__________________________________________________________
Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1997-2
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
and
FIRSTAR TRUST COMPANY
not in its individual capacity but solely as Trustee
Dated as of March 1, 1997
__________________________________________________________
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.............................................. 1-1
SECTION 1.01. General.......................................... 1-1
SECTION 1.02. Specific Terms................................... 1-1
ARTICLE II - ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS........... 2-1
SECTION 2.01. Closing.......................................... 2-1
SECTION 2.02. Conditions to the Closing........................ 2-2
SECTION 2.03. Acceptance by Trustee............................ 2-4
SECTION 2.04. REMIC Provisions................................. 2-4
ARTICLE III - REPRESENTATIONS AND WARRANTIES......................... 3-1
SECTION 3.01. Representations and Warranties Regarding the
Company and the Certificates................... 3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract....................................... 3-2
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate..................... 3-6
SECTION 3.04. Representations and Warranties Regarding the
Contract Files................................. 3-8
SECTION 3.05. Repurchase of Contracts or Substitution of
Contracts for Breach of Representations and
Warranties..................................... 3-8
SECTION 3.06. No Repurchase or Substitution Under Certain
Circumstances.................................. 3-12
SECTION 3.07. Staged-Funding Contract Reserve Account.......... 3-13
ARTICLE IV - PERFECTION OF TRANSFER AND PROTECTION OF
SECURITY INTERESTS......................................... 4-1
SECTION 4.01. Custody of Contracts............................. 4-1
SECTION 4.02. Filings.......................................... 4-2
SECTION 4.03. Name Change or Relocation........................ 4-2
SECTION 4.04. Chief Executive Office........................... 4-3
SECTION 4.05. Costs and Expenses............................... 4-3
ARTICLE V - SERVICING OF CONTRACTS................................... 5-1
SECTION 5.01. Responsibility for Contract Administration....... 5-1
SECTION 5.02. Standard of Care................................. 5-1
SECTION 5.03. Records.......................................... 5-1
SECTION 5.04. Inspection; Computer Tape........................ 5-1
SECTION 5.05. Certificate Account.............................. 5-2
SECTION 5.06. Enforcement...................................... 5-4
SECTION 5.07. Trustee to Cooperate............................. 5-5
SECTION 5.08. Costs and Expenses............................... 5-6
SECTION 5.09. Maintenance of Insurance......................... 5-6
SECTION 5.10. Repossession..................................... 5-8
SECTION 5.11. Commingling of Funds............................. 5-8
SECTION 5.12. Retitling; Security Interests.................... 5-8
ARTICLE VI - REPORTS AND TAX MATTERS................................. 6-1
SECTION 6.01. Monthly Reports.................................. 6-1
SECTION 6.02. Certificate of Servicing Officer................. 6-1
SECTION 6.03. Other Data....................................... 6-1
SECTION 6.04. Annual Report of Accountants..................... 6-1
SECTION 6.05. Statements to Certificateholders and Class C
Certificateholders............................. 6-2
SECTION 6.06. Payment of Taxes................................. 6-8
ARTICLE VII - SERVICE TRANSFER....................................... 7-1
SECTION 7.01. Event of Termination............................. 7-1
SECTION 7.02. Transfer......................................... 7-2
SECTION 7.03. Trustee to Act; Appointment of Successor......... 7-2
SECTION 7.04. Notification to Certificateholders and Class C
Certificateholders............................. 7-3
SECTION 7.05. Effect of Transfer............................... 7-3
SECTION 7.06. Transfer of Certificate Account.................. 7-4
ARTICLE VIII - PAYMENTS.............................................. 8-1
SECTION 8.01. Monthly Payments................................. 8-1
SECTION 8.02. Permitted Withdrawals from the Certificate
Account........................................ 8-2
SECTION 8.03. Payments......................................... 8-2
SECTION 8.04. Limited Guarantee................................ 8-8
SECTION 8.05. Company's or Servicer's Repurchase Option........ 8-8
SECTION 8.06. Capitalized Interest Account..................... 8-9
SECTION 8.07. Excess Proceeds Account.......................... 8-10
ARTICLE IX - THE CERTIFICATES AND CLASS C CERTIFICATES............... 9-1
SECTION 9.01. The Certificates and Class C Certificates........ 9-1
SECTION 9.02. Registration of Transfer and Exchange of
Certificates and Class C Certificates.......... 9-2
SECTION 9.03. No Charge; Disposition of Void Certificates or
Class C Certificates........................... 9-6
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen
Certificates or Class C Certificates........... 9-6
SECTION 9.05. Persons Deemed Owners............................ 9-6
SECTION 9.06. Access to List of Certificateholders' and Class C 9-7
SECTION 9.07. Authenticating Agents............................ 9-7
ARTICLE X - INDEMNITIES.............................................. 10-1
SECTION 10.01. Company's Indemnities........................... 10-1
SECTION 10.02. Liabilities to Obligors......................... 10-1
SECTION 10.03. Tax Indemnification............................. 10-1
SECTION 10.04. Servicer's Indemnities.......................... 10-2
SECTION 10.05. Operation of Indemnities........................ 10-2
SECTION 10.06. REMIC Tax Matters............................... 10-2
ARTICLE XI - THE TRUSTEE............................................. 11-1
SECTION 11.01. Duties of Trustee............................... 11-1
SECTION 11.02. Certain Matters Affecting the Trustee........... 11-2
SECTION 11.03. Trustee Not Liable for Certificates or
Contracts..................................... 11-3
SECTION 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Event of Termination............. 11-3
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses. 11-4
SECTION 11.06. Eligibility Requirements for Trustee............ 11-5
SECTION 11.07. Resignation or Removal of Trustee............... 11-5
SECTION 11.08. Successor Trustee............................... 11-6
SECTION 11.09. Merger or Consolidation of Trustee.............. 11-7
SECTION 11.10. Tax Returns..................................... 11-7
SECTION 11.11. Obligor Claims.................................. 11-7
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee... 11-8
SECTION 11.13. Agents of Trustee............................... 11-9
ARTICLE XII - MISCELLANEOUS.......................................... 12-1
SECTION 12.01. Servicer Not to Assign Duties or Resign;
Delegation of Servicing Functions............. 12-1
SECTION 12.02. Maintenance of Office or Agency................. 12-1
SECTION 12.03. Termination..................................... 12-2
SECTION 12.04. Acts of Certificateholders and Class C
Certificateholders............................ 12-4
SECTION 12.05. Calculations.................................... 12-5
SECTION 12.06. Assignment or Delegation by Company............. 12-5
SECTION 12.07. Amendment....................................... 12-5
SECTION 12.08. Notices......................................... 12-7
SECTION 12.09. Merger and Integration.......................... 12-8
SECTION 12.10. Headings........................................ 12-8
SECTION 12.11. Governing Law................................... 12-8
EXHIBIT A-1-FORM OF CLASS A-1 CERTIFICATE............................ A-1-1
EXHIBIT A-2-FORM OF CLASS A-2 THROUGH A-7 CERTIFICATE................ A-2-1
EXHIBIT B - FORM OF CLASS M-1 CERTIFICATE............................ B-1
EXHIBIT C - FORM OF CLASS B CERTIFICATE.............................. C-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 CERTIFICATE.............................. J-1
EXHIBIT K-1 - FORM OF CERTIFICATE REGARDING REPURCHASED CONTRACTS.... K-1
EXHIBIT K-2 - FORM OF CERTIFICATE REGARDING SUBSTITUTED CONTRACTS.... K-2
EXHIBIT L - FORM OF REPRESENTATION LETTER............................ L-1
EXHIBIT M - FORM OF MONTHLY REPORT................................... M-1
EXHIBIT N - APRIL CONTRACTS.......................................... N-1
AGREEMENT, dated as of March 1, 1997, 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 Firstar Trust Company, a
state banking association organized and existing under the laws of the State of
Wisconsin, 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.
"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
calendar month 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.
"Amount Available" means, as to any Remittance Date, an amount equal to
(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 preceding month,
(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,
(iii) all collections in respect of principal on the Contracts
received after the last day of the prior month up to and
including the third
1-1
Business Day prior to such Remittance Date (but in no event
later than the 10th day of the month in which such Remittance
Date occurs), and
(iv) with respect to the Remittance Date in April 1997, the Excess
Proceeds withdrawn from the Excess Proceeds Account pursuant to
Section 8.07, reduced by
(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,
(iii) the amount, if any, withdrawn by the Trustee from the
Certificate Account pursuant to Section 8.03(b) with respect to
the immediately preceding Remittance Date, and
(iv) with respect to all Remittance Dates other than the Remittance
Date in April 1997, all collections in respect of principal on
the Contracts received on or after the first day of the prior
month up to and including the third Business Day prior to the
preceding Remittance Date (but in no event later than the 10th
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
preceding calendar month on account of Advance Payments in respect of such
calendar month (not including any portion of Advance Payments received during
such month 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).
"April Contracts" means the 278 Contracts identified in Exhibit N.
"Assumption Fee" means any assumption or other similar fee paid by the
Obligor on a Contract.
1-2
"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.
"Certificate" means a Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate, Class A, Class M-1 or Class B, executed and delivered
by the Trustee substantially in the form of Exhibit A, B or C.
"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 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
1-3
such consent, request, waiver or demand has been 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 Certificates which
the Trustee knows to be so owned shall be so disregarded.
"Class," "Class A, " "Class M-1," "Class B" or "Class C" means pertaining
to each Class of Class A Certificates, Class M-1 Certificates, Class B
Certificates and/or Class C Certificates, as the case may be.
"Class A Certificate" means any one of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 Certificates and Class A-7 Certificates executed
and delivered by the Trustee and authenticated by the Certificate Registrar
substantially in the form set forth in Exhibit A and evidencing an interest
designated as a "regular interest" in the Trust 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 and (b) the Class A Formula
Distribution Amount for such Remittance Date; provided that after the Class A-7
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.
1-4
"Class A-7 Cross-over Date" means the Remittance Date on which the Class
A-7 Principal Balance (after giving effect to the distributions of principal on
the Class A-7 Certificates on such Remittance Date) is reduced to zero.
"Class A Formula Distribution Amount" means, as to any Remittance Date, an
amount equal to the sum of (a) one month's interest (or, with respect to the
first Remittance Date, interest from and including the Closing Date to but
excluding April 15, 1997) 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, (vi) the Class A-6
Remittance Rate on the Class A-6 Principal Balance, and (vii) the Class A-7
Remittance Rate on the Class A-7 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, the Original Class A-6 Principal Balance
and the Original Class A-7 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), (a)(vi) and (a)(vii), 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 each Class of Class A
Certificates and any Remittance Date, 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-7 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
1-5
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
(iv) as to any Remittance Date after the Class A-7 Cross-Over Date,
0%.
"Class A Principal Balance" means, as to any Remittance Date, the sum of
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, the Class A-6 Principal Balance, and the Class A-7 Principal Balance.
"Class A-1 Principal Balance" means, as to any Remittance Date, the
Original Class A-1 Principal Balance less all amounts previously distributed to
Holders of Class A-1 Certificates on account of principal.
"Class A-2 Principal Balance" means, as to any Remittance Date, the
Original Class A-2 Principal Balance less all amounts previously distributed to
Holders of Class A-2 Certificates on account of principal.
"Class A-3 Principal Balance" means, as to any Remittance Date, the
Original Class A-3 Principal Balance less all amounts previously distributed to
Holders of Class A-3 Certificates on account of principal.
"Class A-4 Principal Balance" means, as to any Remittance Date, the
Original Class A-4 Principal Balance less all amounts previously distributed to
Holders of Class A-4 Certificates on account of principal.
"Class A-5 Principal Balance" means, as to any Remittance Date, the
Original Class A-5 Principal Balance less all amounts previously distributed to
Holders of Class A-5 Certificates on account of principal.
"Class A-6 Principal Balance" means, as to any Remittance Date, the
Original Class A-6 Principal Balance less all amounts previously distributed to
Holders of Class A-6 Certificates on account of principal.
"Class A-7 Principal Balance" means, as to any Remittance Date, the
Original Class A-7 Principal Balance less all amounts previously distributed to
Holders of Class A-7 Certificates on account of principal.
1-6
"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 Sections 8.03(a)(5)(iii)-(ix) is less than the
Class A Percentage of the Formula Principal Distribution Amount for such
Remittance Date.
"Class A-1 Remittance Rate" means 5.6175% per annum, computed on the basis
of actual days elapsed in a year of 360 days.
"Class A-2 Remittance Rate" means 6.00% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class A-3 Remittance Rate" means 6.42% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class A-4 Remittance Rate" means 6.66% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class A-5 Remittance Rate" means 6.91% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class A-6 Remittance Rate" means 7.24% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class A-7 Remittance Rate" means a floating rate (determined monthly on
each Remittance Date) equal to the Weighted Average Contract Rate, but in no
event greater than 7.62% per annum, in either case computed on the basis of a
360-day year of twelve 30-day months.
"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).
"Class B Certificate" means any one of the Class B-1 and Class B-2
Certificates executed and delivered by the Trustee and authenticated by the
Certificate Registrar substantially in the form set forth in Exhibit C hereto
and evidencing an interest designated as a "regular interest" in the Trust 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.
1-7
"Class B-1 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available less the sum of the Class A Distribution
Amount and 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 April 2001;
(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 11.25%; and (vii) the Class B Principal
Balance as of such Remittance Date is greater than or equal to $11,000,000.
"Class B-1 Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) one month's interest (or, with respect to the
first Remittance Date, interest from and including the Closing Date to but
excluding April 15, 1997) 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) one month's interest (or, with respect to the
first Remittance Date, interest from and including the Closing Date to but
excluding April 15, 1997) 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
1-8
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 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 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 Pool
Scheduled Principal Balance for such Remittance Date (after giving effect to all
distributions of principal on
1-9
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 one month's interest 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%.
"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
1-10
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 monthly as of
each Remittance Date) equal to the Weighted Average Contract Rate, but in no
event greater than 7.56% per annum, in either case computed on the basis of a
360-day year of twelve 30-day months.
"Class B-2 Remittance Rate" means a floating rate (determined monthly as of
each Remittance Date) equal to the Weighted Average Contract Rate, but in no
event greater than 8.05% per annum, in either case computed on the basis of a
360-day year of twelve 30-day months.
"Class C Certificate" means a certificate for Manufactured Housing
Senior/Subordinate Contract Pass-Through Certificates, Series 1997-2, executed
and delivered by the Trustee substantially in the form of Exhibit J, and
evidencing an interest designated as a "residual" interest in the Trust for
purposes of the REMIC Provisions.
"Class C Certificateholder" means the person in whose name a Class C
Certificate is registered on the Certificate Register.
"Class C Distribution Amount" means, as to any Remittance Date, the amount,
if any, distributable pursuant to Section 8.03(a)(12).
"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).
"Class M-1 Certificate" means any one of the Class M-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar 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 Class A Distribution Amount and (b)
the Class M-1 Formula Distribution Amount for such Remittance Date; provided
that after the Eighth 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 April 2001;
(ii) the Average Sixty-Day Delinquency Ratio for such Remittance Date is less
than or equal to
1-11
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 22.5%.
"Class M-1 Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) one month's interest (or, with respect to the
first Remittance Date, interest from and including the Closing Date to but
excluding April 15, 1997) 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-7 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(6)(iii) and (iv) on such
Remittance Date.
"Class M-1 Interest Distribution Amount" means, as to the Class M-1
Certificates and 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.
1-12
"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
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 one month's interest 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-7 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-7 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 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.
1-13
"Class M-1 Remittance Rate" means a floating rate (determined monthly as of
each Remittance Date) equal to the Weighted Average Contract Rate, but in no
event greater than 7.54% per annum, in either case computed on the basis of a
360-day year of twelve 30-day months.
"Closing Date" means March 31, 1997.
"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 (a) on or after the
Cut-off Date with respect to all Contracts other than the April Contracts (or
the date of origination, if later), but excluding any rights to receive payments
which are due pursuant thereto prior to the Cut-off Date, and (b) on or after
April 1, 1997 with respect to the April Contracts, but excluding any rights to
receive payments which are due pursuant thereto prior to April 1, 1997.
"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
1-14
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.
"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 April 1, 2001 and March
31, 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 April 1, 2002 and March
31, 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 April 1, 2003 and March
31, 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
1-15
(iv) if such Remittance Date occurs after April 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 April 1, 1997 with respect to the April Contracts, and
with respect to each other Contract March 1, 1997 or the date of origination, if
later.
"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 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 $25,332,000 in initial aggregate
principal balance of the Class A-1 Certificates,
(ii) one Certificate evidencing $6,282,000 in initial aggregate
principal balance of the Class A-2 Certificates,
1-16
(iii) one Certificate evidencing $75,114,000 in initial aggregate
principal balance of the Class A-3 Certificates,
(iv) one Certificate evidencing $65,972,000 in initial aggregate
principal balance of the Class A-4 Certificates,
(v) one Certificate evidencing $90,960,000 in initial aggregate
principal balance of the Class A-5 Certificates,
(vi) one Certificate evidencing $67,223,000 in initial aggregate
principal balance of the Class A-6 Certificates,
(vii) one Certificate evidencing $136,617,000 in initial aggregate
principal balance of the Class A-7 Certificates,
(viii) one Certificate evidencing $41,250,000 in initial aggregate
principal balance of the Class M-1 Certificates,
(ix) one Certificate evidencing $22,000,000 in initial aggregate
principal balance of the Class B-1 Certificates and
(x) one Certificate evidencing $19,250,000 in initial aggregate
principal balance of the Class B-2 Certificates,
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.
"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
1-17
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 ▇▇▇▇▇'▇, Standard & Poor's and Fitch to downgrade or withdraw its
then-current rating assigned to the Certificates, as confirmed in writing by
▇▇▇▇▇'▇, Standard & Poor's 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 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
1-18
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.
"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 Proceeds" means an amount equal to the excess, if any, of (a) the
aggregate of the Original Class A, Class M and Class B Principal Balances over
(b) the Cut-off Date Pool Principal Balance.
"Excess Proceeds Account" means the account established and maintained
pursuant to Section 8.07.
"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 Investors Service, L.P., or any successor thereto;
provided that if Fitch does not then have a rating outstanding on any of the
Class A, Class M-1 or Class B Certificates, then references herein to "Fitch"
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 Fitch shall be deemed
1-19
to have the equivalent meanings with respect to ratings by or requirements of
such NRSRO.
"Formula Principal Distribution Amount" means, as of any Remittance Date,
the sum of:
(i) all scheduled payments of principal due on each outstanding
Contract during the prior month as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments but
before 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); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior month; plus
(iii) the aggregate Scheduled Principal Balance of all Contracts that
became Liquidated Contracts during the prior month; plus
(iv) the aggregate Scheduled Principal Balance of all Contracts
repurchased during the prior month pursuant to Section 3.05;
plus
(v) with respect to the Remittance Date in June 1997, the Unfunded
Contract Shortfall, if any; plus
(vi) with respect to the Remittance Date in April 1997, an amount
equal to the Excess Proceeds; plus
(vii) all collections in respect of principal on the Contracts
received after the last day of the prior month up to and
including the third Business Day prior to such Remittance Date
(but in no event later than the 10th day of the month in which
such Remittance Date occurs); minus
(viii) with respect to all Remittance Dates other than the Remittance
Date in March 1997, all collections in respect of principal on
the Contracts received on or after the first day of the prior
month up to and including the third Business Day prior to the
preceding Remittance Date (but in no event later than the 10th
day of the prior month); plus
(ix) with respect to the Remittance Date in April, 1998, the amount,
if any, by which the Class A-1 Principal Balance as of such
Remittance Date exceeds the sum on such Remittance Date of the
amounts described above in clauses (i) through (viii); minus
1-20
(x) with respect to the Remittance Date in May, 1998, the
difference between the sum of items (i) through (ix) of the
definition of Formula Principal Distribution Amount on the
Remittance Date in April 1998 and the sum of items (i) through
(viii) of the definition of Formula Principal Distribution
Amount on the Remittance Date in April 1998.
"Funding Termination Date" means June 15, 1997.
"Guarantee Fee" means, as of any Remittance Date, one-twelfth of the
product of 3.00% and the Pool Scheduled Principal Balance for the immediately
preceding Remittance Date.
"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 described in the List of
Contracts, all of which were originated on or before March 5, 1997, and which
have an aggregate principal balance as of the Cut-off Date of approximately
$247,098,012.91.
"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 or
deed of trust 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.
1-21
"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).
"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 list identifying each Contract constituting
part of the corpus of the Trust, which list (a) identifies each Contract and (b)
sets forth as to each Contract (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, and which is attached to the Assignment from the Company
to the Trustee, conveying the Company's right, title and interest in and to the
Contracts (substantially in the form of Exhibit D).
1-22
"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.
"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"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.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto;
provided that, if Moody'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 "▇▇▇▇▇'▇"
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 ▇▇▇▇▇'▇ 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.
"Obligor" means each Person who is indebted under a Contract.
1-23
"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 Trust as a REMIC or compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Original Class A-1 Principal Balance" means $25,332,000.
"Original Class A-2 Principal Balance" means $6,282,000.
"Original Class A-3 Principal Balance" means $75,114,000.
"Original Class A-4 Principal Balance" means $65,972,000.
"Original Class A-5 Principal Balance" means $90,960,000
"Original Class A-6 Principal Balance" means $67,223,000.
"Original Class A-7 Principal Balance" means $136,617,000.
"Original Class M-1 Principal Balance" means $41,250,000.
"Original Class B-1 Principal Balance" means $22,000,000.
"Original Class B-2 Principal Balance" means $19,250,000.
"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 proviso 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 or the Class C
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 (a) the
aggregate denomination of all Class A Certificates of the related Class (which
equals the Original Class A-1 Principal Balance in the case of a Class A-1
Certificate, the Original Class A-2 Principal Balance in the case of a Class A-2
Certificate, the Original Class A-3 Principal Balance in the case of a Class A-3
Certificate, the Original Class A-4 Principal Balance in the case of a Class A-4
Certificate, the Original Class A-5 Principal Balance in the case of a
1-24
Class A-5 Certificate, the Original Class A-6 Principal Balance in the case of a
Class A-6 Certificate or the Original Class A-7 Principal Balance in the case of
a Class A-7 Certificate, (b) the aggregate denomination of all Class M-1
Certificates (which equals the Original Class M-1 Principal Balance) and (c) the
aggregate denomination of all Class B Certificates of the related Class (which
equals the Original Class B-1 Principal Balance in the case of a Class B-1
Certificate or the Original Class B-2 Principal Balance in the case of a Class
B-2 Certificate) and, in the case of the Class C Certificates, being equal to
the percentage specified on the face of such Certificate. The aggregate
Percentage Interests for each Class of Certificates shall equal 100%.
"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.
"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.
1-25
"Remaining Amount Available" means, as to any Remittance Date, the Amount
Available less the sum of the Class A Distribution Amount, the Class M-1
Distribution Amount and the Class B-1 Distribution Amount.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
"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 fifteenth day of each calendar month during the
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing in April 1997.
"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 month with respect to which the Obligor last made a payment
through the end of the immediately preceding month.
"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, the principal balance of such Contract as of the Due
Date in the month immediately preceding such Remittance Date or as of the Due
Date immediately preceding the Cut-off Date, as the case may be, as specified in
the amortization schedule at the time relating thereto (before 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
1-26
and irrespective of any delinquency in payment by, or extension granted to, the
related Obligor.
"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 prior month (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 a 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 Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"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.
"Subsequent Contracts" means those Contracts described in the List of
Contracts that are not Initial Contracts.
"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 prior month (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.
1-27
"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 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, (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 Excess Proceeds Account, if any.
"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.
"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.
"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 such immediately prior Remittance Date, plus (ii) accrued
interest (to the extent payment
1-28
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.
"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.
"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 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.
"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.
"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).
"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 immediately preceding
month.
1-29
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 1997-2. 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 the Trust, excluding the
Excess Proceeds Account, the Staged-Funding Contract Reserve Account, the
obligation and related demand note of the Company pursuant to Section 3.05(c),
and the Capitalized Interest Account, as a REMIC. The Trust shall be
administered pursuant to the provisions of this Agreement for the benefit of the
Certificateholders and the Class C Certificateholders.
b. The Company hereby transfers, assigns, 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 (a) all of the Contracts other than
the April Contracts (other than the principal and interest due on the Contracts
before the Cut-off Date), and (b) the April Contracts (other than principal and
interest due thereon before April 1, 1997), (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 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 or the Land-and-Home Contract Files,
(6) $24,761,587.04 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, and
(7) all proceeds in any way derived from any of the foregoing.
c. The Company hereby acknowledges receipt from the Trust of
$24,761,587.04 paid to the Company 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 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
2-1
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 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)(7) above, 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, the Class C Certificate 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, 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 of receipt of the Land-and-Home Contract
Files in the form of Exhibit G hereto.
e. A letter from Coopers & ▇▇▇▇▇▇▇ LLP or another nationally recognized
accounting firm, stating that such firm has reviewed the 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.
2-2
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. An executed copy of the Assignment substantially in the form of
Exhibit D hereto.
j. An Officer's Certificate listing the Servicer's Servicing Officers.
k. Evidence of continued coverage of the Company under the Errors and
Omissions Protection Policy.
l. Evidence of deposit in the Certificate Account of all funds received
with respect to the 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.
m. An Officer's Certificate confirming that the Company's internal audit
department has reviewed the original or a copy of each Contract and each
Contract File or Land-and-Home Contract File, as applicable, that each Contract
and Contract File or Land-and-Home Contract File, as applicable, conforms in all
material respects with the List of Contracts and that each 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).
n. Letter from ▇▇▇▇▇'▇ confirming that the Class A-1 Certificates have
been assigned a rating of P-1 by ▇▇▇▇▇'▇ and that each of the other Class A
Certificates have been assigned ratings of Aaa by ▇▇▇▇▇'▇ and a letter from
Fitch confirming that the Class A-1 Certificates have been assigned a rating of
F-1+ by Fitch and that each of the other Class A Certificates have been assigned
a rating of AAA by Fitch.
o. Letter from ▇▇▇▇▇'▇ confirming that the Class M-1 Certificates have
been assigned a rating of Aa3 by ▇▇▇▇▇'▇ and a letter from Fitch confirming that
the Class M-1 Certificates have been assigned a rating of AA- by Fitch.
2-3
p. Letter from ▇▇▇▇▇'▇ 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 Baa1 by ▇▇▇▇▇'▇ and a letter from Fitch 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 A by Fitch.
q. The demand note described in Section 3.05(c)(v).
r. Evidence of the deposit of $1,500,000 in the Capitalized Interest
Account, and the deposit of the Excess Proceeds in the Excess Proceeds Account.
s. Any other documents or certificates that the Trustee may reasonably
request.
SECTION 2.03. Acceptance by Trustee.
a. On the Closing Date, if the conditions set forth in Section 2.02 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, 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 trusts herein set forth,
for the use and benefit of all Certificateholders and Class C Certificateholders
and shall issue to or upon the order of the Company Certificates and Class C
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(m), 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 2.04. REMIC Provisions.
a. The Company, as Servicer, and the Class C Certificateholders, by
acceptance thereof, each 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 Trust (excluding the Capitalized
Interest Account, the Excess Proceeds Account, the obligation and related demand
note of the Company pursuant to Section 3.05(c) and the Staged-Funding Contract
Reserve 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 the Trust 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.
2-4
b. The Certificates are being issued in ten classes and are hereby
designated by the Company as constituting the "regular interests" in the Trust
for purposes of Section 860G(a)(1) of the Code. The following terms of the
Certificates are irrevocably established as of the Closing Date: the Class A-1
Remittance Rate is 5.6175%, the Class A-2 Remittance Rate is 6.00%, the Class A-
3 Remittance Rate is 6.42%, the Class A-4 Remittance Rate is 6.66%, the Class A-
5 Remittance Rate is 6.91%, the Class A-6 Remittance Rate as of any Remittance
Date is 7.24%, the Class A-7 Remittance Rate as of any Remittance Date is a
floating rate equal to the Weighted Average Contract Rate (subject to a maximum
rate of 7.62%), the Class M-1 Remittance Rate as of any Remittance Date is a
floating rate equal to the Weighted Average Contract Rate (subject to a maximum
rate of 7.54%), the Class B-1 Remittance Rate as of any Remittance Date is a
floating rate equal to the Weighted Average Contract Rate (subject to a maximum
rate of 7.56%), the Class B-2 Remittance Rate as of any Remittance Date is a
floating rate equal to the Weighted Average Contract Rate (subject to a maximum
rate of 8.05%), the initial aggregate principal balance of the Class A-1
Certificates is $25,332,000, the initial aggregate principal balance of the
Class A-2 Certificates is $6,282,000, the initial aggregate principal balance of
the Class A-3 Certificates $75,114,000, the initial aggregate principal balance
of the Class A-4 Certificates is $65,972,000, the initial aggregate principal
balance of the Class A-5 Certificates is $90,960,000, the initial aggregate
principal balance of the Class A-6 Certificates is $67,223,000, the initial
aggregate principal balance of the Class M-1 Certificates is $136,617,000, the
initial aggregate principal balance of the Class A-7 Certificates is
$41,250,000, the initial aggregate principal balance of the Class B-1
Certificates is $22,000,000, the initial aggregate principal balance of the
Class B-2 Certificates is $19,250,000 and the latest possible maturity date of
the Class A (other than the Class A-1), Class M-1 and Class B Certificates is
June 15, 2028 and the latest possible maturity date of the Class A-1
Certificates is April 15, 1998 (calculated using a prepayment assumption of 0%
and assuming no defaults or delinquencies on the Contracts). The Class C
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 Trust for
purposes of Section 860G(a)(2) of the Code.
c. The Closing Date, which is the day on which the Trust will issue all
of its regular and residual interests, is hereby designated as the "startup day"
of the REMIC constituted by the Trust within the meaning of Section 860G(a)(9)
of the Code.
d. After the Closing Date, neither the Trustee, the Company nor any
Servicer shall (i) accept any contribution of assets to the Trust, (ii) dispose
of any portion of the Trust 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 Trust 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
2-5
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 Trust as a REMIC
or the status of the Certificates as "regular interests" therein or of the Class
C Certificates as the sole class of "residual interests" therein, (B) affect the
distributions payable hereunder to the Certificateholders or the Class C
Certificateholders or (C) result in the imposition of any lien, charge or
encumbrance upon the Trust.
e. 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
Trust 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
Trust, as defined in Section 860F of the Code, or cause the Trust to fail to
qualify as a REMIC at any time that the Certificates or Class C 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 Trust of any "income from
nonpermitted assets," within the meaning of Section 860F(a)(2)(B) of the Code.
2-6
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 and the Class C 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,
Certificateholders or Class C Certificateholders for a breach of a
representation or warranty of the Company set forth in Section 2.02(m), 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, the Certificateholders
and the Class C Certificateholders 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
regulation or any
3-1
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, the Certificates or Class C
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, the Certificateholders
and the Class C Certificateholders as to each Contract:
a. List of Contracts. The information set forth in the 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.
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 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.
3-2
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. Origination. The Contract was originated by a manufactured housing
dealer or the Company in the regular course of its business and, if originated
by a manufactured housing dealer, was purchased by the Company in the regular
course of its business.
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 valid and perfected and enforceable
first priority security interest in such Contract and Manufactured Home.
3-3
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 the date of origination, if
later), 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, the
related Manufactured Home is, to the best of the Company's knowledge, free of
damage and in 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 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.
3-4
p. Equal Installments. Except for 230 Step-up Rate Contracts included
among the Initial Contracts and 519 Step-up Rate Contracts included among the
Subsequent 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, 269 provide for a single-rate increase and 250 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.
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 95%; 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.
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
3-5
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 42 United States 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 (S) 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 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 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 $247,098,012.91.
b. Characteristics. The Contracts have the following characteristics as
of the Cut-off Date (or the date of origination, if later): (i) the Obligors on
not more than 10% of the Contracts by Cut-off Date Pool Principal Balance are
located in any one state (except that the Obligors on approximately 14.48% of
the Contracts by remaining principal balance are located in North Carolina), the
Obligors on not more than 5% of the Contracts by remaining principal balance are
located in an area with the same zip code and the Obligors on not more than 1%
of the Contracts by remaining principal balance are located in California in an
area with the same zip code; (ii) no Contract has a remaining maturity of fewer
than 24 months or more than 360 months; (iii) the final scheduled payment date
on the Contract with the latest maturity is in May 2027; (iv) the
3-6
final scheduled payment date of the Subsequent Contract with the latest maturity
is in May 2027; (v) of the Initial Contracts, approximately 85% of the Cut-off
Date Pool Principal Balance is attributable to loans for purchases of new
Manufactured Homes and approximately 15% is attributable to loans for purchases
of used Manufactured Homes; (vi) of the Subsequent Contracts, approximately 77%
of the Cut-off Date Pool Principal Balance is attributable to loans for
purchases of new Manufactured Homes and approximately 23% is attributable to
loans for purchases of used Manufactured Homes; (vii) of the Contracts as a
whole, approximately 80% of the Cut-off Date Pool Principal Balance is
attributable to loans for purchase of new Manufactured Homes and approximately
20% is attributable to loans for purchases of used Manufactured Homes; and
(viii) no Initial Contract was originated before October 1983, and no Subsequent
Contract was originated before July 1984.
c. Staged-Funding Contracts. Approximately $113,752,888.29 of the
Contracts, by Cut-off Date Principal Balance, are Staged-Funding Contracts that
had not been fully disbursed by the Cut-off Date. Approximately $88,991,301.25
of such amount had been disbursed by the Closing Date, and approximately
$24,761,587.04 remained to be disbursed on or before the Funding Termination
Date.
d. 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.
e. Marking Records. By the Closing Date, the Company has caused the
portions of the Electronic Ledger relating to the 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.
f. 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 that:
a. Possession. Immediately prior to the Closing Date, 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
3-7
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(m), 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 and Class C
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 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 an Eligible Substitute
Contract for a Contract that it is obligated to repurchase pursuant to Section
3.05(a) (such Contract being referred to as the "Replaced Contract") upon
satisfaction of the following conditions:
(i) the Company shall have conveyed to the Trustee the Contract to
be substituted for the Replaced Contract and the Contract File
related to such Contract and the Company shall have marked the
Electronic Ledger indicating that such Contract constitutes part
of the Trust;
(ii) the Contract to be substituted for the Replaced Contract is an
Eligible Substitute Contract and the Company delivers an
Officers' Certificate, substantially in the form of Exhibit K-2
hereto, to the Trustee certifying that such Contract is an
Eligible Substitute Contract;
3-8
(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 Contract as collateral;
(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 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 Contract
for such Replaced Contract will not cause the Trust to fail to
qualify as a
3-9
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 Scheduled Principal Balance of such Replaced Contract is
greater than the Scheduled Principal Balance of the Contract
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 Contract to,
and delete such Replaced Contract 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 Fitch.
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.
(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.
3-10
(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 June
1997.
(iv) On the Business Day prior to each Remittance Date until and
including the Remittance Date in June 1997, 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.
3-11
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 K-1 or K-2, the Trustee shall convey and assign to the Company all of
the Certificateholders' and Class C Certificateholders' 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, the
Certificateholders and the Class C 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 Trust to fail to qualify as a REMIC while any regular interest in the REMIC
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 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 accounts created under this Agreement. The Trustee shall
be deemed
3-12
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, Ba1 or lower by ▇▇▇▇▇'▇, and BB+ or lower by
Fitch (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 Cut-Off Date Principal Balance 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 "Firstar Trust Company, as Trustee for the benefit
of holders of Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1997-2."
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 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.
3-13
d. Any funds remaining in the Staged-Funding Contract Reserve Account
after the Funding Termination Date shall be distributed to the Company.
3-14
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, the Class C 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 is 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 Class C 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
Class C Certificateholders and the Trustee.
4-1
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 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 Class C 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 Class C 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 Class C Certificateholders 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' and the Class C Certificateholders' interests 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 ▇▇▇▇▇'▇ and Fitch.
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
4-2
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' and the Class C Certificateholders' interests in the
Contracts and proceeds thereof and in the Manufactured Homes.
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' and the Class C Certificateholders'
right, title and interest in and to the Contracts (including, without
limitation, the security interests in the Manufactured Homes granted thereby).
4-3
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.
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
5-1
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 and the Class C Certificateholders.
c. On or before the ninth Business Day of each month, 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 next preceding Month.
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
1997-2 (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, the
Certificateholders and the Class C 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
Certificateholders out of their own funds immediately as realized. The Company,
the Servicer and the Trustee shall in no way be liable for losses on amounts
invested in
5-2
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 Aa 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
5-3
of such investment; provided, however, that securities 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 P-1 from ▇▇▇▇▇'▇,
at least A-1+ from Standard & Poor's and at least F-1+ by Fitch
(if rated by Fitch) at the time of such investment or pledge as
a security.
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 Moody's,
Fitch, 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
▇▇▇▇▇'▇, Fitch 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 sue 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 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 and
Class C Certificateholders.
5-4
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 May 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 at a time when such Contract is not in default or such default is not
reasonably foreseeable, if such modification or waiver would be treated as a
taxable exchange under Section 1001 of the Code.
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 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
5-5
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, however, that the amount of coverage provided by each Hazard
Insurance Policy shall be sufficient to avoid the
5-6
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.
5-7
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 Firstar Trust Company, 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
5-8
Servicer or the Trustee as the holder 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 is less than 10% of the Cut-off Date Pool Principal Balance, then on
the Closing Date the Company shall deliver to the Custodian executed assignments
to the Trustee on behalf of the Trust in recordable form of each Mortgage
securing a Land-and-Home Contract.
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) 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.
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 ▇▇▇▇▇'▇ 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.
5-9
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), ▇▇▇▇▇'▇ and Fitch a "Monthly Report," substantially in the form of
Exhibit M 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, ▇▇▇▇▇'▇, Fitch or a Certificateholder, furnish
the Trustee and/or ▇▇▇▇▇'▇, Fitch 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, 1998, 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
6-1
servicing standards identified in the Mortgage 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 and Class C
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, Class C Certificateholder, ▇▇▇▇▇▇ Brothers
Inc., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ 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 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, the Class
A-6 Principal Balance and the Class A-7 Principal Balance after
giving effect to the distribution of principal on such
Remittance Date;
(v) the Pool Scheduled Principal Balance of the Contracts for such
Remittance Date;
6-2
(vi) the Class A Percentage for such Remittance Date and the
following Remittance Date;
(vii) the Pool Factor;
(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 month ending
immediately prior to such Remittance Date;
(xi) the Class M-1 Distribution Test (as set forth in Exhibit M
hereto);
(xii) the Class B Distribution Test (as set forth in Exhibit M
hereto);
(xiii) the Weighted Average Contract Rate of all outstanding
Contracts; and
(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:
6-3
(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 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,
any remaining Unpaid Class M-1 Principal Shortfall after giving
effect to such distribution, any Class M-1 Liquidation Loss
Interest Amount included in such distribution and any remaining
Unpaid Class M-1 Liquidation Loss Interest 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;
(vi) the Pool Scheduled Principal Balance for such Remittance Date;
(vii) the Pool Factor;
(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 month ending
immediately prior to such Remittance Date;
(xi) the Class M-1 Distribution Test (as set forth in Exhibit M
hereto);
(xii) the Class B Distribution Test (as set forth in Exhibit M
hereto); and
6-4
(xiii) 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 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 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;
6-5
(vi) the Pool Scheduled Principal Balance for such Remittance Date;
(vii) the Pool Factor;
(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 month ending
immediately prior to such Remittance Date;
(xi) the Class M-1 Distribution Test (as set forth in Exhibit M
hereto);
(xii) the Class B Distribution Test (as set forth in Exhibit M
hereto); and
(xiii) 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-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 such
distribution and any remaining Unpaid Class B-2 Interest
Shortfall after giving effect to such distribution;
6-6
(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 Pool Scheduled Principal Balance for such Remittance Date
and the following Remittance Date;
(vii) the Pool Factor;
(viii) the Class B-2 Liquidation Loss Amount, if any, for such
Remittance Date;
(ix) the Guarantee Payment, if any, for such Remittance Date;
(x) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days and (b) 60 days or more;
(xi) the number of Manufactured Homes that were repossessed during
the month ending immediately prior to such Remittance Date;
(xii) the number of Manufactured Homes that were repossessed but
remain in inventory as of the last day of the month ending
immediately prior to such Remittance Date;
(xiii) the Class M-1 Distribution Test (as set forth in Exhibit M
hereto);
(xiv) the Class B Distribution Test (as set forth in Exhibit M
hereto); and
(xv) 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.
6-7
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. Copies of all reports provided to the Trustee for the
Certificateholders shall also be provided to ▇▇▇▇▇'▇, Fitch 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 Trust 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 Trust 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
Trust 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 the 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 Trust if, and during such time as, the Servicer is not
the holder of the 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 or the Class C Certificate, by
acceptance thereof, 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 Trust. The Company, as agent for
the tax matters person, shall represent the Trust in connection with all
examinations of the Trust's affairs by tax authorities,
6-8
including resulting administrative and judicial proceedings. Each of the
holders of the Certificates and Class C 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 Certificateholders shall pay, on behalf of the Trust, 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
Trust 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 the 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 the 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.
6-9
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.
7-1
SECTION 7.02. Transfer.
a. 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
7-2
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 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 and Class C
Certificateholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Moody's, Fitch, the
Certificateholders and the Class C 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, Fitch, the Certificateholders and the Class C
Certificateholders at their respective addresses appearing on the Certificate
Register.
c. The Trustee shall give written notice to ▇▇▇▇▇'▇ and Fitch 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.
7-3
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.
7-4
ARTICLE VIII
PAYMENTS
--------
SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each Holder of a
Certificate and Class C 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 or Class C Certificateholder at the address for such
Certificateholder or Class C 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 C Certificateholder holds Class C
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 or Class C 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 or
the Class C Distribution Amount, as applicable. Final payment of any
Certificate or Class C Certificate shall be made only upon presentation of such
Certificate or Class C 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 and Class C Certificateholders required
hereunder. The Trustee's corporate trust operations department, with an office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, shall initially act as Paying Agent. The
Trustee shall require the Paying Agent (if other than the Trustee) to
8-1
agree in writing that all amounts held by the Paying Agent for payment hereunder
will be held in trust for the benefit of the Certificateholders and the Class C
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 and the Class C 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 the Amount
Available (as determined on the immediately preceding Determination Date) from
the Certificate Account and apply such funds to make payment in the following
order of priority:
8-2
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; the
amount in clause (a)(vii) of the definition of Class A Formula
Distribution Amount to the Class A-7 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 (i);
(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;
8-3
5. after payment of the amounts specified in clauses (1) - (4) above,
as follows:
(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 Principal
Balance of each Class (but in no event shall such amount exceed
the Principal Balance of any such Class);
(ii) the Unpaid Class A Principal Shortfall, or, if the remaining
Amount Available is less than such amount, such remaining Amount
Available, (a) on the Remittance Date in April 1998 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 Principal Balance
of such Class), 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 (other than the Class A-1 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-1 Cross-
over Date, the Class A Percentage of the Formula Principal
Distribution Amount to the Class A-1 Certificateholders, but in
no event more than the Class A-1 Principal Balance;
(iv) 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, the Class A
Percentage of the Formula Principal Distribution Amount to the
Class A-2 Certificateholders (reduced, if such Remittance Date
is on the Class A-1 Cross-over Date, by the amount of the Class
A Percentage of the Formula Principal Distribution Amount
actually distributed to the Class A-1 Certificateholders on such
date), but in no event more than the Class A-2 Principal
Balance;
(v) 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, the Class A
Percentage of the Formula Principal Distribution Amount to the
Class A-3 Certificateholders (reduced, if such Remittance Date
is on the Class A-2 Cross-over Date, by the amount of the Class
A Percentage of the Formula Principal Distribution Amount
actually distributed to the Class A-1 and Class A-2
Certificateholders on such date), but in no event more than the
Class A-3 Principal Balance;
8-4
(vi) 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, the Class A
Percentage of the Formula Principal Distribution Amount to the
Class A-4 Certificateholders (reduced, if such Remittance Date
is on the Class A-3 Cross-over Date, by the amount of the Class
A Percentage of the Formula Principal Distribution Amount
actually distributed to the Class A-1, Class A-2 and Class A-3
Certificateholders on such date), but in no event more than the
Class A-4 Principal Balance;
(vii) 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, the Class A
Percentage of the Formula Principal Distribution Amount to the
Class A-5 Certificateholders (reduced, if such Remittance Date
is on the Class A-4 Cross-over Date, by the amount of the Class
A Percentage of the Formula Principal Distribution Amount
actually distributed to the Class A-1, Class A-2, Class A-3 and
Class A-4 Certificateholders on such date), but in no event
more than the Class A-5 Principal Balance;
(viii) 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, the
Class A Percentage of the Formula Principal Distribution Amount
to the Class A-6 Certificateholders (reduced, if such
Remittance Date is on the Class A-5 Cross-over Date, by the
amount of the Class A Percentage of the Formula Principal
Distribution Amount actually distributed to the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-5
Certificateholders on such date), but in no event more than the
Class A-6 Principal Balance;
(ix) if such Remittance Date is on or after the Class A-6 Cross-over
Date but not after the Class A-7 Cross-over Date, the Class A
Percentage of the Formula Principal Distribution Amount to the
Class A-7 Certificateholders (reduced, if such Remittance Date
is on the Class A-6 Cross-over Date, by the amount of the Class
A Percentage of the Formula Principal Distribution Amount
actually distributed to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, and Class A-6 Certificateholders on such
date), but in no event more than the Class A-7 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
8-5
Date is on the Class A-7 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;
(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
8-6
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 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 reimburse the Class C Certificateholders for expenses incurred by
and reimbursable to them pursuant to Section 10.06;
11. after payment of the amounts specified in clauses (1) - (10)
above, to pay the Guarantee Fee to the Company; and
12. after payment of the amounts specified in clauses (1) - (11)
above, to any remaining funds shall be paid to the Class C
Certificateholders.
b. 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) 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 $132,000,000; (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 $99,000,000, (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 $1,925,000; 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 $825,000.
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.
8-7
c. 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 and Class C 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.
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 Fitch.
f. The Class C 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 (S) 860G(a)(7) of the Code in
accordance with (S) 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
8-8
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).
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
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 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 $1,500,000 received from the Company pursuant
to Section 2.02(s). The Capitalized Interest Account shall be entitled "Firstar
Trust Company as Trustee for the benefit of holders of Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates Series 1997-2." On the
Remittance Date occurring in April 1997, if the Monthly Report for such
Remittance Date indicates that the Amount Available is less than the sum of the
Class A Formula Distribution Amount, plus the Class M-1 Formula Distribution
Amount, plus the Class B-1 Formula 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
8-9
funds in the Certificate Account for distribution on such Remittance Date in
accordance with Section 8.03.
b. The Capitalized Interest Account shall be part of the Trust but not
part of the 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 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 April 1997 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. Excess Proceeds Account.
a. On or before the Closing Date, the Trustee shall establish the Excess
Proceeds Account on behalf of the Trust, which must be an Eligible Account, and
shall deposit therein an amount equal to the Excess Proceeds received from the
Company pursuant to Section 2.02(r). The Excess Proceeds Account shall be
entitled "Firstar Trust Company as Trustee for the benefit of holders of
Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates
Series 1997-2." On the Remittance Date occurring in April 1997, the Trustee
shall withdraw the amount of funds in the Excess Proceeds Account (including any
investment earnings thereon), and shall deposit such funds in the Certificate
Account for distribution on such Remittance Date in accordance with Section
8.03. After such date no further amounts shall be deposited in or withdrawn
from the Excess Proceeds Account.
b. The Excess Proceeds Account shall be part of the Trust but not part of
the REMIC. The Trustee on behalf of the Trust shall be the legal owner of the
Excess Proceeds Account. Green Tree Finance Corp.--Two shall be the beneficial
owner of the Excess Proceeds Account, subject to the foregoing power of the
Trustee to transfer amounts in the Excess Proceeds Account to the Certificate
Account. Funds in the Excess Proceeds Account shall, at the direction of the
Servicer, be invested in Eligible Investments that mature no later than the
Business Day prior to the Remittance Date occurring in April 1997. All amounts
earned on deposits in the Excess Proceeds Account shall be taxable to Green Tree
Finance Corp.--Two. Any losses on such investments
8-10
shall be deposited in the Excess Proceeds Account by Green Tree Finance Corp.--
Two out of its own funds immediately as realized.
8-11
ARTICLE IX
THE CERTIFICATES AND CLASS C CERTIFICATES
-----------------------------------------
SECTION 9.01. The Certificates and Class C Certificates.
The Class A, the Class M-1, the Class B and the Class C Certificates shall
be substantially in the forms set forth in Exhibits A, B, C and J, 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 $25,332,000 initial aggregate principal balance, (ii) one or more
Class A-2 Certificates representing $6,282,000 initial aggregate principal
balance, (iii) one or more Class A-3 Certificates representing $75,114,000
initial aggregate principal balance, (iv) one or more Class A-4 Certificates
representing $65,972,000 initial aggregate principal balance, (v) one or more
Class A-5 Certificates representing $90,960,000 initial aggregate principal
balance, (vi) one or more Class A-6 Certificates representing $67,223,000
initial aggregate principal balance, (vii) one or more Class A-7 Certificates
representing $136,617,000 initial aggregate principal balance, (viii) one or
more Class M-1 Certificates representing $41,250,000 initial aggregate principal
balance, (ix) one or more Class B-1 Certificates representing $22,000,000
initial aggregate principal balance, and (ix) one or more Class B-2 Certificates
$19,250,000 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, except for one Class B-2 Certificate with a denomination representing
the remainder of the Original Class B-2 Principal Balance. The Class C
Certificates shall be issuable in Percentage Interests and shall be evidenced by
a single Class C Certificate issued on the Closing Date to Green Tree Finance
Corp.-Two. The expected final maturity of each Class of the Certificates based
on the assumptions that there are no defaults, prepayments or delinquencies with
respect to payments due under the Contracts are as follows: for the Class A-2
Certificates, September 15, 2000; for the Class A-3 Certificates, April 15,
2006; for the Class A-4 Certificates, February 15, 2010; for the Class A-5
Certificates, October 15, 2015; for the Class A-6 Certificates, January 15,
2020; for the Class A-7 Certificates, January 15, 2027; for the Class M-1
Certificates, January 15, 2027; for the Class B-1 Certificates, April 15, 2020;
and for the Class B-2 Certificates, July 15, 2027. The Company does not
represent that any Class of Certificates will, in fact, mature on any given
date.
The Certificates and the Class C Certificates shall be executed by manual
signature on behalf of the Trustee by a duly authorized Responsible Officer or
authorized signatory. Certificates or Class C 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 Class C Certificate or did not hold such offices at the date
of such Certificates or Class C Certificates. No Certificate or Class C
Certificates shall be entitled to any benefit under this Agreement,
9-1
or be valid for any purpose, unless such Certificate or Class C Certificate has
been executed by manual signature in accordance with this Section, and such
signature upon any Certificate or Class C Certificate shall be conclusive
evidence, and the only evidence, that such Certificate or Class C Certificate
has been duly executed and delivered hereunder. All Certificates and Class C
Certificates shall be dated the date of their execution, except for those
Certificates and Class C Certificates executed on the Closing Date, which shall
be dated the Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
Class C 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 Class C Certificates and
of transfers and exchanges of Certificates and Class C Certificates as herein
provided. The Trustee initially appoints itself to be the "Certificate
Registrar" and transfer agent for the purpose of registering Certificates and
Class C Certificates and transfers and exchanges of Certificates and Class C
Certificates as provided herein. The Trustee will give prompt written notice to
Certificateholders, Class C 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 C
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 L attached hereto, which investment letter shall not be an
expense of the Trustee or the Company. The Certificateholder or Class C
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 or
a Class C 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
9-2
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.
(3) Notwithstanding anything to the contrary contained herein, (A)
neither the Class C 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 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 Certificate by any
Disqualified Organization will not result in the imposition of federal
income tax upon the Trust or any Certificateholder or any other person or
otherwise adversely affect the status of the Trust 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 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 Certificateholder for any purpose hereunder, including, but
not limited to, the receipt of distributions on the Class C Certificate,
and shall be deemed to have no interest whatsoever in the Class C
Certificate. Each Class C Certificateholder, by his acceptance thereof,
shall be deemed for all purposes to have consented to the provisions of
this Section 9.02(b)(3).
9-3
(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 or Class C Certificateholder for any purpose
hereunder, including, but not limited to, the receipt of distributions on
the Certificate or Class C Certificate, and shall be deemed to have no
interest whatsoever in the Certificate or Class C Certificate.
(5) The Trustee shall give notice to ▇▇▇▇▇'▇ and Fitch promptly
following any transfer, sale or other disposition of a Class C Certificate.
c. At the option of a Certificateholder or Class C Certificateholder,
Certificates and Class C Certificates may be exchanged for other Certificates or
Class C Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates or Class C Certificates to be
exchanged at such office. Whenever any Certificates or Class C Certificates are
so surrendered for exchange, the Trustee shall execute and deliver the
Certificates or Class C Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate or Class C Certificates
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 and Class
B 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 and Class B Certificates; (iii) ownership and transfers of
registration of the Class A, Class M-1 and Class B 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 and
Class B 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
9-4
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 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 or
Class B Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Class A Certificates,
Class M-1 Certificates or Class B 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 Original Class A-1 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, the Original Class
A-6 Principal Balance, the Original Class A-7 Principal Balance, the Original
Class M-1 Principal Balance, the Original Class B-1 Principal Balance and the
Original Class B-2 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 or Class B
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
9-5
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 or Class C
Certificates.
No service charge shall be made to a Certificateholder or Class C
Certificateholder for any transfer or exchange of Certificates or Class C
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 exchange of Certificates or Class C
Certificates. All Certificates or Class C 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 or Class C
Certificates.
If (a) any mutilated Certificate or Class C 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 or Class C
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 or Class C 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 or Class C
Certificate, a new Certificate or Class C Certificate of like tenor and original
denomination. Upon the issuance of any new Certificate or Class C 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
or Class C 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 or Class C Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate or Class C 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 or Class C Certificate is registered as the owner of such
Certificate or Class C Certificate for the purpose of receiving remittances
pursuant to Section 8.01 and for all other purposes whatsoever, and
9-6
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' and Class C
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 and
Class C 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 or Class C Certificateholders with respect to
their rights under this Agreement or under the Certificates or Class C
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 or Class C
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 from the Certificate Registrar a current list as provided
above, and shall afford such Applicants access to such list promptly upon
receipt. Every Certificateholder or Class C Certificateholder, by receiving and
holding a Certificate or Class C Certificates, 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 or Class C
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 or Class C Certificates. For all purposes of this Agreement, the
execution and delivery of Certificates or Class C Certificates by the
Authenticating Agent pursuant to this Section shall be deemed to be the
execution and delivery of Certificates or Class C Certificates "by the Trustee."
9-7
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 and the Class C 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, the Certificateholders or the Class C
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, the Certificateholders and the Class C
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), the Certificateholders and the Class C
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 and the Class C 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, a Class C Certificateholder or otherwise.
10-1
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), the
Certificateholders and the Class C 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 Certificateholders, pursuant to Section 6.06, pay any taxes or
charges imposed upon the Trust 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 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 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.
10-2
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
11-1
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;
11-2
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, in the Certificates or in the Class C 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 or of the
Class C 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 and Holders of each Class of Class B 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
11-3
impair the right of the Trustee to take any action deemed 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 and
Holders of each Class of Class B 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 and each Class of Class B Certificateholders. Holders of
each Class of Class A Certificates, Holders of Class M-1 Certificates and
Holders of each Class of Class B 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 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.
11-4
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 Fitch. 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
11-5
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the 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 ▇▇▇▇▇▇▇ 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 and Class C 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.
11-6
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 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 Fitch 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 Trust 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. (S) 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 Class C 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 or Class C 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;
11-7
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 and Class C
Certificateholders.
e. The Trustee will cooperate with and assist Certificateholders and
Class C 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 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 and Class C Certificateholders from and against any
and all liability, loss, costs and expenses of the Trustee, Certificateholders
and Class C 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
11-8
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;
(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.
11-9
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 ▇▇▇▇▇'▇ and Fitch 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 Milwaukee, Wisconsin, an office or agency
where Certificates or Class C 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, the Class C 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 to
Certificateholders and Class C
12-1
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 and Class C 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 and Class C Certificateholders on such Remittance Date have
been distributed to Certificateholders and Class C 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 or Class C Certificateholders may surrender their
Certificates or Class C 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 Moody's, Fitch, the Certificateholders and the Class C
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 and Class C Certificates will be made upon
presentation and surrender of Certificates and Class C 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 and Class C 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
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 Trust
by the Trustee. The Trustee shall give such notice to the Certificate Registrar
at the time such notice is given to the Certificateholders and Class C
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 and Class C 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
12-2
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.
c. Upon presentation and surrender of the Certificates and Class C
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, the Class A-6 Principal
Balance and the Class A-7 Principal Balance and, together with any Unpaid Class
A Interest Shortfall and one month's interest at the Class A-1 Remittance Rate,
the Class A-2 Remittance Rate, the Class A-3 Remittance Rate, the Class A-4
Remittance Rate, the Class A-5 Remittance Rate, the Class A-6 Remittance Rate
and the Class A-7 Remittance Rate on the Class A-l 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, the Class A-6 Principal Balance, and
the Class A-7 Principal Balance, respectively, (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 and (v) as to Class C 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 and Class C
Certificateholders do not surrender their Certificates and Class C 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 and Class C Certificateholders to surrender their
Certificates and Class C Certificates for cancellation and receive the final
distribution with respect thereto. If within three months after the second
notice all the Certificates and Class C 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 and Class C Certificateholders who have not surrendered their
Certificates and Class C Certificates for cancellation, together with the final
record list of Certificateholders and Class C
12-3
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 Class C Certificates, and the
cost thereof shall be paid out of the funds and other assets which remain in
trust hereunder.
e. Each Certificateholder and Class C 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 and Class C 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 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 or Class C Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or Class C 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 or Class C
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
d. The ownership of Certificates and Class C Certificates shall be proved
by the Certificate Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder or Class C Certificateholder shall bind
every holder of every Certificate or Class C 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.
12-4
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.
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
or Class C 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 the Trust 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 Trust, the Certificateholders and
the Class C 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 Moody's, Fitch, 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
12-5
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
Trust as a REMIC under the Code, (d) adversely affect the status of the Trust as
a REMIC or the status of the Certificates as "regular interests" therein 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 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 and all Class C Certificateholders if such
amendment would result in the disqualification of the Trust 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 Moody's and
Fitch 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, Fitch and each Certificateholder
and Class C 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.
12-6
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 Trust as a REMIC or the status of the
Certificates as "regular interests" therein, 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 or Class C Certificateholder hereunder shall be
bound thereby.
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
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1639
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
12-7
If to the Trustee:
Firstar Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
ABS Monitoring Department
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to Fitch:
Fitch Investors Service, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Surveillance Group
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
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.
12-8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 31st
day of March, 1997.
GREEN TREE FINANCIAL CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President, General Counsel
and Secretary
FIRSTAR TRUST COMPANY
not in its individual capacity but
solely as Trustee
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Its Vice President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its Assistant Secretary
12-9
EXHIBIT A-1
-----------
FORM OF CLASS A-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.
Class A-[1] (Senior) No.
Cut-off Date: Remittance Rate: ____%
April 1, 1997 with respect [Remittance Rate: Floating Rate
to the April Contracts, and equal to the Weighted Average
otherwise March 1, 1997 Contract Rate (subject to a
maximum of __%)]
First Remittance Date:
April 15, 1997 Denomination: $___________
Aggregate Denomination of
Servicer: All Class A-[1] Certificate:
Green Tree Financial Corporation $___________
Maturity Date:
April 15, 1998
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: 393505 _____
MANUFACTURED HOUSING CONTRACT
-----------------------------
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
---------------------------------------------
SERIES 1997-2, CLASS A-[1] (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.
This certifies that ____________________ 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 1997-2 (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
A-1-1
payments which are due pursuant thereto on or after the Cut-off Date). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1997, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and Firstar Trust Company,
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 fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Remittance Date") of each calendar month commencing in April 1997, 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 15, 1998 or the next succeeding Business Day if such April 15 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
Milwaukee, Wisconsin, 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
A-1-2
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-1-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate Pass-
Through Certificate Trust 1997-2 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 1997-2
By FIRSTAR TRUST COMPANY
By__________________________________
Authorized Signatory
A-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
A-1-5
EXHIBIT A-2
-----------
FORM OF CLASS A-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.
Class A-[2][3][4][5][6][7] No.
(Senior)
Cut-off Date: Remittance Rate: ____%
April 1, 1997 with respect [Remittance Rate: Floating Rate
to the April Contracts, and equal to the Weighted Average
otherwise March 1, 1997 Contract Rate (subject to a
maximum of __%)]
First Remittance Date:
April 15, 1997 Denomination: $___________
Aggregate Denomination of
Servicer: All Class A-[2][3][4][5][6][7]
Green Tree Financial Corporation Certificates:
$___________
Maturity Date:
June 15, 2028
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: 393505 _____
MANUFACTURED HOUSING CONTRACT
-----------------------------
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
---------------------------------------------
SERIES 1997-2, CLASS A-[2][3][4][5][6][7] (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.
This certifies that ____________________ 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 1997-2 (the "Trust"), which includes among its assets a pool
of manufactured housing installment sale contracts and installment loan
A-2-1
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). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of March 1, 1997, between Green
Tree Financial Corporation, as Seller and Servicer (the "Company"), and Firstar
Trust Company, 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 fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Remittance Date") of each calendar month commencing in April 1997, 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
June 15, 2028or the next succeeding Business Day if such June 15 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
Milwaukee, Wisconsin, 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
A-2-2
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-2-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate Pass-
Through Certificate Trust 1997-2 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 1997-2
By FIRSTAR TRUST COMPANY
By_______________________________
Authorized Signatory
A-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
A-2-5
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)
Remittance Rate: Floating Rate equal
Cut-off Date: to the Weighted Average Contract Rate
April 1, 1997 with respect (subject to a maximum of ____%)
to the April Contracts, and
otherwise March 1, 1997 Denomination: $___________
First Remittance Date: Aggregate Denomination of
April 15, 1997 All Class M-1 Certificates:
$__________
Servicer: Maturity Date:
Green Tree Financial Corporation June 15, 2028
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: 393505 _____
MANUFACTURED HOUSING CONTRACT
-----------------------------
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
---------------------------------------------
SERIES 1997-2, 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 ____________________ 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 1997-2 (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). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of March 1, 1997, between Green
Tree Financial Corporation, as Seller and Servicer (the "Company"), and Firstar
Trust Company, 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 fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Remittance Date") of each calendar month commencing in April 1997, 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 June 15, 2028
or the next succeeding Business Day if such June 15 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
Milwaukee, Wisconsin, 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.
B-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.
B-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate Pass-
Through Certificate Trust 1997-2 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 1997-2
By FIRSTAR TRUST COMPANY
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
---------
FORM OF CLASS B 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: Remittance Rate: Floating Rate equal
April 1, 1997 with respect to the Weighted Average Contract Rate
to the April Contracts, and (subject to a maximum of ____%)
otherwise March 1, 1997 Denomination: $___________
First Remittance Date: Aggregate Denomination of
April 15, 1997 All Class B-[1][2] Certificates:
$___________
Servicer: Maturity Date:
Green Tree Financial Corporation June 15, 2028
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: 393505 _____
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
-------------------------------------------------
PASS-THROUGH CERTIFICATES, SERIES 1997-2, 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 ____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in Manufactured Housing
C-1
Contract Senior/Subordinate Pass-Through Certificate Trust 1997-2 (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). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1997, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and Firstar Trust Company, 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 fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Remittance Date") of each calendar month commencing in April 1997, 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 June 15, 2028, or the
next succeeding Business Day if such June 15 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
Milwaukee, Wisconsin, 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,
C-2
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-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate Pass-
Through Certificate Trust 1997-2 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 1997-2
By FIRSTAR TRUST COMPANY
By_______________________________
Authorized Officer
C-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-5
EXHIBIT D
---------
FORM OF ASSIGNMENT
------------------
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 1997 between Green Tree Financial Corporation (the
"Company") and Firstar Trust Company, as Trustee (the "Trustee"), the Company
does hereby transfer, assign, set over and otherwise convey to the Trustee (i)
all right, title and interest in the manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
right, title and interest in and to the Collateral Security and any and all
rights to receive payments which are due pursuant to (a) the Contracts, other
than the April Contracts, from and after March 1, 1997 (or the date of
origination, if later), but excluding any rights to receive payments which were
due pursuant thereto prior to March 1, 1997 and (b) the April Contracts, from
and after April 1, 1997, but excluding any rights to receive payments which were
due pursuant thereto prior to April 1, 1997) identified in the List of Contracts
delivered pursuant to Section 2.02(a) of the Agreement, which List of Contracts
is also attached hereto, (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 policy to
the extent they relate to the Manufactured Homes, (v) all documents contained in
the Contract Files and Land-and-Home Contract Files (vi) all amounts 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, and (vii) all proceeds 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 19th day of March, 1997.
GREEN TREE FINANCIAL CORPORATION
[Seal] By_________________________________
[Name]
[Title]
D-1
EXHIBIT E
---------
FORM OF CERTIFICATE OF OFFICER
------------------------------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF OFFICER
We, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, hereby certify that we are
the duly elected Senior Vice President, General Counsel and Secretary, and Vice
President and Controller, 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, 1997 (the "Pooling and Servicing
Agreement") between Green Tree and Firstar Trust Company, as Trustee, and the
Underwriting Agreement relating to the Class A, Class M-1 and Class B
Certificates, dated March 13, 1997 (the "Underwriting Agreement"), among Green
Tree, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ 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 is a
Certificate of Good Standing for Green Tree dated March 11, 1997, issued by
the Secretary of State of the State of Delaware.
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.
E-1
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 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 Statements and the Prospectus, at the time the
Registration Statements 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 Statements, at the time they became effective did not, and
as of the date hereof do 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 Statements
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 Statements or Prospectus. The conditions to the
use by the Green Tree of registration statements 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 Statements and the Prospectus.
There are no contracts or documents of the Green Tree which are required to
be filed as exhibits to the Registration Statements 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 is true and correct on
and as of the date hereof. To the best of our knowledge, the
representations
E-2
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 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.
Dated: March 31, 1997
___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President,
General Counsel and Secretary
___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Controller
E-3
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 Certificates by
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 and the
Class C Certificate, 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, the
Class C Certificate 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
F-1
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.
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 Class C Certificate, 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 Class C Certificate
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 the
Class C Certificate, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class C Certificate described in the
Prospectus under the heading "Certain Federal Income Tax Consequences."
7. The transfer of the 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. (S) 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 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 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 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 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. (S)336.9-301(3)) who becomes such
after the Closing Date, except that a subsequent purchaser of any 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
F-2
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.
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 the Trust
created pursuant to the Pooling and Servicing Agreement will qualify as a REMIC.
Further, the Certificates will evidence ownership of the "regular interests" and
the Class C Certificate will evidence ownership of the single class of "residual
interest" in such 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 March 22, 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 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. (S)(S) 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. (S) 548) as in effect on the
date hereof.
F-3
EXHIBIT G
---------
FORM OF TRUSTEE'S ACKNOWLEDGEMENT
---------------------------------
Firstar Trust Company, a state banking association organized under the
laws of the State of Wisconsin, acting as trustee (the "Trustee") of the trust
created pursuant to the Pooling and Servicing Agreement, dated as of March 1,
1997, 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 2.03 of the Pooling and Servicing
Agreement, that the Trustee has received and holds in trust thereunder the
following: (i) all right, title and interest in the manufactured housing
installment sale contracts and installment loan agreements (including, without
limitation, all mortgages and deeds of trust and any and all rights to receive
payments which are due pursuant to (a) the Contracts, other than the April
Contracts, from and after March 1, 1997 (or the date of origination, if later),
but excluding any rights to receive payments which were due pursuant thereto
prior to March 1, 1997 and (b) the April Contracts, from and after April 1,
1997, but excluding any rights to receive payments which were due pursuant
thereto prior to April 1, 1997), identified in the List of Contracts delivered
pursuant to Section 2.02(a) of the Pooling and Servicing Agreement, (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 Land-
and-Home Contract Files, (vi) all amounts 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) the Limited Guarantee and (viii) all proceeds of
the foregoing.
The Trustee further acknowledges receipt of the Land-and-Home Contract
Files, 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 and the Class C Certificateholders.
G-1
IN WITNESS WHEREOF, Firstar Trust Company, 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, 1997.
FIRSTAR TRUST COMPANY,
as Trustee
By________________________________
Name:
Title:
By________________________________
[seal] Name:
Title:
G-2
EXHIBIT H
---------
FORM OF CUSTODIAN'S ACKNOWLEDGMENT
----------------------------------
____________________, a __________________________________________ (the
"Custodian") acting as Custodian under a Custodial Agreement dated as of
__________, 199__, between the Custodian and Firstar Trust Company, as Trustee
(the "Trustee") (the "Custodial Agreement") under the Pooling and Servicing
Agreement dated as of February 1, 1997 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 and (d) 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, ____________________ has caused this acknowledgment to
be executed by its duly authorized officer and its corporate seal affixed hereto
as of this ___ day of _______, 199__.
___________________________________,
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, 1997 between the Company and Firstar Trust
Company, 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 _________________________, 19_____.
GREEN TREE FINANCIAL CORPORATION
By__________________________________
[Name]
[Title]
I-1
EXHIBIT J
---------
FORM OF CLASS C CERTIFICATE
---------------------------
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.
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 No.
(Subordinate)
Cut-off Date: Percentage Interest:
April 1, 1997 with respect
to the April Contracts, and
otherwise March 1, 1997
First Remittance Date:
April 15, 1997
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
------------------------------------------------
PASS-THROUGH CERTIFICATES, SERIES 1997-2, CLASS C (RESIDUAL INTEREST)
---------------------------------------------------------------------
J-1
Cut-off Date Pool Principal Balance: $
This certifies that ___________________________________________________ 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 1997-2 (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 March 1, 1997) (the "Contracts"). The Trust has
been created pursuant to a Pooling and Servicing Agreement (the "Agreement"),
dated as of March 1, 1997, between Green Tree Financial Corporation, as Seller
and Servicer (the "Company"), and Firstar Trust Company, as Trustee of the Trust
(the "Trustee"). This Class C Certificate is one of the Class C Certificates
described in the Agreement and is issued pursuant and subject to the Agreement.
By acceptance of this Class C 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
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in April
1997, so long as the Agreement has not been terminated, by check (or, if such
Class C Certificateholder holds Class C 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 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 difference between (A) the Amount
Available, and (B) the sum of (i) the Class A Distribution Amount, (ii) the
Class M-1 Distribution Amount, (iii) the Class B-1 Distribution Amount, (iv) the
Class B-2 Distribution Amount, (v) the Monthly Servicing Fee, (vi) amounts to
reimburse the Class C Certificateholder for expenses incurred by and
reimbursable to it and (vii) the Guarantee Fee.
The Class C 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 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 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 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.
J-2
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class C
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Milwaukee, Wisconsin, 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 Class C Certificates evidencing the same
aggregate amount of Class C 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 Certificate is exchangeable for new Class C 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 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 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 Trust 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 Certificates shall be "regular interests" in the REMIC and the Class C
Certificates shall be the "residual interest" in the REMIC. In addition, the
holder of this Class C 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 Trust, and (ii) agrees to cooperate with the Company in connection with
examinations of the Trust'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.
J-3
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1997-2 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 1997-2
By FIRSTAR TRUST COMPANY
By________________________________
Authorized Officer
J-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
J-5
EXHIBIT K-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, 1997 between the Company and Firstar Trust
Company, 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
________, 19__.
GREEN TREE FINANCIAL CORPORATION
By_________________________________
[Name]
Title]
K-1
EXHIBIT K-2
-----------
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, 1997 between the Company and Firstar Trust Company, 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 for each such Eligible Substitute
Contract [are being held by the Company, as Servicer] [have been delivered to
_____________________________________, the successor Servicer].
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 [description, as to each Contract, as to how
it satisfies the definition of "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
K-2
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 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 _________________________, 19____.
GREEN TREE FINANCIAL CORPORATION
By______________________________________
[Name]
[Title]
K-3
EXHIBIT L
---------
FORM OF REPRESENTATION LETTER
-----------------------------
Firstar Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Green Tree Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1639
RE: Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1997-2, Class C
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
Class C 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.
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 13, 1997 and related Prospectus Supplement dated
March 13, 1997, 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.
L-1
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. (S)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 Class C 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 Class
C 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 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
L-2
EXHIBIT M
---------
FORM OF MONTHLY REPORT
----------------------
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1997-2
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 _______
Interest
--------
Class A Certificates
--------------------
2. Aggregate Class A interest
(a) Class A-1 Remittance Rate (5.6175%) _______%
(b) Class A-l Interest _______
(c) Class A-2 Remittance Rate (6.00%) _______%
(d) Class A-2 Interest _______%
(e) Class A-3 Remittance Rate (6.42%) _______%
(f) Class A-3 Interest _______
(g) Class A-4 Remittance Rate (6.66%) _______%
(g) Class A-4 Interest _______
(h) Class A-5 Remittance Rate (6.91%) _______%
(i) Class A-5 Interest _______
(j) Class A-6 Remittance Rate (7.24%) _______%
(k) Class A-6 Interest _______
(l) Class A-7 Remittance Rate (7.62%
unless the Weighted Average Contract
Rate is less than 7.62%) _______%
(m) Class A-7 Interest _______
M-1
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 (7.54%, unless
Weighted Average Contract Rate is less
than 7.54%) _______%
(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 _______
(b) Class B-1 Remittance Rate (7.56%, unless
Weighted Average Contract Rate is less
than 7.56%) _______
(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 _______
M-2
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 month _______
(f) Minus principal received during the
first 10 days of the prior month _______
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 _______
(d) Class A-4 _______
(e) Class A-5 _______
(f) Class A-6 _______
(g) Class A-7 _______
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 _______
(g) Class A-7 Principal Balance _______
18. Unpaid Class A Principal Shortfall
(if any) following current
Remittance Date _______
M-3
Class M-1 Distribution Test and Class B Distribution Test
---------------------------------------------------------
(applicable on and after the Remittance Date occurring in
April 2001)
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%) _______
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 April 1, 2001
to March 31, 2002, 6.5% from
April 1, 2002 to March 31, 2003,
8.5% from April 1, 2003 to
March 31, 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
M-4
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 22.5% _______
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 $11,000,000 _______
(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 11.25% _______
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 _______
M-5
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
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 _______
M-6
(e) Remaining Unpaid Class B-1 Liquidation
Loss Interest Shortfall _______
Class B-2 Certificates
----------------------
36. Remaining Amount Available _______
Interest
--------
37. Class B-2 Remittance Rate (8.05%,
unless Weighted Average Contract Rate
is less than 8.05%) _______%
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 _______
Class A, Class M-1, and Class B Certificates
---------------------------------------------
Aggregate Scheduled Balances of delinquent Contracts as of Determination Date
47. 30 - 59 days _______
M-7
48. 60 days or more _______
49. Manufactured Homes repossessed _______
50. Manufactured Homes repossessed
but remaining in inventory _______
51. Weighted Average Contract Rate
of all outstanding Contracts _______
Class C Certificates
--------------------
52. Monthly Servicing Fee (deducted from
Certificate Account balance to arrive
at Amount Available if the Company or
from Green Tree Financial Servicing
Corporation is not the Servicer; deducted
from funds remaining after payment of
Class A Distribution Amount, Class M-1
Distribution Amount, Class B-1
Distribution Amount and Class B-2
Distribution Amount, if the Company
or Green Tree Financial Servicing
Corporation is the Servicer) _______
53. Guarantee Fee
54. Class C Residual Payment _______
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 _______
M-8
Please contact ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of Firstar Trust Company (▇▇▇) ▇▇▇-▇▇▇▇ with
any questions regarding this Statement or your Distribution.
M-9
EXHIBIT N
---------
APRIL CONTRACTS
---------------
N-1