date: $_____________
O-1
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
GREEN TREE FINANCIAL CORPORATION
By: ____________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION
By: __________________________
Name:
Title:
O-2
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 1998, between the undersigned and U.S. Bank National
Association as Trustee (the "Trustee"), the undersigned does hereby transfer,
assign, set over and otherwise convey, without recourse, to Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates, Series 1998-2, a trust
created by the Agreement, to be held in trust as provided in the Agreement, (i)
all the right, title and interest of the Company in and to the Subsequent
Contracts identified in the List of Contracts attached hereto as Exhibit A,
including, without limitation, all right, title and interest in and to the
Collateral Security and all rights to receive payments on or with respect to the
Subsequent Contracts (other than the principal and interest due on the
Subsequent Contracts before the applicable Subsequent Cut-off Date), (ii) all
rights under every Hazard Insurance Policy relating to a Manufactured Home
securing a Subsequent Contract for the benefit of the creditor of such
Subsequent Contract, (iii) all rights under all FHA/VA Regulations pertaining to
any Subsequent Contract that is an FHA/VA Contract, (iv) the proceeds from the
Errors and Omissions Protection Policy and all rights under any blanket hazard
insurance policy to the extent they relate to the Manufactured Homes, (v) all
documents contained in the Contract Files and the Land-and-Home Contract Files
relating to the Subsequent Contracts, and (vi) all proceeds and products of the
foregoing.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others. All undefined capitalized terms used in this Assignment
have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ___ day of __________, 1998.
GREEN TREE FINANCIAL CORPORATION
[Seal] By: ____________________________
Name:
Title:
P-1
EXHIBIT Q
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of March 1, 1998
(the "Agreement") between the Company and U.S. Bank National Association as
Trustee. All capitalized terms used herein without definition have the
respective meanings specified in the Agreement. The undersigned further
certifies that:
1. This Certificate is delivered in connection with the sale to the Trust
on __________________ (the "Subsequent Transfer Date") of Contracts (the
"Subsequent Contracts") identified in the List of Contracts attached to the
Subsequent Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and warranties
in Section 3.01 of the Agreement are true and correct; all representations and
warranties in Sections 3.02 and 3.03 of the Agreement with respect to the
Subsequent Contracts are true to the best of his knowledge; and all
representations in Section 3.04 of the Agreement with respect to the Subsequent
Contracts are true and correct.
3. All conditions precedent to the sale of the Subsequent Contracts to the
Trust under Section 2.03 of the Agreement have been satisfied. Without
limitation of the foregoing, the Company is not insolvent, the transfer of
Subsequent Contracts on the date hereof will not render the Company insolvent,
the undersigned is not aware of any pending insolvency, the Pre-Funding Period
has not ended, and the Company has delivered to the Trustee or its Custodian the
related Land-and-Home Contract File for each Subsequent Contract that is a
Land-and-Home Contract.
4. The aggregate Cut-off Date Principal Balance of the Subsequent
Contracts ($_____________) does not exceed 25% of the Original Certificate
Principal Balance ($_____________).
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
_______________, 1998.
By: ______________________________
Name:
Title:
Q-1
